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Rent - T in administration (2) Print

If T has gone into administration, L may well consent to an assignment of the lease to an assignee. In that situation, can L then sue the assignee for the earlier rent arrears?

The starting point is that an assignee is only directly liable to L whilst the lease is vested in the assignee. Accordingly, the assignee will not be liable, prima facie, for the rent arrears accrued by T. However, he may be indirectly liable because the lease is likely to give L the right to forfeit for non-payment of rent and service charges. Since that right to forfeit is a proprietary right, it will bind any assignee of T, and the end result therefore is that the assignee may have to pay the arrears of rent and service charge in order to obtain relief from forfeiture.

So, if you are acting on behalf of an assignee from a T in administration, then be aware of the potential liability for arrears that will fall on your client, as assignee. The answer, of course, is to make sure that the point is addressed in L’s licence to assign.

February 2010
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