Can you assign a lease to another party

Read more on commercial leases here. Almost every commercial lease contains restrictions on assigning, subletting or otherwise transferring the leased premises to another party and will detail any requirements for transferring the lease.

Ben Cobb is a Solicitor in the Commercial Property team. Consent should always be recorded in a formal document to avoid arguments. In view of the legal problems which can arise it is preferable to obtain advice from a solicitor before proceeding. If premises are assigned without consent, the landlord may not recognise the new tenant at all and continue to hold the original tenant liable for the rent and all other provisions of the lease including any breaches of covenant by the transferee.

Leases are more likely to allow under- or sub-letting of part of premises with consent if they can be easily sub-divided, such as an individual floor forming part of a larger office block. The landlord is entitled to ask for further documentation or information regarding the potential tenant, in order to make a decision.

A reference from an existing landlord of other premises for the payment of the rent and compliance with the lease terms may also be required. These checks can include:. It is likely that they may withhold their consent for assigning the lease to any tenant intending to make large-scale changes depending upon the type of premises involved. It is important to recognise that the assignment of a lease to a new tenant does not automatically exempt you from all liabilities related to that tenancy going forwards.

In fact, once the lease assignment is complete you can still be liable should the new tenant miss any payments or otherwise break the terms of their contract. Exactly what you will be liable for depends on when your lease began. If your lease began before January you will remain liable for all payments by any subsequent tenants — even if the lease is assigned several more times after you.

For leases that began after January , you will be required to sign an Authorised Guarantee Agreement. This means you guarantee payments for the next tenant, but not any further tenants. Landlords can only claim payments of rent within six months of the money being due, and only after full notice has already been served to the former tenant. There are a number of costs involved in lease assignment, and these can vary depending on the specific circumstances of your lease.

If the rent under the new lease is above the market rate, you may have to pay a premium to the new tenant to offset these costs. On the other hand, if the rent under the new lease is below the market rate, the new tenant may instead want to pay you a premium.

A final charge to be considered is the cost of this advice. It is highly recommended to involve your solicitor when opting to pursue a lease assignment so as not to inadvertently break the terms of your contract and leave yourself open to court action.

Assignment of a lease is not the only way to get out of a commercial lease and depending on your circumstances and the contract you have with your current landlord, it may not always be the best option. Read your contract carefully to check if it contains a clause like this, and if it does, what terms and conditions are involved. Any time limits specified in the lease for giving of notice must be strictly followed.

You would need to negotiate the specific terms of your exit and your landlord may require a pay-out to offset the inconvenience of having to market the property again. Occasionally, tenants want to leave a rental property before the end of their lease.

Individuals may take new jobs in new cities, and companies may go out of business or sell their enterprise to a third party. Whatever the reason, tenants can transfer their lease interests to new parties by completing an assignment of the lease.

The new tenant takes on the lease responsibilities, including rent and property maintenance, and the original tenant is released from most if not all of its duties.

Successful property management begins with good documentation, and a properly-drafted and executed assignment will ensure that all parties — new and old — understand the obligations that are being transferred and the responsibilities that each will have under the new arrangement. The following provision-by-provision instructions will help you understand the terms of your assignment.

The numbers below e. Please review the entire document before starting your step-by-step process. Contents 11 min read. Read more. Real Estate and Business. Special circumstances can require a tenant or a landlord to assign a commercial lease. Find out the most common situations for a commercial lease assignment and whether it's right for your situation. The best subletting situations occur when the landlord, tenant, and subtenant are all on the same page. Here is some information on how everyone can get there via the proper legal forms.

Business Management. Your commercial lease is a key element of your business. Making sure the lease protects you and covers all situations will allow you to conduct business with peace of mind.

Here are a few tips for negotiating your lease. Need to assign your rights and duties under a contract? Learn more about the basics of an assignment and assumption agreement. A landlord can assign his leases to a new buyer of his building. Likewise, a tenant may be able to assign his lease if he needs to relocate. Find out how to assign your lease and what you can do to protect yourself when doing so. Overview Occasionally, tenants want to leave a rental property before the end of their lease.

Commercial rental applications are easy to fill out, but lease clauses can be confusing or undesirable. Follow these suggestions to better prepare for renting a commercial space. If you're terminating your lease early, you'll need to draft a letter explaining yourself and provide additional information. If both of the original parties agree to the change and sign documents transferring existing interests and obligations, an agreement can be assigned and assumed by a third party.

Overview Successful property management begins with good documentation, and most landlords start leasing arrangements with rental applications. A rental application allows a landlord to organize and evaluate applicants for a piece of property, and to use the information provided to run credit and background checks on those individuals and companies.

Collectively, this information can be used to select tenants who will pay rent promptly and care well for the property.

Understand what you're agreeing to before you put your name on the dotted line. Property Owners. Wondering whether you should be renting out your property by using a lease agreement or a rental agreement? 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 up until January In January , Jake suffers a financial crisis and has to close down his business to move to a different city. 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. 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. 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. John Daniel "J. He was born in Fairhope, Alabama and after earning his undergraduate degree at Auburn University, he received a law degree from Thomas Goode Jones School of Law in After law school, he formed the Law Office of J.

Hawke LLC and over the last decade he has fought incredibly hard for each and everyone of his clients. His practice focuses on representing people facing criminal charges and clients dealing with family law matters.

Read more at Skandslegal. He specializes in working with businesses to build risk-based data privacy and security systems from the ground up.

Michael has extensive experience advising companies from start-ups to established publicly-traded companies. Areas of expertise include contract drafting and negotiation, terms of use, business structuring and funding, company and employee policies, general transactional issues as well as licensing and regulatory compliance.

His prior experience before entering private practice includes negotiating sales contracts for a Fortune healthcare company, as well as regulatory compliance contracts for a publicly traded dental manufacturer.