Enforcing An Authorised Guarantee Agreement: What You Need To Know
An authorised guarantee agreement, or AGA, is a legal instrument used to transfer the responsibilities of a tenant to a new one. It is usually implemented when a new tenant assumes control of a leased property. In this situation, the landlord will request the former tenant to sign an AGA, which essentially guarantees that the new tenant will honour the terms of the lease.
However, there are times when the new tenant fails to uphold the lease terms, despite having signed the AGA. In such cases, the landlord has the right to enforce the agreement and hold the former tenant accountable. If you are a landlord or a tenant, here is what you need to know about enforcing an authorised guarantee agreement.
What is an Authorised Guarantee Agreement?
Before we dive into enforcing an AGA, let`s first understand what it is. As mentioned earlier, an AGA is a legal instrument used to transfer the responsibilities of a tenant to a new one. It is a form of guarantee that the new tenant will honour the lease terms and conditions, especially if the former tenant defaults.
An AGA is often used in commercial leases, where businesses change hands frequently. In most cases, landlords will require the outgoing tenant to sign the AGA before releasing them from their lease obligations. Once the new tenant is in place, the AGA ensures that they take over the legal obligations of the lease, including rent payments and property maintenance.
Enforcing an AGA
If the new tenant defaults on the lease agreement, the landlord can enforce the AGA and hold the former tenant accountable. Enforcing an AGA requires some legal process, including issuing a notice of default and following the guidelines in the original lease agreement.
Here are some basic steps involved in enforcing an AGA:
1. Review the original lease agreement. Before enforcing the AGA, check the original lease agreement for any specific guidelines or instructions on how to proceed. This will help you ensure that you are following the correct legal procedures.
2. Issue a notice of default. Once you have identified the lease violations, you need to issue a notice of default to the new tenant and the former tenant who signed the AGA. This notice should outline the violations and give the new tenant a chance to remedy the situation within a specified period.
3. Take legal action. If the new tenant fails to remedy the situation, the landlord can take legal action against them and the former tenant who signed the AGA. This may include seeking damages or other legal remedies as outlined in the original lease agreement.
It is important to note that enforcing an AGA can be a complicated legal process. It is advisable to seek legal counsel to ensure that you are following the correct procedures and protecting your interests.
In conclusion, an authorised guarantee agreement is a necessary legal instrument that protects the interests of landlords and tenants in commercial leases. Enforcing an AGA is a legal process that requires careful attention to detail and adherence to the guidelines outlined in the original lease agreement. As a landlord or tenant, it is crucial to understand your rights and obligations related to an AGA and seek legal counsel if necessary.