ASSIGNMENT / SUBLEASING - Understanding Commercial Leases - Part 10

This is part 10 of a multi-part series on Understanding Commercial Leases

ASSIGNMENT / SUBLEASING

PURPOSE - Protects Landlord and/or Tenant by specifying mechanism for Tenant  assigning lease or subleasing to a new Tenant OR Landlord assigning lease to new Landlord.

LANDLORD ASSIGNMENTS - Lease typically provides little or no restrictions on Landlord’s assignment of lease to new Landlord.

TENANT ASSIGNMENTS - Lease typically provides some type of restriction on Tenant’s assignment or subleasing, as the Landlord wants to make sure replacement Tenant is satisfactory.

SOME TYPICAL ASSIGNMENT CLAUSES

• Tenant CANNOT assign without Landlord’s consent.
• Tenant CAN assign, but only if new Tenant is on same “financial” level as old Tenant.
• Tenant CAN assign, even without Landlord’s consent.

LANDLORD'S INTEREST

• Make sure Landlord can assign with no restrictions.
• Make sure Tenant cannot assign unless Landlord approves, or unless new Tenant is at least as financially secure as old Tenant.
• Charge a fee for consenting to assignments to cover assignment processing costs (legal, etc.)
• Make sure old tenants are not relieved of
  responsibility as part of the assignment.
• Make sure lease says landlord can withhold consent for any reason whatsoever

TENANT'S INTEREST

• Make sure Landlord cannot “block” an assignment, as this prevents Tenant from
  selling business.
• Put in a “cap” on any fees that may be charged to prevent “blackmail” by Landlord.
• Make sure lease says any consent cannot be arbitrarily or “unreasonably withheld”.
• Make sure old Tenant is relieved of responsibility as part of the assignment.