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Assignments (or sales) of commercial leases

Assigning a Lease to a New Tenant

Completion of assignment

Once a licence to assign has been completed the tenant and assignee are free to complete the assignment (or transfer) of the lease. The assignment will often take place on the same day as the licence is completed. However, it can also take place some days, weeks or months after the date of the licence, so long as any time limit imposed by the licence is complied with.

Deed of assignment or transfer? 

The assignment is effected by a deed of assignment (if the lease is not registered at the Land Registry) or a transfer (for a registered lease). There is a prescribed Land Registry form for the transfer of a registered lease (which can also be used for an unregistered lease).

The tenant and assignee may have agreed heads of terms for the assignment at the outset. If so, the deed of assignment or transfer will reflect those heads of terms. The deed of assignment or transfer must be executed as a deed by both parties.

If possible the parties should execute the deed in duplicate, i.e. two copies of the deed are produced and they both sign each copy. This means that after completion of the deed each party can retain an original document executed by both parties. However, if timescale or logistics make this approach difficult, the deed can be executed in separate parts by the tenant and assignee.

When the deed has been executed by both parties, they need to agree to complete it by entering the date in the gap at the top of the deed.

Notice of assignment 

The lease or the licence to assign (or both) will usually include a clause requiring the assignee to give the landlord “notice of assignment”. This is a formal notice confirming that the assignment has taken place and asking the landlord to send rent demands and other correspondence to the new tenant.

If the lease is registered at the Land Registry, the assignee will also need to give the landlord copies of the updated Land Registry title for the lease, showing the assignee as the registered proprietor of the lease.

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