Assignment of a commercial lease

Assigning a commercial lease transfers the tenant's interest to another party, subject to the lease and applicable law. It is different from simply allowing a buyer to trade from the premises under the seller's lease. ^[1]

Establish the consent route

Read the assignment covenant and identify the information required about the proposed assignee. Gather accounts, references, business details and the agreed transaction timetable. Check whether superior landlord or lender involvement is needed.

Do not assume that a buyer's payment for the business completes the lease transfer. Coordinate the licence to assign, transfer deed and any replacement security with the business sale documents.

Understand continuing exposure

Ask whether the outgoing tenant or guarantor remains liable and whether an authorised guarantee agreement is proposed. Its effect depends on the lease history and legal framework. Obtain advice before accepting a document whose title suggests a routine administrative step.

Deposits and guarantees need explicit treatment at completion. A business purchase with premises should identify what happens if landlord consent is delayed or refused. Keep completed consent documents and evidence of required notices with the sale file.

Distinguish the lease transfer from the wider business deal Identify the existing tenant and the legal entity proposed to take over the lease. A buyer may purchase assets through a different company from the one discussed during negotiations. Ensure the assignment application uses the intended assignee and explains the proposed business activity. Buying stock, equipment or goodwill does not itself transfer the tenancy. If the buyer must occupy the premises to operate the acquired business, the transaction documents need a coordinated route for the lease transfer rather than assume access will follow automatically from the asset purchase.

Read the lease and later variations for the conditions affecting assignment. Ask whether the proposed transaction concerns the whole premises and whether any superior interest or lender also needs attention. Keep informal sharing or early occupation proposals separate from the assignment process. Allowing a buyer to trade before the legal transfer completes can create obligations and consent issues of its own. The advisers should assess the actual interim arrangement instead of treating it as a harmless way to bridge a delay in the landlord's paperwork. ## Supply an assignee application that addresses the landlord's questions Prepare the financial and business information reasonably relevant to the consent assessment, as advised under the lease and applicable law. This may include accounts, trading history, references and details of proposed security. Explain a new company's structure and funding rather than submit an empty trading record without context. The RICS leasing code discusses assignment and associated security as connected matters. ^[1] A coherent application helps the landlord assess the proposed tenant and enables the outgoing tenant's adviser to identify which questions remain unanswered.

Keep a record of the application, additional requests and responses. If the landlord appears to delay or impose a disputed condition, give the solicitor the actual correspondence and dates. Avoid reducing the issue to a claim that consent must always be given or that any delay permits occupation without it. The legal position depends on the covenant, applicable duties and circumstances. Ask what step is appropriate to progress the application while preserving the business transaction's timetable and the parties' evidence of how the request was handled. ## Understand what the outgoing tenant may still promise Examine any proposed authorised guarantee agreement and related guarantor document before treating it as routine consent paperwork. Ask which obligations would continue, what events could trigger liability and how the lease history affects the analysis. The outgoing tenant may be transferring occupation while retaining a defined exposure to the incoming tenant's performance. A business owner deciding whether to sell needs that information alongside the sale price, because the commercial benefit of exit can be materially different if significant contingent obligations remain.

Deal separately with the existing rent deposit and any replacement security. Establish whether the old deposit is returned, assigned under an agreed mechanism or retained for a particular purpose. Check how arrears, service charge adjustments and other outstanding matters are allocated at completion. The buyer and seller may agree their own allocation, but that does not automatically alter the landlord's rights. Ask the advisers to distinguish obligations owed to the landlord from reimbursement promises between the transaction parties, so each party understands whom they may need to pursue later. ## Align consent, completion and the post-transfer record Agree which documents must complete together and which conditions must be met before the business sale proceeds. If landlord consent is outstanding, the sale contract should address the dependency in terms the parties understand. Do not assume a signed draft licence means consent has become effective regardless of its conditions. The conveyancers should confirm the required execution, payments and any other completion steps. Keep the agreed timetable realistic where several parties or superior interests must provide documents before the assignment can take place.

After completion, retain the licence, transfer, security arrangements and evidence of notices or registration steps handled. Supply the incoming tenant with the current lease documents, review records and relevant property information under the agreed handover. The outgoing tenant should keep evidence of releases and any continuing obligations rather than discard the lease file after receiving the sale money. If an unexpected demand arrives later, these documents allow an adviser to identify whether it concerns a pre-assignment liability, a continuing promise or an account that should have been transferred to the new tenant.