Don't get burnt by an AGA

It’s important that anyone entering into a commercial property lease, whether a landlord or a tenant, considers their AGA (an acronym for Authorised Guarantee Agreement, contrary to the terrible pun).

- Richard Whiteley

Normally, the terms of a lease allow a tenant to sell (assign) the lease on to a new tenant, subject to conditions, and that will almost always include a requirement that the outgoing tenant enters into an Authorised Guarantee Agreement.

In an AGA, the outgoing tenant will be acting as a guarantor of the new tenant’s liabilities under the terms of the lease. This means that the outgoing tenant will have to pay the rent and observe and perform the tenant’s covenants of the lease if the new tenant does not keep up with these obligations.