Five ways to keep your guarantor on the hook
We recently encountered an interesting scenario where a tenant was looking to transfer (‘assign’) a lease to another member of its group.
What’s interesting about that, you might ask?
The original tenant was guaranteed by its parent company and the parent company was also looking to guarantee the assignee.
What’s wrong with that, you might ask?
Well, the law categorically prohibits this type of arrangement on the basis that a guarantor should not remain ‘on the hook’ after the original tenant has left. This is fine in most cases, but it does pose a problem where (as in this case) the existing guarantor specifically wants to guarantee the incoming tenant…
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