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Demystifying Assignment of Lease: Your Go-To Guide

LegalGPS : July 29, 2023 at 8:17 AM

When you’re talking about property leasing, it’s important to understand that there are a lot of terms and concepts that you may have never heard before. One of them is the assignment of lease, which refers to a situation where a tenant transfers their rights and responsibilities under the lease agreement to another party.

What is an Assignment of Lease, and why is it so crucial?

An Assignment of Lease is a term you may have heard thrown around, especially if you're involved in rental properties. It’s a pretty important document. But what exactly is it? Well, in simple terms, an Assignment of Lease is an agreement where the original tenant of a property transfers their leases and all of its rights and obligations to a new tenant. Now, you might be wondering, "When would this scenario ever occur?"

Let's imagine you're a tenant who signed a three-year lease for an office space. However, two years in, you need to relocate due to unprecedented growth of your business. Instead of breaking the lease, you might choose to assign your lease to another business looking for office space. This means that you, as the original tenant, no longer have any obligations under the lease. The new tenant is now responsible for paying rent and complying with all of the terms of the previously signed agreement.

Now that you understand, let's get into the step-to-step guide on how to create an Assignment of Lease!

Steps to Write an Assignment of Lease

Creating a thorough Assignment of Lease agreement doesn't need to be an overwhelming task. Simply follow these steps to ensure your agreement is both comprehensive and legally binding:

Step 1: Identify the Parties

The information of each party should be included. For the existing tenant (the assignor), make sure to include:

Full legal name or business name

Postal mailing address

Phone number and email address

Do the same for the new tenant (the assignee). Make sure all the information is up-to-date and accurate to avoid any unnecessary confusion or disputes. For example, if the assignor is a business, make sure they have updated their mailing address with the post office to reflect their new building location. If a party has multiple addresses, be sure to list them all.

Step 2: Specify the Lease

This section requires exact information from the original lease agreement, including:

Property address and description

Lease start and end date

A reference to the original lease agreement (for instance, a sentence like "the lease agreement dated...")

Remember to include a copy of the original lease as an attachment to ensure the assignee understands the terms they're adhering to. If not already included in the original lease agreement, be sure to add the following information: Description of rental property, Lease term (how long the lease is good for), Rent amount, and Security deposit amount.

Step 3: Detail the Assignment

State that the assignor is transferring all their interests and obligations in the lease to the assignee. Here, write something like:

"The Assignor hereby assigns, transfers, and conveys to the Assignee all of the Assignor's rights, title, and interest in and to the Lease, together with all the Assignor's obligations, liabilities, and duties under the Lease."

This means that the assignor is transferring all of their interests and obligations in the lease to the assignee. This includes any future rent payments, repairs and maintenance responsibilities, notices of default by either party, and so on.

Step 4: Landlord's Consent

Many leases require the landlord's consent to assign the lease. The assignor should request written consent from the landlord and include a clause like:

"The assignment of the lease is not valid unless and until the landlord provides written consent."

This is followed by a place for the landlord to affirm consent by signing or initialing. This is important because the landlord can elect to withhold consent and the assignment will not be valid. If this is the case, you may need to provide additional consideration for your landlord's assent (for example, an increase in rent).

Step 5: Assignee Acceptance

Include a statement in which the new tenant agrees to the assignment and the terms of the lease. It may look like:

"The Assignee hereby accepts this assignment, assumes all duties and responsibilities under the Lease, and agrees to perform all of the Assignor's obligations under the Lease."

You need to do this because the new tenant needs to have an affirmative acceptance of the assignment in order for it to be valid. This is typically done through a letter from the assignee stating that they agree to perform all of your obligations under the lease.

Step 6: Signature and Date

Every binding legal document needs a date and a signature. Make sure that there is a proper place for the assignor and the assignee to sign and print their names, with a line for the date.

By following these clear, actionable steps, you'll be able to construct an effective Assignment of Lease agreement. Remember, every situation is unique, so adjust the template as necessary, being sure to include all relevant details.

Clear so far? Great! Now, let's focus on the tips to draft a perfect Assignment of Lease.

Tips to Draft a Perfect Assignment of Lease

Accurate Dates: Be sure to include the date when this agreement will take effect. Precision avoids any confusion about durations, when the assignee takes over, or when the assignor's obligations end.

Clear Terms: This document should restate the terms of the original lease. The assignee needs a clear understanding of what they're stepping into. Bit ambiguous? Think of it like this: the assignee should be able to step into the assignor's shoes comfortably.

Specify Rent Terms: Stating the rent amount, due dates, and method of payment in the assignment helps create a record of the agreed-upon rent terms, ensuring no misunderstanding arises in the future.

Specify the Term: The assignment should state how long the new lease lasts. For example, if the original lease is for one year, then the assignee will assume only a one-year term.

Specify Other Conditions: If there are other conditions in place—such as tenant improvements or utility allowances—then specify these too.

An assignment of lease doesn't have to be a formidable task to overcome. With a cautious and considered approach, these documents can be a smooth and seamless part of managing a successful lease transition.

Our contract templates can offer you even more support, empowering you towards crafting an excellent and individualised Assignment of Lease ready for your task. So why not take your next step towards leasing success and check them out today? Click here to get started!

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Navigating the world of lease assignment agreements: what you need to know.

Are you planning to lease a property but need to transfer the lease to someone else? Or are you interested in taking over an existing lease for your business or personal use? If so, then understanding the world of Lease Assignment Agreements is crucial. A Lease Assignment Agreement allows for the transfer of a tenant’s rights and obligations under their existing lease agreement. However, navigating this process can be complex and overwhelming without proper information and guidance. In this blog post, we’ll provide you with everything you need to know about Lease Assignment Agreements – from what they are and their different types to their benefits and risks. So let’s dive in!

What is a lease assignment agreement?

A lease assignment agreement is a legal document that allows a tenant to transfer their lease rights and obligations to another party . This means that the new tenant takes over the existing lease, including any remaining time on it, and assumes all responsibilities outlined in the original agreement .

This type of agreement is commonly used when a tenant needs to move out before their lease expires or when someone wants to take over an existing lease for business purposes. The landlord must agree to this transfer by signing off on the Lease Assignment Agreement .

It’s important to note that a Lease Assignment Agreement differs from subletting because in subleasing, the original tenant still retains some control over the property while in an assignment, they give up all rights and responsibilities.

A Lease Assignment Agreement can be beneficial for both parties involved – as long as everything is clearly defined and agreed upon beforehand.

What are the different types of lease assignment agreements?

When it comes to lease assignment agreements , there are different types that you should be aware of. The most common ones include the following:

1. Absolute Assignment: This type of lease assignment agreement involves the transfer of all rights and interests in a leased property from one party (the assignor) to another (the assignee). The assignee takes over all obligations and responsibilities related to the lease .

2. Sublease Agreement: A sublease agreement is an arrangement where the original tenant sublets their space to a new tenant for a portion or entirety of the remaining term on their lease. In this case, both parties must agree with any changes made regarding rent, utilities, maintenance expenses etc.

3. Partial Assignment: This occurs when only part of the leased property’s rights and interest is transferred from one party to another. The partial assignment does not release the assignor from their obligation towards future liabilities under the original terms agreed upon in leasing contract .

4. Assumption Agreement: In this type of lease assignment agreement, one party agrees to take responsibility for fulfilling obligations owed by another party if they default on payment or other obligations specified in leasing contract .

Understanding these various types will help you make informed decisions about which option suits your needs best before signing any legal documents associated with Lease Assignment Agreements

What are the benefits of a lease assignment agreement?

A lease assignment agreement is a legal document that allows a tenant to transfer their leasehold interest in a property to another party. This type of agreement offers several benefits for both the tenant and the new assignee.

Firstly, for tenants looking to exit their lease early, an assignment agreement can help avoid hefty penalties or fees imposed by landlords for breaking a lease . By assigning their lease to another party, tenants can fulfill their contractual obligations while also finding someone else to take over their remaining rent payments .

On the other hand, assignees benefit from being able to acquire an existing lease without having to go through lengthy negotiations with landlords. Additionally, they may be able to secure more favorable terms than if they were starting from scratch on a new rental agreement .

For landlords, allowing assignments can reduce vacancy periods and ensure consistent cash flow as new tenants move in seamlessly when old ones leave. It also saves time and resources since there is no need for extensive screening of prospective tenants.

A well-executed lease assignment agreement presents numerous advantages for all parties involved in the transaction.

What are the risks of a lease assignment agreement?

Entering into a lease assignment agreement comes with its own set of risks that both the assignor and assignee should consider before signing on the dotted line . One of the biggest risks is liability for any outstanding rent payments or damages to the property.

If the original tenant fails to pay rent or causes damage to the property, then both parties could be held responsible under the terms of some lease assignment agreements. This means that even if you are not directly at fault, you could still end up facing legal action for unpaid rent or repairs.

Another potential risk is losing control over who occupies your leased space. In some cases, landlords may require approval before allowing a new tenant to assume a lease agreement . If this approval isn’t granted and you’ve already assigned your lease to someone else without permission, then both parties could face eviction as a result.

There’s always a risk involved in giving up your rights as an original tenant when you sign onto an assignment agreement. You’ll be relinquishing control over how long your business stays in one location and what happens once it moves out – which can impact everything from future expansion plans to overall financial stability.

How to prepare for a lease assignment agreement?

Preparing for a lease assignment agreement is an important step in ensuring a smooth and successful transfer of your lease rights to another party. Here are some steps you should take to prepare for the process:

1. Review your current lease agreement: Before entering into a lease assignment agreement, it’s essential to review your existing lease terms carefully. Ensure that you understand all clauses related to assignments, subletting or transfers.

2. Communicate with the landlord: Contacting your landlord early on can help avoid any misunderstandings later on during the process. You may need their approval before assigning the lease, so keep them informed throughout.

3. Identify potential assignees: Determine who you want to assign the lease too and ensure they meet all necessary requirements set out by both the landlord and existing lease agreement .

4. Negotiate terms with assignee: Once you’ve identified potential assignees, negotiate terms such as rent payments and security deposits if needed.

5. Draft an Assignment Agreement: Work with legal counsel or use online resources like templates from professional associations where possible, ensuring that all parties agree upon its contents before finalizing it.

Preparing well for a Lease Assignment Agreement can be complex depending on various factors involved but following these steps will help make it easier and more manageable !

How to execute a lease assignment agreement?

Executing a lease assignment agreement is the final step in transferring your lease to a new tenant. Before you sign on the dotted line, make sure you have all your ducks in a row.

Firstly, review the terms of your existing lease and ensure that they are clear and concise. This includes any clauses regarding subletting or assigning the lease. You should also check for any restrictions that may prevent you from assigning the lease without landlord approval.

Next, identify potential tenants who may be interested in taking over your lease. Once you’ve found someone suitable, it’s time to negotiate terms with them directly or through an attorney.

Once both parties agree on terms such as rent payments and security deposits, it’s time to draft up an assignment agreement document. This document should include details about both parties involved along with signatures from each party acknowledging their understanding of its contents.

Submit this executed agreement along with other necessary documents such as consent forms from landlords and financial statements to complete the transfer process smoothly.

To sum it up, a lease assignment agreement is an essential document that plays a crucial role in transferring the rights and obligations of the lessee to another party. As we have discussed in this article, there are different types of lease assignment agreements with benefits and risks involved.

To navigate the world of lease assignment agreements successfully, one must prepare adequately by reviewing the original lease agreement thoroughly and seeking legal advice if necessary. Proper execution of the agreement is also crucial to ensure that all parties understand their responsibilities.

Understanding how a lease assignment agreement works can help you make informed decisions when dealing with leases. Whether you’re a landlord or tenant looking to transfer your interests in a property, always remember to be cautious and seek professional guidance throughout the process.

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What is Assignment of Lease and How It Differs from Subletting

The assignment of lease (and rent) is a foggy topic that is often confused with subletting. Let's clear the air once and all right now. Learn the differences between a lease assignment and sublease so you can make the right choice.

What is Assignment of Lease? - The Important Basics

Let's begin by introducing the 3 players in a lease assignment - The landlord, the original tenant (assignor) and the new tenant (assignee). The original tenant has an unexpired lease agreement with the landlord and he wants out. Since the original tenant can't just break the agreement and walk off, what he does is to get a new tenant to swap places... and take over all his rights and obligations for the remainder of the lease period. So if the original tenant signs a 1 year commercial lease and the business goes bust after 8 months, the new tenant will be assigned a 4-month commercial lease (with the same terms and conditions as the original agreement). Now here's the big catch: Even though the original tenant has handed over all his duties and obligations to the new tenant, he is not off the hook... unless the landlord agrees to release him from all liabilities. If the new tenant stirs up trouble, our dear original tenant will find himself in hot soup as well. Of course, whether the original tenant is allowed to pull this assignment trick out of his hat is a whole new matter. Knowing for sure is actually simpler than most people think: First, examine your local landlord tenant laws for any lease assignment rules. Most of the time, landlords are given the right to allow or disallow assignments but once in a while, the local law let tenants have the final say instead. If there's no mention of lease assignments in your law text, then your rental lease agreement shall dictate the terms.

Difference Between Lease Assignment and Subletting

When it comes to subletting vs assignment of lease, there's often a massive mix-up. Sometimes even real estate professional get it wrong by assuming them to be one and same thing. However if you dig deeper, you will find that the differences are not just numerous, but important as well. Let's begin by dragging the landlord into the picture. An assignment of lease launches the new tenant into a direct relationship with the landlord - The landlord collects rent straight from the new tenant and deals with the new tenant directly on all lease issues. So in this case, the original tenant gets to take back seat and doesn't have to manage the new tenant actively. On the other hand, there's no direct relationship between the landlord and new tenant (subtenant) in a sublease. Instead the original tenant plays mother goose and is responsible for collecting rent from the subtenant and making sure that he's following the lease rules. When you compare the two, a sublease is a lot more hands-on for the original tenant. No matter which path you take, you will still want a good new tenant who pays the rent on time and follows the lease rules to the agreement. For the golden rules on screening tenants and running credit checks, Click here for our guide to running tenant credit checks. When you have a lease assignment, the terms and conditions of the lease remains largely unchanged - It's almost like taking the original lease agreement and swapping the tenant's name with another. With a sublease, there's more breathing space - The original tenant can decide how much rent to charge, how long the subtenant is going to stay or even collect security deposit... as long as it stays within the boundaries drawn by the original lease agreement between the landlord and original tenant.

Should You Choose Assignment of Lease or Sublease?

You are the Landlord - A lease assignment is recommended in most cases. You will have more control over your new tenant (instead of leaving matters in the original tenant's hands and hoping that he would do a good job)... plus you still have the original tenant to cover your back in case anything goes wrong. You are the Original Tenant - Now this is a tricky one. If you want to someone to take over the entire lease and property for its remaining duration (e.g. your business goes belly-up and you no longer need the office), then help yourself to a lease assignment. If the landlord's consent is required for assignment (and he doesn't give the nod), you can always try offering him a lease assignment fee as a deal sweetener. However, if you are looking for someone to share the place (and rent)... or perhaps you need someone to cover the rent while you are overseas for a few short months, then a sublease would be ideal. You are the New Tenant - An assignment of lease works better for you most of the time. You won't be at the mercy of the original tenant (for example if he screws up and the landlord terminates the original lease agreement, your sublease might also go up in flames). But if you only want to rent part of the property... or don't want to tie yourself down for the remaining lease duration, then you are better off sticking to a sublease. Now that we have covered the topic of assignment vs sublease, go ahead and take your pick - Click here for an assignment of lease form or Click here for a sublet agreement instead.

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assignment of lease

• The process where a tenant transfers their remaining entitlements of a rented property as stated in a lease agreement
• The tenant, due to unexpected circumstances, had to proceed with the assignment of lease to another party.
• In a scenario where the business owner has to relocate, an assignment of lease can be an option to transfer the rental rights to another entity.
• The new lessee acquired the property through an assignment of lease from the original tenant.
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Assignment And Assumption Of Lease

Jump to section, what is an assignment and assumption of lease.

An assignment and assumption of lease is a legal real estate document that allows one party to transfer rights and obligations of a lease to another party. Often used in real estate transactions and mortgage lending, the assignment and assumption of lease agreement requires the landlord to consent to move forward.

An assignor may include an assumption agreement to provide legal protection by transferring obligations to the new tenant. For example, if a tenant defaults on a mortgage or stops paying rent, the original seller is no longer liable. Assignment and assumption of lease agreements cover terms like who is newly responsible for the lease and the landlord's contract for this agreement.

Common Sections in Assignment And Assumption Of Leases

Below is a list of common sections included in Assignment And Assumption Of Leases. These sections are linked to the below sample agreement for you to explore.

Assignment And Assumption Of Lease Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.2 2 d425646dex102.htm ASSIGNMENT AND ASSUMPTION OF LEASE , Viewed October 18, 2021, View Source on SEC .

Who Helps With Assignment And Assumption Of Leases?

Lawyers with backgrounds working on assignment and assumption of leases work with clients to help. Do you need help with an assignment and assumption of lease?

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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

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Key terms and definitions

Obtaining landlord permission, tenants and subtenants responsibilities and liabilities, protecting the tenant from sublease pitfalls, putting the agreement in writing, alternatives to subleasing, final takeaways, templates and examples to download in word and pdf formats, tenants and subtenants obligations under a sublease agreement.

From finding a new job in another state to returning home to care for a sick family member to taking the big step of moving in with a new partner, many people find themselves in a situation where they need to cancel their existing lease so they can move somewhere else. Unfortunately, many landlords are reluctant to cancel existing leases, since that puts them in the position of potentially losing money while they look for a new tenant to fill the space. However, there is a solution that is workable for tenants while also being amenable to many landlords: a Sublease Agreement , also known as a sublet. There are many misconceptions about how subleases work and the responsibilities of people involved. This guide will walk through the most important terms to know and the main issues to be aware of when creating a sublease arrangement:

1. Differences between a sublease and an assignment

2. How to get permission from a landlord to sublet

3. Responsibilities and liabilities of the tenant and subtenant

4. Protective measures for the tenant

5. Sublease alternatives

There are many terms used in subleasing that are often used interchangeably and in confusing ways. However, the key distinction is between subleases and assignments . Both of these can be easily created, but have different legal implications and responsibilities for the involved parties that will be explored further in this guide.

What is a "sublease"?

A Sublease Agreement involves a transfer of less than all of the lease . For example, if a person living alone in a leased two bedroom apartment decides to rent out the spare bedroom to a new roommate, that would be a sublease. Or, if a person rents their whole apartment to someone for a couple of months while they travel for the Summer, but then return to the apartment in the Fall, that would also be considered a sublease. The main parties involved in a sublease are:

1. the original tenant , also known as the sublessor , who is the person who first rented the property and plans to rent the space to a new renter, and

2. the subtenant , also known as the sublessee , who is the person who rents their property from the sublessor.

What is an "assignment"?

An Assignment Agreement involves the entire remainder of the lease being transferred to a new tenant. For example, if someone was required to move to a new state for their job and a new tenant takes over the remaining six months on their lease, that would be called an assignment. The main parties involved in an assignment are:

1. the assignor , who is the person who originally rented the property, and

2. the assignee , who is the person renting the property from the assignor and taking over the remainder of their lease.

The first, and most important step, in arranging a sublease or assignment agreement is getting permission from the landlord. The landlord must consent to the arrangement and put this consent in writing using a Consent to Sublease form. If a tenant does not get the consent of the landlord, they leave both themselves and their subtenant or assignee in danger. The landlord would have the option of evicting the tenant, in the case of a sublease, or evicting the assignee, in the case of an assignment, for violation of the original lease agreement. Further, the landlord would feel less obligated to correct defects with the property, such as fixing leaky faucets or broken appliances, given that they do not have a valid agreement with the subtenant or assignee to provide these services.

Unless it says otherwise, when the lease prohibits tenants from subletting or assigning without their landlord's consent, ordinarily the landlord can arbitrarily refuse to permit a sublease or assignment according to their own discretion . However, some states and many leases now provide that the landlord must not unreasonably refuse to give consent to a sublease or assignment. In these instances, if the tenant is able to find a new person who will be at least as good a tenant -- able to pay rent on time, not play the stereo too loud, and follow the other agreements in the lease -- the landlord must accept that person as a subtenant.

If a person's lease prohibits them from assigning the lease without permission from the landlord but does not mention anything about subletting, would that person still be able to sublet the apartment to their friend? Yes, if the lease states only that an assignment is forbidden, the person would still be able to sublet their apartment. Conversely, if the lease prohibits only subletting, the tenant would be able to assign the lease without their landlord's approval. Both actions are prohibited only if the lease says that the tenant cannot sublease the property OR assign the lease without the landlord's consent. Note, however, that some cities, such as New York, have ordinances regulating subleases that take precedence over private agreements.

When subleasing an apartment, the original tenant should try their best to find a person who they think is trustworthy and will continue to pay the rent. The main reason for doing this is that the original tenant remains responsible for making sure the rent gets paid . The subtenant usually does not have to answer to the landlord, only the original tenant; the landlord can generally only sue the original tenant for the rent . If the subtenant does not pay the rent on time, the landlord can start eviction proceedings against the original tenant. If the subtenant owes several months of back rent, the original tenant is responsible for making sure it is paid. In the same way, the original tenant is responsible for making sure the rental is in good shape even if they are not currently living there.

What can a tenant do if they end up paying for the outstanding rent or damage a subtenant did to the property? The tenant can then go to the subtenant to ask that they be reimbursed for this money and take them to small claims court if they refuse to pay.

Unlike in a sublease, in an assignment, if the assignee fails to pay the rent, the landlord can go directly after the assignee for the unpaid rent . The landlord can also sue the assignee for any damage to the apartment that they are responsible for. Be aware, however, that the landlord can still sue the assignor, or original tenant, as well, even if the landlord consented to the assignment. The landlord has their choice of who to go to when they are looking to get paid.

Before subleasing a property or assigning a lease, the original tenant should make sure their subtenant or assignee is a responsible person who will pay the rent on time and will not damage the apartment. In a sublease or assignment, the original tenant essentially steps into the role of landlord to their subtenant or assignee. Therefore, it's important for them to protect themselves the same way a landlord would. When entering into sublease or assignment agreements, the original tenant often puts protective measures in place , including requiring payment of a security deposit, often equal to at least one month's rent, and putting the terms and agreements of the sublease in writing, including details like the length of the sublease or assignment, the amount of rent, when and to whom it must be paid, late charges, payment for damages, and so on.

Since the original tenant is acting as a landlord when subleasing, they are bound by some of the same laws that apply to the landlord . For example, each state has different rules and guidelines about the maximum amount that may be charged for a security deposit. In most cases, the original tenant may not reenter the property without giving appropriate notice to the subtenant. However, particular to assignments, those agreements often include a provision that the original tenant has the right to reenter the property and retake possession of it if the assignee fails to pay the rent. This gives the assignor some additional protection if the assignee defaults on the lease.

Once all parties, including the original tenant, subtenant, and landlord agree to the sublease or assignment, it should be put in writing. A written agreement works to protect all of the parties and their rights and obligations under the lease agreement . An oral agreement is enforceable in some states, but in all cases is subject to potential misunderstandings and challenges in court. A written Lease Assignment Agreement is usually relatively brief since it incorporates all of the provisions included in the original Residential Lease Agreement or Commercial Lease Agreement . A Sublease Agreement is more extensive and includes specifics related to when and to whom rent payments will be made, whether the subtenant will pay a security deposit to the original tenant and if so the method and amount of that payment, who will receive notices related to the rental. Once a Sublease Agreement or Lease Assignment Agreement has been put into writing, it should be signed by all involved parties. The Agreement must always be signed by the tenant and subtenant or assignee. However, the document may also be signed by the landlord to serve as a written record that the landlord grants their permission and is aware of the arrangement.

What if a tenant must move out of their rental property for some reason, say, six months before the lease expires, but they don't want to worry about the potential hassle and risk of finding a subtenant or assignee? The lease may give the tenant the right to cancel their lease by giving a certain amount of notice, usually two to three months. In a month-to-month lease, the tenant usually must give only thirty days notice. If the lease does not allow for this, the tenant has the option of finding a new tenant, subject to their landlord's approval, and the tenant's own trouble and expense. When the tenant finds a suitable person, they can ask their landlord to sign a document releasing them from their original lease . The landlord will then have the new tenant pay a deposit and sign a new lease. If the landlord agrees to do this, the original tenant will no longer be liable for the rent or acts of the new tenant. This solution is often acceptable to reasonable landlords.

Subleasing can be a great option for someone looking to move somewhere else, either temporarily or permanently, while they are in the middle of their current lease term. Here are the most important things to remember when setting up a sublease or assignment agreement:

• A sublease is a transfer of less than all of the lease; an assignment is a transfer of the entire remainder of the lease.
• The landlord must grant their permission for the sublease or assignment in writing if the tenant wants to protect themselves from future liability.
• In a sublease, the landlord can only go after the original tenant for rent or damages owed by the subtenant; in an assignment, the landlord can go after either the original tenant or the assignee.
• The original tenant can use measures such as collecting a security deposit to protect themselves in case the subtenant or asignee fails to pay the rent or causes damages.
• The best way to protect all involved parties is to put the agreement in writing.

About the Author: Malissa Durham is a Legal Templates Programmer and Attorney at Wonder .Legal and is based in the U.S.A.

• Sublease Agreement
• Lease Assignment Agreement
• Consent to Sublease

This residential lease assignment is between , an individual (the " Original Tenant ") and an individual (the " New Tenant ").

On or about , the Original Tenant and (the " Landlord ") entered into a lease agreement (the " Lease ").

The Lease covers the property located at , , , and more particularly described as follows: (the " Premises ").

Under section of the Lease, the Original Tenant is permitted to assign its interest in the Lease, with the consent of the Landlord.

The Original Tenant wishes to assign to the New Tenant's his or her rights in, and delegate all of his or her obligations under, the Lease, and the New Tenant wishes to accept this assignment.

The parties therefore agree as follows:

1. ASSIGNMENT.

The Original Tenant assigns to the New Tenant of all his or her rights in, and delegates to the New Tenant all of his or her obligations under, the Lease. This transfer will become effective as of (the " Effective Date "), and will continue until the present term of the Lease ends.

2. ASSUMPTION OF RIGHTS AND DUTIES.

After the Effective Date, the New Tenant shall assume all rights and duties under the Lease, including the obligation to pay rent under the Lease when it is due.   The Original Tenant will have no further obligations under the Lease   The Original Tenant will remain bound to the Landlord under the Lease, notwithstanding the assignment . However, the Original Tenant remains responsible for obligations accruing before the Effective Date.

3. REIMBURSEMENT.

On or before the Effective Date, the New Tenant shall pay to the Original Tenant, which is the sum of:

• (a)  the security deposit held by the Landlord under the Lease; and
• (b)  the rent or other deposits paid in advance by the Original Tenant for any period after the effective date of this assignment.

4. INDEMNIFICATION.

• (a) The Original Tenant shall indemnify the New Tenant from all damages, liabilities, expenses, claims, or judgments (including interest and reasonable attorneys' fees) (collectively, "Claims" ) arising out of the Original Tenant's failure to perform his or her obligations under the Lease before the Effective Date.
• (b) The New Tenant shall indemnify the Original Tenant from all Claims relating to the Lease, except if those costs arise from the Original Tenant's failure to perform his or her duties under the Lease before the Effective Date.
• (c) The New Tenant shall indemnify the Original Tenant from all Claims attributable to the acts or omissions of the New Tenant or his or her agents, contractors, or employees with respect to the Premises or any activities on the Premises. This indemnification will survive the termination of the Lease and this assignment.

5. CONTINUING EFFECTIVENESS OF LEASE.

This assignment is made on the understanding that all other terms of the Lease remain in full effect, including the prohibition against further assignments and subleases without the Landlord's express written consent.

6. ORIGINAL TENANT'S REPRESENTATIONS.

The Original Tenant represents that he or she:

• (a) has the power and authority to enter into and carry out this assignment;
• (b) has not previously assigned his or her rights under the Lease;
• (c) is the lawful and sole owner of the interests assigned under this assignment;
• (d) the interests assigned under this assignment are free from all encumbrances;
• (e) except for the Landlord and the Original Tenant, there are no parties in possession or occupancy of the Premises or any part of them, and there are no parties with possessory rights on the Premises or any part of them; and
• (f) has performed all obligations and made all required payments under the Lease.

7. CONDITION OF PREMISES.

The New Tenant has examined and inspected the Premises and accepts them "as is" and in its present condition with all faults. Except as provided in this assignment, the Original Tenant makes no representations, covenants, or guaranties about the status, nature, or condition of the Lease or the Premises.

8. INTERPRETATION .

In interpreting the language of this assignment, the parties shall be treated as having drafted this assignment after meaningful negotiations. The language in this assignment will be construed as to its fair meaning and not strictly for or against either party.

9. GOVERNING LAW .

• (a) Choice of Law. The laws of the state of govern this assignment (without giving effect to its conflicts of law principles).
• (b) Choice of Forum. Both parties consent to the personal jurisdiction of the state and federal courts in County, .

10. AMENDMENTS.

No amendment to this assignment will be effective unless it is in writing and signed by a party or its authorized representative.

11. COUNTERPARTS; ELECTRONIC SIGNATURES.

• (a) Counterparts. The parties may execute this agreement in any number of counterparts, each of which is an original but all of which constitute one and the same instrument.
• (b) Electronic Signatures . This agreement, agreements ancillary to this agreement, and related documents entered into in connection with this agreement are signed when a party's signature is delivered by facsimile, email, or other electronic medium. These signatures must be treated in all respects as having the same force and effect as original signatures.

12. SEVERABILITY.

If any one or more of the provisions contained in this assignment is, for any reason, held to be invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability will not affect any other provisions of this assignment, but this assignment will be construed as if those invalid, illegal, or unenforceable provisions had never been contained in it, unless the deletion of those provisions would result in such a material change so as to cause completion of the transactions contemplated by this assignment to be unreasonable.

13. NOTICES.

• (a) Writing; Permitted Delivery Methods . Each party giving or making any notice, request, demand, or other communication required or permitted by this assignment shall give that notice in writing and use one of the following types of delivery, each of which is a writing for purposes of this assignment: personal delivery, mail (registered or certified mail, postage prepaid, return-receipt requested), nationally recognized overnight courier (fees prepaid), facsimile, or email.
• (b) Addresses. A party shall address notices under this section to a party at the following addresses:
• If to the Original Tenant:
• If to the New Tenant:
• (c) Effectiveness. A notice is effective only if the party giving notice complies with subsections (a) and (b) and if the recipient receives the notice.

14. WAIVER.

No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this assignment will be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy will be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, and no waiver will constitute a continuing waiver, unless the writing so specifies.

15. ENTIRE AGREEMENT.

This agreement constitutes the final agreement of the parties. It is the complete and exclusive expression of the parties' agreement about the subject matter of this agreement. All prior and contemporaneous communications, negotiations, and agreements between the parties relating to the subject matter of this agreement are expressly merged into and superseded by this agreement. The provisions of this agreement may not be explained, supplemented, or qualified by evidence of trade usage or a prior course of dealings. Neither party was induced to enter this agreement by, and neither party is relying on, any statement, representation, warranty, or agreement of the other party except those set forth expressly in this agreement. Except as set forth expressly in this agreement, there are no conditions precedent to this agreement's effectiveness.

16. HEADINGS.

The descriptive headings of the sections and subsections of this assignment are for convenience only, and do not affect this agreement's construction or interpretation.

17. EFFECTIVENESS.

This assignment will become effective when all parties have signed it. The date this assignment is signed by the last party to sign it (as indicated by the date associated with that party's signature) will be deemed the date of this assignment.

18. NECESSARY ACTS; FURTHER ASSURANCES.

Each party shall use all reasonable efforts to take, or cause to be taken, all actions necessary or desirable to consummate and make effective the transactions this assignment contemplates or to evidence or carry out the intent and purposes of this assignment.

[SIGNATURE PAGE FOLLOWS]

Each party is signing this agreement on the date stated opposite that party's signature.

ORIGINAL TENANT

[PAGE BREAK HERE]

LANDLORD'S CONSENT AND RELEASE

As Landlord under the Lease, I hereby consent to this assignment of the Lease, and to the New Tenant's assumption of the Original Tenant's obligations under the Lease, including the obligation to pay rent when it is due. As of the Effective Date, I release the Original Tenant from all liability for obligations (including rent payments) under the Lease. However, the Original Tenant remains primarily obligated as tenant under the Lease and I do not waive or relinquish any rights under the Lease against either the Original Tenant or the New Tenant.

Attach a copy of the Lease as Exhibit A

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Assignment of Lease Explained

• December 1, 2023

Understanding the complexities surrounding the assignment of a lease is crucial for both tenants and landlords. Within the UK, various situations might compel a tenant to transfer their lease to another party. In this guide we will delve into the essentials, helping you understand every facet of a lease assignment.

What is an Assignment of Lease?

In the world of property management and real estate, the concept of an “assignment of lease” is fundamental. It involves a tenant, known as the assignor, transferring their entire legal interest in a property to another individual or entity, called the assignee. This process is common in both residential and commercial contexts and plays a significant role in maintaining the fluidity of property interests, especially in a dynamic market.

When a tenant signs a lease, they agree to specific commitments, including paying rent and maintaining the property, which are enforceable for a set period. However, various circumstances may prompt a tenant to vacate the property before the lease term expires. Herein lies the importance of the assignment of lease.

Through lease assignment, the original tenant can exit the property and pass on the responsibility to a third party, who then assumes the role of the tenant with all its incumbent responsibilities. It’s important to note that while the new tenant steps into the shoes of the original tenant, the lease terms remain unchanged.

For instance, if an individual rents a flat and later decides to move out before the lease’s expiration due to reasons such as relocating for a job or changing living situations, they may opt for an assignment of the lease. This strategy allows another person to take over the living space and adhere to the responsibilities under the original lease, ensuring that the flat does not remain unoccupied and the landlord continues to receive rent payments. This seamless transition can be especially beneficial in residential areas with high demand for housing, as it minimises financial instability for the landlord and provides immediate accommodation for those in need of a home.

Key Components of Lease Assignment

• Assignor and Assignee: The existing tenant (assignor) and the new tenant (assignee) are the primary parties in this agreement. Their willingness to transfer and assume the lease’s obligations, respectively, drives the assignment process.
• Landlord’s Role: While not a direct party to the assignment, the landlord plays a pivotal role. Most lease agreements stipulate that landlords must provide consent before any assignment takes place. This clause protects the landlord’s interests, ensuring the new tenant is reliable and meets the required standards.
• Legal Documentation: The process requires several legal documents, including the initial lease agreement and a deed of assignment. The latter must clearly articulate that all rights and responsibilities have been transferred to the new tenant. This precision prevents future disputes regarding the terms of the lease.
• Liabilities: The assignment of lease doesn’t inherently absolve the original tenant of responsibilities. Depending on the agreement’s terms, the assignor might remain liable if the assignee fails to fulfil the lease obligations. This potential continued liability underscores the importance of thorough assignee vetting.

The Legal Ground

The legality surrounding the assignment of a lease is rooted in UK property law. It necessitates compliance with various statutory requirements and often involves complex legal procedures. Consequently, parties usually engage solicitors to ensure that the assignment aligns with legal protocols, protecting the interests of all involved parties.

The assignment of a lease is a nuanced process, influenced by factors unique to each situation. Whether prompted by personal, business, or financial changes, lease assignments facilitate flexibility in property occupancy and use. Understanding this concept is crucial for tenants seeking an early exit from a lease, individuals looking for established lease properties, and landlords wishing to maintain continuous tenancy and income streams.

Understanding the Deed of Assignment of Tenancy

A “deed of assignment tenancy” is a legal document that evidences the transfer of lease obligations from the current tenant to another. It is an essential part of the lease assignment process, binding the new tenant to the terms stated in the original lease.

Landlord’s Checks Before Permitting Assignment of a Lease

The assignment of a lease, while beneficial in maintaining continuous occupancy and consistent rent payments, necessitates thorough due diligence on the part of the landlord. Before consenting to an assignment, it’s imperative for landlords to conduct comprehensive checks, mirroring the depth of evaluation done during the initial tenant screening process. These checks are crucial in mitigating potential risks and safeguarding the landlord’s investment.

Detailed Assessment of the Prospective Assignee

Landlords should ascertain the financial stability and reliability of the assignee. This assessment often involves:

• Credit Checks: This allows landlords to have a clearer understanding of the prospective assignee’s credit history, highlighting their ability to keep up with regular rent payments and financial commitments.
• Employment Verification: Landlords typically require proof of ongoing, stable employment. This verification helps ensure that the new tenant has a consistent income stream capable of covering the rent and other associated costs.
• References: Previous landlords or property managers can provide insights into the assignee’s behaviour, paying habits, and overall reliability. Personal references might also be necessary to form a more comprehensive view of the prospective tenant.

Review of the Assignee’s Intent

Understanding the prospective tenant’s reasons for seeking the property and their long-term intentions can provide reassurance. For instance, landlords should feel more comfortable knowing that the assignee plans to reside in the property for an extended period and doesn’t intend to sublet without permission or engage in unlawful activities.

Examination of Financial Documentation

Landlords may request documentation such as bank statements or savings accounts to further verify the assignee’s ability to afford the property. This scrutiny is particularly pertinent in higher-rent areas or for properties with higher maintenance costs.

Ensuring Contractual Compliance

It’s important for the landlord to confirm that the assignee understands and agrees to the terms set out in the original lease. The assignee must comply with all existing conditions, and any deviation needs to be negotiated with and approved by the landlord.

Legal Considerations

Given the legal complexities surrounding lease assignments, landlords often seek legal advice during this process. Lawyers can help ensure that the assignment adheres to local property laws, the original lease’s terms, and that the landlord’s interests are thoroughly protected throughout the transition.

By conducting these comprehensive checks, a landlord exercises due diligence, significantly reducing the likelihood of issues arising from the assignment of the lease. This meticulous approach helps maintain the property’s revenue stream, upholds community standards, and ensures the continued preservation and value of the property investment. It’s a proactive measure, providing the landlord with peace of mind that they are handing over their property to a reliable and responsible assignee.

Costs Involved in Lease Assignment

The process of lease assignment, while a practical solution for tenants looking to transfer their lease obligations, does entail various costs that both the assignor (original tenant) and assignee (new tenant) need to consider. These expenses contribute to a seamless transfer process, ensuring all legalities are properly managed, and all parties are adequately protected. Understanding these costs is essential as it prevents unexpected surprises and allows for a more transparent transaction.

Costs for the Assignor

• Advertising Costs: If the landlord does not immediately have a new tenant, the original tenant may need to advertise the property. This could involve online listings, printed materials, or hiring an estate agent to expedite the process, all of which incur costs.
• Tenant Screening Costs: The assignor might opt to conduct preliminary screenings of potential assignees, which include credit checks, reference checks, and other background investigations to ensure they’re presenting a reliable tenant to the landlord.
• Legal Fees: The legal intricacies of transferring a lease require the involvement of legal professionals. The assignor typically bears the cost for legal consultations, drafting the deed of assignment, and any related legal documentation.
• Landlord’s Administrative Fees: Some landlords charge an administrative fee for processing a lease assignment, covering the time and resources they expend to conduct their checks and modify their records.
• Potential Liability Costs: If the assignee fails to meet the lease obligations, and depending on the terms of the assignment, the original tenant may remain partially liable. This contingent liability could lead to future costs.

Costs for the Assignee

• Security Deposit: It’s standard practice for the new tenant to provide a security deposit before moving in. In some cases, the assignee reimburses the original tenant for the initial deposit, depending on its condition and any agreement between the parties.
• Advance Rent: The assignee may need to pay the first month’s rent in advance, similar to standard leasing arrangements.
• Legal Fees: Assignees also incur legal fees. They need legal counsel to review the terms of the lease, ensure the assignment is conducted correctly, and understand their new responsibilities and liabilities.
• Stamp Duty: Depending on the property’s value and the lease’s remaining duration, the assignee might need to pay Stamp Duty Land Tax (SDLT) on the premium or the rent of the lease.

Shared Costs

In some instances, both parties negotiate and equally share specific costs, such as those for legal consultations, to ensure fairness and mutual satisfaction in proceeding with the transaction.

Both assignors and assignees must factor in these expenses to accurately assess whether a lease assignment is a financially viable option. It is advisable to consult with real estate professionals and legal advisors to understand all potential charges fully. Having a clear, upfront understanding of these costs allows both parties to make informed decisions, ensuring a smooth, transparent, and fair transition process.

Does Assignment Create a New Tenancy?

No, an assignment does not create a new tenancy. It merely transfers the existing tenant’s rights and obligations to the new tenant, who then steps into the shoes of the original tenant under the same lease terms.

The Necessity of Legal Assistance

It is highly advisable to engage a solicitor during the assignment of a lease. A solicitor can provide necessary legal advice, prepare the deed of assignment of lease, and ensure compliance with various property and contract laws.

Deed of Assignment vs Tenancy Agreement

While they might sound similar, a deed of assignment is not the same as a tenancy agreement. The former refers to the document transferring existing lease rights to a new tenant, while the latter is a contract outlining the terms between a landlord and tenant for new occupancy.

Parties Involved in Signing the Deed of Assignment

The deed of assignment of lease is typically signed by the outgoing tenant, the incoming tenant, and sometimes, the landlord, especially when their consent is a prerequisite for the lease transfer.

Landlord’s Consent to Lease Assignment

A landlord can refuse to consent to assign a lease, but this refusal must be reasonable. Scenarios for justifiable refusal might include the prospective tenant’s inability to meet financial commitments or proposed use of the property that violates lease terms.

Lease Assignment vs Subletting

• Lease assignment involves the complete transfer of the tenant’s rights to another party.
• Subletting occurs when the tenant temporarily hands over the property rights to another party but retains some rights or eventually plans to return.

Financial Responsibilities in Lease Assignment

Typically, the outgoing tenant or the incoming tenant covers the costs related to the assignment of lease, such as legal fees, administrative charges, and any leasehold improvements. The specific arrangements may vary based on mutual agreements.

Assigning a Lease Without a Deed: Is It Possible?

No, a lease assignment must be evidenced by a deed to be legally binding. The deed of assignment tenancy is crucial as it protects the interests of all parties involved and provides legal clarity.

The Meaning of ‘Assignment’ in Rent Context

In the context of renting, ‘assignment’ refers to transferring the existing tenant’s lease obligations and rights to another party. The assignee assumes responsibility for rent payments and adherence to the lease terms.

Advantages of Assigning a Lease

There are several benefits associated with the assignment of a lease, including:

• Flexibility for the tenant needing to vacate the property before lease termination.
• Minimal interruption in rent payments for the landlord.
• Opportunity for another tenant to occupy the premises without having to negotiate a new lease.

Stamp Duty and Lease Assignment

Stamp duty on assignment of lease may apply depending on the premium paid and the lease’s yearly rent. It’s important to consult a solicitor to understand any potential tax implications.

Post-Assignment Liabilities for Tenants

After the assignment of a lease, the original tenant is generally released from future liabilities. However, they may remain liable if the new tenant defaults, depending on specific lease terms or if guarantees were provided.

Essential Documents for Lease Assignment

In the process of a lease assignment, several critical documents must be prepared, reviewed, and signed to ensure a legally binding transfer of rights and responsibilities from the original tenant (assignor) to the new tenant (assignee). These documents are crucial in defining the terms of the assignment, protecting the interests of all parties involved, and complying with legal standards. Here are the essential documents required for a successful lease assignment:

1. The Original Lease Agreement

• Before any transfer, all parties must review the original lease. It’s vital to understand any clauses or terms that could impact the assignment, such as conditions requiring the landlord’s consent for any lease transfer.
• The original lease agreement serves as the foundation for the assignment, outlining the terms and obligations that the assignee will need to adhere to.

2. Deed of Assignment of Lease

• This legal document formally transfers the lease obligations from the assignor to the assignee. It must clearly state the terms under which the lease is assigned, including any continuing liabilities of the assignor, if applicable.
• It should be comprehensive, detailing the rights and responsibilities of all parties and any guarantees provided by the assignor.
• The deed is usually drafted by a solicitor to ensure that it complies with legal standards and adequately protects everyone’s interests.

3. Landlord’s Consent to Assignment

• Most leases require the landlord’s formal approval for any assignment to occur. This document is the landlord’s written agreement, permitting the transfer from the current tenant to the new one.
• It may come with conditions the assignee must satisfy, which should be clearly outlined in the consent form.

4. Assignee’s Letter of Acceptance

• This document is proof that the assignee understands and agrees to the terms set out in the original lease and the deed of assignment.
• The letter may restate key lease terms for clarity and will affirm the assignee’s commitment to abide by all the lease conditions and responsibilities.

5. Legal Advisories

• Though not a formal part of the lease assignment, documentation of legal advice received by both the assignor and assignee (and possibly the landlord) is crucial.
• These advisories ensure each party has been informed of their legal rights and obligations, potentially offering protection in the event of future disputes.

6. Inventory List

• If relevant, an inventory list detailing the condition of the property, especially for furnished rentals, would be necessary. This document helps manage expectations and responsibilities concerning the property’s state and contents at the time of the assignment.

7. Proof of Assignee’s Financial Stability

• While not always formally part of the assignment documentation, evidence of the assignee’s ability to meet financial commitments (like bank statements or employment confirmation) often needs to be submitted to the landlord during the assignment process.

The process of assigning a lease is a complex legal transaction that requires strict adherence to procedural standards. These essential documents ensure that the assignment progresses smoothly, with clear understanding and agreement from all parties involved. Both assignor and assignee should seek legal counsel to ensure their interests are protected, and all documents are in order, further underscoring the importance of each document’s role in this pivotal real estate process.

Energy Performance Certificate (EPC) Requirements

Yes, an EPC is generally required for a lease assignment, especially if the building is to be sold or rented out. This certificate ensures that the property meets the necessary energy efficiency standards.

Registering an Assignment of Lease

Registration of an assignment of lease is crucial. It validates the change of tenant under the lease, making it legally binding and enforceable. This process usually involves submitting the deed of assignment to the appropriate land registry.

Timeframe for Assigning a Lease

Assigning a lease can take anywhere from a few weeks to several months, depending on factors like obtaining the landlord’s consent, the new tenant’s credibility, and the speed of legal processes.

Embracing the Benefits of Lease Assignment

Whether you’re a tenant seeking flexibility or a landlord desiring continued occupancy, lease assignment offers solutions that can cater to your individual needs, promoting ease and continuity in the leasing process.

If you’re considering a lease assignment, it’s paramount to seek professional advice to navigate the complexities involved. The information contained in this article should be used for information purposes only and should not be relied upon in place of specific legal advice.

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Assignment Of A Lease: Everything You Need To Know! 📃

May 08, 2024 | Laura Everitt

There are are plenty of reasons why you might want to exit your commercial lease early. Perhaps your current premises are no longer suitable for the needs of your growing business, or maybe your business is in financial difficulty and you need to find a lease with more favourable terms.

There are also plenty of options when it comes to deciding how to exit a lease before the specified end date. Some of the most common include: assignment of a lease, which involves passing the lease onto another business; terminating the lease, with the help of a break clause if your contract contains one; or subletting your premises and adopting the role of landlord yourself.

Unfortunately, exiting a lease early is not always a simple process. A lease is a legal contract, and if you break it your landlord could take you to court. Opting to pursue a process such as assigning the lease to a new tenant can make exiting a lease early possible, but there are many factors that should be considered before beginning this process.

If you are thinking of trying to leave your lease early, it is advisable to obtain independent legal advice from an appropriately experienced commercial property solicitor before taking any action.

If you require legal advice or assistance on getting out of a commercial lease please call us on 0800 086 2929 , email [email protected] or complete our Free Online Enquiry Form .

In addition to office meetings, we also offer remote meetings via telephone and video conferencing software so can assist you wherever you are based.

What is assignment of a lease?

The process of assignment of a lease is essentially selling the lease to a third party (the “assignee”).

If you are a commercial property tenant, your contract likely contains a clause that allows you to assign your lease to a new tenant. To do this, you will need to find a potential new tenant yourself. Your landlord will expect this new tenant to meet the same expectations they originally set for you, and you will probably need their consent before the assignment can be completed.

While your landlord cannot reasonably withhold their consent for the assignment, they are under no obligation to give their consent if the new tenant doesn’t meet the terms set out in your contract – so it’s wise to be picky yourself about the tenant you select.

There are likely to be restrictions around when and if you can assign your lease specified in your contract. Some common restrictions include not allowing lease assignments if the contract is for a short period, and not allowing the lease to be assigned if the lease is ending within a few years.

Once a lease as been assigned, the assignee will become the new tenant and will be responsible for ensuring compliance with all of the tenant’s obligations in the lease.

What checks will a landlord make before permitting assignment of a lease?

Financial status

Your landlord will want to see evidence – usually in the form of business bank account statements – that the new tenant is in a strong financial position

Statements from previous landlords that the tenant has leased property from will be required to show that the tenant is reliable and doesn’t have a history of missing payments or otherwise neglecting their responsibilities as a tenant

Proposed use of the premises

Your landlord will probably be looking for a new tenant to intend to use the premises in broadly the same way as you have done in the past as the lease will specify what use is allowed.

Likelihood of requesting alterations to the building

As above, your landlord will require advanced notice of any alterations the new tenant may wish to make to the premises, and in some cases written permission in the form of a Licence to Alter will be required. It is likely that they may withhold their consent for assigning the lease to any tenant intending to make large-scale changes depending upon the type of premises involved.

What liabilities will you have when assigning a lease?

It is important to recognise that the assignment of a lease to a new tenant does not automatically exempt you from all liabilities related to that tenancy going forwards. In fact, once the lease assignment is complete you can still be liable should the new tenant miss any payments or otherwise break the terms of their contract.

Exactly what you will be liable for depends on when your lease began. If your lease began before January 1996 you will remain liable for all payments by any subsequent tenants – even if the lease is assigned several more times after you. This is called “privity of contract”.

For leases that began after January 1996, you will be required to sign an Authorised Guarantee Agreement . This means you guarantee payments for the next tenant, but not any further tenants.

Landlords can only claim payments of rent within six months of the money being due, and only after full notice has already been served to the former tenant.

What does lease assignment cost?

On the other hand, if the rent under the new lease is below the market rate, the new tenant may instead want to pay you a premium. If this is the case, you’ll need to make a decision on whether to charge VAT – or “opt to tax” – something that’s worth getting professional advice on.

A final charge to be considered is the cost of this advice. It is highly recommended to involve your solicitor when opting to pursue a lease assignment so as not to inadvertently break the terms of your contract and leave yourself open to court action. You should therefore also factor solicitors’ fees into your calculations when considering the cost of exiting your lease.

How to get out of a commercial lease – what are the alternatives?

Assignment of a lease is not the only way to get out of a commercial lease and depending on your circumstances and the contract you have with your current landlord, it may not always be the best option.

Some alternative ways to get out of a commercial lease early include:

Using a break clause

Some lease contracts include a “break clause” which offers both parties the opportunity to end the lease early in certain circumstances. Read your contract carefully to check if it contains a clause like this, and if it does, what terms and conditions are involved. Any time limits specified in the lease for giving of notice must be strictly followed.

Negotiating a lease exit

If your contract does not include a break clause, your landlord may still be open to you exiting the lease early. You would need to negotiate the specific terms of your exit and your landlord may require a pay-out to offset the inconvenience of having to market the property again.

Compared to lease assignment, negotiating an exit from your lease should provide a clean break with no further liabilities, but we would recommend seeking legal advice to confirm that you were exiting the contract cleanly.

Subletting the premises

A final option to consider when looking at how to get out of your commercial lease early is subletting. If your contract allows it, you can take on the role of landlord by finding and leasing your property to a new tenant.

You can use the rent payments from your new tenant to cover your own obligations, but in return you’ll be expected to take a hands-on role managing the property and dealing with the sub-tenant directly.

Need assistance with assignment of lease?

Exiting a lease early can be a complex process, whether you choose to do so by arranging the assignment of your lease or by one of the other means mentioned above.

Lease assignment is an effective way for tenants to get out of a commercial lease early. However, this can be a slow process and you will incur costs.

Contacting a solicitor at an early juncture is advisable so that you are appropriately advised at the outset of any key considerations and potential pitfalls. For example, even though you are selling the lease, you could potentially remain liable afterwards; this will depend on the age of the lease and whether you have entered into an authorised agreement or not.

Laura Everitt is the Head of our Property Department and has many years of experience in dealing with lease assignment.  Laura assists and advises clients all over the country.  In addition to office meetings, Shakeel offers remote meetings via telephone or video conferencing software so can assist you wherever you are based.

Make a Free Enquiry

If you are considering how to get out of a commercial lease or have any queries relating to any of the issues discussed in this article, please get in touch with our of our experienced property lawyers by calling 0800 086 2929 , emailing [email protected] or completing our Free Online Enquiry Form .

The content of this article is for general information only. The information in this article is not legal or professional advice. If you require legal or professional advice you should obtain independent expert advice from qualified commercial property solicitors such as those within our firm .

Call us 24/7 on 0800 086 2929 , email  [email protected] , or complete our Free Online Enquiry Form to arrange a free, no-obligation discussion and let us explain your legal rights and options.

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What is the liability of an outgoing tenant under an 'old' lease following assignment? Is a landlord obliged to pursue the current tenant for any arrears before pursuing a former tenant or guarantor to a former tenant?

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Related legal acts:

• Land Registration Act 2002 (2002 c 9)
• Landlord and Tenant (Covenants) Act 1995 (1995 c 30)
• Landlord and Tenant Act 1954 (1954 c 56)
• Law of Property Act 1925 (1925 c 20)

Key definition:

Tenant definition, what does tenant mean.

A person to whom a lease is granted.

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Meaning of assignment in English

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• It was a plum assignment - more of a vacation really.
• He took this award-winning photograph while on assignment in the Middle East .
• His two-year assignment to the Mexico office starts in September .
• She first visited Norway on assignment for the winter Olympics ten years ago.
• He fell in love with the area after being there on assignment for National Geographic in the 1950s.
• act as something
• all work and no play (makes Jack a dull boy) idiom
• be at work idiom
• be in work idiom
• housekeeping
• in the line of duty idiom
• short-staffed
• undertaking

You can also find related words, phrases, and synonyms in the topics:

assignment | Intermediate English

Assignment | business english, examples of assignment, collocations with assignment.

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Word of the Day

troubleshoot

to discover why something does not work effectively and help to improve it

Searching out and tracking down: talking about finding or discovering things

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