Procedural Steps for the Assignment of a Lease

VOCABULARY flashcards covering the key legal principles, documents, and procedures involved in the assignment of commercial leases according to the SQE1 syllabus.

Assignment

The transfer of an existing lease by the tenant (the ‘seller’ or ‘assignor’) to a third party (the ‘buyer’ or ‘assignee’).

Licence to Assign

A formal deed in which the landlord provides consent to the assignment of the lease by the assignor to the assignee.

Authorised Guarantee Agreement (AGA)

A typical requirement for 'new leases' where the assignor guarantees the performance of the tenant’s covenants by the assignee, including the payment of rent.

Old Lease

A lease granted before 1 January 1996, where the assignee remains liable to the landlord via privity of estate for covenants that 'touch and concern' the land.

New Lease

A lease granted on or after 1 January 1996, where the assignor is automatically released from tenant covenants upon assignment unless an AGA is entered into.

Privity of Estate

The legal relationship between a landlord and an assignee that makes the assignee liable for covenants that 'touch and concern' the land while the lease is vested in them.

Privity of Contract

A direct contractual relationship between parties; in 'old leases', the landlord creates this by requiring the assignee to enter into a direct covenant for the remainder of the term.

Absolute Title

A class of title where the Land Registry guarantees the leasehold title, making it unnecessary for an assignee to investigate the superior freehold title.

Good Leasehold Title

A class of title where the Land Registry does not guarantee the soundness of the superior freehold title, often leading assignees to insist on deduction of the freehold title.

TR1

The prescribed form used under the Land Registration Rules 2003 for the assignment of a registered lease or an unregistered lease exceeding seven years in length.

Deed of Assignment

A document used to transfer legal title of a lease, typically used for the assignment of unregistered leases for seven years or less as they do not trigger first registration.

Apportionments

The process of adjusting financial outgoings, such as rent paid in advance or insurance premiums, so that the assignee reimburses the assignor for the period from completion until the next payment date.

OS1

An official search of the registers of the leasehold title carried out pre-completion to check for new entries and gain a priority period for registration.

SDLT/LTT

Taxes (Stamp Duty Land Tax or Land Transaction Tax) payable on any purchase price or 'premium' charged by the assignor during an assignment.

Notice of Assignment

A formal notification, usually required by a standard lease provision, given to the landlord in duplicate following completion along with the appropriate fee.

SCPC (Standard Commercial Property Conditions)

Contract conditions providing that if landlord’s consent is not obtained by the completion date, completion is postponed and rescission cannot occur until six months have passed.

SC (Standard Conditions of Sale)

Contract conditions allowing either party to rescind the contract if landlord consent is not given three working days before the completion date.