Assignment of Lease or Sublease

There is a great deal of confusion between the assignment of a lease and a sublease. The differences are substantial.

When a tenant assigns his or her lease, the tenant (assignor) is giving up all rights to the premises and vacates the entire premises. While the assignee takes possession of the premises and must pay rent directly to the landlord, it is important to be aware that if the assignee defaults on the lease, the original tenant will usually remain liable to the landlord. The terms of an assignment are always negotiable among the three parties, but the original lease remains in effect unless the landlord agrees to modified terms. In short, the landlord must reasonably approve the assignee.

When a tenant gives another the right to occupy a portion of the entire premises for a defined period of time, the tenant is subletting his or her leased premises. Tenants have the right to sublet their premises subject to the reasonable right of the landlord. A sublease requires a written agreement signed by the sublessor, the sublessee, and the landlord. The original tenant or sublessor remains liable for the rent and the terms of the lease. With a sublease, the sublessee pays rent to the sublessor or original tenant who pays the landlord.

In most commercial leases, a change in the corporate ownership of the tenant is considered an assignment of the lease which requires approval by the landlord.

The right of a tenant to assign or sublease is an important provision that requires careful consideration and should be approved by an attorney.


Pacific Commercial Building Management