Joseph Ollech recounts some recent developments in the world of virtual assignments & alienation clauses
Alienation covenants are a common feature of both commercial and residential leases. They are key to a landlord’s ability to control the onward passage of the leasehold interest, whether it be by assignment or by sub-lease, by licence to part with or share possession, or via the creation of a trust structure.
Covenants by the tenant against alienation can take a variety of forms. For example, they may be absolute or conditional, or they can relate to the whole of the premises or to part. Typically the tenant covenants not to assign or sublet the premises which are the subject of the lease, without the consent of the landlord which is not to be unreasonably withheld.
When presented with a request to permit an assignment the landlord will have an opportunity to consider the credentials of the proposed new tenants, and in all likelihood to require his current tenant to enter into an authorised guarantee agreement (AGA) in accordance
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