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02 December 2016

I am thinking of assigning my pharmacy lease. Can I assign it to my guarantor?

The ability to sell a lease gives flexibility for contractors who may want to sell their business.

Before any sale you should check your lease to confirm if a sale is permitted, and if so, any potential conditions the landlord can impose to allow the sale. This could include:

  • that an Authorised Guarantee Agreement from the outgoing tenant is required where they guarantee the party they sell to; and/or
  • the buyer provides suitable guarantors on the lease.

In some leases there may even be an absolute bar preventing you from selling your lease.But what if you have a guarantor such as a parent company to the lease and you would like to transfer your lease to that guarantor? came into force.

An 'old lease' can be sold to the tenant's guarantor but in contrast, a recent case has confirmed that any sale of a 'new lease' to a tenant's guarantor will be legally void. This is because the guarantor will remain liable on the lease after the tenant has sold its interest which the Act was intended to restrict.

This recent decision is likely to cause some impact on pharmacy group reorganisations and restructurings where parent company guarantees are involved. Legal advice should be obtained at the earliest stage to ensure that this is not an issue on any sale or purchase.

This article was written by Jennifer Berritt and first published by P3 in October 2016. For more information please contact Jennifer on +44 (0)20 7427 2578 or