Q&A - If I assign the lease on my business premises will I be exempt from future liability?

Q: I have outgrown my leased business premises and want to move. There is still almost two years left to run on my lease, but I have a friend who is keen to take over the premises and the lease. If I assign the lease to him will it exempt me from future liability for the premises?

A:  Before you can assign the lease for the premises you will probably need to get the consent of the landlord. Under the terms of a standard lease the landlord cannot ‘unreasonably' withhold consent; it is normally the case that he or she can impose certain conditions, so it would be wise to seek proper legal advice about your specific lease.

The landlord will want to know that the proposed new tenant is financially viable before agreeing to let him take over the lease and may request proof including accounts, together with business, personal and sometimes bank references. The landlord will probably also want to run a credit check, which he may require you to pay for. Additionally he may request a deposit or a guarantee if the new tenant is a limited company

If the lease began prior to1st January 1996, irrespective of whether you may have taken it on after that date, you will be liable to the landlord for all future payments under that lease even if the lease is assigned to someone else. If the lease began after 1st January 1996 you will probably still be required to guarantee payments by the person to whom you have assigned the lease under an authorised guarantee agreement

For the assignment of the lease you, your landlord and the proposed new assignee will each need separate legal representation, and it would be usual for you to be responsible for payment of fees in respect of yours and your landlord's solicitors.