Assignment and Underletting Disputes 

Disputes involving the assignment or underletting of a commercial lease can arise for various reasons and resolution often requires careful consideration of the lease terms and statutory requirements. Most commercial leases contain express provisions requiring the tenant to obtain the landlord’s consent before assigning or granting an underlease. Disagreements often occur when consent is delayed, refused, or unreasonably withheld, or where a tenant assigns or underlets without permission.

At JMW, we act for both landlords and tenants in assignment and underletting disputes across all types of commercial properties. Our solicitors can advise on your rights and obligations under the lease, the Landlord and Tenant Act, and any conditions imposed in relation to obtaining consent. Whether you are seeking to assign or underlet your lease, or you have received a request for consent from a tenant, we provide clear, practical legal advice to help you resolve issues efficiently and protect your interests.

If you would like to discuss an assignment or underletting dispute, contact our property litigation team today on 0345 872 6666 or complete our online enquiry form to request a call back.

How JMW Can Help

JMW’s Property Litigation team can advise on all aspects of assignment and underletting disputes, including the service of any required notices. We act for both landlords and tenants in matters involving commercial lease assignments, underletting disputes, and related applications for landlord’s consent.

We can also assist before a dispute arises by providing advice on your ability to assign or underlet under the terms of the lease, and any preconditions that may apply to the process. Our team has experience across a range of commercial leases, advising on complex transactions involving head leases, subleases, and authorised guarantee agreements.

JMW can assist with: 

• Advising on whether landlord’s consent is required to assign or underlet a lease, and the correct procedure for obtaining such consent.
• Advising on the consequences of assigning or granting an underlease without the landlord’s consent, and the liability that may arise for a tenant who has assigned in breach of covenant.
• Considering and advising on conditions for consent to an assignment or underletting, including situations where a landlord may impose conditions or unreasonably withhold consent.
• Applications to court for declarations where consent is alleged to be unreasonably withheld, and defending such applications on behalf of landlords.
• Working with our colleagues in our Real Estate Commercial Team to undertake the necessary transactional work once an assignment or underletting has been agreed or ordered by the court.

Our expert team of property litigation solicitors is here to provide the legal support you need. We specialise in proactive management and use our expertise to help you maximise your investment. We can resolve a wide range of commercial property disputes by offering practical, tailored advice to protect your rights and interests. We are expert problem-solvers, with extensive experience in advising during challenging market conditions.

JMW has a proven track record in resolving property disputes for well-known commercial entities, and we work closely with clients to find cost-effective solutions, whether through negotiation, mediation or, when necessary, litigation. Our aim is to preserve and improve landlord and tenant relationships where possible.

Meet the Team

JMW’s dedicated team of property litigation solicitors have extensive experience advising landlords and tenants on assignment and underletting disputes, commercial lease assignments, and issues involving landlord’s consent (such as underletting without consent).

Case Studies

What Are Lease Assignments?

A lease assignment occurs when a tenant transfers the whole of its interest in a commercial lease to another party, known as the assignee. Once the assignment is complete, the assignee becomes responsible for complying with the terms of the lease, including the payment of rent and performance of all tenant covenants.

Most commercial leases include provisions preventing a tenant from assigning the lease without first obtaining the landlord’s consent. These clauses are designed to allow landlords to assess the incoming tenant’s financial standing and ability to meet the lease obligations. In some cases, a landlord may also require an authorised guarantee agreement, which keeps the outgoing tenant liable if the new tenant defaults.

Disputes can arise where a tenant assigns the lease without consent, where the landlord’s consent is unreasonably withheld, or where conditions imposed by the landlord are alleged to be unfair. Such disputes often involve complex issues under the Landlord and Tenant Act and may result in applications to court for declarations or damages.

At JMW, we have extensive experience advising on commercial lease assignment disputes, helping landlords and tenants understand their rights and obligations, negotiate terms by consent, and resolve disagreements quickly and effectively.

What Is Underletting in a Lease?

Underletting, also known as subletting, occurs when a tenant grants a new lease - called an underlease or sublease - of part or all of their leased premises to another party. The tenant who grants the underlease remains bound by the covenants in their own lease, while the new undertenant takes on obligations under the terms of the underlease.

Most commercial leases include express provisions that restrict a tenant’s ability to underlet without first obtaining the landlord’s consent. The landlord may also impose conditions before granting such consent, for example requiring that the underlease reflects the same covenants as the head lease, or that an authorised guarantee agreement or additional security is provided.

Disputes can arise when a tenant underlets without the landlord’s consent, or when landlord’s consent is unreasonably withheld or delayed. Issues may also occur where the underlease terms conflict with the head lease, or where a notice of underletting has not been properly served.

At JMW, our property litigation solicitors provide clear and practical property underletting legal advice. We act for both landlords and tenants in underletting disputes, advising on consent requirements, lease covenants, and remedies where a breach has occurred.

What Are the Common Causes of Assignment and Underletting Disputes?

Most modern commercial leases contain express provisions stating that a tenant must obtain the landlord’s consent before assigning the lease or granting an underlease. These provisions are designed to protect the landlord’s interest in the property and to ensure that any new tenant is financially stable and capable of complying with the terms of the lease.

However, assignment and underletting disputes can arise for a variety of reasons even when such provisions are in place. Common causes include:

• A tenant wishes to assign or underlet the premises but the landlord refuses consent, or will only grant consent on certain conditions that the tenant considers unreasonable.
• A tenant assigning or underletting without the landlord’s consent, in breach of covenant or contrary to an express provision in the lease.
• A landlord wishes to assign its reversionary interest and seeks a release from covenants given to the tenant, but the tenant is unwilling to provide such a release.
• Disputes regarding whether the required notice of underletting or assignment has been properly served under the Landlord and Tenant Act.
• Challenges over the enforceability of a guarantee or authorised guarantee agreement given in relation to an assignment or underletting.

Other disputes can arise over whether the landlord has unreasonably withheld consent, imposed excessive conditions, or sought additional security beyond what is permitted under the lease. In some cases, disagreements may concern who is responsible for the landlord’s legal costs associated with the consent process or the validity of a declaration sought in court.

What Is the Process of Instructing JMW in Relation to your Commercial Property?

Instructing JMW is a clear, user-friendly process designed to give you peace of mind and set clear expectations. The process of working with our property litigation team is as follows:

• Initial discussion: When you contact us, we will discuss your commercial property, lease, and any specific issues or disputes you require assistance with, including preventing or resolving assignment and underletting disputes.
• Assessment of your needs and bespoke strategy: Our team will work with you to understand your business and the terms of your commercial lease, create a relationship that works for all parties and set out a clear approach to managing your assignment or underletting matter.
• Costs and timescales: We will provide clear estimates of potential costs and timescales for the work. We recognise that timing can be crucial when dealing with landlords’ consent, lease assignment disputes, or underletting disputes.
• Proactive file management: We act quickly on receipt of instructions and are always thinking about the next step you may need to take. We maintain regular communication and provide concise, prompt, and practical advice throughout the process.

Q

Is consent from a landlord necessary in order to assign or underlet a lease?

A

This will depend on the terms of the commercial lease. Some leases do not impose restrictions on a tenant’s ability to assign or grant an underlease, but most modern leases require the landlord’s consent to an assignment or underletting. If the lease includes such a restriction, the tenant must obtain consent before proceeding to avoid breaching the lease covenants.

Q

What are the consequences of assigning a lease or granting an under-lease without the landlord’s consent?

A

Subject to the landlord’s consent to an assignment or underletting being required by the lease, if there Where the landlord’s consent is required under the lease, completing an assignment or underletting without such consent may amount to a breach of covenant. This can give rise to assignment disputes and potentially expose the tenant to legal action or damages.

Depending on when the lease was granted, an assignment without consent may also affect whether the outgoing tenant or original tenant remains liable for the lease covenants and obligations, including rent and repair. Such disputes are governed by the Landlord and Tenant Act and the terms of the lease.

Q

Can a landlord impose conditions for consent to an assignment or underletting?

A

Subject to the terms of the commercial lease, a landlord may impose reasonable conditions for consent to an assignment or underletting. Common conditions include:

• The incoming assignee or undertenant being of sufficient financial standing.
• The outgoing tenant entering into an authorised guarantee agreement.
• Payment of the landlord’s legal costs associated with the consent process.

Under the Landlord and Tenant Act 1988, a landlord must not unreasonably withhold consent to an assignment provided certain conditions are met. If a landlord’s consent is being unreasonably withheld or delayed, an application can be made to the court for a declaration that the landlord has acted unlawfully. Our team has extensive experience representing both landlords and tenants in such applications involving lease assignment consent disputes.

Q

What is the typical turnaround time?

A

We understand the importance of acting quickly on instructions. While specific timelines vary depending on the complexity of the assignment and underletting dispute, we prioritise efficiency, proactive communication and practical outcomes to complete transactions quickly and pragmatically.

Q

Can JMW advise both landlords and tenants?

A

We act for both landlords and tenants, which allows us to understand the commercial drivers and challenges faced by each party. This experience helps us anticipate negotiation tactics and achieve effective results in commercial lease assignment disputes and underletting disputes.

Q

Does JMW work with specific property sectors or asset classes?

A

We work across the full commercial property market, including shopping centres, retail parks, industrial estates, offices, and mixed-use developments. Our solicitors have extensive experience handling assignment and underletting disputes across various asset classes and business sectors, including retail, leisure and industrial property.

Q

Can property disputes be resolved without litigation?

A

In many cases, property disputes can be resolved without going to court, saving time, money and stress. While the suitability of alternative dispute resolution methods depends on the specific circumstances of your case, these approaches are often effective in reaching a settlement that benefits all parties. At JMW, we help clients to explore these options at an early stage and tailor our approach to the needs of each specific dispute.

Q

How much do JMW’s services cost?

A

Our property litigation team offers fixed fees, in addition to hourly rates. We can give you an idea of potential costs and funding structures during our initial consultation. Get in touch with our expert property litigation team to learn more about how we can help you today.