Licensees warned over lease reassignments

Licensees have been warned to take full legal advice when reassigning their leases. More lessees have contacted The Publican, concerned that they have not received the correct advice over the terms of their lease and reassignments.

One Wellington Pub Company licensee says he faces bankruptcy over assigning his lease. Roy Stamper says despite suffering from ill-health, including diabetes and arthritis, he has taken back a lease on his previous pub - the Milford Hall, South Milford, North Yorkshire - which has cost him £56,000 in rent and fees since March.

He said: "I sold it on but the guy who went in was not experienced and turnover halved. I have someone interested, but if this next deal goes wrong I'll be filing for bankruptcy."

Under the terms of his agreement Roy has a 20-year lease for which he is responsible for the next assignee called a privity of contract. Many lease agreements issued prior to 1996 allow the pubs' owners to pursue all previous tenants for any financial failures but the Landlord and Tenant (Covenant) Act 1995 changed this policy and now only one previous tenant can be liable.

Peter Gullis, operations director at Wellington Pub Company, said this agreement applies to all commercial leases and all tenants are advised to take independent legal advice.

"It is the tenants' choice of assignee as it is his lease for 20 years," he explained.

Due to the terms of these agreements the pub-owning companies are within their rights to claim back these losses.

Tony Payne, chief executive of the Federation of Licensed Victuallers' Associations, said: "I recommend everybody take away the privity of contract."

He advises licensees to take one of three options: surrender their goodwill, get the new licensee to sign a new lease or pay a premium to get out of the contractual responsibility.