An authorized guarantee agreement (AGA) is a legal document used in the United Kingdom that provides a covenant or promise by a third party to secure the obligations of a tenant when they assign a lease to a new tenant.
In simpler terms, an AGA is a promise made by someone else to be responsible for the lease if the original tenant is unable to fulfill their obligations. Essentially, it provides additional security for landlords or property owners when leasing their property to new tenants.
An AGA typically covers a range of obligations including the payment of rent, repairs, and other liabilities under the lease. This means that if the original tenant cannot fulfill these obligations, the third party who provided the AGA will be responsible for ensuring that they are met.
It’s important to note that an AGA can be a considerable liability for the third party who signs it. This is because an AGA is a legally binding contract which can have significant financial implications if the original tenant defaults. Therefore, a person signing an AGA should make sure they fully understand the implications of such an agreement before proceeding.
For example, landlords or property owners may require an AGA from the original tenant’s guarantor, such as a parent or guardian, to ensure that rent is paid on time and the property is maintained in good condition.
In summary, an authorized guarantee agreement is a legal document used in the UK to provide additional security for landlords or property owners when leasing their property to new tenants. It provides a promise or covenant by a third party to secure the obligations of the original tenant when they assign a lease to a new tenant. However, it’s important to understand the implications of an AGA before agreeing to sign it.