Authorised Guarantee Agreement Example

An AGM is an agreement that obliges an outgoing tenant to guarantee the execution of the rental agreements contained in the rental agreement by the new tenant or “Zessional”. In the case of an “old” lease, the original lessor and the original tenant are required to fulfill all the obligations of the landlord and tenant for the duration of the tenancy, even if they transfer their interests to someone else. This principle is called “fidelity to the contract”. For example, an original tenant, who assigned his lease a few years earlier, could, as a result of the default of the current tenant, obtain a claim on unpaid rents or for the performance of other tenant obligations, and he would have to pay or honor those obligations. This was seen as particularly distressing for tenants and seen as excessive protection for landlords. As a result, the 1995 Act stipulated that tenants and third parties were exempt from their assignment obligations. An AGM obliges an outgoing tenant to ensure the execution by the new tenant of the agreements contained in the lease agreement, but this only applies to leases granted from 1996 onwards. Taking on the role of guarantor exposes the outgoing tenant to the risk of significant financial costs if the new tenant proves unreliable and cannot meet the conditions set out in the rental agreement. When a tenant assigns his lease to a new tenant (pensioner), the lessor may require the tenant to make an AGM with the lessor, a prerequisite for granting his consent to the assignment of the lease. An AGM is a form of guarantee that the (outgoing) tenant gives to the landlord only if the buyer does not fulfill the tenants` obligations of the rental agreement, such as for example.

B the payment of the rent, the repair of the property, etc., the outgoing tenant will do it. In other words, the outgoing tenant becomes the guarantor of the secessionist. 9. However, an AGM must not entail an obligation for the outgoing tenant to perform an obligation of a person other than the assignee. be an agreement in which the tenant guarantees the performance by the assignee of the Covenants from which the tenant has been exempted. .

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