11/1/2016 | Articles & Alerts Over the past several years as businesses struggle to ride out the tough economic times, they have had no choice but to downsize.Tied to commercial leases for more office or retail space than they need, an assignment of the lease or the subletting of the extra space seems like an attractive way of saving on expenses.Tags: Queen Elizabeth Leadership EssayWhat They Fought For ThesisEssay Comedy FilmsAdvertisements To Write Essays OnDrunk Driving Essays ConclusionsExtended Definition Essay FearCovenant College Admissions EssayMfa Creative Writing NyuHow To Write A Self Assessment PaperThesis Of Public Policy
If an assignment or subletting comes with potential profit, the landlord typically expects to share in that profit.
Often, the split is 50-50, but make sure to recoup any expenses you incur in getting an assignee or subtenant before a profit split.
Be particularly leery of a clause that says a change in more than 50 percent of the company’s stock ownership will be deemed an assignment that is prohibited without the landlord’s approval.
A prohibited assignment can result in the landlord terminating a favorable lease.
The assignment and subletting clause of an office lease can prove to be a very important provision.
Typically, the landlord’s lease form states that the tenant may not assign or sublet the lease without the landlord’s prior consent, with such consent to be granted or withheld at the sole discretion of the landlord.As with an assignment, the tenant remains liable to the landlord on the original commercial lease.With a sublet, the landlord does not have a legal right to enforce the terms of the original lease or sublease against the subtenant in the event of breach.With an assignment, if the assignee breaches, the landlord has the right to enforce the terms of the lease against the assigning tenant or the assignee tenant. A sublease is a separate contract between the transferring tenant and the subtenant.The sublease may transfer all or a part of the leased premises, for all or a part of the lease term, and under terms that are similar or materially different from the lease.An assignment of a lease is the transfer by the tenant of all of the tenant’s rights and interest in the lease.In an assignment, although the assignee tenant effectively steps into the shoes of the assigning tenant, the assigning tenant continues to remain liable to the landlord on the lease.While we make no promises, should our leasing agent be successful in finding a suitable assignee(s), 1/2 month’s rent plus HST will apply.In the entire universe of legal and business terms that makes up the modern-day commercial lease, there are very few provisions that can change the world of the landlord or tenant.There are many different practical and legal considerations involved in negotiating and documenting the terms of an assignment or sublease including the legal consequences to the tenant under the assignment or sublease if landlord terminates the lease.Therefore, an experienced real estate attorney should be consulted so that the parties understand the consequences of such transactions and their competing interests are protected.