Authorised Guarantee Agreement Template for England and Wales

An Authorised Guarantee Agreement (AGA) is a critical legal document that bridges the gap between outgoing and incoming tenants in commercial lease assignments. Under the Landlord and Tenant (Covenants) Act 1995, when you assign your lease to another party, your landlord may require you to guarantee the new tenant's performance through an AGA. This arrangement ensures continuity of security for the landlord while allowing you to transfer your lease obligations.

When do you need this document?

You'll need an AGA whenever you're assigning a commercial lease and your landlord requires additional security. This typically occurs in office buildings, retail premises, industrial units, and other commercial properties where the lease includes assignment provisions. The requirement is particularly common when the incoming tenant's financial standing doesn't fully satisfy the landlord's security requirements, or when the original lease contains specific clauses mandating AGAs upon assignment. Most modern commercial leases include provisions allowing landlords to request AGAs as a condition of consent to assignment.

Key legal considerations

The guarantee obligations under an AGA are comprehensive, covering rent payments, service charges, insurance premiums, and compliance with all lease covenants. You remain liable for the incoming tenant's obligations until they assign the lease to another party or the lease expires. Crucially, the guarantee is limited to the period when the assignee holds the lease - it doesn't extend to subsequent assignments unless specifically stated. The AGA must clearly define the scope of your liability, including any caps on financial exposure and specific circumstances that might trigger your guarantee obligations. Consider negotiating provisions that limit your liability to a fixed period or monetary amount, and ensure the agreement includes clear termination conditions.

Legal requirements in England and Wales

Under the Landlord and Tenant (Covenants) Act 1995, AGAs must comply with specific statutory requirements to be enforceable. The agreement must be executed as a deed, requiring proper witnessing and delivery according to the Law of Property Act 1925. All parties - landlord, outgoing tenant, and incoming tenant - must be clearly identified, and the document must reference the original lease and assignment deed. The AGA cannot impose greater obligations than those contained in the original lease, ensuring proportionate liability. English courts have established that AGAs must be reasonable and cannot be used to circumvent the 1995 Act's protections for tenants. The document should include proper definitions of key terms, specify the duration of guarantee obligations, and outline the procedures for enforcement to ensure compliance with English property law principles.