Landlord requiring guarantor to take new lease on disclaimer
A guarantor of a lease will normally covenant to take a new lease for the balance of the term in the event of the lease being disclaimed, the obligation to do so being triggered by a notice from the landlord. Active Estates Ltd v Parness [2002] EWHC 893 (Ch); [2002] 36 EG 147 affirms that the landlord cannot serve such a notice if he has repossessed the premises.
Interestingly, it was held on the particular facts of that case (carefully analysed by Sandi Murdoch in
As to the drafting of guarantees, the case has prompted Nigel McClea and John Martin, of Pinsent Curtis Biddle, to criticise current practice for its failure to spell out how, if at all, the put option should operate at various stages of the forfeiture process: see
Landlord requiring guarantor to take new lease on disclaimer
A guarantor of a lease will normally covenant to take a new lease for the balance of the term in the event of the lease being disclaimed, the obligation to do so being triggered by a notice from the landlord. Active Estates Ltd v Parness [2002] EWHC 893 (Ch); [2002] 36 EG 147 affirms that the landlord cannot serve such a notice if he has repossessed the premises.
Interestingly, it was held on the particular facts of that case (carefully analysed by Sandi Murdoch in Guaranteed results Estates Gazette 5 October 2002, p168, and The options are foreclosed Estates Gazette 12 October 2002, p175) that certain arrangements made by the landlord for the use of the premises did not amount to repossession.
As to the drafting of guarantees, the case has prompted Nigel McClea and John Martin, of Pinsent Curtis Biddle, to criticise current practice for its failure to spell out how, if at all, the put option should operate at various stages of the forfeiture process: see Beyond the shadow of a doubt Estates Gazette 11 January 2003, p98.
