The concept of the Authorised Guarantee Agreement (AGA) was introduced by the Landlord & Tenant (Covenants) Act 1995 to implement changes to the law on Privity of Contract on the Assignment of a commercial property lease.

An Authorised Guarantee Agreement (AGA) is an agreement that an outgoing tenant enters into with the landlord when it assigns its lease to a new tenant. Under an AGA, the outgoing tenant (assignor) guarantees the performance of the covenants by the new tenant (assignee).   The outgoing tenant therefore becomes the guarantor for the new tenant.  Quite often covenant strength of an assignee will become an important aspect of a negotiation due to the ongoing liabilities associated with the AGA until the assigned lease expires.

A common requirement on granting a lease.  The tenant provides an AGA if it assigns the lease, guaranteeing the assignee’s performance of the lease obligations given to the landlord.