Assignment, sublease and amendment counsel for tenants, landlords and business buyers.
Assignment consent is a negotiated gate, not a formality
Most commercial leases prohibit assignment or subletting without landlord consent, and many add conditions: creditworthiness review, a fee, or continuation of the original tenant's guaranty. When a business is sold, the lease assignment is often the single item most likely to delay or derail the closing.
Assignment versus sublease
- Assignment: the original tenant transfers its entire leasehold interest to a new tenant, who steps into the lease directly with the landlord.
- Sublease: the original tenant retains its lease and separately leases the space, or part of it, to a subtenant, remaining primarily liable to the landlord.
- The choice affects who the landlord can pursue for default and whether the original tenant's guaranty survives.
Guaranty release on assignment
Assigning a lease does not automatically release the original tenant or guarantor from liability. A landlord's consent to assignment can, and often should, be conditioned on an express release, particularly in a business sale where the seller expects a clean exit.
Amendments
Lease amendments modify agreed terms mid-term: extending the term, adjusting rent, expanding or reducing the premises, or changing use. Amendments should be drafted with the same care as the original lease and should confirm which prior terms remain unchanged.
Process for an assignment tied to a business sale
- 1
Review
Confirm the lease's assignment and consent provisions early in the sale negotiation.
- 2
Request consent
Submit the buyer's financials and request landlord approval, allowing for the lease's notice period.
- 3
Negotiate release
Seek an express release of the seller's guaranty as a condition of consent.
- 4
Document
Execute the assignment and assumption agreement alongside the business sale closing.
Answers
Frequently asked questions
- Do I need the landlord's consent to assign my lease?
- Almost always, yes. Commercial leases typically prohibit assignment without landlord consent, and many specify the standard the landlord must apply, such as reasonable consent, or reserve broad discretion.
- Am I still liable after I assign my lease?
- Unless the landlord expressly releases you, an assigning tenant and any guarantor generally remain liable for the assignee's future defaults. A release should be negotiated as part of the consent, not assumed.
- What's the difference between assigning and subleasing?
- An assignment transfers the entire lease to a new tenant who deals directly with the landlord. A sublease keeps the original tenant in the primary role, with the subtenant occupying under a separate arrangement between the original tenant and the subtenant.
- Can a landlord unreasonably withhold consent to an assignment?
- It depends entirely on the lease language. Some leases require the landlord's consent not be unreasonably withheld; others give the landlord unrestricted discretion. The applicable standard should be identified before a request for consent is submitted.
- How do I change the terms of an existing lease?
- Through a written amendment signed by both landlord and tenant. Oral modifications or informal email exchanges are generally insufficient to alter a written lease's terms.
Official sources
Consult the official sources above for current rules and procedures.