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Commercial Property Law

Commercial Lease Guarantor UK — AGA on Assignment, Guarantee Provisions, and PCO Obligations

Covers types of guarantee in commercial leases (corporate; personal; rent deposit; AGA); the LT(C)A 1995 framework for post-1995 Act leases; AGA mechanics and the one-deep guarantee chain; s.17 fixed charge notice within 6 months; overriding lease right under s.19; guarantee caps; and enforcement steps against corporate and personal guarantors.

20 min readUpdated 8 June 2026Last reviewed: 17 May 2026commercial-leaseguarantoragaltca-1995

Types of Guarantee — Corporate, Personal, Rent Deposit, and AGA

Corporate guarantee: parent/group company guarantees tenant — essential for SPV or newly incorporated tenants. Personal guarantee: individual director or owner — exposes personal assets. Rent deposit deed: cash security (3-6 months' rent) held by landlord — immediately realisable without litigation. AGA: outgoing tenant guarantees the immediate assignee under a post-1995 Act lease as a condition of consent to assign (LT(C)A 1995 s.16).

AGA Mechanics — The LT(C)A 1995 Framework

Under LT(C)A 1995 s.5, the outgoing tenant is automatically released from future tenant covenants on assignment of a post-1995 Act lease. The landlord can require an AGA (s.16) guaranteeing only the immediate assignee's performance for the duration of that assignee's tenure. The AGA terminates on the next assignment; the new outgoing tenant can then be required to give a new AGA. A guarantor of the original tenant is released when the original tenant is released — cannot be required to guarantee an AGA (s.16(4)).

Section 17 Fixed Charge Notice and Overriding Lease Right

Under s.17 LT(C)A 1995, to recover a fixed charge (rent, service charge, insurance) from a former tenant or guarantor under a pre-1995 Act lease or AGA, the landlord must serve a s.17 notice within 6 months of the charge falling due. Failure extinguishes that charge permanently. A former tenant or guarantor who pays under s.17 can require an overriding lease (s.19) — an intermediate tenancy sitting above the current tenant, allowing the former tenant/guarantor to manage and recoup their outlay.

Enforcement Against Commercial Lease Guarantors

Check the guarantee deed for primary vs secondary obligation. For pre-1995 Act leases and AGAs, serve s.17 notice within 6 months of the fixed charge falling due. Send formal demand; issue county court (claims under £100,000) or High Court proceedings if not settled. Apply for charging order on guarantor's property after obtaining judgment. For corporate guarantors in insolvency: automatic moratorium applies in administration and liquidation; file proof of debt and consider whether the overriding lease route is more valuable.

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