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Handling Subleases and Assignments as a Landlord

After you have completed the often long process of screening and moving in a new tenant, sometimes tenants inform you that they wish to end their lease early, typically due to reasons such as a job change or moving in with a significant other. This can be disheartening when you have put in the work to get the vacancy filled, and it may be tempting to minimize the additional work you may have to do to get the unit rented again by agreeing to a tenant’s proposal to sublease or assign their tenancy to a new person of their choosing. While there can be benefits to subleases and assignments, and in some places you cannot outright ban or unreasonably refuse a sublease, there are some pitfalls to be aware of with both options, as well as an alternative that may be preferable. It has also become increasingly popular for tenants to use their units for short-term vacation rentals, a practice which additionally carries a number of downsides for landlords.

When a tenant wants to leave their lease early or temporarily, and proposes to have a substitute tenant of their choosing live in the rental in their place and pay rent to the original tenant, this is called a sublease. For example, your original tenant may be a college student who plans to study abroad for a semester, but wishes to return after that. Another example may be if the original tenant wishes to rent out part of the unit, perhaps just one bedroom, in order to help them cover their expenses. In order to give you more control of these situations should they arise, it is best to have a clause in your lease specifying whether subleases are allowed, and if so, setting forth a requirement for the tenant to obtain your written permission or meet other criteria before subleasing the rental. Be sure to check state and local law regarding subleases, as some jurisdictions do not allow you to unreasonably deny requests to sublease, even if your individual lease does not permit them. It is also wise to require a subtenant to undergo the same screening process as the original tenant with regard to credit history, income, and other factors, but as always you should not make your decisions based on discriminatory factors.

Landlords should thoroughly screen potential subtenants and assignees even if the time left on a lease or periodic rental agreement is short. A bad subtenant or assignee can wreak a lot of havoc in a short amount of time or even refuse to leave once the lease or rental agreement is up.

The primary advantage of allowing a sublease is that you will presumably have an uninterrupted stream of income for the rental unit, which won’t sit vacant while you find a new tenant. Especially if the sublease request has come from a good and trustworthy long term tenant, then it may be worthwhile to grant the request and trust their judgment regarding who the subtenant is, subject to meeting your screening requirements. Your original tenant will also remain responsible for any failure to pay rent during the subtenancy, as well as any damage to the property. The downsides of allowing a sublease include that because the original tenant, rather than you, will be the subtenant’s landlord, it may be difficult to enforce the terms of the lease in the event of any violations. The subtenant may also refuse to leave at the agreed-upon time, potentially making it necessary for you to evict both them and the original tenant.

Assignments

An assignment is similar to a sublease in that it involves someone new taking the place of the original tenant, but the original tenant in these cases does not intend to return. The assignee assumes the legal place of the original tenant in the lease, meaning that they are renting from you rather than the original tenant. This means that the assignee is typically responsible for all of the original tenant’s general obligations under the lease, which allows you to pursue legal action against them in the event of a violation. Further, if the assignee fails to pay rent , you can actually pursue payment from the original tenant. Therefore, an assignment allows you the advantage of an uninterrupted supply of income for the unit without requiring you to do as much work to find a new tenant, and permits you to hold the original tenant responsible if the assignee does not follow through on their obligation to pay rent.

The original tenant remains liable for the rent (the subtenant is liable to the original tenant)
The original tenant remains liable for lease violations
The landlord must evict the original tenant in order to evict the subtenant

Assignment:

The assignee becomes liable for the rent, and the original tenant is only liable if the assignee does not pay
The assignee becomes liable for lease violations
The assignee can be evicted for any reason for which the original tenant could have been evicted

Creating a New Tenancy

While allowing a sublease or assignment may be advisable in some situations, in many cases the best and simplest option is to terminate the original tenant’s lease in writing and begin a new lease with the new tenant. This may still allow you to take advantage of the original tenant’s legwork in identifying a replacement tenant provided that the new tenant meets your requirements, but gives all the parties the added benefit of clarity when it comes to the legal relationship between you and the new tenant, especially if things go awry after they move in.

Short-Term Rentals

Particularly in competitive rental markets and large cities, tenants are turning to short-term rental services like Airbnb to rent out the units they themselves rent, and make a profit by collecting a fee from their guests. Many landlords disfavor this practice due to the increased wear and tear on the rental, people they haven’t screened using their property, and possible liability issues, among other things. Further, a number of cities have begun to highly regulate if not outright prohibit short-term vacation rentals of this nature. If you do not wish to allow tenants to host short-term vacation renters, once you have checked your local laws on the topic, it is best to clearly prohibit this practice in your written lease or rental agreement, and distinguish this type of rental from more standard subleases.

Last reviewed October 2023

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Commercial Landlord's Reasonable Consent to S...

Commercial Landlord’s Reasonable Consent to Sublease or Assign

(This may not be the same place you live)

What is an Assignment of a Commercial Lease?

A commercial lease assignment occurs when a tenant transfers all of their interest in a leased property to another party prior to the expiration of the original lease. The original tenant can be released from liability in the event that the new tenant breaches the lease.

What Does it Mean to Assign a Commercial Lease?

What does it mean to sublet a commercial lease, what is a sublease of a commercial lease, can a commercial lease be assigned or subleased, what is an approval clause, what are reasonable commercial objections, do i need a lawyer if there are problems with my commercial sublease or assignment.

It is very common when businesses merge or relocate to a new location that they will be stuck with the lease of their original location. In other situations, a company may seek to assign or sublet their commercial lease when they outgrow their commercial location or they cannot make their lease payments in a timely manner.

It is common in all of these situations for the business to attempt to assign or sublet their commercial lease. The assignment of a commercial lease refers to when a party to the lease transfers all of their interests and obligations of that lease to a third party.

Usually, in commercial settings, the commercial tenant will assign their interests in the lease to another commercial tenant. In addition, a landlord may assign their interests in the lease to another landlord.

It is important to note, however, that many commercial leases will include restrictions on the ability to assign. Therefore, it is important for an individual to review their lease to determine if assigning the lease is a possibility.

The lease will outline all of the rights that the commercial tenant maintains over the property. Generally, the majority of consumer protection laws which apply to residential leases do not apply to commercial leases.

Depending on the state laws, however, restrictions on assignments of commercial leases may be valid if those restrictions are considered reasonable.

Commercial subleases arise when a company transfers a portion of their lease rights to a third party for a temporary time period. A company may either sublet a portion of their office space while they continue to work in that space or they can sublet the entire office location until the end of their lease or for a specific period of time.

For example, suppose a seasonal company, a Halloween store, signed a year-long fixed lease term, they may seek to sublet that property for the 8 months during which their store does not operate in order to generate income to pay the rent. It is important to note that, when subletting, the original tenant, called the sublessor, is still obligated to the landlord for the terms outlined in the lease.

This means that a sublessor maintains privity of estate and privity of contract with the landlord. The sublessee, or the individual or entity that utilizes the lease for a temporary period of time, is only liable to the original tenant for the terms of lease, not the landlord.

In other words, the original lease between the original commercial tenant and the landlord remains effective throughout the sublease period. In addition, the original tenant is responsible for the new tenant.

This means that the sublessee would approach the original tenant with any concerns related to the rental property and would pay rent directly to them. It has become increasingly popular for big box retail stores to sublease corners of their facilities to smaller retail stores.

This is also popular for startups which do not have enough capital to lease an entire unit and, instead, prefer to cut costs by sharing an office space with other businesses. For example, in a grocery store or a shopping center , there may be several other types of businesses subleasing from the main store, including:

Nail salons;
Ophthalmology services;
Cell phone repair shops;
Food vendors.

Other reasons a business may desire to sublease or to seek out a sublease may include:

Lower rates: The rate for a commercial sublease, especially a short-term lease, may be lower than lease rates;
Flat rental payment structure: Commercial leases often have flat rental payment structures that have no unusual surprises;
Fewer obligations: In commercial subleases, the sublessees typically have limited obligations to repair and maintain common areas;
Better bargaining position: A sublease may put the sublessee in an advantageous position when it comes to negotiating a new lease with the landlord directly, for example, when the main lease ends;
Less complex lease: Commercial subleases are usually not as complex as commercial leases; or
Additional income: One of the most common reasons for subleasing is to gain an additional source of rental income in order to make or lessen lease payments.

There are several advantages for subletting or seeking out a sublease agreement for a company. There are, however, also disadvantages for subletting a lease.

For example, being responsible for any late or missed payments from the sublessor that may cause the original renter to default on their lease with the landlord. Additionally, as noted above, as the sublessor, the business is responsible for maintaining the location and completing repairs.

If, however, the lease provides that the landlord has a duty to make repairs , then as the sublessor, the original renter will act as the intermediary to ensure that the repairs are done in a timely manner, meaning that, as a sublessee, repairs may be delayed.

A sublease of a commercial lease occurs when a commercial tenant transfers all or part of their interest in the leased property to another party prior to the expiration of the lease. The original tenant will remain liable for any damages in the event the lease is breached.

The right of a commercial tenant to assign or sublease a commercial lease is determined by the terms provided in the lease. The terms of a lease may expressly prohibit a tenant from assigning or subletting.

The terms of a lease may also allow a tenant to assign or sublease only with the consent of the landlord or if certain conditions are met. Certain jurisdictions also prohibit landlords from unreasonably withholding consent.

If there is not a provision in the lease stating otherwise, commercial leases can generally be assigned or subleased. It is important to note that the tenant’s ability to assign or sublease a commercial lease can be negotiated at the time the lease is signed or renewed.

Numerous commercial leases will contain express provisions stating that the landlord is required to consent to the assignment or sublease of the property if it is reasonable, known as an approval clause. The purpose of these clauses is to protect tenants against liability for damages or risk of forfeiture if the landlord’s consent is improperly withheld.

In general, there must be reasonable commercial objections for a landlord to withhold consent.

Landlords are permitted to withhold consent for an assignment or sublease based on several factors, including:

The subtenant’s suitability for the particular locale;
The subtenant’s suitability for the particular building;
Legality of the proposed use;
Nature of the occupancy and whether the proposed use is materially different from the use specified in the original lease; and
The original tenant’s failure to pay rent.

Commercial real estate can be very complex. In many cases, commercial leases are drafted by attorneys. If you are a landlord or a commercial tenant who has any issues, questions, or concerns related to a commercial sublease or assignment, it may be helpful to consult with a real estate attorney .

Your lawyer will be able to advise you of your rights and obligations under the lease. In addition, your attorney can represent you in court if necessary.

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assignments basic law

Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

Founded in 1939, our law firm combines the ability to represent clients in domestic or international matters with the personal interaction with clients that is traditional to a long established law firm.

What Is a Commercial Lease Assignment?

A commercial lease assignment happens when a tenant transfers all of the rights to a lease to someone else but remains liable for rent payments to the landlord. 4 min read updated on February 01, 2023

A commercial lease assignment happens when a tenant transfers all of his or her rights to a lease to someone else but remains liable for rent payments to the landlord.

A Tenant's Right to Assign or Sublet a Commercial Lease

Due to difficult financial times, businesses have been forced to downsize.

Often these businesses find themselves in commercial leases for more space than they need. In order to save money, these businesses will consider a commercial lease assignment or subletting the extra space. Both options have pros and cons, but the first step is examining the current lease in order to figure out whether there are any restrictions on assignment or subletting.

Commercial leases are contracts and, as such, are subject to their terms. Thus, the language of the lease will dictate whether or not the tenant is able to assign the lease to someone else or sublet the space.

If a lease doesn't contain any rules against assignment or transfer, then a tenant is allowed to assign or sublet. Unless your lease says otherwise, you do not have to get your landlord's consent to sublet or assign your lease.

Businesses might sublet or assign office or retail space to help with costs or to avoid a penalty if they need to end their commercial lease earlier than their contract stipulates. Sometimes, this may be their only option, regardless of their financial position.

Legal Considerations

When considering your options, you should be aware of the legal differences between assignment and subletting.

There are also several legal and practical aspects to consider when negotiating an assignment or sublease. This includes any legal consequences the tenant may face if the landlord ends the lease.

It is in your best interest to consult an experienced real estate attorney so that you can protect yourself and understand all of your options . Whether you sublet or assign your lease, you will need to find a new tenant. However, there are still differences between the two.

Before subletting or assigning your lease, you should review your lease agreement and talk about your options with your landlord.

It is also important to check your state's laws regarding subleases and assignment because some states require the landlord's consent in order to complete this transfer.

What Happens If I Breach the Lease by Subleasing or Assignment?

Breaching your lease can carry severe consequences, including the following:

Paying damages to your landlord
Termination of the lease agreement

What Is an Assignment of Lease?

A lease assignment happens when the tenant transfers all of his or her rights and interest in a lease to another party. Although the new tenant takes on these rights and interests, the assigning tenant is still liable to the landlord.

If the new tenant breaches the lease, the landlord can enforce the terms of the lease on both the new tenant and old tenant. The former, or assigning, tenant is still liable to the landlord according to the original commercial lease agreement.

A lease assignment can also be called:

A lease transfer
Assignment agreement
Assignment of lease
Lease assignment

Sometimes, a tenant has to leave before their lease is up. In this case, they might be allowed to assign, or transfer, their lease to a new tenant. The old tenant, or assignor, transfers his rights to a new tenant, the assignee.

You can assign both residential and commercial leases. In an assignment, the assignor transfers their lease to a new tenant using a lease assignment agreement. The new tenant then takes the place of the assignor, but the former tenant is still responsible for missed rent checks and damages.

What Does a Lease Assignment Agreement Contain?

A lease assignment agreement is a document that transfers a commercial or residential lease from one party to another. When a tenant needs to break a lease and has a new tenant lined up, they can use a lease assignment agreement.

A lease assignment agreement contains basic information:

Identifying information
Assignment start date
Landlord name

Lease assignment agreements are pretty simple because they reference the original lease. This means that all of the terms in the old lease are automatically included in the new agreement.

A lease assignment agreement transfers the entire lease, whereas sublease agreement does not. Assignments transfer the whole lease from one tenant to another.

The most important thing to know about lease assignment agreements is that they usually need the landlord's permission. If you're considering assigning your lease, you should make absolutely sure that your landlord agrees to the arrangement because you are transferring your lease to a new party.

If you need help with commercial lease assignment, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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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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Leasehold Mortgage vs. Assignment of Lease

1. Foreclosure Right of Redemption & Tenant's Rights in Maryland
2. How to Get Out of a Timeshare That Has a Mortgage Attached
3. What Does "Encumbrances" Mean in Real Estate?

Although leasehold mortgages and assignments of lease are both legal processes relating to property leases, they’re actually very different. A leasehold mortgage is a loan placed on a piece of leased land, usually used by developers for construction projects. An assignment of lease transfers an unexpired lease to someone else, who then takes over the rental payments.

A leasehold mortgage is a loan taken out on a piece of property that is owned by someone else, while an assignment of lease transfers the lease on a property to someone else.

Mortgage Leases and Leasehold Mortgages

Generally, when someone wants to purchase a property, that property is financed using a mortgage. For commercial property buyers, though, mortgage lending isn’t quite as straightforward. There are various types of commercial mortgages, and one of those is a leasehold mortgage .

With a leasehold mortgage, a commercial real estate investor can obtain financing for a building based on the land that person is leasing. Common in real estate development, this type of mortgage gives the developer the funds necessary to put a building on land that is leased, based on the assumption that once construction is finished it will begin generating the income necessary to make it worth it for the property owner.

Assignment of Lease

If you own a home and want to get rid of it, you must either bring in a renter or sell it to someone else. With a lease, though, you can turn over the lease to someone else, provided your landlord is OK with it. This is done through the use of an assignment of lease , which gets you out of an unexpired lease by letting you transfer it to someone else.

Unlike a leasehold mortgage, an assignment of lease is not only a process, but it’s also a title document that both parties must read and sign. This type of arrangement comes in handy if your business fails to become profitable and must close, yet you have a remaining lease on your space. It may also be an option if your business grows so quickly that you need a larger space and therefore must move before your lease expires.

Leasehold Mortgage Versus Lease Assignment

Although leasehold mortgages and lease assignments are different by nature, they also have something in common. They refer to various activities that can take place based on a lease . While leasehold mortgage financing requires taking out a loan, though, a lease assignment is merely transferring an agreement from one party to another.

One similarity between the two is that they both refer to leases, which means property owners may have a stake in the outcome. With a leasehold mortgage, the borrower must have permission to take out such a mortgage – a permission that is usually conveyed as part of a commercial ground lease . With an assignment of lease, the landlord must sign off on the transfer before it can be finalized.

Approvals for Leasehold Mortgages

Getting a leasehold mortgage isn’t just a matter of heading to a bank and asking. The borrower will need to be able to prove that he has the right to request this type of loan . Usually, this starts by looking at the lease and finding the section specific to mortgages on the leased property.

Most commercial ground leases will state that the lessee must provide written notice to the lessor of an impending request to obtain financing for the property. That notice should include contact information for the potential mortgage lender, and the lender should verify that the lease allows a tenant to borrow money from the type of lending institution the borrower has approached.

Approvals for Lease Assignments

A tenant can’t simply turn a lease over to someone else. Obviously, the landlord will have a say in the situation and likely will want to clear the new tenant before approving the transfer. The landlord’s permission is usually granted in the form of a legal document known as the License to Assign .

The landlord’s approval may not be the only thing you’ll need to secure before you can complete an assignment of lease. On your lease agreement, check the section called Alienation , which should detail circumstances in which your landlord can refuse to allow you to assign your lease to someone else. If you fail to go through the landlord approval process, your landlord could later revoke the lease assignment.

Defining a Ground Lease

Before you can establish a mortgage leasehold interest in a property, you first must have the rights to lease the space. Leasehold mortgages are most commonly seen with ground leases, which are commercial leases issued to a tenant who wants to develop property on a lot. The property owner permits the developer to erect a building on that land with the understanding that once development is complete, the land and all the improvements revert back to the owner of that land.

Property owners agree to leasehold mortgages because once development is complete, the owner can then sell the property at a profit. It’s a small price to pay to allow someone to lease the property during the construction phase in order to recoup some money at the end of it. However, it can be risky for the property owner if the person leasing the property stops paying the lease or the leasehold mortgage payment and there’s no one around to pay the rent.

Leasehold Mortgage Foreclosures

If you own a property and stop paying your mortgage, the bank will eventually foreclose. But if you stop making payments on your leasehold mortgage, things get a little more complicated. Someone else owns that property, and that person expects a lease to continue to be paid even if the loan goes bad.

A lender can foreclose on the borrower’s interest in a property , but that same lender likely won’t want to continue to make the rent on that property, even if the owner expects it. Since commercial leases can sometimes run for multiple years, this obligation is something a lender definitely needs to think about. It’s important that agreements be written in a way that the lender doesn’t expressly assume the lease in the event of a foreclosure.

Assignment of Lease Versus Subletting

If you think assignment of lease sounds a lot like subletting , you’re right. But there’s a very specific difference between the two. With an assignment of lease, you are stepping out of the situation and setting up a direct relationship between the new tenant and your previous landlord. With subletting, your relationship with your landlord continues, but you introduce a new relationship between you and a third-party tenant who now pays the rent.

While both processes require legal documentation, subletting puts the agreement between the original tenant and the person who will be staying in the rented property. As with an assignment of lease, though, you’ll need to make sure you have your landlord’s approval before the new person moves in. But neither assignment of lease nor subletting require that you involve a lender, as in the case of leasehold mortgage financing.

Liabilities of Assignments of Lease

As with any type of mortgage lease, when you have a lease on a property, the liability falls on you if you fail to make mortgage payments or you damage the building in some way. When you shift the lease via a legal document, though, this liability goes with it. This only applies if the landlord releases that liability , though, so it’s important to make sure that’s part of your documentation.

Although you may be able to escape liability for what the transferee does to the rental space, there’s one area where liability will probably be unavoidable. If your transferee exits the lease before your original term is up, your landlord will probably come right back to you to fix the issues. Your Assignment of Lease document should detail what will happen in this event, including your right to reoccupy the premises if you choose.

Benefits of a Ground Lease

You may have never heard of these ground leases before, but they’ve definitely happened all around you. Large chain retailers like Whole Foods and Starbucks use ground leases to build new locations on already-owned land, often in situations where they rest alongside other shops and restaurants in a retail strip.

Businesses often choose ground leases with leaseholder mortgages because they can access a property without having to make a considerable down payment. They simply need to obtain leasehold mortgage financing and they can start building. For larger corporations, this is as much a benefit as a slowly growing small business since it keeps capital free for them to spend on other expenses, such as building costs.

Subordinated Ground Lease

When a landlord agrees to a ground lease, often that means agreeing to take a subordinated position if the tenant defaults on her leasehold mortgage. This means your landlord is agreeing that if you don’t make your payments, the property itself acts as collateral. As a result, the landlord may increase rent payments for tenants in order to compensate for that risk.

An unsubordinated ground lease, on the other hand, accounts for any mortgage lease issues by stating that if you don’t pay your rent or your mortgage payments, the property owner takes a top role legally. You may have a tougher time getting a bank to agree to take a lower priority than the landlord and because of this inconvenience, generally, you’ll find the rent is lower to compensate for it.

Leasehold Improvements Versus Leasehold Mortgages

Another term that can be confused with leasehold mortgages is something called leasehold improvements , which can be done without the loan and subsequent mortgage leasehold interest involved in a leasehold mortgage. A leasehold improvement simply refers to adjustments a tenant makes to a property that apply specifically to the internal contents , such as paint, new flooring or upgraded lighting fixtures. This is different from the building improvements that are handled by a landlord and apply specifically to common areas, elevators and other nonrentable areas of a building.

Unlike leasehold mortgages, leasehold improvements don’t involve taking out a loan . The owner may provide a particular amount of money for such improvements, called a Tenant Improvement Allowance. Landlords may also be willing to discount rent or provide money through something called a Building Standard Allowance. In other cases, the landlord himself pays for the improvements in something called a Turnkey Job, which is generally done prior to move-in but can be done while you’re occupying the space, with sufficient notice each time before entering the unit.

Liabilities of Leasehold Mortgages

Before taking a mortgage leasehold interest stake in a property, a lessee will also want to reduce his own liability. If there is a casualty during the time this loan is in place, the developer may find it difficult to get access to the insurance proceeds necessary to repair any damages that were suffered. For that reason, many property owners will employ an escrow agent to hold the funds so that they’re guaranteed to only be used for damage-related costs.

If there’s an injury or another incident on your property during the time you hold a lease, local laws will determine where responsibility falls. Landlord-tenant law covers such a situation, and often landlords have insurance to protect against these types of claims. Although you, as the developer, have a responsibility to keep your worksite safe, the landlord is responsible for ensuring common areas are maintained and proper signage is posted when a hazard exists on site.

USLegal: Leasehold Mortgage Law and Legal Definition
JDSupra: When a Lender Forecloses on a Leasehold Interest
White and Williams LLP: Leasehold Financing: Key Issues for Mortgage Lenders
What Is A Ground Lease? | Massimo CRE Coach
LawDepot: What Type of Leases Do You Have?
Sherin and Lodgen: Why a Leasehold Mortgage?
FindLaw: Liability for Tenant Injuries and Insurance for Landlords

Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. She spent nearly a year as a ghostwriter for a credit card processing service and has ghostwritten about finance for numerous marketing firms and entrepreneurs. Her work has appeared on The Motley Fool, MoneyGeek, Ecommerce Insiders, GoBankingRates, and ThriveBy30.

Foreclosure right of redemption & tenant's rights in maryland, how to get out of a timeshare that has a mortgage attached, what does "encumbrances" mean in real estate, do insurance rates go up if you rent part of your house, can a joint owner mortgage a property without consent of the other owner, mortgage contingency vs. commitment, can a co-owner of real property rent without the others permission, equity vs. refinance tips, tax implications of owning a residential rental property, how to sell an easement, what is a leasehold estate, what is an assignment of trust deed.

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Assigning Your Lease

When you assign a lease, you move out permanently and a new tenant moves in for the remainder of the lease term. An assignment of a lease differs from a sublet. With a sublet, the original tenant gives up an apartment temporarily. With an assignment, the original tenant gives up the apartment permanently . 26

The person to whom you assign your lease is referred to as the "assignee." Both you and the assignee remain responsible to the landlord for the obligations contained in the lease. 27 As the original tenant, you can escape such responsibilities only if the landlord clearly releases you from them. 28

To be valid, an assignment must be in writing. 29 While your lease may say that you need the landlord's permission to assign, many leases also state that the landlord cannot unreasonably deny her consent. If this is the case, the landlord cannot unreasonably deny you permission to assign. 30

Where a lease does not specifically prohibit a landlord from unreasonably denying consent, she can deny her consent for any reason. If a lease forbids assignment, you assign anyway, and the landlord objects to it, the landlord can terminate your lease. 31 If you then move out, the landlord will have a duty to make reasonable efforts to find a new tenant. If the landlord attempts to sue you for any rent or costs she has incurred because of your breach of the lease, you can argue that you had a person willing to take over the lease who could have paid the landlord the rent. Also, even if you do not get the landlord's permission before assigning the lease, if the landlord knowingly accepts rent from the assignee, then she is probably required to accept the assignment. 32

If you are moving out, you should also arrange with the landlord to get your security deposit back if you paid one. See Chapter 3: Security Deposits and Last Month's Rent .

26 . Marcelle, Inc. v. Sol & S. Marcus Co. , 274 Mass. 469, 472 (1931) .

27 . Dwyer v. Lavigne , 319 Mass. 26 (1946) , cases cited therein, and Carlton Chambers Co. v. Trask , 261 Mass. 267 (1927) .

28 . Walker v. Rednalloh Co. , 299 Mass. 591 (1938) ; London v. Grossman , 21 Mass. App. Ct., Dec. 91 (1961); and General Properties, Inc. v. Gallo , 19 Mass. App. Ct., Dec. 188 (1960).

29 . G.L. c. 183, §3 .

30 . If a court finds that the landlord did unreasonably deny consent to the assignment, the original tenant is not liable for the rent. Adams, Harkness & Hill, Inc., v. Northeast Realty Corp. , 361 Mass. 552, 557 (1972) . However, where a lease does not specifically prohibit a landlord from unreasonably denying consent before assigning or subleasing, the landlord is free to deny consent for any reason. Slavin v. Rent Control Board of Brookline , 406 Mass. 458, 463 (1990) .

31 . Healthco, Inc. v. E & S Assocs. , 400 Mass. 700, 702 (1987) .

32 . Maybury Shoe Co. v. Izenstatt , 320 Mass. 397 (1946) .

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What is the Difference Between Subletting and Assigning a Lease?

By Lianne Tan Lawyer

Updated on February 5, 2020 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

What Is a Lease Assignment?

What is subleasing, is assignment or sublease more appropriate, key takeaways.

As a tenant, you might find yourself in a situation where you need to get out of the lease. Here, you can choose to either:

assign the lease; or
sublet the premises.

Both assignment and subletting will require your landlord’s consent before you do so. While there are some similarities between both options, there are key differences between the subletting and assigning a lease. This article explains the crucial distinctions between assignment and subletting and outlines when each would be appropriate.

Assigning a lease is the process of transferring all your obligations as a tenant under a lease to a new tenant. The new tenant will then be responsible for:

paying rent;
paying outgoings; and
any repair and maintenance obligations.

The party that you assign the lease to will become the tenant under the lease.

However, it is important to understand that an assignment does not release you from your legal responsibilities under the lease. This means that you are still responsible to the landlord if the new tenant breaches the lease.

For example, if the new tenant does not pay their rent, you will be legally responsible for paying it.

There are some exceptions to this, including:

where your lease includes a clause releasing you from all your obligations under the lease on an assignment; or
if you are a retail tenant and the relevant state or territory-based laws outline that you will no longer be legally responsible on an assignment.

If you wish to be released from your legal responsibilities after you assign your lease, you will need to negotiate this with your landlord.

Assigning a lease will often require that you meet a set process and conditions, including:

obtaining your landlord’s consent; and
proving that the new tenant will be able to meet their obligations under the lease.

When finalised, all parties should sign a deed of assignment which formalises the arrangement.

Subletting your premises allows a new tenant to take over either:

part of your premises; or
all of your premises.

Depending on how much of your premises you have sublet, the third party will also take over some of your legal obligations under the lease.

For example, if you run a teaching centre at your premises, you might sublet a classroom to a tutoring business. The tutoring business will then pay part of your rent and may be responsible for maintaining the classroom that you have sublet out.

If you sublet your premises, you are still legally responsible under the lease. This means that if your subtenant does not meet their obligations under the lease, you will be responsible for rectifying any breaches.

For example, if your subtenant fails to pay their rent, you must still pay the full rent to the landlord. If you do not, you will be in breach of the lease.

It is important to remember that if you sublet your premises, you effectively become the sublandlord under your sublease. Generally, a sublease will include and incorporate the terms of the original lease you signed with the landlord as well. In this case, you should take care to exclude certain obligations of your landlord, like to insure the building.

If you are subletting the premises to share the financial cost of the lease, you should pay attention to the timing of the subtenant’s obligations. This will ensure that the subtenant will pay you their portion of the rent before you are due to pay the landlord.

Like an assignment, subletting will require you to follow a certain procedure and meet certain conditions. You will also need to obtain the landlord’s consent before you proceed. To formalise the arrangement, both you and the subtenant must sign a sublease.

Whether an assignment or a sublease is more appropriate for you will depend on your intention for your business.

A sublease may be more appropriate if you:

intend to downsize your business;
wish to share part of the costs under your lease; or
have additional space in the premises that you have no use for.

On the other hand, if you intend to sell your business or end your lease early, an assignment will be more appropriate.

While both assigning and subletting your premises allows you to pass on part or all of your premises to another party, they are two distinct types of dealings. An assignment passes on the whole of the property to a third party and may allow you to be released from legal responsibility. In comparison, a sublet allows you to offload part of your lease obligations to another party, while you still remain legally responsible under the lease. If you have any questions about assigning or subletting a lease, contact LegalVision’s leasing lawyers on 1300 544 755 or fill out the form on this page.

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Sublet and Assignment Clauses In California Commercial Leases

There are a myriad of provisions in commercial leases that benefit either the lessor, lessee, or, in certain circumstances, both. As the provisions contained in a commercial lease can drastically impact the rights and obligations of the parties, it is of particular importance that each party effectively negotiate its position in order to obtain the most favorable terms possible. Sublet and assignment clauses are important provisions that should be considered carefully by both landlords and tenants when negotiating the terms of a commercial lease.

Sublease and assignment clauses accomplish similar results. They allow tenants to transfer their lease obligations to another individual or entity. However, each clause operates in a different way. With a sublease, a tenant transfers part of the leased property to another tenant while remaining on the premises, or transfers the entire property to another tenant for a period of time during the term of the lease. An assignment occurs when a tenant transfers all of its rights and obligations under the term of the lease to another individual or entity for the entire remaining term of the lease. Essentially, the new tenant takes the place of the old tenant and releases the old tenant of its obligations to the landlord. The extent of the obligations released depends on the terms of the assignment clause.

Assignment and Subletting Clauses

Consent Conditions : Most assignment and subletting clauses in commercial leases require landlord consent. Generally, landlord’s will insist on a consent requirement in order to retain the ability to properly “vet” a sublessor or assignee. When negotiating these provisions, the landlord and tenant should be careful to clarify under what circumstances the landlord may withhold consent. Often, landlords will be willing to include language indicating that the landlord “will not unreasonably withhold consent”.

Cost of Sublet/Assignment : Some clauses impose an application fee on tenants in order for the landlord to review a sublease or assignment request. The clause may also require that the tenant pay any attorney fees or other costs associated with the preparation of a sublease/assignment agreement. In some cases, the clause may allow the landlord to increase the rental rate upon sublease or assignment. Such clauses tend to discourage potential sublessors and assignees.

Continuing Obligations : Most assignment clauses also require that the old tenant remain liable to the landlord in the event that the sublessor or assignee default for any reason. This means that, should the sublessor or assignee fail to pay rent or default for any reason, the assignor (prior tenant) becomes liable for the breach. From a landlord’s perspective, the original lease is entered into after significant scrutiny. As such, landlords typically want to retain as much control as possible. By insisting on a tenant’s continuing liability, they afford themselves an additional layer of protection. However, in cases where tenants anticipate selling their business prior to the end of the lease term, it is advisable to negotiate with landlords for more liberal assignment language. Depending on the parties relative bargaining positions , landlords may be willing to include a novation provision wherein the assigning tenant will be absolved from any obligations under the lease. More likely, however, tenants will have a better chance seeking novation after presenting landlord with a viable assignee at the time an assignment is requested.

Recapture Clauses : Recapture clauses provide landlords with maximum advantage. Generally, a recapture clause allows landlords to terminate the lease merely because a tenant requests a sublease and/or assignment. In essence, where a commercial lease includes a recapture clause tenants are effectively precluded from assigning the lease. Otherwise, the risk of termination is too great. Recapture clauses allow landlords to decide whether they wish to withhold consent to an assignment, consent to the assignment or to terminate the lease and, at least in theory, approach the proposed assignee to negotiate a new lease independently of the assignor. Tenants should always try and negotiate for the removal of recapture clauses. For landlords desirous of retaining maximum control over who their tenants are, recapture clauses are beneficial. Partnership and Corporate Concerns : Assignment clauses are also generally triggered where a corporation, limited liability company or partnership transfers more than twenty-five percent (25%) of its ownership to a third party. Often, unsuspecting tenants trigger assignment provisions when they decide to bring on additional investors. Ideally, tenants should negotiate for a higher percentage such as fifty percent (50%). Either way, it’s important for tenants to be aware of these provisions to avoid breaching the assignment provisions in their lease. For instance, if a corporation sells 30% of its shares and the triggering percentage is 25%, it will be in violation of the lease assignment provisions if it does not obtain the landlord’s consent.

To ensure maximum legal protections, it is important for landlords and tenants to consult with an attorney before and during the negotiation of a commercial lease. If you have questions about commercial leasing, contact a San Diego business attorney today.

Assignment of Contract

Jump to Section

What is an assignment of contract.

An assignment of contract is a legal term that describes the process that occurs when the original party (assignor) transfers their rights and obligations under their contract to a third party (assignee). When an assignment of contract happens, the original party is relieved of their contractual duties, and their role is replaced by the approved incoming party.

How Does Assignment of Contract Work?

An assignment of contract is simpler than you might think.

The process starts with an existing contract party who wishes to transfer their contractual obligations to a new party.

When this occurs, the existing contract party must first confirm that an assignment of contract is permissible under the legally binding agreement . Some contracts prohibit assignments of contract altogether, and some require the other parties of the agreement to agree to the transfer. However, the general rule is that contracts are freely assignable unless there is an explicit provision that says otherwise.

In other cases, some contracts allow an assignment of contract without any formal notification to other contract parties. If this is the case, once the existing contract party decides to reassign his duties, he must create a “Letter of Assignment ” to notify any other contract signers of the change.

The Letter of Assignment must include details about who is to take over the contractual obligations of the exiting party and when the transfer will take place. If the assignment is valid, the assignor is not required to obtain the consent or signature of the other parties to the original contract for the valid assignment to take place.

Check out this article to learn more about how assigning a contract works.

Contract Assignment Examples

Contract assignments are great tools for contract parties to use when they wish to transfer their commitments to a third party. Here are some examples of contract assignments to help you better understand them:

Anna signs a contract with a local trash company that entitles her to have her trash picked up twice a week. A year later, the trash company transferred her contract to a new trash service provider. This contract assignment effectively makes Anna’s contract now with the new service provider.

Hasina enters a contract with a national phone company for cell phone service. The company goes into bankruptcy and needs to close its doors but decides to transfer all current contracts to another provider who agrees to honor the same rates and level of service. The contract assignment is completed, and Hasina now has a contract with the new phone company as a result.

Here is an article where you can find out more about contract assignments.

Assignment of Contract in Real Estate

Assignment of contract is also used in real estate to make money without going the well-known routes of buying and flipping houses. When real estate LLC investors use an assignment of contract, they can make money off properties without ever actually buying them by instead opting to transfer real estate contracts .

This process is called real estate wholesaling.

Real Estate Wholesaling

Real estate wholesaling consists of locating deals on houses that you don’t plan to buy but instead plan to enter a contract to reassign the house to another buyer and pocket the profit.

The process is simple: real estate wholesalers negotiate purchase contracts with sellers. Then, they present these contracts to buyers who pay them an assignment fee for transferring the contract.

This process works because a real estate purchase agreement does not come with the obligation to buy a property. Instead, it sets forth certain purchasing parameters that must be fulfilled by the buyer of the property. In a nutshell, whoever signs the purchase contract has the right to buy the property, but those rights can usually be transferred by means of an assignment of contract.

This means that as long as the buyer who’s involved in the assignment of contract agrees with the purchasing terms, they can legally take over the contract.

But how do real estate wholesalers find these properties?

It is easier than you might think. Here are a few examples of ways that wholesalers find cheap houses to turn a profit on:

Direct mailers
Place newspaper ads
Make posts in online forums
Social media posts

The key to finding the perfect home for an assignment of contract is to locate sellers that are looking to get rid of their properties quickly. This might be a family who is looking to relocate for a job opportunity or someone who needs to make repairs on a home but can’t afford it. Either way, the quicker the wholesaler can close the deal, the better.

Once a property is located, wholesalers immediately go to work getting the details ironed out about how the sale will work. Transparency is key when it comes to wholesaling. This means that when a wholesaler intends to use an assignment of contract to transfer the rights to another person, they are always upfront about during the preliminary phases of the sale.

In addition to this practice just being good business, it makes sure the process goes as smoothly as possible later down the line. Wholesalers are clear in their intent and make sure buyers know that the contract could be transferred to another buyer before the closing date arrives.

After their offer is accepted and warranties are determined, wholesalers move to complete a title search . Title searches ensure that sellers have the right to enter into a purchase agreement on the property. They do this by searching for any outstanding tax payments, liens , or other roadblocks that could prevent the sale from going through.

Wholesalers also often work with experienced real estate lawyers who ensure that all of the legal paperwork is forthcoming and will stand up in court. Lawyers can also assist in the contract negotiation process if needed but often don’t come in until the final stages.

If the title search comes back clear and the real estate lawyer gives the green light, the wholesaler will immediately move to locate an entity to transfer the rights to buy.

One of the most attractive advantages of real estate wholesaling is that very little money is needed to get started. The process of finding a seller, negotiating a price, and performing a title search is an extremely cheap process that almost anyone can do.

On the other hand, it is not always a positive experience. It can be hard for wholesalers to find sellers who will agree to sell their homes for less than the market value. Even when they do, there is always a chance that the transferred buyer will back out of the sale, which leaves wholesalers obligated to either purchase the property themselves or scramble to find a new person to complete an assignment of contract with.

Learn more about assignment of contract in real estate by checking out this article .

Who Handles Assignment of Contract?

The best person to handle an assignment of contract is an attorney. Since these are detailed legal documents that deal with thousands of dollars, it is never a bad idea to have a professional on your side. If you need help with an assignment of contract or signing a business contract , post a project on ContractsCounsel. There, you can connect with attorneys who know everything there is to know about assignment of contract amendment and can walk you through the whole process.

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Assignment of lease

How it relates to the law in british columbia canada.

In British Columbia, an assignment of lease is a legal document that transfers the rights and obligations of a lease from one party to another. The assignment must be in writing and signed by both the assignor (the original tenant) and the assignee (the new tenant). The landlord must also give their consent to the assignment. Under the British Columbia Residential Tenancy Act, a landlord cannot unreasonably withhold their consent to an assignment of lease. However, the landlord may require the new tenant to meet certain criteria, such as having a good credit score or a stable income. If the landlord unreasonably withholds their consent to an assignment, the original tenant may apply to the Residential Tenancy Branch for dispute resolution. The Branch may order the landlord to consent to the assignment or may terminate the tenancy agreement altogether. Overall, an assignment of lease is an important legal document in British Columbia that protects the rights of both tenants and landlords.

Impact on Business Owners in British Columbia

The assignment of lease impacts small businesses in British Columbia by allowing them to transfer their lease obligations to another party with the landlord's consent. This can be beneficial for small businesses that need to relocate or transfer their lease to another party. However, the landlord may require the new tenant to meet certain criteria, which could be a challenge for small businesses with limited resources. Additionally, if the landlord unreasonably withholds their consent to an assignment, small businesses may need to seek dispute resolution through the Residential Tenancy Branch, which could be time-consuming and costly. Overall, small businesses in British Columbia need to carefully review and negotiate the terms of an assignment of lease agreement to ensure that their rights and obligations are protected.

Potential Legal Risks, Legal Challenges, or Legal Pitfalls for Businesses in British Columbia

As a small business owner in British Columbia, it is important to be aware of the potential legal risks and challenges associated with the assignment of lease. This refers to the transfer of a lease from one tenant to another, and can occur when a business is sold or when a tenant wishes to sublet their space. One potential legal risk is that the landlord may not approve the assignment of lease. This can occur if the new tenant does not meet the landlord's requirements or if the landlord wishes to terminate the lease altogether. To avoid this, it is important to carefully review the lease agreement and any requirements for assignment before entering into any agreements. Another potential legal challenge is that the new tenant may not be able to fulfill the obligations of the lease, such as paying rent or maintaining the property. This can result in legal action being taken against both the new and old tenants. To mitigate this risk, it is important to thoroughly vet any potential new tenants and ensure that they have the financial resources and experience necessary to fulfill the lease obligations. Finally, it is important to ensure that all necessary legal documentation is in place when assigning a lease. This includes a written agreement between the old and new tenants, as well as approval from the landlord. Failure to properly document the assignment of lease can result in legal disputes and financial penalties. In summary, small business owners in British Columbia should be aware of the potential legal risks and challenges associated with the assignment of lease. To avoid or mitigate these issues, it is important to carefully review the lease agreement, vet potential new tenants, and ensure that all necessary legal documentation is in place. Seeking the advice of a legal professional can also be helpful in navigating this process.

BC Commercial Tenancy Act

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Assignment Of Lease: A Brief Look

What is an Assignment? Simply put, it is a transfer of an existing lease by the current tenant to a new tenant with the consent of the landlord.

Let’s see how this works in practice.

To begin with, there should be an existing lease between a landlord and tenant. And the Assignee. The Assignee is the crucial factor that makes Assignment work. He or it is the newcomer to whom the existing lease will be assigned or passed or transferred to. Why does an assignment take place?

It happens for several reasons. Existing tenant want to leave for reasons, usually due to business not doing well, Age, retirement are just a few. Or, someone new comes into the area and wants to take over the lease for their prospective venture. This often is the case.

In legal jargon, the old tenant who wants to get out of the lease is called the Assignor and the new person who wants to get the remainder of the lease is called an Assignee. The landlord remains the same.

What happens next?

1. In practice, the Assignor will instruct his solicitors that he wants to assign the lease. 2. The Assignee will instruct his own solicitors that he wants to buy that lease. 3. The Assignor’s solicitors will contact the landlord’s solicitors about the proposed assignment, asking the landlord’s consent for the transaction to take place. As can be seen there will be three different solicitors involved.

Who pays the legal fees?

The parties will foot their own legal bill except for the Landlord. It’s common practice that the Assignee pays the landlord’s legal fees in addition to his own.

What does the Landlord’s solicitor do?

The solicitor will take instructions from his client as to whether the landlord is willing to give consent for the proposed assignment. And, before such consent can be given, the solicitor will ask the Assignor to provide satisfactory references for the Assignee. These are usually bank and trade references confirming that the proposed assignee is solvent and capable of paying the rent on the lease.

Upon satisfactory receipt of references, the landlord’s solicitors will draft the following documents:

1. Licence to assign 2. Rent deposit deed 3. Authorised guarantee agreement

These will be sent to the Assignor who in turn will send them to the Assignee’s solictors. These are legally binding contractual documents and need to be thoroughly perused before the parties put their signatures on them.

Briefly let’s look at what the above three documents are:

Licence to Assign is the document that enables the current tenant (Assignor) to transfer the lease to the Assignee (incoming tenant) with the landlord’s permission (consent). All three parties will sign this document.

A landlord usually requires a rent deposit as a precondition to providing its consent to the assignment of a lease. A rent deposit is a sum of money provided by the Assignee (who will become the new tenant) to the landlord as security for payment of the rent and performance of the tenant’s covenants in the lease. A rent deposit is attractive to landlords because it is an immediately accessible source of money that can be withdrawn as soon as the tenant is in breach of a relevant covenant in the lease.

An Authorised Guarantee Agreement is a legal document where the outgoing tenant (Assignor) must guarantee the performance, by the assignee, of the covenants from which the tenant has been released. In the event that the Assignee is in breach of any of the Covenants, the outgoing tenant agrees to bear the burden. This is a very important piece of legal document that merits its own article.

All leases are different. And it is always best to look at the requirements of the lease and understand what is needed before you can assign your lease.

If you would like to talk more about this topic, contact Krish Thirugnanamoorthy on 0118 947 8638 for a free quotation or email [email protected]

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What is an Assignment of a lease?

14 Feb -->What is an Assignment of a lease?

When you buy or are granted a lease, you take ownership and possession of the property for a fixed period of time, which is known as the term of the lease. You might take a ten-year lease, knowing that you might only want the property for a few years, and then want to move on as your business grows, but the landlord won’t grant a lease for a shorter period. This might not put you off taking the lease, as you can sell the remainder of the lease on, under certain criteria. This is known as assigning a lease , and we’ve set out below more detail of how this works.

So, in legal terms, the assignment of a lease is a process whereby all rights that have previously been possessed over a property are transferred from one party to another. It’s not unlike selling a house, but there’s a bit more paperwork involved! In particular, the outgoing lessee, the new lessee, and the landlord will all need to enter into a document known as a licence to assign .

There are various requirements that need to be satisfied before the current lessee can be released from the lease and the obligations under the lease are transferred to the new lessee under the Licence. The lease will usually set out what the Landlord’s criteria is before an assignment is possible, but we’ve set out below the most common requirements.

What criteria must be met?

Most of the time this would require similar checks to the ones carried out on the original tenant when the lease was first granted. These might include

Financial checks. The landlord will want to know that the new tenant is going to be able to pay the rent. If not, they may ask for personal guarantees, or make the outgoing tenant continue to have some liability.
Although a landlord’s main requirement is that their tenants can pay the rent, they may also want to know that they are complaint people , not likely to break the terms of the lease, cause a disturbance or upset other tenants. The landlord may, for example, ask for references from a previous landlord as to the tenant’s good character.
Restrictions on activity. The landlord may restrict what business a new tenant can engage in. For example, if the landlord is a shopping centre, and the outgoing tenant sells men’s’ clothes, they’ll probably have no objection in the new tenant selling men’s clothes, but they might object to the premises being taken over by a business selling women’s clothes, if they feel they already have enough tenants in that line of business. Or they might only want tenants who sell high-end products.

Duties placed on the Landlord

Most modern leases will include a requirement that any consents required by the landlord must not be unreasonably withheld or delayed. If the tenant requests a licence to assign a lease, which the landlord either refuses without good reason, or takes a very long time to consent to, the tenant can take action, such as going to court for a declaration that the landlord is in breach of the lease. However this is a very major step to take, and we’d always encourage clients to do everything they can to reach an agreement without court action being necessary.

Not all leases will include an express provision requiring the landlord to give consent fairly and promptly. If that’s the case, it can be much harder and possibly more expensive but never impossible to do an assignment.

Can a landlord object to the assignment of a lease?

As we’ve set out above, if the lease includes a provision that consent to an assignment should not be unreasonable refused or delayed, any landlord who fails to comply is in breach of lease. This could result not just in court action but costs and possibly damages to the tenant.

However, it should be remembered that the right to assign the lease is generally subject to permission of the landlord being granted. So, a tenant should not assign the lease to a new party until a licence to assign has been properly executed. If he does, the landlord could apply for an injunction to prevent the letting, which could end with the tenant having to pay costs and damages to the landlord. Alternatively, the landlord could seek forfeiture of the lease , which could have far more significant consequences for the tenant.

When will it be sufficiently reasonable for a landlord to withhold consent?

Although this will always depend on the circumstances of the lease, here are some guidelines as to the types of situation when a landlord may be justified in refusing to agree to an assignment of a lease:

Insufficient information supplied in respect of the new tenant. This would mean that the Landlord is unable to make a judgment on the proposed tenant. It will usually be for the tenants (old and new) to satisfy the landlord that the new tenant is a good fit.
Character and financial standing of the assignee
The landlord has decided that the future viability of the building as a whole could be at risk, such as if he feels the new tenant would damage the reputation of the area or be detrimental to other tenants

When will it be sufficiently unreasonable for a landlord to withhold consent?

Again, this will depend on the facts of the case, but generally, it is likely to be held to be unreasonable for a landlord to withhold consent on the following grounds

Issues that are not covered by the lease. So, for example, if the lease doesn’t require a new tenant to prove that they are of good standing, it might be unreasonable for the landlord to try to imply this into the assignment process.
The landlord makes an argument that the tenant will have a lasting effect on the lettings of the other properties in the vicinity , except other properties owned by the landlord.
The landlord wants repossession of the property.
The landlord wants to withhold consent on the grounds of race, sex or disability . So if the outgoing tenant’s target audience was heterosexual men, but the incoming tenant’s target audience is homosexual men, this alone is unlikely to be a good enough reason.

Assigning a Sub-lease

A sub-lease is where a tenant has sublet the property or part of it to a third party. Sometimes that third party may want to assign the sub-lease to a new tenant. If so, not only will the landlord’ consent be required, but also that of the tenant who granted the sub-lease.

Knowing the difference between assigned lease and a sublease

Knowing the difference between an assigned lease and a sublease could help you make the right decision when choosing which route to take. Although both achieve the same result, an assignment of a lease is distinctively different to a sub-lease.

An assignment of a lease is a complete transfer of the right to be the tenant under the lease. The third-party (or new tenant) becomes the “tenant” under the lease, taking over all of the leased premises, substituting for the old tenant. The new tenant, therefore, pays the rent due under the lease directly to the landlord and is responsible for all aspects of complying with the lease.

As we have explained above, a sub-lease is an entirely new lease between the tenant and a third party as sublessee for the premises or sometimes for a part of the premises. The original lease between the tenant and the landlord remains in place and is unaffected by the sub-lease. This results in the original tenant remaining liable for all the obligations of the original lease, whilst collecting rent from the subtenant.

If you own a lease and you are considering selling it, or you’re thinking about buying an existing lease, then hopefully this will give you enough information to consider your options, but we’d be very happy to talk to you about this further before you make any final decisions.

Disclaimer – our articles are designed to give you guidance and information. There is no substitute for proper direct advice, particularly as everyone’s circumstances are different. If anything in this article may affect you, please contact us for advice that is specific to your circumstances.

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What is an Assignment of Rents?

WHAT IS AN ASSIGNMENT OF RENTS?

An assignment of rent is a binding contract between a lender and a borrower stipulating that in the event the borrower defaults on the mortgage, the lender will be entitled to collect any rent payments made by a tenant occupying the property. If the lender is aware that the borrower intends to use the mortgaged property as a rental property, the lender may include an assignment of rents clause in the mortgage agreement to further protect its interest. A lender may choose to enter a general assignment of rents or a specific assignment of rents.

In a general assignment of rents, the agreement is binding on all future leases. A specific assignment of rents is only binding on the specific parties listed in the agreement. In the context of a real estate transaction, an assignment of rents, whether general or specific, may be registered on title. An assignment of rent may also be registered under the Personal Property Security Act as a secured interest. An assignment of rents is typically only deleted from the title when the corresponding mortgage is discharged and paid in full.

Contact us if you require legal assistance with your real estate transaction. Our real estate law team has the experience and knowledge to assist you throughout every step of the transaction.

Disclaimer: The information contained in this article is not to be construed as legal advice. The content is drafted and published only for the purpose of providing the public with general information regarding various real estate and business law topics. For legal advice, please contact us.

About the Author:

Shahriar Jahanshahi is the founder and principal lawyer at Jahanshahi Law Firm with a practice focus on representing business star-ups and investors in the province of Ontario. For further information about Shahriar Jahanshahi, click here .

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Handling Subleases and Assignments as a Landlord
An assignment is similar to a sublease in that it involves someone new taking the place of the original tenant, but the original tenant in these cases does not intend to return. The assignee assumes the legal place of the original tenant in the lease, meaning that they are renting from you rather than the original tenant. This means that the ...
Collateral Assignment Of Lease: Definition & Sample
A collateral assignment of lease is a legal contract that transfers the rights to rental payments from the asset's owner to a lender to secure funding. In this contract, the lease's rentals are like a loan from the funder to the lessor and the lease acts as security. Collateral assignment of lease agreements are often used in commercial real ...
Commercial Leases: Assignment vs. Sublet
Assignment of a lease refers to when one party of the lease transfers all the interest and obligations of the lease to a third party. Typically in commercial settings, a commercial tenant will assign their interest in the lease to another commercial tenant. Additionally, a landlord may also assign their interest in the lease to another landlord.
Commercial Landlord's Reasonable Consent to Sublease or Assign
The right of a commercial tenant to assign or sublease a commercial lease is determined by the terms provided in the lease. The terms of a lease may expressly prohibit a tenant from assigning or subletting. The terms of a lease may also allow a tenant to assign or sublease only with the consent of the landlord or if certain conditions are met.
Assignments: The Basic Law
Assignments: The Basic Law. The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States. As with many terms commonly used, people are familiar with the ...
What Is a Commercial Lease Assignment?
Lease assignment agreements are pretty simple because they reference the original lease. This means that all of the terms in the old lease are automatically included in the new agreement. A lease assignment agreement transfers the entire lease, whereas sublease agreement does not. Assignments transfer the whole lease from one tenant to another ...
PDF Assignments and Collateral Assignments Of Commercial Leases
signment of lease is a collateral assignment and assumption of lease whereby a landlord and ten-ant agree that a certain third party has a security interest in the lease pursuant to a separate agreement. Typically, this scenario will arise when a tenant's business is subject to mortgage financing or subject to a franchise agreement.
assignment of lease Definition, Meaning & Usage
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.
Lease Assignment Provisions—Why They Matter
Lease Assignment Provisions—Why They Matter. When a tenant assigns its rights and interest under a lease to a successor tenant, the enforceability of the assignment and its legal consequences are usually addressed and governed by language in the assignor-tenant's lease or a lease assignment document. The landlord's attorney usually will ...
Leasehold Mortgage vs. Assignment of Lease
An assignment of lease transfers an unexpired lease to someone else, who then takes over the rental payments. Tip. A leasehold mortgage is a loan taken out on a piece of property that is owned by ...
Assignment of Leases and Rents definition
Definition of "Assignment of Leases and Rents". Sometimes called Assignment of Leases, Rents and Profits or simply Assignment of Rents, this is a document attached to a mortgage loan agreement which entitles the lender to any income (from leases, rents, etc.) derived from the property once the owner defaults on the loan.
What Is the Difference Between Subletting and Assigning Your Lease?
The process for assigning or subletting your lease should be set out in your lease agreement. Unless otherwise stated, you will need the written consent of the landlord before you can assign or sublet your lease. In the case of an assignment, the landlord usually has the right to approve the new assignee.
Assigning Your Lease
With an assignment, the original tenant gives up the apartment . The person to whom you assign your lease is referred to as the "assignee." Both you and the assignee remain responsible to the landlord for the obligations contained in the lease. As the original tenant, you can escape such responsibilities only if the landlord clearly releases ...
How To Handle A Landlord Assignment Of Lease?
Draft the landlord assignment of lease form: Prepare a legally precise landlord assignment of lease form outlining the terms of the transfer. Ensure this document aligns with any clauses related to the assignment in the original lease. Sign the agreement: All involved parties should review and sign the landlord assignment of lease form.
The Difference Between Subletting and Assigning a Lease
What Is a Lease Assignment? Assigning a lease is the process of transferring all your obligations as a tenant under a lease to a new tenant. The new tenant will then be responsible for: paying rent; paying outgoings; and; any repair and maintenance obligations. The party that you assign the lease to will become the tenant under the lease.
Sublet and Assignment Clauses In California Commercial Leases
This means that, should the sublessor or assignee fail to pay rent or default for any reason, the assignor (prior tenant) becomes liable for the breach. ... Recapture clauses allow landlords to decide whether they wish to withhold consent to an assignment, consent to the assignment or to terminate the lease and, at least in theory, approach the ...
Assignment of Contract: What Is It? How It Works
An assignment of contract is a legal term that describes the process that occurs when the original party (assignor) transfers their rights and obligations under their contract to a third party (assignee). When an assignment of contract happens, the original party is relieved of their contractual duties, and their role is replaced by the ...
What is Assignment of lease
An assignment of lease refers to the transfer of a tenant's rights and obligations under a lease agreement to another party. In the context of business, real estate, or technology law in British Columbia, an assignment of lease typically involves the transfer of a commercial lease from one tenant to another, with the landlord's consent. The new ...
Assignment Of Lease: A Brief Look
What is an Assignment? Simply put, it is a transfer of an existing lease by the current tenant to a new tenant with the consent of the landlord. Let's see how this works in practice. To begin with, there should be an existing lease between a landlord and tenant. And the Assignee. The Assignee is the crucial factor that makes Assignment work.
What is an Assignment of a lease?
This would mean that the Landlord is unable to make a judgment on the proposed tenant. It will usually be for the tenants (old and new) to satisfy the landlord that the new tenant is a good fit. ... An assignment of a lease is a complete transfer of the right to be the tenant under the lease. The third-party (or new tenant) becomes the ...
What is an Assignment of Rents?
An assignment of rent is a binding contract between a lender and a borrower stipulating that in the event the borrower defaults on the mortgage, the lender will be entitled to collect any rent payments made by a tenant occupying the property. If the lender is aware that the borrower intends to use the mortgaged property as a rental property ...
Assigning A Lease
Once this is all taken care of, the landlord basically confirms their consent to the transfer, and the tenant also lets them know that they agree to it. This should be covered in what we call a Deed of Consent to Assignment . The assignee will also agree to inherit the rights under the existing lease from a certain date until the lease term ends.
Super Micro Stock Plunges 23% On Lack Of Preliminary Results. It's A
Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities.

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