can you prohibit assignment in a lease

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How To Circumvent A Lease’s Assignment And Subletting Restrictions

That discussion is over. The “norm” for leases is that the landlord will have some control over assignments and sublettings. That’s our starting point today.

We promised to use this week’s posting to tell readers about what “triggered” us to get into the topic of lease transfers. So, here it is.

We were given a lease that permitted the landlord to recapture the leased space in lieu of consenting to an assignment or subletting. We were also given a document describing a particular transaction. After looking at the lease and the “new” papers, we were compelled to tell the landlord that it had no right of recapture and also that its consent wasn’t even required.

Several years earlier, this same landlord consented to a subletting of the entire leased premises. Now, that SUBTENANT was assigning its sublease. Remember the law. A landlord has neither privity of contract nor privity of estate with a subtenant. That means that while the subtenant and the landlord have a “connection” or “bond” through their respective, related interests in the same piece of real estate, there is no legal relationship between them. Arguments can be made, in appropriate circumstances, that the landlord is a “third party beneficiary” of the agreement between its tenant (the sublessor in such a case) and the subtenant. In general, landlords will be unhappy if that is the route by which they have any control over a subtenant.

While the sublease in question was certainly subject to the provisions of the original lease, the original lease only spoke of the need for the landlord’s consent to assignments of that original lease and for the original tenant’s subletting of the leased premises. A lot of leases stop at the same point. Basically, this particular landlord’s form of lease did not bar assignments of subleases.

Now, think about it. Leases typically allow assignments and subletting to a tenant’s affiliates. What happens if a tenant sublets the entire premises to an affiliate (for which no consent is required) and immediately or two years later, that affiliate assigns that sublease to an unrelated party? We think the answer is that, under the lease we looked at (and under a lot of other leases we’ve seen), the landlord gets to stand by and watch it happen. One reason for this kind of outcome is that common law favors “alienability.” In this context that means common law disfavors restraints on assignments and sublettings. As a result, all such restrictions are strictly construed against a landlord. Basically, if a lease doesn’t clearly and specifically include a particular restriction, it will be an uphill battle for a landlord to “expand” on what is actually written in the lease. And, it will be an expensive battle for all parties.

Our conclusion that the assignment of the sublease was outside of the landlord’s control wasn’t a new thought for us, only a reminder. A number of years ago, we wrote an article about circumventing assignment and subletting restrictions. What follows is an excerpt from that article. If this whets your appetite for more, you can click HERE and see the entire article.

The full article has more examples and a lot of background on assignments and sublettings. The additional examples are more complicated (and sneaky) than what Ruminations is listing below. If the list below intrigues you, you might want to go back and find that link we provided at the end of the paragraph above).

LEASE TRANSFERS A LEASE MIGHT NOT CONTROL • A prohibition against assignment does not prohibit subletting, and vice versa . In most jurisdictions, merely agreeing that there is to be no subletting of the premises does not prohibit subletting of part of the leased premises. • A bar against assignment in the lease does not bar a subtenant from assigning its sublease. It may not bar a further subletting by a subtenant. Remember, there is no privity between a subtenant and the prime landlord. • There are a myriad of transfers that happen by operation of law, and not all “triggers” are involuntary. An individual tenant’s death transfers the deceased tenant’s interest to her or his estate and then to one or more beneficiaries. Similarly, dissolution of an entity-tenant results in a distribution of its assets to the tenant’s interest holders – shareholders, members, partners, and the like. Then, there is a matter of reviewing some seemingly innocent “boilerplate” provisions. Doing so may lead to discovering that the lease’s provisions “are binding upon inure to the benefit of heirs, successors, administrators, and personal representatives.” This may not be intended. Further, not all jurisdictions analyze the same set of facts in the same way. Again, without dealing with this form of transfer in a lease, the result may be unsettling. Covering these contingencies wrongly or without giving it much thought can also be upsetting to a tenant’s family if the lease is lost upon the family member’s death causing irreparable injury to the family business. • And, speaking of transfers by operation of law, what if a creditor levies on a tenant’s particular asset such as the tenant’s interest in its lease and the lease is sold at auction to the creditor ? • A landlord may have joint or co-tenants until one of those tenants assigns to the other. • Does consent to the first assignment or subletting result in a landlord’s right to vet the next one down the line? That appears to be the majority rule as to assignments, but not as to sublettings. What if the consent was by acquiescence or silence? If an assignee succeeds to the original tenant’s possessory right to the leased premises, but doesn’t assume the lease itself, does it need the landlord’s consent when it wants to further assign its interest in the lease or sublet the leased premises? • Typically, when a small business is sold, the seller will assign its lease to the buyer and take back “paper” secured by the buyer’s assets. But, what good are those assets if it can’t get the lease back at the same time? How can it do so? Will reserving a reversionary right in the assignment do the trick? • Similarly, an assigning tenant will be helpless to mitigate its damages if it can’t “get the lease back” when its assignee defaults under the lease. While a conditional reassignment document can be executed in connection with an assignment if the landlord agrees to such an arrangement at the time of the assignment, a lease could cover the same contingency when first crafted. By crafting for such a situation in the first place, a lease could require the landlord to re-let to the original tenant pursuant to an identical lease, for what would have been the remaining lease term (provided the original tenant makes the landlord whole). • Is a leasehold mortgage an assignment of the lease? If it isn’t, especially because court construe restrictions on assignments very narrowly, can a tenant compel such an assignment on its landlord? Remember, a leasehold lender taking over as tenant under a lease may be hampered in assigning the lease to someone who might be able to use the leased premises. But, what if the lender sells the defaulted mortgage to a party that wants to use the leased property for itself? What if the mortgagee was a “friend” of the tenant? • Can a tenant assign a single right it holds under the lease, such as its purchase option, without running afoul of a no-assignment provision? • Imagine that a lease allows assignment but not subletting. What keeps a tenant from assigning the lease to a new tenant and taking back an assignment that becomes effective in three or five years?

If you like this posting (or if you hate it or even you are indifferent), tell us and your fellow readers by posting a comment to this posting. You can do so through the link just below the title where it says “post a comment” or “comments.”

Ira: Whenever I do a sublease (which is a real brain teaser of an exercise), I try to establish privity of contract between the subtenant and the landlord at the time of creation of the transaction (a 3-party instrument) the in the most obvious subjects. I use a copy of the master-lease and change the word “Tenant” to “Subtenant” or add the word “Subtenant” where appropriate and where it make common sense. As to payment obligations, if the master-tenant fails to turn the lease rent over to the landlord, the subtenant is required to do so (pay lease rent and any “profit” owed, not sublease rent) upon notice from the landlord. With respect to performance obligations, like repairs and the notices required to trigger the performance, the notice would run directly from the landlord to the subtenant and performance would be rendered directly from the subtenant to the landlord. Thus, the “sublease” begins to look more and more like an assignment but some portion of the term is reserved to the master-tenant to preserve the structure of a sublease. Also, if the subtenant defaults, the master-tenant, as sublessor, has standing to bring an eviction action in Landlord -Tenant court. A landlord in the context of an outright assignment may not be able to do so – being relegated to the regular courts in an action in ejectment. As far as other transactions you allude to are concerned, there are many ways a tenant can transfer the lease and many ways a landlord can lock him down – which is beyond the scope of your post.

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2022 New York Laws RPP - Real Property Article 7 - Landlord and Tenant 226-B - Right to Sublease or Assign.

(b) The tenant shall inform the landlord of his intent to sublease by mailing a notice of such intent by certified mail, return receipt requested. Such request shall be accompanied by the following information: (i) the term of the sublease, (ii) the name of the proposed sublessee, (iii) the business and permanent home address of the proposed sublessee, (iv) the tenant's reason for subletting, (v) the tenant's address for the term of the sublease, (vi) the written consent of any cotenant or guarantor of the lease, and (vii) a copy of the proposed sublease, to which a copy of the tenant's lease shall be attached if available, acknowledged by the tenant and proposed subtenant as being a true copy of such sublease.

(c) Within ten days after the mailing of such request, the landlord may ask the tenant for additional information as will enable the landlord to determine if rejection of such request shall be unreasonable. Any such request for additional information shall not be unduly burdensome. Within thirty days after the mailing of the request for consent, or of the additional information reasonably asked for by the landlord, whichever is later, the landlord shall send a notice to the tenant of his consent or, if he does not consent, his reasons therefor. Landlord's failure to send such a notice shall be deemed to be a consent to the proposed subletting. If the landlord consents, the premises may be sublet in accordance with the request, but the tenant thereunder, shall nevertheless remain liable for the performance of tenant's obligations under said lease. If the landlord reasonably withholds consent, there shall be no subletting and the tenant shall not be released from the lease. If the landlord unreasonably withholds consent, the tenant may sublet in accordance with the request and may recover the costs of the proceeding and attorneys fees if it is found that the owner acted in bad faith by withholding consent. 3. The provisions of this section shall apply to leases entered into or renewed before or after the effective date of this section, however they shall not apply to public housing and other units for which there are constitutional or statutory criteria covering admission thereto nor to a proprietary lease, viz.: a lease to, or held by, a tenant entitled thereto by reason of ownership of stock in a corporate owner of premises which operates the same on a cooperative basis. 4. With respect to units covered by the emergency tenant protection act of nineteen seventy-four or the rent stabilization law of nineteen hundred sixty-nine the exercise of the rights granted by this section shall be subject to the applicable provisions of such laws. Nothing contained in this section two hundred twenty-six-b shall be deemed to affect the rights, if any, of any tenant subject to title Y of chapter 51 of the administrative code of the city of New York or the emergency housing rent control law. 5. Any sublet or assignment which does not comply with the provisions of this section shall constitute a substantial breach of lease or tenancy. 6. Any provision of a lease or rental agreement purporting to waive a provision of this section is null and void. 7. The provisions of this section except for items in paragraph (b) of subdivision two of this section not previously required, shall apply to all actions and proceedings pending on the effective date of this section. 8. Nothing contained in this section shall be deemed to prevent or limit the right of a tenant to sell improvements to a unit pursuant to article seven-C of the multiple dwelling law.

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Assignment of Lease

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What is an assignment of lease.

The assignment of lease is a title document that transfers all rights possessed by a lessee or tenant to a property to another party. The assignee takes the assignor’s place in the landlord-tenant relationship.

You can view an example of a lease assignment here .

How Lease Assignment Works

In cases where a tenant wants to or needs to get out of their lease before it expires, lease assignment provides a legal option to assign or transfer rights of the lease to someone else. For instance, if in a commercial lease a business leases a place for 12 months but the business moves or shuts down after 10 months, the person can transfer the lease to someone else through an assignment of the lease. In this case, they will not have to pay rent for the last two months as the new assigned tenant will be responsible for that.

However, before the original tenant can be released of any responsibilities associated with the lease, other requirements need to be satisfied. The landlord needs to consent to the lease transfer through a “License to Assign” document. It is crucial to complete this document before moving on to the assignment of lease as the landlord may refuse to approve the assignment.

Difference Between Assignment of Lease and Subletting

A transfer of the remaining interest in a lease, also known as assignment, is possible when implied rights to assign exist. Some leases do not allow assignment or sharing of possessions or property under a lease. An assignment ensures the complete transfer of the rights to the property from one tenant to another.

The assignor is no longer responsible for rent or utilities and other costs that they might have had under the lease. Here, the assignee becomes the tenant and takes over all responsibilities such as rent. However, unless the assignee is released of all liabilities by the landlord, they remain responsible if the new tenant defaults.

A sublease is a new lease agreement between the tenant (or the sublessor) and a third-party (or the sublessee) for a portion of the lease. The original lease agreement between the landlord and the sublessor (or original tenant) still remains in place. The original tenant still remains responsible for all duties set under the lease.

Here are some key differences between subletting and assigning a lease:

Under a sublease, the original lease agreement still remains in place.
The original tenant retains all responsibilities under a sublease agreement.
A sublease can be for less than all of the property, such as for a room, general area, portion of the leased premises, etc.
Subleasing can be for a portion of the lease term. For instance, a tenant can sublease the property for a month and then retain it after the third-party completes their month-long sublet.
Since the sublease agreement is between the tenant and the third-party, rent is often negotiable, based on the term of the sublease and other circumstances.
The third-party in a sublease agreement does not have a direct relationship with the landlord.
The subtenant will need to seek consent of both the tenant and the landlord to make any repairs or changes to the property during their sublease.

Here is more on an assignment of lease here .

Parties Involved in Lease Assignment

There are three parties involved in a lease assignment – the landlord or owner of the property, the assignor and the assignee. The original lease agreement is between the landlord and the tenant, or the assignor. The lease agreement outlines the duties and responsibilities of both parties when it comes to renting the property. Now, when the tenant decides to assign the lease to a third-party, the third-party is known as the assignee. The assignee takes on the responsibilities laid under the original lease agreement between the assignor and the landlord. The landlord must consent to the assignment of the lease prior to the assignment.

For example, Jake is renting a commercial property for his business from Paul for two years beginning January 2013 up until January 2015. In January 2014, Jake suffers a financial crisis and has to close down his business to move to a different city. Jake doesn’t want to continue paying rent on the property as he will not be using it for a year left of the lease. Jake’s friend, John would soon be turning his digital business into a brick-and-mortar store. John has been looking for a space to kick start his venture. Jake can assign his space for the rest of the lease term to John through an assignment of lease. Jake will need to seek the approval of his landlord and then begin the assignment process. Here, Jake will be the assignor who transfers all his lease related duties and responsibilities to John, who will be the assignee.

You can read more on lease agreements here .

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Assignment of Lease From Seller to Buyer

In case of a residential property, a landlord can assign his leases to the new buyer of the building. The landlord will assign the right to collect rent to the buyer. This will allow the buyer to collect any and all rent from existing tenants in that property. This assignment can also include the assignment of security deposits, if the parties agree to it. This type of assignment provides protection to the buyer so they can collect rent on the property.

The assignment of a lease from the seller to a buyer also requires that all tenants are made aware of the sale of the property. The buyer-seller should give proper notice to the tenants along with a notice of assignment of lease signed by both the buyer and the seller. Tenants should also be informed about the contact information of the new landlord and the payment methods to be used to pay rent to the new landlord.

You can read more on buyer-seller lease assignments here .

Get Help with an Assignment of Lease

Do you have any questions about a lease assignment and want to speak to an expert? Post a project today on ContractsCounsel and receive bids from real estate lawyers who specialize in lease assignment.

Meet some of our Assignment of Lease Lawyers

I have been practicing law for more than 7 years in Maine and have owned my law practice, Dirigo Law LLC, since 2020. My practice focuses mostly on Real Estate / Corporate transactions, Wills, Trusts, and Probate matters.

My name is Melissa “Mel” Green and I provide legal counsel to entrepreneurs, start-ups, and small businesses that is clear, concise, and focused on the practical impact of decisions. As trusted legal counsel, I proactively identify risks, and develop effective, practical solutions that protect my clients businesses, create positive outcomes, and help mitigate legal exposure. My areas of expertise include business formation, contract law/commercial transactions, healthcare law, and intellectual property. I also provide services as an outside general counsel or “fractional general counsel”. Prior to starting my own law firm, I spent the majority of my career in-house at large and small corporations, both for profit and not-for-profit, working with senior and executive management, in addition to other stakeholders at a variety of management levels. to proactively identify and address risks, mitigate legal exposure, streamline processes, lead persuasive negotiations that are integral to ensuring positive outcomes for the organization, and deliver hands-on, spectacular client service. There came a time when I realized that individuals and smaller entities were not receiving the same level of legal support and guidance as mid-size to large companies and as a result, individuals and small businesses were not growing and sustaining on the same level. I wanted to use my expertise to provide those that were underserved by the legal market with competent counsel at an affordable price. With the increasing number of new businesses, I knew that I could make a difference to those that needed legal guidance but were putting it off in fear of “Big Law” prices. I love to “partner” with my clients, get a deep understanding of their business, develop lasting professional relationships and watch them prosper. I want to find a way to help my clients maximize the reach, value and impact of their business. Services that I have provided over the course of my career: (i) reviewing, drafting and negotiating commercial agreements (leases, MSAs and SOWs, consulting services agreements, confidentiality agreements, SaaS agreements, coaching agreements, independent contractor agreements, coaching agreements, photographer agreements, waivers and releases, licensing agreements, etc.), (ii) business formation (operating agreements, written consents, bylaws, etc.), (iii) preparing policies and procedures for businesses in highly regulated industries, (iv) conducting federal trademark searches and filing trademark applications/preparing trademark opinion letters after conducting appropriate legal research, and (v) general business counsel.

Robert Jay H.

My Legal career hasfocused on representing businesses (corporations and limited liability companies) as general outside counsel. In this capacity, I have drafted a broad range of legal documents as well as analyzed proposed agreements drafted by the other party's attorney to the agreement for the pupose of determining the risks to which my client would be exposed. I maintained the client's minute book if no one in-house was available for that task. Additionally, if rquested, I served as a general advisor to the client's executive offers and to its Board of Directors.

Stan provides legal services to small to medium-sized clients in the New England region, and throughout the U.S. and abroad. His clients are involved in a variety of business sectors, including software development, e-commerce, investment management and advising, health care, manufacturing, biotechnology, telecommunications, retailing, and consulting and other services. Stan focuses on the unique needs of each of his clients, and seeks to establish long term relationships with them by providing timely, highly professional services and practical business judgment. Each client's objectives, business and management styles are carefully considered to help him provide more focused and relevant services. Stan also acts as an outsourced general counsel for some of his clients for the general management of their legal function, including the establishment of budgets, creation of internal compliance procedures, and the oversight of litigation or other outside legal services.

Sam Widdoes has practiced law in California since 2014. He began his career as a litigation associate at a boutique firm in Los Angeles, and founded a production development company with a partner in 2017. Since then, Sam has served as the head of business and legal affairs at District 33, while working hand-in-hand with writers, directors and actors to develop, pitch and produce scripted and unscripted content. In that role, Sam produced the documentary series BLACKBALLED for Quibi/Roku, and will produce the upcoming documentary feature AS WE SPEAK directed by J.M. Harper for Paramount+/MTV, and the doc series THE BLACK BOX for MRC and XYZ Films. He is also the executive producer of an upcoming limited series with CBS TV starring Judith Light and Noah Wyle called SHADOWS IN THE VINEYARD, and a feature comedy for Spyglass Entertainment, among other projects. In early 2022, Sam opened WIDDOES LAW, APC, after recognizing a need for experienced legal services in the unscripted and documentary spaces. Since opening his own practice, Sam has advised producers, editors, directors and rights holders on a variety of agreement negotiations, including option purchase contracts, collaboration agreements and documentary producer deals. Sam also serves as production counsel for several documentary features, series and short films, and will draft, negotiate and advise on all legal aspects of the projects, including financing, production and distribution. Sam earned his Juris Doctor from The Catholic University of America, Columbus School of Law in 2013, where he graduated on the Dean's List and as a member of the Society of Trial Advocates. He holds a BA in journalism from the University of Richmond, and sits on the Board of Trustees at Turning Point School in Culver City, California. Sam is passionate about quality storytelling, and supporting those with the vision and drive to share their stories with the world.

Robert is a skilled corporate lawyer, licensed to practice law in NY and DC. He has over 25 years of experience, with a focus on Venture Capital, Private Equity, M&A, General Business Law and Company Formation. Robert brings business side experience to every legal transactions. This allows him to shape a client's legal needs around its business goals to drive success in an effective and efficient manner.

I’m a New York based attorney with substantial experience in media and art law, corporate structuring and commercial contracts. For the past several years, I have been advising startups and new business on their legal needs, with a special focus on tech and entertainment.

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Contract to lease land from a church.

I’m planning on leasing land from a church. Putting a gym on the property. And leasing it back to the school.

Ok; first step is that you will need a leasing contract with the church. Ask them to prepare one for you so you would just need an attorney to review the agreement and that should cost less than if you had to be the party to pay a lawyer to draft it from scratch. You need to ensure that the purpose of the lease is clearly stated - that you plan to put a gym on the land so that there are no issues if the church leadership changes. Step 2 - you will need a lease agreement with the school that your leasing it do (hopefully one that is similar to the original one your received from the church). Again, please ensure that all the terms that you discuss and agree to are in the document; including length of time, price and how to resolve disputes if you have one. I hope this is helpful. If you would like me to assist you further, you can contact me on Contracts Counsel and we can discuss a fee for my services. Regards, Donya Ramsay (Gordon)

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Real Estate Attorney Los Angeles for Evictions, Fraud & Nondisclosure and HOA Disputes

Commercial Leases and Properties – CA Rules on Assignments & Subleases

Starting with Cal. Civ. Code § 1995.010, California has codified the rules with respect to a tenant’s transfer of interest in a commercial lease, i.e., an assignment or sublease. For purposes of the rules regarding assignments and subleases of commercial property, a “lease” would include a lease or sublease of real property for other than residential purposes, and includes modifications and other agreements affecting a lease. A “tenant” includes a subtenant or assignee. A “transfer” of a tenant’s interest includes an assignment, sublease, or other voluntary or involuntary transfer or encumbrance of all or part of a tenant’s interest in the lease, and a “restriction on transfers includes a provision in a lease that restricts the right of transfer of the tenant’s interest in the lease. See Cal. Civ. Code § 1995.020. These rules apply to all commercial leases except to leases with restrictions on transfers executed before September 23, 1983 wherein the lease does not provide a standard for a landlord giving or withholding consent. See Cal. Civ. Code § 1995.270.

Legislative Findings and Declarations:

Until the case of Kendall v. Ernest Pestana, Inc., 40 Cal.3d 488 (1985), and its predecessor, Cohen v. Ratinoff, 147 Cal.App.3d 321 (1983), the parties to commercial real property leases could reasonably rely on the law of the state to provide that if a lease restriction requires the landlord’s consent for transfer of the tenant’s interest in the lease but provides no standard for giving or withholding consent, the landlord’s consent may be unreasonably withheld. (Emphasis added.)

The California Legislature found that the Kendall and Cohen decisions reversed the law on which parties to commercial real property leases executed before September 23, 1983, the date of the Cohen decision, could reasonably rely, thereby frustrating the expectations of the parties, with the result of impairing commerce and economic development.

Restrictions on Transfers in a Commercial Lease:

Most commercial leases contain restrictions on the tenant’s ability to freely transfer or assign his/her/its interest in the lease. If the lease does not include a restriction on the tenant’s ability to transfer, then the tenant retains an unrestricted right to transfer the interest in the lease. See Cal. Civ. Code § 1995.210. Any ambiguity in a restriction on transfer of a tenant’s interest in a lease shall be construed in favor of transferability. See Cal. Civ. Code § 1995.220. A landlord may restrict a tenant’s right to transfer by absolutely prohibiting transfers. See Cal. Civ. Code § 1995.230.

Standards, Conditions and Consent:

A restriction on transfer of a tenant’s interest in a lease may provide that the transfer is subject to any express standard or condition, including, but not limited to, a provision that the landlord is entitled to some or all of any consideration the tenant receives from a transferee in excess of the rent under the lease. See Cal. Civ. Code § 1995.240.

A restriction on transfer of a tenant’s interest in a lease may require the landlord’s consent for transfer subject to any express standard or condition for giving or withholding consent, including, but not limited to, either of the following: (a) The landlord’s consent may not be unreasonably withheld. (b) The landlord’s consent may be withheld subject to express standards or conditions. See Cal. Civ. Code § 1995.250.

Tenant’s Burden Of Proof For Unreasonably Withholding Consent:

If a restriction on transfer of the tenant’s interest in a lease requires the landlord’s consent for transfer but provides no standard for giving or withholding consent, the restriction on transfer shall be construed to include an implied standard that the landlord’s consent may not be unreasonably withheld. Whether the landlord’s consent has been unreasonably withheld in a particular case is a question of fact on which the tenant has the burden of proof. The tenant may satisfy the burden of proof by showing that, in response to the tenant’s written request for a statement of reasons for withholding consent, the landlord has failed, within a reasonable time, to state in writing a reasonable objection to the transfer. See Cal. Civ. Code § 1995.260.

Tenant Remedies For Unreasonable Withholding Of Consent:

Restrictions – A remedy provided by law for violation of the rights of the tenant or of the landlord concerning transfer of a tenant’s interest in a lease, including a remedy provided in this article, is (a) subject to an express provision in the lease that affects the remedy and (b) subject to any applicable defense, whether legal or equitable, including, but not limited to, waiver and estoppel. See Cal. Civ. Code § 1995.300.

Remedies – If a restriction on transfer of a tenant’s interest in a lease requires the landlord’s consent for transfer subject to an express or implied standard that the landlord’s consent may not be unreasonably withheld, and the landlord unreasonably withholds consent to a transfer in violation of the tenant’s rights under the lease, in addition to any other remedies provided by law for breach of a lease, the tenant has all the remedies provided for breach of contract, including, but not limited to, either or both of the following: (a) The right to contract damages caused by the landlord’s breach; and (b) The right to terminate the lease. See Cal. Civ. Code § 1995.310.

If you have questions regarding your Commercial Lease, contact one of our Los Angeles Commercial Lease Attorneys for a free consultation and case evaluation.

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

Landlord - Tenant Law Center Contents

Landlord - Tenant Law Center
Tenants' Legal Rights & Duties
Screening Tenants & Legal Compliance for Landlords
Preparing Leases and Rental Agreements
Rent Rules & Related Legal Concerns for Landlords
Security Deposits & Related Legal Requirements for Landlords
Rental Property Management & Legal Considerations for Landlords
Preparing Rental Property for a New Tenancy & Related Legal Concerns
Recordkeeping Practices for Landlords & Legal Implications
Setting Rules for Co-Tenants and Guests as a Landlord
Repairing and Maintaining Rental Property as a Landlord
Protecting Tenant Safety as a Landlord & Legal Obligations
Addressing Health Hazards as a Landlord & Legal Obligations
Providing Property Security as a Landlord & Avoiding Legal Liability
When Landlords Have a Legal Right of Entry to Rental Units
Ending a Tenancy as a Landlord & Related Legal Considerations
The Tenant Move-Out Process & Legal Requirements for Landlords
Handling Abandoned Tenant Property as a Landlord
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What is Subletting? A Guide to Subletting Laws by State

Subletting is a process where you rent out your leased apartment for a temporary period.
Subletting your apartment can save you money and provide you freedom, but bad tenants can get you evicted and leave you with costly repairs.
After getting approval and finding a sublessee, it’s essential to draft and sign a subleasing agreement.
Several states across the U.S. do not allow subleasing, or they have certain stipulations regarding the practice.
If you are considering subletting your apartment, you need to know the responsibilities of all parties involved .

In this guide, you'll learn:

What subletting (subleasing) is
How subletting works
Laws on subletting for each state

What is subletting?

How does subletting work, get approval from your landlord, find a sublessee.

Draft and sign subleasing agreement

Subletting Laws by State

Subletting is renting out an apartment, or any property, that has your name on the lease. Imagine having six months left on your 12-month lease, but you get a job opportunity too good to give up in another state. Subletting your place for the remaining six months would help you avoid hurting your rental history and paying the cost to break your lease.

You’ll become a sublessor and the person who decides to move in will be the sublessee. Just as you signed a leasing agreement, you will have to draft a subleasing agreement approved by your landlord and signed by your sublessee.

Subletting is the same as subleasing; the two words are interchangeable.

As long as your landlord, or state law, approves, anyone can sublet. People who find themselves stuck in a lease turn to subletting, even if that means they’re just moving down the street. The pros of subletting sum up to the freedom it provides renters while the cons depend on the type of tenant you get.

The steps to subletting are essentially the same no matter where you live, but the order of the steps may change depending on your state, and sometimes city’s, laws on subletting.

Check your lease to see if there’s already rules about subletting from your landlord. Depending on your reason for subletting, some landlords/property managers may allow it anyway. Regardless, ask your landlord for approval in writing. You may not need written approval depending on what state you live in, but it will protect you if you run into legal issues later on.

It’s important to find a sublessee you can trust to be honest and on time with payments. You’re taking on the role of a landlord when you sublet. Whether it’s a stranger, friend or family member, be sure to:

Ask about their rental history and credit score
Interview potential sublessees - would your landlord approve of them? Create a list of qualifiers or requirements you want a sublessee to meet (ex. Are they employed, do they have pets, etc.)
Run a background check - your name is on the lease, you want to make sure your sublessee doesn’t get you evicted
Ask for a security deposit - if necessary, this a way to save yourself from paying for damages you didn’t make
Be clear about monthly costs and neighborhood rules if there are any (ex. some Home Owners Associations (HOAs) don’t allow loud noises after certain hours)

You might have to find a sublessee before asking your landlord about subletting. Some states require that your sublet approval request includes who the sublessee is.

Draft and sign a subleasing agreement

Your subleasing agreement needs to be as explicit as possible. Do not leave anything to be assumed or unclear. Detail who is responsible for what and how payments should be handled, i.e. check, wired, etc. If you prefer a ready-to-fill-out template or what to know more about what exactly you should include, read Subletting: Who's Responsible .

Some states call subletting a ‘transfer’ or ‘transfer of interest’, or they may refer to it as an ‘assignment’ as in a tenant ‘assigns’ their lease to another person(s).

The following states do not specifically address subletting in their state laws: Alabama, Connecticut, Florida, Indiana, Maryland*, Massachusetts, Mississippi, Nebraska, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming. If you live in one of these states, your lease determines if it is legal to sublet. Some leases will have clauses prohibiting subletting while others may require you to get written approval from your landlord first or having nothing at all. No matter the situation, we recommend getting written approval from your landlord before subletting.

Alaska Statute 34 Sec. 34.03.060 states tenants cannot sublet without their landlord’s consent. Before asking for approval, you must find a prospective sublessee. An approval request to sublet in Alaska must include the prospective sublessee’s:

Name, age, and current address
Martial status
Job title, name of place of employment, and name and address of employer
Who would reside with the prospective sublessee (e.g. children, spouse, pets)
Two credit references (something to verify your credit ex. Credit card company, bank, credit report, utility company)
Names and addresses of prospective sublessee’s previous landlords within the last three years

The landlord has 14 days to respond to a written approval request to sublet. If the landlord does not respond within 14 days, it is safe to assume consent is given. Landlords may deny approval requests to sublet but only for one of the following reasons:

The prospective sublessee does not meet the credit requirements
Potential number of people in household
Potential number of people in household under 18
Prospective sublessee is unwilling to agree to the same terms as the subletter
Potential pets
Potential commercial activity
Previous landlord(s) of prospective sublessee does not recommend due to past issues

If the landlord’s denial does not include one of the above reasons, the tenant is allowed to sublet to the prospective sublessee included in their approval request.

Arizona’s revised statutes only explicitly state subletting in Title 33, Chapter 11, Section 33-1454 which declares tenants must receive written approval to sublet by their landlord. Unfortunately, Chapter 11 is for Mobile Home Parks. People renting other types of properties, like apartments or houses, should check their leasing agreement to see if their landlord allows subletting. If the lease does not explain whether subletting is allowed, ask your landlord.

According to Arkansas Attorney General, tenants need written approval from their landlord before subletting. In Arkansas, the landlord determines the amount the subletter will pay.

Subletting in California is popular due to the high costs of rent, but it’s also confusing. California Code, Civil Code - CIV § 1995.210-270 declares:

If your lease does not restrict subletting, it is safe to assume you can sublet
You cannot sublet if it is restricted by your lease; however, your landlord can allow you to sublet via written approval
Your landlord is entitled to some or all of the rent your sublessee pays if your lease restricts subletting but your landlord gives you written approval

San Francisco, Oakland and Berkeley passed laws to protect renters in roommate/subletting situations. If you live in one of these cities, your landlord can neither deny you the right to nor evict you for replacing a roommate or subletting a room without their consent.

According to the Colorado Landlord Tenant Handbook , tenants need written approval from their landlord to sublet. Some leases will detail whether subletting is allowed. If it’s not stated in the lease, you will still need written approval.

Delaware code Title 25 - Chapter 55 Section 5508 states tenants can sublet their apartment as long as the lease does not prohibit it. The law does not require your landlord’s approval to sublet; however, we recommend that you at least notify the landlord that you’ll be subletting and who the sublessee(s) is.

The Georgia Landlord Tenant Handbook states your lease determines whether you’re allowed to sublet or not. If your lease does not explicitly state whether you can sublet or not, contact your landlord for approval.

Hawaii Statute Title 28 Chapter 521 Section 37 declares tenants can sublet their apartment without their landlords approval as long as their lease does not prohibit subletting.

While the Idaho Attorney General’s Landlord and Tenant Manual states tenants can sublet if their lease does not prohibit it, it is not clear on whether tenants need approval from their landlord first. Because the law allows subletting, we recommend notifying your landlord that you will sublet and who the sublessee will be.

Tenants in Illinois may sublet their apartment if their lease allows it. According to the Illinois State Bar Association , most leases require tenants to get written approval by their landlord. While it is legal to sublet without the landlord’s approval if you’re lease does not prohibit it, we recommend notifying your landlord that you’re subletting and who the sublessee is - it’s the best way to make sure you’re legally protected in case anything happens.

Renters in Chicago living in a rental governed by the City of Chicago Rent Lease Tenant Ordinance are able to sublet once they find a sublessee that can meet the landlord’s requirement (background check, credit check, etc.). Chicago Municipal Code Chapter 5-12-120 requires landlords to approve sublet requests for reasonable sublessees without charging additional fees.

Iowa’s landlord tenant law gives tenants the right to sublet their rental if their lease does not prohibit subletting.

According to Kansas Statute 58-2511 , it is illegal for tenants to sublet a part or all of their rental without written consent from their landlord. The law doesn’t say how long landlords have to respond to sublet requests and on what grounds they can deny a request. In situations like this, we recommend using the same requirements your landlord used when you applied for the lease. It’s not a guarantee, but it gives you a better chance of getting approval if your sublessee is someone your landlord would give their own lease.

Tenants in Kentucky who sublet their rental without written consent from their landlord can get evicted. Kentucky Revised Statute (KRS) 383.180 states all the landlord has to do is give a 10-day notice to the tenant before recovering possession. To avoid losing your lease, send your landlord a written approval request to sublet.

Louisiana Civil Code 2713 states that it is legal to sublet in Louisiana as long as your lease does not forbid it.

If you decide to sublet in Louisiana, keep Louisiana Revised Statute 9:3251 in mind which states that lessors (tenants) must transfer their original security deposit to their sublessee. Once the sublessee ends their sublease, they’re responsible for returning the security deposit back to the original tenant.

To put it simply, tenants in Maine can sublet even if their lease prohibits subletting. If a landlord wants to prohibit subletting, Maine Revised Statute Title 11 §2-1303 paragraph eight states that they must make that clear in the lease, but it can’t stop a tenant from subletting nor does it make the sublet ineffective. Landlords who aren’t in favor of the subletting situation can only do one of two things:

Hold the tenant accountable for damages created by the sublessee
Take the tenant to court

Maryland state law does not state whether residents can sublet without their landlord’s consent. Some landlords include a clause in their lease agreements that prohibit subletting, but others fail to address it in their leases. The People’s Law Library of Maryland , a website maintained by the Thurgood Marshall Law Library, claims tenants do not need their landlord’s consent to sublet if their lease does not prohibit subletting.

A Practical Guide for Tenants and Landlords by the Michigan Legislature states that it is legal for tenants to sublet without notifying or requesting approval from their landlord if their lease neither forbids nor allows subletting. Be sure to check your lease first as some landlords prohibit subletting in the lease agreement while others demand that you need their written consent first.

Tenants whose lease does not prohibit subletting can legally sublet according to the Minnesota Attorney General’s website . If your lease does not clarify your landlord’s stance on subletting, it’s safe to assume you do not need to notify or get approval from your landlord before subletting. Otherwise, tenants should refer to their lease which may prohibit or require approval to sublet.

It is legal for tenants in Missouri to sublet as long as they have their landlord’s approval first. Missouri’s Landlord-Tenant Law allows landlords to double rent if tenants sublet without their approval.

While it is legal to sublet in Montana, Montana Code Annotated (MCA) 70-24-305 requires tenants to get their landlord’s approval first. Failing to do so can result in the landlord taking the tenant to court for violating their lease agreement according to the Montana Tenants’ Rights & Duties Handbook .

In Nevada, your lease determines whether you can sublet or not. Nevada Revised Statute (NRS) 40.2514 finds tenants who sublet when their lease prohibits it guilty of unlawful detainer and subject to eviction.

The New Jersey Lease Information Bulletin states tenants may be able to sublet if their lease doesn’t prohibit it, but doesn’t say if approval from the landlord is needed.

Tenants in New Mexico need to get written approval from their landlord to sublet. According to chapter four of the New Mexico Legal Aid Renters’ Guide , state law only says that some leases prohibit subletting, and if so, to get written approval before subletting.

New York Real Property (RPP) Law Article 7 Section 226-B states tenants have the right to sublease with their landlord’s written consent. To get consent, tenants must submit a request for approval containing:

The length of the sublet
The prospective sublessee’s name and address
Their reason for subletting
Their current address or address of apartment/home that will be sublet
Written consent of cotenants, if any
A copy of the sublease agreement

Landlords have 30 days from the date the request was sent to respond. If a landlord denies a request, they must include their reasons for denial in their response. Failure to respond within 30 days or with reasonable reasons for denying gives tenants the right to sublet and recover any attorney or court fees they may incur if the landlord takes them to court.

Oregon Revised Statute (ORS) 90.555 declares tenants who want to sublet for more than three days need to have a written agreement between them, the sublessee and the landlord. The subleasing agreement needs to include a clause requiring the sublessee to pay rent directly to the landlord and a clause giving the sublessee the same rights. However, the law does not give tenants the right to sublet if their lease prohibits it.

South Carolina

South Carolina Code of Law 27-35-60 forbids subletting without getting written approval from your landlord first.

South Dakota

South Dakota Codified Law 43-32-17 requires tenants to get their landlord’s approval before subletting.

Texas Property Code Sec. 91.005 states subletting is illegal if tenants do not have their landlords consent.

Virginia’s Residential Landlord and Tenant Act (§ 55.1-1200) gives landlords 10 business days, starting from the day they receive the request, to approve or deny a sublet approval request. By law, it is legal for tenants to assume consent is given if their landlord has not responded within 10 business days.

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Subleasing and Assignment Provisions in Commercial Leases

June 17, 2020

Before the COVID-19 pandemic, many business owners paid little attention to subleasing and assignment provisions when negotiating commercial leases . It was common to focus on rent, maintenance, taxes, and insurance, which affect a tenant’s bottom line, and options to renew the lease if the business thrives. Recently, however, one of the top concerns of commercial tenants is flexibility in case they no longer need to use a portion, or all, of the leased space. In this context, subleasing and assignment provisions are key deal terms.

The Difference Between Subleasing and Assignment

A sublease does not alter the relationship between the landlord and the tenant, who remains liable for all of the tenant’s obligations under the lease. However, the tenant enters into a subordinate lease (the sublease) with a subtenant regarding a portion, or all, of the leased space. After a sublease is signed, the landlord interacts with the tenant, and the tenant interacts with the subtenant.

An assignment alters the relationship between the landlord and the tenant by assigning the tenant’s rights and obligations from the first tenant (the assignor) to the second tenant (the assignee). The assignee steps into the shoes of the assignor, and has a direct contractual relationship with the landlord. After an assignment of the lease, the landlord interacts directly with the assignee.

Important Deal Points Regarding Subleasing and Assignment

Leases may include many provisions regarding subleasing and assignment. Some of the most common issues include the following:

In what circumstances is landlord consent required? Leases typically require the landlord’s consent for any sublease or assignment. However, some leases have different provisions for special circumstances, such as subleasing or assignment to a related entity, or assignment of the lease in connection with the sale of the tenant’s business.
What is the standard for landlord consent? Provisions that require the landlord’s consent may be followed by a standard such as “in the landlord’s sole discretion,” or “which may not be unreasonably withheld.” Obviously, the second standard is more favorable to the tenant. However, as a practical matter, if a dispute arises regarding whether a landlord’s denial was reasonable or unreasonable, arbitration or litigation would be expensive, the outcome would be uncertain, and the prospective subtenant or assignee may be unwilling to wait to see how the dispute is resolved.
What information must be provided regarding the proposed subtenant or assignee? Many leases require confidential financial information regarding the proposed subtenant or assignee. The proposed subtenant or assignee may be more comfortable providing information if the lease contains confidentiality and non-disclosure requirements to restrict the landlord’s use of the information. An argument can be made that less information should be required regarding a proposed subtenant than a proposed assignee, because the landlord will not enter into a direct contractual relationship with the subtenant and the tenant will remain liable under the lease.
What are the landlord’s alternatives? A tenant might assume that if the tenant requests consent to a sublease or assignment, the landlord’s alternatives will be limited to granting or withholding consent. However, many leases give the landlord a third alternative, to cancel the lease if the tenant requests a sublease or an assignment. This is known as a right of recapture.
When is the landlord’s response due? Some leases do not set a deadline for the landlord’s response to a request for consent to a sublease or assignment. A delayed response would prevent the tenant from moving forward until the response is received. A delayed response also may result in a lost opportunity, if the proposed subtenant or assignee is under time constraints.
What is the effect if the landlord fails to provide a timely response? A lease may provide that if the landlord fails to respond to a request for consent within a specified period of time, then consent is deemed granted, or a lease may provide that in such circumstances, consent is deemed denied. The first alternative is more favorable for a tenant, but the prospective subtenant or assignee might not be willing to rely on a “deemed consent” provision and may require actual consent before moving forward.
What are the landlord’s remedies if a sublease or assignment is made without requesting consent? Generally, if a tenant subleases or assigns a lease without obtaining required consent from the landlord, then the tenant is in default and the landlord can exercise all remedies under the lease. The lease also may provide that a sublease or assignment without the landlord’s consent is invalid and unenforceable.
Will the assignor be released from liability for the tenant’s obligations after an assignment? It may seem like common sense that if a lease is assigned with the landlord’s consent, then the original tenant (assignor) will no longer be responsible for the tenant’s obligations under the lease. However, a lease may provide that the assignor will remain liable under the lease after an assignment. Similarly, the landlord’s written consent may state that both the assignor and the assignee will be responsible for the tenant’s obligations after the lease is assigned. In order to be released, the assignor should obtain a written agreement from the landlord stating that after an assignment, the assignor will no longer be responsible for the tenant’s obligations under the lease.
Will a guarantor be released from liability for the tenant’s obligations after an assignment? Many landlords require a personal guaranty from an individual, or a corporate guaranty from a related entity, to ensure payment of the tenant’s obligations under a commercial lease. Guarantees typically provide that they will remain in effect even if the lease is assigned. However, the tenant may be able to negotiate for the termination of the guarantee in the event that the lease is assigned. In some cases, the landlord may require a substitute guarantor.
What is the effect of subleasing on the obligations of the tenant and the guarantor? A sublease does not affect the tenant’s obligations to the landlord under the lease, or the guarantor’s obligations to the landlord under the guaranty.

If a business owner is considering entering into a new lease, it is important to carefully review the subleasing and assignment provisions and negotiate any necessary changes before signing the lease. If a tenant desires to sublease or assign an existing lease, it is important to review the applicable requirements and restrictions before taking any action. An experienced real estate attorney can assist the tenant by spotting issues, explaining alternatives, and negotiating with the landlord to help the tenant accomplish its business objectives.

ABOUT THE AUTHOR(S)

Michael D. Klemm

Phone: 952-746-2198, email: [email protected], due diligence in commercial real estate transactions, three alternatives for a buyer to keep a seller’s low mortgage interest rate, webinar replay: hoa fall legal updates 2022, escalation clause tips and traps for buying a home (or an island), webinar replay: hoa fall webinar, on-demand webinar – covid-19 and hoas: how to operate during the pandemic, covid-19 and commercial real estate leases in minnesota, january 1 deadline for preventative maintenance plans, schedules and budgets, crossing the line obtaining building permits for decks in cic’s.

Are Anti-Assignment Clauses Enforceable?

Written by: Brittainy Boessel

July 22, 2020

8 minute read

Contracts, in general, are freely assignable, which means that either party can transfer its contractual obligations or rights to a third party. But sometimes contracts include anti-assignment clauses to limit or prohibit assignment. Read on to discover the basics of assignment and anti-assignment clauses, what makes them unenforceable, and learn how to negotiate them.

What Is Assignment?

An assignment is like a transfer. If an agreement permits assignment, a party could assign — or transfer — its obligation to another party. The second party — the one to whom the contract was assigned — would then be required to provide the products or services.

Assignments don’t necessarily relieve liability for the party who transfers the agreement. Depending on the contract, the party who assigned its obligations may remain a guarantor of— or responsible for—the performance of the third party assigned the work. In other words, the party to the contract (the assignor) would be responsible for breaches committed by the party to which it assigned its performance (the assignee). To remove itself from the liability of the agreement, the assignor would need to seek a novation , which cancels the first contract and creates a new contract between the party that is the assignee and the original counterparty to the contract.

What is an Anti-Assignment Clause?

Anti-assignment clauses—also sometimes referred to as assignment clauses or non-assignment clauses—can appear in various forms. Essentially, they prevent one or both contracting parties from assigning some or all of their respective contractual obligations or rights to a third party.

Anti-Assignment Language to Look for in a Contract

When reading through your contract, you can typically find a separate paragraph entitled “Assignment,” “Non-assignment,” or “Anti-assignment.” Sometimes you’ll find the assignment language buried within a “Miscellaneous Provisions” section, which contains all the boilerplate language of a contract, such as severability and waiver provisions.

Contracts include two primary types of anti-assignment clauses. The first type categorically precludes all assignments of rights and duties. It usually reads something like this: “Neither Party may assign, delegate, or transfer this agreement or any of its rights or obligations under this agreement.”

The second type prohibits assignments unless the assigning party obtains the prior written consent of the other party. It usually reads something like this: “Neither this agreement nor any right, interest, or obligation herein may be assigned, transferred, or delegated to a third party without the prior written permission of the other party, and whose consent may be withheld for any reason.”

Some clauses may state that a change of control, such as a merger, consolidation, or acquisition, is considered an assignment. Read carefully , because you want to ensure that you won’t be in breach if you transfer the contract to an affiliate.

Additionally, check the termination section of your agreement. Some termination clauses may state that a non-assigning party may terminate the contract in the event of a non-permitted assignment. Or a termination clause may state that the agreement automatically terminates upon such a transfer.

Without an anti-assignment provision, contracts are generally assignable even absent the consent of the counterparty. The Uniform Commercial Code (UCC), a group of laws governing the sale of goods, prefers the free transferability of all types of property, including contracts.

Still, courts normally enforce anti-assignment clauses that are negotiated and agreed upon by both parties, depending on the applicable law, the jurisdiction governing the contract, and the language agreed upon in the contract. Be aware though that courts tend to narrowly interpret anti-assignment clauses. For instance, an anti-assignment clause may prohibit assignment but fail to state that an assignment in violation of the contract will be invalid. In this case, a party may be able to file a suit for breach of contract, but the court may not permit it to invalidate the assignment.

Even without a solid anti-assignment clause, there may still be an opportunity to prevent certain assignments. Courts may not enforce assignments to which the counterparty did not consent, even in the absence of a valid anti-assignment clause, especially if the contract is personal in nature. Some obligations can be performed equally well by a third party, such as a requirement to make payments. But a personal obligation involves a special relationship between parties or requires special levels of expertise, discretion, or reputation. For example, personal service contracts, including employment agreements, are personal enough in nature that they’re not transferable unless the non-transferring party consents.

In general, assignment is not enforceable when:

The contract prohibits and voids assignment

As discussed above, contract provisions can prohibit and void an assignment.

The assignment materially changes the contract

If the assignment would significantly impact the performance of the contract — for instance, if it greatly increases the risks or burden imposed on the other party — then a court would likely not enforce the assignment.

The assignment violates the law

Certain laws prevent assignments. For example, some states legislate that an employee cannot assign its future wages to a third party.

The assignment violates public policy

If the assignment would harm public policy interests, it will be void. For instance, victims may not assign their personal injury claims to third parties to discourage excessive litigation.

Negotiating Anti-Assignment Clauses

In certain situations, the inclusion of an anti-assignment clause may not be in a party’s best interests. If a party depends on a unique service provider or a specific person to perform, then it must make sure that that service provider or person can’t assign work to an unknown third party without its consent. For instance, if you pay a premium to hire a renowned jazz band to perform at your charity gala, you don’t want a local high school garage band to show up instead. In any situation involving unique services or providers, make sure you have the right to consent prior to any assignment under the agreement.

Another example of the importance of assignability is in mergers and acquisitions. When a company purchases another business, the acquired business’s existing customer base and supplier contracts make it more valuable . Consequently, if a party hopes to eventually sell its business, it would want the right to assign its existing contracts to the buyer. Otherwise, potential buyers may be scared off because of the time and money it will take to transfer the existing agreements. Plus, the existence of anti-assignment clauses may heavily impact the selling price. If it’s possible you may sell your business, ensure that you have the right to assign your contracts and that consent is not solely within the discretion of the counterparty.

If you want the right to assign the contract, but your agreement does not permit assignments, you’ll need to negotiate with your counterparty on this point. If the clause in your agreement prohibits all assignments, try to include a carve out by allowing assignment of your rights and obligations upon the prior written consent of the other party. Add that the counterparty shall not unreasonably withhold or delay consent. You may also want to carve out an exception to the anti-assignment clause by excluding assignments between affiliates or necessitated by change of control transactions, such as mergers or acquisitions.

Courts tend to construe anti-assignment and anti-delegation clauses narrowly. As mentioned, a number of courts have held that an anti-assignment clause does not remove the power of a party to assign the contract and invalidate the contract unless the provision explicitly states that such assignments will be invalid or void. Thus, if you want to make an assignment that violates your agreement, rather than creating an opportunity for a breach of contract case, explicitly state in your contract that such assignments are invalid or void.

If you don’t want the counterparty to be able to assign its rights or obligations, state your preference clearly in your agreement with one of these options.

Require consent always

Don’t require consent for affiliates or successors

Include a clause such as, “Neither party may assign or delegate this agreement or its rights or obligations under this agreement without the prior written consent of the other party, except that no consent is required (a) for assignment to an entity in which the transferring party owns greater than 50 percent of the assets; or (b) in connection with any sale, transfer, or disposition of all or substantially all of its business or assets; provided that no such assignment will receive an assigning party of its obligations under this agreement. Any assignment or delegation that violates this provision shall be void.”

Require consent to be given reasonably

Note that you will not be able to prevent assignments resulting from court orders or by operation of law, such as those ordered through a bankruptcy hearing.

When you enter a contractual relationship, make sure to clearly determine your rights and obligations, as well as those of the other party. If it may be important for your business to have the right to assign all or parts of the contract, negotiate for the removal of the anti-assignment clause, or request changes to it to provide sufficient flexibility for you to assign.

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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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Non-Monetary and Monetary Lease Defaults
Holdover Tenants
Constructive Evictions
Landlord’s Failure to Make Repairs
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What do lease assignment and subletting encompass?

In commercial landlord/tenant leasing in Florida, lease assignment and subletting are two distinct methods for transferring leasehold interests. A lease assignment occurs when a tenant transfers their entire interest in the lease to a third party, known as an assignee. The assignee assumes all the tenant’s rights and obligations under the lease, including paying rent and fulfilling lease terms.

On the other hand, subletting is a more limited transfer, wherein the original tenant retains some rights and obligations while granting a subtenant the right to occupy and use the leased property for a certain period or under specific conditions.

For instance, consider a commercial tenant who wishes to relocate but still has time remaining on their lease. The tenant could assign their lease to another business, allowing the new business to assume the lease’s obligations and occupy the space. Alternatively, the tenant could temporarily sublet the space to another business, maintaining the lease with the landlord and resuming their responsibilities once the sublease ends.

Need a commercial leasing advocate? Schedule your consultation today with a top commercial landlord/tenant leasing attorney.

In Florida, which laws and regulations apply to lease assignment and subletting?

Lease assignment and subletting in Florida are primarily governed by the Florida Landlord and Tenant Act , particularly Section 83.06 . This statute stipulates that, unless the lease explicitly prohibits assignment or subletting, a tenant may transfer their interest in the lease without the landlord’s consent. However, the landlord retains the right to terminate the lease if the tenant fails to comply with the lease terms, even after assignment or subletting.

In addition to state laws, federal laws like the Americans with Disabilities Act and the Fair Housing Act can also impact commercial lease assignments and subletting. These federal laws require that commercial spaces be accessible to individuals with disabilities and prohibit discrimination in housing transactions. Therefore, tenants, assignees, and subtenants must adhere to these regulations when transferring leasehold interests.

Overall, the laws and regulations governing lease assignment and subletting in Florida depend on the specific lease terms, state statutes, and applicable federal laws. Therefore, tenants considering assignment or subletting should thoroughly review their lease and consult a knowledgeable attorney to ensure compliance with all relevant laws and regulations.

How do lease assignment and subletting commonly lead to litigation between commercial landlords and tenants?

The following issues commonly lead to litigation:

Ambiguity in lease terms: Lease assignment and subletting disputes often arise due to vague or ambiguous lease terms, leading to differing interpretations by the parties involved. Lease terms should be explicit and well-defined to avoid misunderstandings.
Non-compliance with consent requirements: If a lease agreement requires the landlord’s consent for assignment or subletting, disputes may arise when the tenant fails to obtain such permission or when the landlord unreasonably withholds it.
Breaches of lease obligations: In the context of lease assignments or subleases, tenants, assignees, or subtenants may breach lease obligations, such as paying rent, maintaining the property, or adhering to use restrictions. Breaches may trigger litigation to enforce the lease terms or seek damages.
Inadequate due diligence: When a tenant assigns a lease or sublets the property, the assignee or subtenant may have financial or operational issues that impact the landlord. Insufficient due diligence by the parties can lead to disputes and potential litigation.

When a set of facts is appropriate for legal intervention, there are many paths a claimant may take. We are value-based attorneys at Jimerson Birr, which means we look at each action with our clients from the point of view of costs and benefits while reducing liability. Then, based on our client’s objectives, we chart a path to seek appropriate remedies.

To determine whether your unique situation may necessitate litigation or another form of specialized advocacy, please contact our office to set up your initial consultation.

How should counsel for commercial landlords draft, review, and negotiate a lease that mitigates litigation risks?

Counsel should consider the following to protect their clients:

Clearly define assignment and subletting provisions: Lease agreements should explicitly outline the rights and obligations of the parties concerning lease assignments and subletting. The language must be clear, and the process for obtaining landlord consent, if required, should be well-defined.
Incorporate warranties and representations: Adding warranties and representations by the tenant, assignee, or subtenant in the lease agreement can help ensure that they meet specific financial and operational standards, reducing the risk of disputes and litigation.
Address default scenarios: The lease should explicitly state the consequences of default in the case of lease assignment or subletting, including the landlord’s remedies and the tenant’s potential liability.
Provide a dispute resolution mechanism: Including a dispute resolution clause, such as mediation or arbitration, can help minimize litigation risks by providing a streamlined process for resolving disagreements concerning lease assignment and subletting.
Ensure compliance with applicable laws: Drafting lease provisions that comply with relevant Florida and federal laws, such as Florida Statutes Section 83.06, the Americans with Disabilities Act, and the Fair Housing Act, can help reduce litigation risks and avoid disputes arising from non-compliance.

Please contact our office to set up your initial consultation to see what forms of intellectual property protection may be available for your unique situation.

Frequently Asked Questions

What is the difference between assignment and subleasing?
Assignment: An assignment is when the tenant transfers their rights under the lease to another party.
Subleasing: A sublease is when the tenant allows another party to use the property for a period of time.
What are the requirements for assigning or subleasing a commercial lease in Florida?
The lease must allow assignment or subleasing.
The landlord must approve the assignment or subleasing.
The tenant must provide the landlord with a copy of the assignment or sublease agreement.
What are the rights of the assignee or sublessee if the tenant assigns or subleases the lease without permission?
The assignee or sublessee may not have any rights under the lease.
The assignee or sublessee may face eviction from the property.

Have more questions about how commercial leasing could impact your business?

Crucially, this overview of lease assignment and subletting does not begin to cover all the laws implicated by this issue or the factors that may compel the application of such laws. Every case is unique, and the laws can produce different outcomes depending on the individual circumstances.

Jimerson Birr attorneys guide our clients to help make informed decisions while ensuring their rights are respected and protected. Our lawyers are highly trained and experienced in the nuances of the law, so they can accurately interpret statutes and case law and holistically prepare individuals or companies for their legal endeavors. Through this intense personal investment and advocacy, our lawyers will help resolve the issue’s complicated legal problems efficiently and effectively.

Having a Jimerson Birr attorney on your side means securing a team of seasoned, multi-dimensional, cross-functional legal professionals. Whether it is a transaction, an operational issue, a regulatory challenge, or a contested legal predicament that may require court intervention, we remain tireless advocates at every step. Being a value-added law firm means putting the client at the forefront of everything we do. We use our experience to help our clients navigate even the most complex problems and come out the other side triumphant.

If you want to understand your case, the merits of your claim or defense, potential monetary awards, or the amount of exposure you face, you should speak with a qualified Jimerson Birr lawyer. Our experienced team of attorneys is here to help. Call Jimerson Birr at (904) 389-0050 or use the contact form to schedule a consultation .

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Practical Law

If a lease contains an absolute prohibition on assignment, can the landlord consent to an assignment anyway?

Practical law resource id a-132-0384 (approx. 4 pages).

Residential Tenancies
Assignments, Variations, Surrenders and Termination - Land and Buildings
Business Tenancies (Non-contentious)

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COMMENTS

Sublet and Assignment Clauses in Commercial Leases
Of course, if you want to assign or sublet during the life of the lease, you can always approach the landlord and ask to reopen the issue. ... Many leases prohibit subleases and assignments without the landlord's consent but provide that the landlord will be reasonable when evaluating your proposed sublease or assignment. Courts have developed ...
Nonassignability Clauses in Commercial Leases: When is an assignment
Anti-assignment lease provisions that prohibit or limit the change in ownership or control of the tenant have been enforced by the courts, including a sale of stock, subsequent equity mergers, and transfers by operation of law. For example, in In re Washington Capital Aviation & Leasing, 156 B.R. 167 (Bankr. E.D. Va. 1993), the Virginia ...
Subleasing and Assignment of Leases
A sublease is when you transfer some (but not all of) your rights to use and enjoy the premises; you keep some right to re-enter or retake the premises. For example, you have a 12-month lease but you plan to go on a three-month vacation in the middle of the lease period. With a sublease, someone else (called the "subtenant" or "sublessee ...
PDF Rights of Residential Owners and Tenants
If a lease says nothing about assignment it may be assigned with no consent required. If the lease prohibits assignment or allows assignment only ... prohibit or require changes to the agreement. If the tenancy is a month-to-month unregulated tenancy, the owner can either accept the current rent, raise
How To Circumvent A Lease's Assignment And Subletting Restrictions
• A prohibition against assignment does not prohibit subletting, and vice versa. In most jurisdictions, merely agreeing that there is to be no subletting of the premises does not prohibit subletting of part of the leased premises. • A bar against assignment in the lease does not bar a subtenant from assigning its sublease.
2022 New York Laws RPP
§ 226-b. Right to sublease or assign. 1. Unless a greater right to assign is conferred by the lease, a tenant renting a residence may not assign his lease without the written consent of the owner, which consent may be unconditionally withheld without cause provided that the owner shall release the tenant from the lease upon request of the tenant upon thirty days notice if the owner ...
Understanding How a Commercial Lease Assignment Works
Lease Assignment 101. In basic terms, a lease assignment occurs when the current tenant to an existing lease agreement (known as the "assignor") assigns the lease rights and obligations to a third party (known as the "assignee"). A lease assignment should not be confused with a sublease, in which the existing tenant transfers by a ...
Leasing Basics
A lease may prohibit transfers altogether or permit transfers subject to specified conditions, the most common condition being that a landlord consent to transfer before it is made. If you are silent, rules will be implied. The only time standards are implied into a lease is when the lease is silent, in which case: (1) if the lease is silent on ...
Subletting vs. Assigning a Commercial Lease
A Lease Assignment Agreement is used when a tenant who is renting property from a landlord wants to transfer the entire interest that the tenant has in the property to a third party. The third party then assumes the lease and all rights and obligations under the lease that the tenant had with the landlord.
Assignment 101: Considerations for Landlords and Tenants in ...
Often a landlord will prohibit assignments and subleases with other current tenants of the property or with a prospective tenant with whom the landlord is negotiating for the lease of space at the property. Assignment Provisions ... An overly restrictive permitted-use clause in a lease can thwart even the most tenant-friendly assignment clause ...
Assignment of Lease: Definition & How They Work (2023)
The assignment of lease is a title document that transfers all rights possessed by a lessee or tenant to a property to another party. The assignee takes the assignor's place in the landlord-tenant relationship. You can view an example of a lease assignment here .
CA Rules on Assignments & Subleases
Commercial Leases and Properties - CA Rules on Assignments & Subleases. Starting with Cal. Civ. Code § 1995.010, California has codified the rules with respect to a tenant's transfer of interest in a commercial lease, i.e., an assignment or sublease. For purposes of the rules regarding assignments and subleases of commercial property, a ...
Assigning a Lease in New York
Unlike , New Yorkers do not have any explicit legal right to assign a lease. 1 But New York law does make it possible for a lease to give a particular tenant complete control over the assignment process. So, if a lease specifically states that a tenant doesn't need their landlord's approval to assign, there's no need to check in with the ...
PDF Sublets, Assignments and Illusory Tenancies
Assignments A lease assignment conveys to another person all the tenant's rights to occupy the apartment, whereas a sublet is based upon a temporary absence by the prime tenant who intends to return to the apartment at the end of the sublease. A tenant may not assign his/her lease without the written consent of the owner, which may be
How to Negotiate Assignment Rights for Commercial Leases
Before you enter into a lease negotiation, you should review your current lease terms and understand what they say about assignment rights. Some leases may prohibit assignment altogether, while ...
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 ...
What is Subletting? A Guide to Subletting Laws by State
Some leases will detail whether subletting is allowed. If it's not stated in the lease, you will still need written approval. Delaware. Delaware code Title 25 - Chapter 55 Section 5508 states tenants can sublet their apartment as long as the lease does not prohibit it. The law does not require your landlord's approval to sublet; however, we ...
Subleasing and Assignment Provisions in Commercial Leases
Generally, if a tenant subleases or assigns a lease without obtaining required consent from the landlord, then the tenant is in default and the landlord can exercise all remedies under the lease. The lease also may provide that a sublease or assignment without the landlord's consent is invalid and unenforceable.
Are Anti-Assignment Clauses Enforceable?
As discussed above, contract provisions can prohibit and void an assignment. The assignment materially changes the contract; If the assignment would significantly impact the performance of the contract — for instance, if it greatly increases the risks or burden imposed on the other party — then a court would likely not enforce the assignment.
The Process of Assigning a Contract
Property leases tend to specifically address assigning and subletting by the tenant. Residential leases normally prohibit assignment or subletting without the consent of the landlord.. Similarly, a commercial tenant almost always has to get consent from the landlord to assign the lease.
Assigning Your Lease
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 ...
Lease Assignment and Subletting
In addition to state laws, federal laws like the Americans with Disabilities Act and the Fair Housing Act can also impact commercial lease assignments and subletting. These federal laws require that commercial spaces be accessible to individuals with disabilities and prohibit discrimination in housing transactions. Therefore, tenants, assignees ...
If a lease contains an absolute prohibition on assignment, can the
If a lease contains an absolute prohibition on assignment, can the landlord consent to an assignment anyway? Anonymous (Public sector) Add reply. Related Content. Q: My client has received a request for a consent for an assignment of a lease, however, the lease contains an absolute prohibition on alienation and my client would like to decline ...