Overview

"Old" leases
For "old" leases granted on or before 31 December 1995 (which includes tenancies entered into pursuant to an option or agreement completed before this date) former tenants and guarantors as original contracting parties to the lease or parties to a licence to assign, remain liable for lease covenants such as the payment of rent and service charge for the duration of the term of the lease.
As a result, former tenants and guarantors are liable for breaches of covenant even after leases have been assigned and former tenants have parted with their interests in premises, although this liability is subject to new restrictions imposed by section 17 of the 1995 Act (referred to below).
The widespread use of upward-only rent reviews may mean that former tenants and guarantors are called upon to discharge obligations which are more onerous than those originally undertaken.
The continuing nature of the liability of former tenants and guarantors means that where a tenant is assigning an old lease it should get an indemnity from the incoming tenant and guarantor against future breaches of covenant. Unfortunately, the indemnity will be worthless if the party giving it becomes insolvent.
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