Commercial Lease Assignment (or not)

[Exasperated]

Hello,
I would be grateful for opinions as to whether a commercial lease was or was not assigned to a new tenant.

The circumstances are that "Company Ltd" was the tenant under a lease with some years remaining. The company was facing financial difficulties and the directors placed the company into administration. However, one of the directors wanted to take the business on and so started a new LTD company ("Company 2 LTD") to purchase the business from the administrator. Prior to this, he contacted the landlord who verbally agreed that his new company would be offered an assignment of the lease should he continue with those plans. "Company 2" did indeed purchase the business, the landlord issued invoices for rent addressed to Company 2 at the leased address, Company 2 paid those invoices and also paid a bill for legal fees related to the assignment of the original lease. However, the landlord did not provide any paperwork related to the assignment.

All happy until some months later, the landlord is trying to impose a different lease with onerous terms, stating that an assignment never took place because company 1 ltd became insolvent before the assignment could take place, and thus the lease was forfeited. Company 2 is nothing more than a tenant at will and will be evicted if new terms are not agreed.

What are your opinions on the tenant's chances of arguing that an assignment evidently took place because of the financial transactions around it? Or is the tenant's position impossible because of the lack of paperwork?

Thanks!

Ex

[Ripped-Off]

Re: Commercial Lease Assignment (or not)

Have a read through Javad v Aqil [1991] 1 All ER 243. See if there is any authority in there that will answer your question.

[R0b]

Re: Commercial Lease Assignment (or not)

Was it ever discussed how long the lease was for? We're the invoices the same amount as the original lease contract? Do you have contact with directors of company 1 who can confirm the rent was the same as in the lease and do you have a copy of the lease by any or can you obtain it from the directors? Sometimes leases may be submitted to the land registry which you could obtain but not always the case.

Just because there is no paperwork does not mean that the assignment didn't take place. If there were witnesses to confirm the verbal agreement that may strengthen your argument but if the rent amounts were the same as before, i can't see how the new landlord can argue the lease wasn't assigned. If it was forfeited why did he send an invoice addresses to company 2 for the rent and legal fees if there was no intention of an assignment? Implied conduct and consideration of payment and could amount to intention of assignment. He problem is if you don't have the original lease how do you know what the terms were?

[CLL1]

Re: Commercial Lease Assignment (or not)

The answer is, we need to see the lease.

[Openlaw15]

Re: Commercial Lease Assignment (or not)

Hello,
I would be grateful for opinions as to whether a commercial lease was or was not assigned to a new tenant.

The circumstances are that "Company Ltd" was the tenant under a lease with some years remaining. The company was facing financial difficulties and the directors placed the company into administration. However, one of the directors wanted to take the business on and so started a new LTD company ("Company 2 LTD") to purchase the business from the administrator. Prior to this, he contacted the landlord who verbally agreed that his new company would be offered an assignment of the lease should he continue with those plans. "Company 2" did indeed purchase the business, the landlord issued invoices for rent addressed to Company 2 at the leased address, Company 2 paid those invoices and also paid a bill for legal fees related to the assignment of the original lease. However, the landlord did not provide any paperwork related to the assignment.

If the landlord was sending invoices to company 2 then surely he recognises the commercial lease was assigned from company 1 to company 2, on your facts.

All happy until some months later, the landlord is trying to impose a different lease with onerous terms, stating that an assignment never took place because company 1 ltd became insolvent before the assignment could take place, and thus the lease was forfeited. Company 2 is nothing more than a tenant at will and will be evicted if new terms are not agreed.

If there were a lease to the new 2nd company, ie an assignment of the original terms, the landlord cannot introduce new covenant terms. The assignment means the actual lease terms transfer. if the landlord were to argue new terms were applicable it means it is an altogether new lease with different arrangements. Was this lease assigned by deed document if not it will be an equitable assignment. Rob is the trainee solicitor so he can correct me if he believes am wrong. As far as I know there is a specific criteria for a lease at common law (case law). Tenant at will is nothing more than you have permission (ie merely licence). Your evidence of a lease is the invoices so there must have at least been an acknowledgement that the company 2 has acquired the terms of company 1, by the landlord.
What are your opinions on the tenant's chances of arguing that an assignment evidently took place because of the financial transactions around it? Or is the tenant's position impossible because of the lack of paperwork?

Thanks!

Ex

See above - i agree with you on the invoices in a company amounting to an assignment of the lease to company 2. If the terms of the commercial lease for company 2 mirror company 1 terms I fail to see how this would not prove at least an equitable assignment. However, a transfer of land interest requires it must be in writing: Law of property Act 1925/ L(MP)A 1989. A lease is for all intent and purposes is a transfer of a person's land albeit it is not ownership as per a freehold interest (ie ownership). Have you either attempted to or actually have registered this lease on the property's land register. It has been compulsory I believe since the Land registration Act 2002, or 2003 when actually enacted.