Guide to our Deed of Assignment of Lease Template

Posted by David Cammack on 14th May 2015

Our template Deed of Assignment of Lease will be needed by a tenant of an unregistered lease of business premises who is wishing to assign the remainder of the term of the lease to a new tenant – “the assignee”. It presumes that you have obtained the consent of the landlord (which is generally needed – check the terms of the lease) to assign the lease. Such consent is usually granted in a separate document (i.e. a licence to assign). A template licence to assign is available separately from Legalo if you need one – click the link.

This assignment of lease deed has optional clauses, so you can still use it whether or not:
1. you need the consent of the landlord to the assignment;
2. the assignee is paying a “premium” to the assignor for the assignment of the lease, i.e. it is buying the lease from the assignor (or vice versa, i.e. a “reverse premium”); and
3. the tenant can claim another lease on its expiry (called “security of tenure”).

When drafting your assignment from this template, you should ensure it reflects any details agreed in either (a) any contract that sets out the assignment’s terms or (b) any heads of terms that set out the basic details agreed for the assignment.

Assigning a Sub-Lease

When you have a sub-lease and you are assigning it, you can still use this deed of assignment. While the terminology in the template will refer to a lease, you can either use it as it is or you can change it to refer to a sub-lease throughout if you prefer.

Just remember that, with a sub-lease, you may need the consent of both (a) the landlord who owns the freehold title and (b) the tenant of the head-lease or superior lease (who in this case is the immediate landlord of the sub-tenant). Again, as with just having a single lease in place, you can use our  template licence to assign if you need one. In this case you can use it twice: (a) with the ultimate landlord and (b) with the head tenant. The consents you need will depend on the terms of the sub-lease and the head-lease.

When not to use this template

You should not use this template assignment of lease if the lease interest is registered at the Land Registry. For example, this could be because, when the landlord first granted it, it was for a term of 7 years or more. You should then just use a form TR1 instead of this assignment – the TR1 form is available for free from https://www.gov.uk – currently at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/390836/TR1__web_friendly_PDF_.pdf

Assumptions in the Deed of Assignment of Lease

This template presumes that:

  • the right amount of SDLT (stamp duty land tax) was paid when the lease was granted (if not, the assignee may become liable for this);
  • there is no claw-back of relief claimed against SDLT, e.g. when the lease was granted, that might be caused by this assignment;
  • (as noted above) the parties did not need to register the lease when granted; and
  • there is no need to apportion and costs between the assignor and assignee (e.g. there is no rent review overdue; rent and all service charges have been paid up-to-date by the assignor).

If these are not the case, then you will need to make appropriate amendments to the template. Follow through the guide that comes with the template to see where this needs to be done.

Clauses in our Deed of Assignment of Lease

Date – Complete the full date once everyone has executed the deed.

Parties – Fill in the name, company details and address of each party here. If any party is an individual, replace this as follows: “[NAME] of [ADDRESS]”.

Background

(B) If you do not need the landlord’s consent, then delete paragraph B.

Numbered clauses in the Assignment of Lease

1. Interpretation

In this clause we have defined the important terms used in the Assignment of Lease template.

  • Contract – if the parties have signed a contract to agree the terms of the assignment, then fill in its details here. If not, the definition can be omitted.
  • Lease – insert the details.
  • LTA 1954 – if when granted the parties contracted the lease out of the right to renew (called “security of tenure”) under the old system, which required a court order to approve the contracting out, then retain this wording.
  • Premium – if the assignor is charging a premium (or the assignee is charging a reverse premium), then state the price here. NB This may incur SDLT (stamp duty land tax). If there is no premium, this definition can be omitted.
  • Property – fill in the address of the property. Where the lease is not for the whole of a unit, clearly identify which part(s).
  • Title Documents – If there are other documents that affect the lease (e.g. encumbrances affecting the freehold title or any superior lease), list them in the schedule. If not, the definition can be omitted.

2. Assignment

In 2.1, use option 1 if the assignee is paying a premium. Use option 2 if the assignor is paying a reverse premium. If neither is paying a premium, then delete both options and the word “and” that follows.

In 2.1, select which of options 3 and 4 applies – use option 4 only if the lease has expired but is being held over by the continued payment of rent pending the renewal of the lease under the security of tenure provisions of the Landlord and Tenant Act 1954.

In 2.1, if choosing option 3, also choose which type of title guarantee the assignor is offering. If the parties have already entered into a contract for the assignment, then the contract should already state the type of title guarantee to be given. For the rules about title guarantee and what covenants “full” or “limited” title imply, see the Law of Property (Miscellaneous Provisions) Act 1994.

In clause 2.2, if there is a contract that states what matters the assignment was subject to, then keep option 1 and delete option 2 (including clauses 2.2.1 to 2.2.6); if not keep option 2 and delete option 1. In clauses 2.2.2 and 2.2.3, if there was a contract, then delete the words “the Contract”; if not, delete the words “this agreement”.

Delete clause 2.2.5 if you have no Title Documents to list in the schedule. In clause 2.2.6 list any other matters to which the assignment is subject. For example this could be outstanding breaches of any of the covenants in the lease. If there are no matters to which the assignment is subject, then delete it.

In relation to clause 2.5, if, when the lease was granted, the lease was contracted out of the right to renew (called “security of tenure”) under the old system which required a court order to approve the contracting out, then keep this clause. If not, delete clause 2.5.

3. Indemnity

Clause 3.1 raises the level of damages and costs the assignor can claim from the assignee for any breach of this assignment by the assignee to an indemnity level. That means this would provide a greater level of protection than applies to a simple breach of contract claim. Delete clause 3.2 if there’s no Title Documents to be listed in the schedule.

4. Costs

Clause 4 assumes the assignee is paying some or all of the assignor’s legal costs. Choose which option. If choosing the first option, i.e. where the costs are not limited to a set figure, choose if they are to be limited to what is reasonable. If choosing the second option, fill in the figure.

5. VAT

If VAT applies, the party must pay it on top of any sums stated in the deed.

Schedule

Complete relevant details of title documents here (excluding the lease). If there are no other documents that affect the lease, then delete the whole of the schedule.

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