MAKE YOUR FREE Licence to Assign
What we'll cover
What is a Licence to Assign?
A Licence to Assign is an agreement between a commercial landlord and a tenant used when the tenant wants permission to assign or transfer their obligations under a lease to another party (known as the ‘assignee’). Landlords should use Licences to Assign to formally consent to commercial tenants transferring their commercial lease obligations to another party.
For use in England and Wales only.
When should I use a Licence to Assign?
Use this Licence to Assign if:
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your tenant has approached you for consent to assign the lease of a commercial property to another business
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the original lease agreement prevents the tenant from assigning without your consent
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you have seen the assignee's financial accounts and they are in a position to pay the rent and other sums due under the lease
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the assignee will use the property for a purpose allowed under the original lease
Sample Licence to Assign
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LICENCE TO ASSIGN A LEASE - ENGLAND & WALES
This licence to assign is made on________________________________(date) between:
- (we or us);
- (you or your).
Meanings
- In this Agreement, the following words are defined:
Assignee Assignment Transfer of the Lease to the Assignee; Lease The lease of premises at , dated where you are now the tenant.
Conditions to Our Consent
- We have considered your request and consent to the Assignment on condition that:
- on or before the date of the Assignment you pay to us all rent and other sums payable under the Lease up to the date of the Assignment;
- the Assignment is completed within months after the date of this licence to assign.
Notice of Assignment and Registration Fee
- When the Assignment is complete, the Assignee shall, within one month:
- give us written notice confirming the date when the Assignment was completed;
- give us a copy of the deed of Assignment;
- pay us a registration fee of £.
- This Agreement shall be governed by and interpreted according to the law of England and Wales and all disputes arising under the Agreement (including non-contractual disputes or claims) shall be subject to the exclusive jurisdiction of the English and Welsh courts.
About Licences to Assign
Learn more about making your Licence to Assign
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How to make a Licence to Assign
Making a Licence to Assign online is simple. Just answer a few questions and Rocket Lawyer will build your document for you. When you have all of the details prepared in advance, making your document is a quick and easy process.
To make your Licence to Assign you will need the following information:
Party details
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What are the landlord’s details (ie legal structure, name and address)?
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If the landlord is a partnership, will one partner sign in the presence of a witness or will all partners (up to a maximum of 4) sign in the presence of witnesses? What are the details of the partner(s)?
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If the landlord is an LLP, will one partner sign in the presence of a witness or will two partners sign in the presence of witnesses? What are the details of the partner(s)?
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If the landlord is a company, will one director sign in the presence of a witness or will two directors sign? What are the details of the director(s)?
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What are the tenant’s details (ie legal structure, name and address)?
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What are the assignee’s details (ie legal structure, name and address)?
Property and commercial lease
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What is the address of the commercial property?
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What is the date of the commercial lease?
Assignment
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Do you know the date when the request to assign the lease was made? If so, when was the request first made?
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Does the tenant have to give a guarantee that the assignee will comply with its obligations under the lease?
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How long will the Licence last before it expires?
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What is the registration fee amount?
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Common terms in a Licence to Assign
Landlords use Licences to Assign to consent to the assignment of a commercial lease. To do so, this Licence to Assign template covers:
Party details
The start of the Licence to Assign sets out the parties to the Licence. These are the commercial landlord and the commercial tenant who wants to assign their lease.
Meanings
The section provides definitions for certain key terms that are used throughout the Licence, such as ‘Assignment’ and ‘Lease’. By explaining the meaning of these key terms, everyone understands exactly what they mean for the purposes of the Licence.
This section also specifies who the intended assignee is.
Conditions to our consent
The section sets out that the landlord consents to the assignment of the lease provided certain conditions are met. If these conditions aren’t met to the landlord’s satisfaction, the commercial tenant cannot assign the lease.
Notice of assignment and registration fee
The section sets out what steps the assignee should take after the assignment takes effect and within what time period.
If you want your Licence to Assign to include further or more detailed provisions, you can edit your document. However, if you do this, you may want a lawyer to review or change the Licence to Assign for you, to make sure it complies with all relevant laws and meets your specific needs. Ask a lawyer for assistance.
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Legal tips for making a Licence to Assign
Understand when you may withhold consent for an assignment
Check your original commercial lease to see what it says about assignments. If the lease absolutely prohibits assignment, you can refuse consent without giving a reason. However, if the lease prevents assignment without your consent, you must have a good reason for refusing. For example, because the intended assignee cannot pay the rent due under the lease. For more information, read the FAQ ‘What happens if the lease doesn't allow assignments?’.
Understand when to seek advice from a lawyer
Ask a lawyer for advice if:
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this document doesn’t meet your specific needs
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the original lease does not allow the tenant to assign the lease
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an assignee that you do not want the lease assigned to has the ability to pay the rent under the lease
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the assignee’s intended use of the property is different to the use allowed under the original lease
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the property is located in Scotland
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Licence to Assign FAQs
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What is included in a Licence to Assign?
This Licence to Assign template covers:
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providing a commercial tenant with consent to assign
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an optional requirement that the tenant will guarantee the rent and sums due under the lease
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a time limit for completion of the lease assignment
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the landlord's registration fee
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Why do I need a Licence to Assign?
You will need to use a Licence to Assign if you have a Commercial lease and it doesn't allow the tenant to transfer the lease to a new tenant without obtaining the landlord's consent first. This Licence to Assign is suitable if the lease was originally granted on or after 1 January 1996 and it does not contain a clause stating that it is an 'old' tenancy for the purposes of the Landlord and Tenant (Covenants) Act 1995.
For more information, read Assigning a business lease.
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What happens if the lease doesn't allow assignments?
If the lease absolutely prohibits assignment, then the landlord can refuse consent without giving a reason. If the lease prevents assignment without the landlord's consent the landlord must have a good reason for refusing any requests for consent. Refusal is likely to be justified only if the assignee:
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cannot show that it has the financial strength to pay the rent and other sums due under the lease or to meet the cost of repairs and other tenant obligations, or
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intends to use the property for a purpose not allowed by the lease (eg using a shop as a fast food outlet or restaurant)
Commercial landlords often require that the assignee:
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shows accounts from the past 3 years demonstrating after-tax profits at least 3 times the level of the rent due under the lease, or
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provides a bank, parent company or director’s personal guarantee
Where there is a legitimate doubt over the assignee's financial strength, the landlord may insist that the current tenant guarantees the assignee's ability to meet all tenant obligations under the lease.
For more information, read Assigning a business lease.
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How should the tenant apply to assign their lease?
There is no prescribed (ie required) form for a tenant's application for consent to assign. This means that the tenant can make their request to assign the lease however they wish. This will typically be verbal, by letter or by email.
If you know the date the tenant requested to assign their lease, the Licence to Assign will include the original request date. If you don’t know when the tenant first made the request, the Licence will simply say that a request was made.
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How long will the Licence to Assign last before it expires?
As the landlord, you can set a time limit for the completion of the assignment. You are also entitled to insist that the assignment takes place within a reasonable period after the date on which the assignee’s references were provided.
If the assignment has not been completed within the agreed time period, the commercial tenant will no longer have permission to assign the lease and the tenant will need to re-apply for permission.
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What is the registration amount?
As a landlord, you can charge your commercial tenant to register an assignment. Landlords should use this fee to cover administration costs for updating records and management systems as to who is occupying the property. Fees of £25 or £50 are common.
Under this Licence to Assign the assignee should pay the landlord the registration fee within one month of the assignment.
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