When a renter transfers an existing lease to another tenant, an assignment has taken place. There are several considerations when carrying out this transaction. It’s important to remember that assignment is not the same as subletting, in which one tenant grants a different lease to a different tenant. Make sure you know the rules and requirements before assigning a lease.
An assignment is more common in commercial than residential property. It can take place when a business closes down, or when one of several parties moves out of a property and wishes to terminate their lease obligations. No matter the scenario, an assignment of lease is always subject to approval of the landlord or property owner. Most leases require that any assignment of the lease be done with the landlord’s written permission. The landlord has the right to refuse tenancy of the property to any third parties who were not on the original lease.
If the party to whom you assign the lease is new to the property, he is known as the sub-tenant. The sub-tenant must agree to all the lease terms, including rent, deposits, maintenance and access to the property by the landlord. The sub-tenant also has all the rights that you enjoyed as tenant. Assignment of lease can also refer to the transfer of leased equipment from one party to another, under the same terms as the original lease.
You carry out the assignment, whether for real estate or equipment, by a separate document called an Assignment of Lease. This document specifies the date of assignment, on which the rental transfers to the sub-tenant, and with the written assent of the landlord indemnifies the tenant against any damages or breach of lease terms by the sub-tenant. In most cases, the rent must be paid in full by the tenant when the property is transferred.
The landlord has the right to terminate the assignment of lease if its terms, or the terms of the original lease, are violated. He also may return possession of the property to the tenant in the case of any breach of the lease terms of the sub-tenant, including nonpayment of rent.