As a professional, I`ve come across a lot of legal terms and agreements. One such agreement that has been gaining attention of late is the Authorised Guarantee Agreement (AGA). In this article, we will discuss what an AGA is, why it is needed and what it entails.
What is an Authorised Guarantee Agreement (AGA)?
An Authorised Guarantee Agreement (AGA) is a legal document that is often used in commercial property leasing. It is a guarantee agreement that is entered into by a tenant who assigns its lease to a new tenant. This means that if the new tenant defaults on their lease, the original tenant (the assignor) will be responsible for the rent and other liabilities until the end of the lease.
Why is an AGA needed?
An AGA is needed to protect the landlord`s interests. When a tenant assigns its lease, the landlord has no control over who takes over the lease. The new tenant may default on their rent payments or create damage to the property.
With an AGA, the landlord can hold the original tenant responsible for the lease terms, ensuring that they meet their obligations if the new tenant fails to do so. This arrangement gives the landlord the assurance that they will receive their rental income and that there is someone who can be held accountable for any damages.
What does an AGA entail?
An AGA is a legally binding agreement that requires the original tenant (the assignor) to provide a guarantee to the landlord that the new tenant (the assignee) will fulfill its obligations under the lease agreement. This means that the assignor agrees to be responsible for the rent and other liabilities if the assignee fails to pay.
Typically, an AGA will cover for the duration of the lease, but it can also include a specified amount of time after the assignment. This is to ensure that the landlord has enough time to collect any rent or damages owed by the assignee.
In conclusion, an Authorised Guarantee Agreement (AGA) is a legal document that is often used in commercial property leasing. It is a guarantee agreement that is entered into by a tenant who assigns its lease to a new tenant. The purpose of an AGA is to protect the landlord`s interests by holding the original tenant responsible for the lease terms, ensuring that they meet their obligations if the new tenant fails to do so. It is essential for both landlords and tenants to understand the implications of an AGA and seek legal advice before entering into it.