Decision highlights risk to landlords of inadvertently releasing a guarantor

Eversheds has commented on the UK Court of Appeal decision in Topland Portfolio 1 v Smiths News Trading.

The UK Court of Appeal has confirmed that a guarantor can be released from liability where a landlord and tenant enter into a licence for alterations, if the effect of the licence is to vary the lease terms without the guarantor’s consent.

James Batham, partner and head of retail at Eversheds, said: ‘The Court of Appeal’s decision highlights the risk to landlords of inadvertently releasing a guarantor. The law on the release of guarantors is not favourable to landlords and so the utmost care should be taken when negotiating any document that could affect obligations under the lease. Rent reviews and concession agreements in particular can have unintended consequences.’