Landlords Beware
Landlord and Tenant Law
Landlords must take care to ensure they do not unintentionally discharge a Guarantor from their obligations under a Lease.
It has long been the principle that should a Lease be varied without the Guarantor’s consent, the Guarantor will be released from their obligations. Common practice has been for Landlords to include in Leases a clause which states the Guarantor provides their consent in respect of any variations, and agree to continue to be bound by their obligations after the variation has taken place.
However, a recent Court of Appeal Case has ruled that such clauses can no longer be relied upon where the effect of a variation is that there is potential to increase the Tenant’s, and consequently the Guarantor’s, obligations under the Lease.
To be safe, whenever the terms of a Lease are varied, Landlords should ensure they obtain the Guarantor’s express written consent to the variation, or risk losing the valuable protection provided by a Guarantor.
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