Assignment of Lease

What is an Assignment of Lease?

Definition

Assignment of Lease refers to the transfer of the existing lease agreement from the original tenant (assignor) to a new tenant (assignee). The assignee acquires the same rights and obligations that the assignor held under the initial lease agreement. Typically, the assignor remains liable for lease obligations unless the landlord releases them from such liability.

Examples

Commercial Property: Abel, who leases a warehouse for 20 years, decides after 5 years that he no longer needs the warehouse. He assigns the lease to Baker. Baker now has all rights to use the warehouse and must comply with the lease terms. Abel remains liable unless the landlord absolves him of this responsibility.
Residential Property: Sarah, who rents an apartment under a year-long lease, needs to relocate to another city for work. She finds a new tenant, John, to take over her lease. By legally assigning the lease to John, Sarah transfers all her rights and duties under the lease to him, though she may still be accountable to the landlord in some cases.

Frequently Asked Questions

What is the difference between a sublease and an assignment of lease?
- A sublease does not transfer all lease rights and responsibilities, while an assignment transfers all interests in the lease to the assignee.
Does the landlord need to approve the assignment of lease?
- Most lease agreements require landlord consent for a lease assignment, ensuring the new tenant is vetted.
Is the assignor still liable after the lease is assigned?
- Yes, unless the landlord explicitly releases the assignor from the lease obligations.
Can any lease be assigned?
- Some leases contain a “non-assignment clause” which prohibits or restricts lease assignment.
What should be included in an assignment of lease agreement?
- The agreement should include terms like the names of assignor and assignee, property address, lease term, and an explicit approval clause from the landlord.

Sublease: An agreement where the original tenant rents out the property to a new tenant while retaining some rights to the property.
Lease Agreement: A contractual arrangement calling for the lessee to pay the lessor for use of an asset.
Tenant-at-Will: A tenant who occupies property with the landlord’s consent but without a fixed-term lease.
Lease Option: A lease agreement that includes an option to purchase the property.

Online Resources

Investopedia: Assignment of Lease
Rocket Lawyer: Lease Assignment Agreement
U.S. Small Business Administration (SBA): Commercial Leasing Basics

References

“Principles of Real Estate Practice” by David C. Ling, Wayne R. Archer
“Real Estate Law” by Marianne M.Jennings
“Essentials of Real Estate Finance” by David Sirota

Suggested Books for Further Studies

“Property Management Kit For Dummies” by Robert S. Griswold – A practical guide to property management law, including lease assignments.
“Commercial Lease: A Practical Guide” by Mark Warda – This book provides a comprehensive understanding of the legal aspects of leasing commercial properties.
“Landlord’s Legal Guide in Nolo” by Janet Portman & Marcia Stewart – A detailed guide including forms and tips on different aspects of renting and lease assignments.

Real Estate Basics: Assignment of Lease Fundamentals Quiz

### What does an assignment of lease effectively transfer? - [x] All rights and obligations under the current lease to the new tenant (assignee). - [ ] Only a portion of the lease obligations to the new tenant. - [ ] No rights, only the tenant's presence. - [ ] Just the original tenant’s (assignor) liability. > **Explanation:** An assignment of lease transfers all rights and obligations under the current lease from the assignor to the assignee. ### Who remains liable for the lease after an assignment? - [ ] Only the assignor - [ ] Only the assignee - [ ] Both the assignor and assignee - [x] The assignor, unless released by the landlord > **Explanation:** The assignor typically remains liable for the lease unless they are explicitly released from further obligations by the landlord. ### In what scenario must a landlord's consent typically be obtained? - [ ] Importing goods into the leased property - [x] Assigning the lease to another party - [ ] Painting the leased property - [ ] Hosting social gatherings in the property > **Explanation:** Most lease agreements require the landlord's consent before assigning the lease to another party. ### Why might a lease contain a non-assignment clause? - [ ] To facilitate lease assignments - [ ] To allow the assignor to sublease easily - [x] To prevent or restrict the assignment of the lease - [ ] To improve the property's value > **Explanation:** A non-assignment clause is included in a lease to prevent or restrict the lease’s assignment without the landlord's approval or conditions. ### What must be executed to complete an assignment of lease? - [ ] A rental application - [ ] A lease termination form - [x] An assignment of lease agreement - [ ] A property evaluation report > **Explanation:** An assignment of lease agreement needs to be executed to legally complete the transfer of lease rights from the assignor to the assignee. ### What does the new tenant (assignee) acquire through lease assignment? - [x] All the assignor's rights and obligations under the original lease - [ ] Only partially assumes responsibility based on mutual agreement - [ ] Gains only tenancy without obligations - [ ] Receives an equal share with the assignor > **Explanation:** Through the assignment of lease, the assignee acquires all the assignor's rights and obligations under the original lease. ### How does an assignment of lease differ from a sublease? - [ ] They are the same; both transfer full lease rights. - [x] Assignment transfers full lease rights and responsibilities, while sublease does not. - [ ] Sublease generally transfers more obligations than assignment. - [ ] Assignment is temporary, but sublease is permanent. > **Explanation:** An assignment transfers full lease rights and responsibilities to the assignee, while a sublease does not transfer all rights and responsibilities and keeps the original lessee (sublessor) accountable to the landlord. ### What section in a lease agreement might address transfer of lease? - [ ] Maintenance section - [ ] Utility section - [x] Assignment and Subleasing section - [ ] Property Description section > **Explanation:** The Assignment and Subleasing section of a lease agreement generally addresses the rules and conditions regarding the transfer of lease. ### What should an assignment of lease agreement include? - [x] Names of the assignor and assignee, lease term, property address, landlord’s approval clause - [ ] Only the property address and landlord’s contact - [ ] Newly altered lease terms - [ ] A summary of local lease laws > **Explanation:** An assignment of lease agreement should include the names of the assignor and assignee, property address, lease term, and a clause for landlord’s approval. ### Can an assignor escape lease obligations entirely upon assignment? - [ ] Yes, automatically once assigned - [x] Not unless released by the landlord - [ ] Only if the lease term is under one year - [ ] Yes, unless the property is subleased > **Explanation:** An assignor cannot escape lease obligations entirely unless they are released by the landlord upon assignment.