What is Lease Assignment?
The Short Answer
Lease Assignment explained simply
A Lease Assignment happens when the original tenant (the "assignor") transfers their entire interest in a lease agreement to a new tenant (the "assignee"). This means the new tenant takes on all the rights and responsibilities of the original lease, including paying rent and following all lease terms. This is different from a sublease, where the original tenant remains responsible for the lease.
Real-World Example
Selling a Coffee Shop with a Lease
Imagine you own a coffee shop and want to sell it. You have three years left on your commercial lease. Instead of breaking the lease, you can assign it to the new owner of the coffee shop. The new owner then becomes responsible for paying rent and maintaining the property according to the original lease terms. You, as the original tenant, are typically still on the hook if the new owner defaults, unless the landlord agrees to release you from the lease.
Why this matters
Lease assignment is crucial when selling a business that operates from a leased location. It allows the new owner to continue operating in the same space without negotiating a brand new lease. For the seller, it helps facilitate the sale and avoid penalties for breaking a lease. For the buyer, it provides continuity and avoids the hassle of finding a new location.
Always get landlord approval in writing for a lease assignment. Without it, you could be in breach of your original lease agreement.
Always get landlord approval in writing for a lease assignment. Without it, you could be in breach of your original lease agreement.
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