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Authorised Guarantee Agreement Definition

If you`re involved in commercial real estate transactions, you may have come across the term « authorised guarantee agreement » or AGA. This legal agreement is commonly used in lease assignments and subletting situations, and it`s important to understand what it entails.

An authorised guarantee agreement is a contract that requires the original tenant (assignor) to guarantee the performance of the new tenant (assignee) under the lease agreement. In other words, the assignor promises to cover any losses or damages if the assignee fails to comply with the terms of the lease.

This agreement is usually necessary when the tenant wants to assign or sublet their lease to another party. The landlord may require an AGA to ensure that they have recourse if the assignee defaults on the lease. The assignor can also benefit from an AGA as it limits their liability to the assignee`s actions and can provide some protection against future claims.

The terms of an authorised guarantee agreement can vary, but typically it requires the assignor to:

– Guarantee the assignee`s liabilities under the lease agreement

– Pay any rent or other outstanding amounts if the assignee defaults

– Take back the lease if the assignee cannot fulfill their obligations

AGAs are generally beneficial for all parties involved in a lease assignment or subletting scenario. They provide the landlord with extra security, protect the assignor from liability, and give the assignee a chance to take over a lease without assuming full responsibility.

However, it`s essential to carefully review the terms of an AGA before signing. It`s a legally binding document that can have long-term consequences, so it`s best to seek professional advice before entering into an agreement.

In conclusion, an authorised guarantee agreement is a legal contract that guarantees the performance of a new tenant under a lease agreement. It`s commonly used in lease assignments and subletting situations and can provide extra security for the landlord, assignor, and assignee. However, it`s important to understand the terms of an AGA before signing and seek professional advice if needed.