Lease Agreements

Question from Expert Answers User

“I sold my business almost two years ago and just found out the new tenant went bankrupt last October, they sent a special delivery letter in November to a address i lived at in 1995 when i first signed the lease agreements, i did not see that letter until this week as it was sent to my solicitor and they past on to me, has there been too long of a time for them to contact me too still make a claim against me, the lease has six years too run, in November they were looking for £3000″ .

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Answer from solicitors online

In answering your question, I assume that you are being chased by the landlord of your former business premises for the rent arrears incurred by the person you sold your business and signed over the lease agreements to.

If that is correct, then it is highly likely that your original lease agreement to occupy the business premises would have included provision for there to be a chain of indemnities for any tenant assigning the lease agreements to guarantee payment of the rent and any arrears accrued by later tenants down the line in agreements

Such terms are almost standard in modern commercial leases.

In practice this means that when you assigned the lease agreements to the new tenant on the sale of your business, you remained potentially liable to the landlord for any arrears of rent incurred by the new tenant.

The reality is that leases can be assigned many times, and a landlord is able to go back along the chain of former tenants until he finds a suitable person against whom to pursue recovery of the arrears of a defaulting later tenant.

You in turn would have the legal right to pursue a remedy against the defaulting tenant to seek recovery of any money you have had to pay to the landlord.

However, an indemnity is only ever as good as the person who gives it. In the circumstances you describe, the new tenant has been bankrupt, and thus may not have funds or assets to repay you in any event.

Effectively, the landlord has all the protection in these circumstances and is thus free to chose the best target from whom to seek payment.

If my assumption as to the basis of your problem is correct, then such a lease places quite a high burden upon you as a tenant for the risk of future rent should you assign the lease, and cease to occupy. Your solicitors (if any) should have advised you of this when you were first entering into the lease agreement.

If you had solicitors advice
at the outset, and they did not advise of the existence of any rent indemnity clause, its nature and effect, then you may well have a potential claim against such solicitors for their failure properly to advise you.