Authorised Guarantee Agreement Scotland

An authorised guarantee agreement (AGA) is a legal document commonly used in Scotland to ensure that the obligations of a tenant are passed on to the incoming tenant of a commercial property. The purpose of an AGA is to protect the landlord by ensuring that they continue to receive rent payments and other benefits if the tenant defaults on their lease agreement.

Under the terms of an AGA, the outgoing tenant (assignor) guarantees to the landlord (assignee) that the incoming tenant (assignee) will fully comply with the covenants and obligations set out in the lease agreement. This means that if the new tenant defaults on their obligations, the outgoing tenant will be held responsible for their actions.

In Scotland, an AGA is required by law if a tenant assigns their lease to a new tenant. This is known as a “statutory assignation” and is governed by the Law of Property (Miscellaneous Provisions) (Scotland) Act 1985.

An AGA can be granted for a fixed period of time or in perpetuity. The length of time will depend on the terms of the lease agreement, but typically lasts for the duration of the lease or until the end of the assignee’s tenancy.

An AGA requires careful consideration and negotiation by both the outgoing and incoming tenants. The outgoing tenant will want to limit their liability as much as possible, while the incoming tenant will want to ensure that they are not unfairly burdened with obligations that they did not originally enter into. It is important to seek legal advice before entering into an AGA to ensure that your interests are fully protected.

In conclusion, an authorised guarantee agreement is an important legal document in Scotland that protects the interests of both landlords and tenants when assigning a commercial property lease. It is essential to seek professional legal advice before entering into an AGA to ensure that your rights and obligations are fully understood and protected.