Lease Guarantees - Effective Drafting & Avoiding the Pitfalls

Introduction

Where performance of a tenant’s lease obligations is backed by a guarantee, the word may give the impression that payment of the rent is ‘guaranteed’.

However, guarantees have come to appear increasingly vulnerable in the light of legal developments over recent years. The benefit of a guarantee can be lost through successive assignments of the lease, or by variation of the lease. Guarantees may be set aside for undue influence. Insolvency procedures have been used to restructure lease commitments, and effectively relieve parent companies of the burden of guarantees at precisely the point where the landlord expected to be able to call on them.

The reality is that the guarantee must be drafted appropriately, and other formalities correctly addressed. This webinar addresses the essentials of a reliable lease guarantee and the potential pitfalls.

What You Will Learn

This webinar will cover the following:

• What measures can be put in place upon taking the benefit of a guarantee to limit the risk of losing it in future
• Assessing the financial strength of a guarantor
• The content of a well-drafted guarantee clause
• Avoiding inadvertent release of guarantors, including hidden traps on rent review and alterations
• How, and to what extent, the benefit of a guarantee can be retained upon an assignment of the lease
• How insolvency procedures can be used to attack guarantees, and what to expect

This webinar was recorded on 7th May 2020