Alterations Invalidate Surety

When a landlord gave a tenant a licence to make substantial alterations, little did it think that it was undermining its future financial position.

The reason was that another party had ‘stood surety’, acting as guarantor over the lease payments. The variation of the lease meant that the surety was no longer bound by its undertaking, having not given its consent to the alterations.

When the tenant became insolvent, the landlord sought payment under the guarantee given by the surety. However, the High Court agreed with the surety that the variation in the lease meant that its guarantee was no longer valid.

In certain circumstances the benefit of third party undertakings can be lost inadvertently.

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If you are considering the acquisition of a property which has such arrangements in place, or are a landlord considering an application for an alteration to a lease, we can advise you on how best to protect your position.

Contact us for advice.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.