Any commercial lease you have will usually have a clause that gives details about how your business can pass on or ‘assign’ the commercial lease to another enterprise. If your property is being leased on a leasehold basis, you should ensure your business has taken legal advice about how assignment is handled if you want to pass on the lease. As the assignor it will usually be your responsibility to ensure that the new assignee of the property or land is reputable and can pay the rent that would be due. Performing a credit check on the assignee is an absolute pre-requisite. In addition, you should have a commercial property solicitor to help you ensure the new lease is legally binding and protects your rights.
It is important to understand that assignment of a commercial lease is not the same as subletting a commercial property. Assignment means you are transferring the total rights and responsibilities over the commercial lease to another business; subletting, on the other hand, means your business maintains overall rights and responsibilities over the property or land, but gives another business the right to use those premises or land and to assume certain rights and responsibilities under the commercial lease.
The Landlord and Tenant Act 1988 governs all assignments. Your existing landlord also has some fundamental responsibilities as well that include to give their consent to the assignment unless they can show reasonable grounds under which to refuse the assignment of your lease. And if your landlord also has their own superior landlord, they must seek his or her consent for the assignment to take place.
If you can’t come to an agreement with your landlord about the assignment, you can apply to the court for a judgment about your application. In these instances the representation of a commercial property solicitor with expertise with commercial leases will be vital, as this area of commercial property law can be highly complex and in some cases very contentious.
Ben Letham works for Contact Law, the UK's foremost legal brokerage company - finding the right commercial lawyers and commercial property solicitors for your company's needs.
