When the tenant and the original assignee entered the administration, the lessor attempted to recover the rent from the co-operative group as part of the above guarantees. It is for the Tribunal to ascertain whether the provisions constituted a valid partial guarantee of an AGe and were therefore enforceable; or whether they were direct guarantees that were invalid and unenforceable under the 1995 Act. A supermarket and car park were leased by the owner (A-A Shah Properties) to the original tenant (Somerfield Stores Ltd), pursuant to a lease agreement of 22 June 2006, for a period that expires in 2031 (the lease). The tenant`s obligations in the tenancy agreement were guaranteed by Somerfield Ltd. In 2011, the lease was awarded to 99p Stores Ltd and Co-operative Group Food Ltd assumed responsibility for the warranty. Your landlord can follow you based on the age of your lease and the appropriateness of an authorized warranty contract. An approved guarantee contract is a specific form of guarantee that applies specifically to lease agreements concluded from 1996. With respect to the second provision, the High Court found that it was a valid partial guarantee. The judge explained that this second provision was a sub-guarantee of this effective guarantee, since the outgoing tenant had a sub-guarantee (effectively guaranteed) in the licence to transfer, observe and enforce the provisions of the AGM. A recent High Court decision in the Co-Operative Group Food Ltd/. A-A Shah Properties Ltd (2019) refers to a dispute in the approved guarantee agreement (AGM), in this case an agreement involving a guarantor of the outgoing tenant. The Coop case was complicated by the fact that there was more than one provision in the transfer licence, but the bottom line is that the lessors and their lawyers must be very careful in drawing up to distinguish between a partial guarantee and a direct guarantee, to ensure that the outgoing tenant`s guarantor always guarantees only the outgoing tenant`s benefit and not the delivery of the assignee. When a tenant enters into a lease with a new tenant (delegate), the lessor may require the tenant to enter into an AGM with the landlord as a condition of consent to the assignment of the tenancy agreement.
An AGM is a form of guarantee that the tenant (outgoing) gives to the lessor that if the assignee does not fulfill the obligations of the lease, such as the payment of rent, repair of the property, etc., the outgoing tenant will do so. In other words, the outgoing tenant becomes the guarantor of the agent. This subtle and complex legislation can be important pitfalls, especially for unwary renters and anyone responsible for developing the various transfer and warranty documents.