Licence to Assign Lease

There are times in business where legal information can be quite confusing. If you have never heard of the licence to assign lease you might have a lot of questions. In this article we will overview that document, what it is used for, when to use it, how it protects you, and cover the document template we sell here.

The licence to assign lease is where you grant permission as the landlord to a tenant of a property to sell the lease to another. Already you can see why it can be a mouthful to explain. To offer an explanation, see our example below.

A landlord owns a building in which the tenant is using it for storage. The tenant decides they no longer need the building. However, the original lease still has time left on it. To break the lease would cost the tenant their deposit and any rent owed as stated in the lease agreement. To avoid this complicated issue and money lost the tenant has asked the landlord for permission to sell the lease. The original lease would then be transferred to the new tenant and finished out by that new tenant. This new tenant is responsible for paying the rent that is left, and the existing tenant is now out of the equation.

This is different from a sub-let. In a sub-let the existing tenant can be held responsible for any default on the original lease, even though a new tenant is in place. For a sub-let situation you would need a licence to sub-let agreement. The licence to assign lease is needed for the situation we are describing here.

For the licence to assign lease to be effective the landlord has to actually grant permission. Furthermore, the landlord will want to approve the new tenant. They have the right to refuse any prospective tenant even if they have granted a general licence to assign lease. Typically the refusal comes from the risk of the new tenant not being able to pay the rent owed. However, the landlord may offer a licence to assign lease and approval if a guarantor signs a document stating they are responsible for the tenant if they default based on the existing lease.

Now that you understand what the licence to assign lease is and how it can be used, we can look at other aspects. You need to use the licence to assign lease any time a tenant does not wish to break a contract and asks that an assignment of lease occur. However, you are under no obligation to actually do as the tenant asks. While it can only be used in this type of situation, a landlord can decline the use of the licence to assign lease for any reason. There are UK laws about subletting, leases, and assignment of lease that need to be followed. Without the landlord approval a new tenant cannot gain possession of the existing tenant’s space. All parties involved must also sign the licence to assign lease. The Tenants Covenants Act of 1995 can affect how the licence to assign lease is used. It is imperative that you understand this act before you enter into any agreement. The document is meant to protect the landlord but offer the tenant a way out of a lease without breaching it and being protected if the new tenant defaults.

Our site offers you the document template for the licence to assign lease. This document was created by a solicitor to make it legal in a court of law. It is completely DIY and modifications can be made. Once signed it must be registered in the proper municipal.

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