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Assignment and Assumption of Lease and Landlord Consent

You can use a Lease Assignment to outline the terms for assigning the responsibilities of a lease to someone else. You need to make sure that the landlord has given his or her consent for the Lease Assignment to go into effect. The terms of assignment, consent of the lessor, and acceptance by the assignee are covered in this Lease Assignment, including the length of the assignment, consent of the person taking over the lease, and acceptance by you, the current lease holder. A Lease Assignment transfers the rights and obligations of an existing lease from one tenant to another.

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This form has been prepared for general informational purposes only. It does not constitute legal advice, advertising, a solicitation, or tax advice. Transmission of this form and the information contained herein is not intended to create, and receipt thereof does not constitute formation of, an attorney-client relationship. You should not rely upon this document or information for any purpose without seeking legal advice from an appropriately licensed attorney, including without limitation to review and provide advice on the terms of this form, the appropriate approvals required in connection with the transactions contemplated by this form, and any securities law and other legal issues contemplated by this form or the transactions contemplated by this form.

ASSIGNMENT AND ASSUMPTION OF LEASE AND LANDLORD CONSENT

THIS ASSIGNMENT AND ASSUMPTION OF LEASE AND LANDLORD CONSENT (" Agreement ") is effective as of _________________ (the “ Effective Date ”), between  _____________  a ________________ corporation (" Assignor "), and ________________   a ________________ corporation (" Assignee ") who agree as follows:

A.              Lease .  ________________ a Delaware corporation (“ Landlord ”), and Assignor, as tenant, are parties to that certain Master Lease dated as of ________________  (the “ Master   Lease ”), pursuant to which Assignor leased from Landlord, and Landlord leased to Assignor, certain premises consisting of approximately ________________ rentable square feet located ________________ (the “ Leased Premises ”) in the building with a street address of ________________________________  (the “ Building ”).  A true, correct and complete copy of the Lease is attached hereto as  Exhibit “A”  and is by this reference incorporated herein and made a part hereof.  The Lease is scheduled to expire on ________________. 

B.         Assignor desires to transfer and assign all of its right, title and interest, as subtenant, in, to, and under the Lease to Assignee, and Assignee wishes to assume all of Assignor's duties, liabilities, and obligations thereunder.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties mutually covenant and agree as follows:

1.               Assignment .  Assignor, for and in consideration of the payment of rent and the performance of all of the Lease covenants by Assignee as successor subtenant under the Lease, does hereby grant, assign, and convey to Assignee all of Assignor’s right, title, and interest in and to the Lease, for the residue of the term of the Lease, at the rent and other charges set forth in the Lease and subject to the conditions contained in the Lease and henceforth to be performed and observed by Assignee.    

2.               Performance of Lease Covenants and Conditions; Assumption . For the benefit of Assignor and Landlord and Landlord, Assignee hereby assumes all rights, duties, and obligations of the subtenant under the Lease and Assignee hereby covenants and agrees to perform all of the duties and obligations of the subtenant pursuant to the Lease from and after the Effective Date as if Assignee were the original subtenant thereunder. Assignee shall make all payments of rent, additional rent, and other sums due under the Lease from the subtenant thereunder, for the period from and after the Effective Date, when due and payable strictly in accordance with the terms, covenants, and conditions of the Lease.

3.               Letter of Credit .  Within three (3) business days following the full execution of this Agreement by the parties hereto, Landlord’s execution of its consent and Landlord’s execution of the Landlord’s Consent, each as set forth below, Assignee shall deliver to Landlord a letter of credit which satisfies the requirements of Section 21 of the Lease.  Within three (3) business days following Landlord’s receipt of such Letter of Credit from Assignee, Landlord shall return the original Letter of Credit to Assignor and thereafter such original Letter of Credit shall be void and of no further force or effect. 

4.               Possession . Assignor hereby tenders, and Assignee hereby accepts, possession of the Premises in its “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS” condition. Assignor makes no representations or warranties with respect to the physical condition of the Premises or the suitability thereof for Assignee’s use.

5.               Assignment and Subleasing . Subject to the provisions of the Lease, Assignee may assign the Lease, or sub-lease all or any portion of the Premises, but Assignee must also obtain Assignor’s prior written consent, which consent shall not be unreasonably withheld or delayed. As a condition of granting such consent to an assignment, Assignor may require that the new assignee assume the obligations of the subtenant under the Lease and take subject to all of the terms and conditions contained both in the Lease and this Agreement and as a condition of consenting to any lease, Assignor may require that each sublessee agree, by an express provision in its lease, to be bound by all of the terms and provisions of the Lease and this Agreement.  If Assignee assigns the Lease or leases the Premises, in whole or in part, Assignee shall nevertheless remain liable to Assignor for the full performance of Assignee’s obligations under the Lease and this Agreement.

6.               Entry . Assignee agrees that Assignor may at any time during the regular business hours enter upon the Premises for purpose of inspecting the same.

7.               Insurance . Assignee agrees to maintain in effect all of the insurance coverages required to be maintained by the subtenant under the Lease and to provide evidence of such insurance to Assignor from time to time. Assignee agrees to name Assignor as an additional insured under the general liability insurance carried by Assignee with respect to the Premises.

8.               Lease Amendments or Modifications . Assignee shall not enter into any lease amendments or modifications of the Lease with Landlord without the prior written consent of Assignor, which consent shall not be unreasonably withheld or delayed.

9.               Broker Commissions; Fees .  Assignee acknowledges and agrees that Assignee shall be solely responsible for the payment of all broker commissions in connection with this Agreement.  Each of Assignee and Assignor represents and warrants to the other that it has taken no act nor permitted any act to be taken pursuant to which it or the other party hereto might incur any claim for brokerage commissions or finder’s fees in connection with the execution of this Agreement other than Jones Lang LaSalle representing Assignee and CBRE representing Assignor.  Each party agrees to indemnify, defend and hold the other harmless against all liabilities and costs arising from a breach of such representation and warranty, including, without limitation, for attorneys’ fees and costs in connection therewith.  In addition, Assignee shall pay any fees charged by Landlord and Landlord in connection with obtaining the consent of each of them.

10.            Indemnification.    Assignee hereby indemnifies and holds Assignor and its officers, directors, shareholders, members, affiliates, representatives, agents, employees, successors and assigns harmless from and against all claims, damages, demands, losses, expenses and costs incurred, arising out of, or in connection with Assignee’s failure, from and after the Effective Date, to observe, perform and discharge any and all of the subtenant’s covenants, obligations and liabilities in connection with the Lease.  Assignor hereby indemnifies and holds Assignee and its officers, directors, shareholders, members, affiliates, representatives, agents, employees, successors and assigns harmless from and against all claims, damages, demands, losses, expenses and costs incurred, arising out of, or in connection with Assignor’s failure to the extent accruing prior to the Effective Date, to observe, perform and discharge any and all of the subtenant’s covenants, obligations and liabilities in connection with the Lease.

11.            Defaults under Lease . Within two (2) days after receiving any notice from Landlord relating to the performance of the obligations of the subtenant under the Lease, Assignee shall send a copy of such notice to Assignor. Within two (2) days after receiving any notice from Landlord relating to the performance of any obligations of the subtenant under the Lease, Assignor shall send a copy of such notice to Assignee. If Assignee is in default under the provisions of the Lease or this Agreement, and if Assignee fails to cure such default within fifteen (15) days after receipt of notice from Landlord or Assignor specifying the nature of such default with respect to non-monetary defaults and two (2) business days with respect to monetary defaults, then Assignor may reenter the Premises, with or without process of law, and cure such default, in which event Assignee shall promptly reimburse Assignor for all costs and expenses with regard thereto, or, at Assignor’s option, Assignor may repossess and enjoy the Premises as of Assignor’s first and former estate and either declare this Agreement to be terminated at no further force or effect or, without terminating the same, Assignor may reassign the Lease to itself or others or sublet the Premises to itself or others, in whole or in part, for the account of Assignee, in which event Assignee shall promptly reimburse Assignor for any rent deficiencies and other charges, costs, reasonable attorneys’ fees, or expenses so incurred by Assignor with respect thereto.

12.            Attorneys’ Fees .  In any action between the parties to enforce any of the terms or provisions of this Agreement, the prevailing party in the action shall be entitled to recover from the non-prevailing party, in addition to damages, injunctive relief or other relief, its reasonable costs and expenses, including, without limitation, costs and reasonable attorneys’ fees, as the court shall determine.  Any such attorneys’ fees and other expenses incurred by either party in enforcing a judgment in its favor under this Agreement shall be recoverable separately from and in addition to any other amount included in such judgment, and such attorneys’ fees obligation is intended to be severable from the other provisions of this Agreement and to survive and not be merged into any such judgment.

13.            Successors and Assigns .  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.

14.            Severability .  If any provision of this Agreement shall be held invalid or unenforceable for any reason and to any extent, the remainder of this Agreement shall not be affected, but shall be enforced to the greatest extent permitted by law.

15.            Governing Law .  This Agreement shall be governed by and construed in accordance with the laws of the State of California.

16.            Counterparts .  This Agreement may be executed in one or more counterparts.  All such counterparts, when taken together, shall comprise the fully executed Agreement.  Signatures of the parties transmitted by facsimile or electronic mail in PDF format shall be deemed to constitute originals and may be relied upon, for all purposes, as binding the transmitting party hereto.  The parties intend to be bound by the signatures transmitted by facsimile or electronic mail in PDF format, are aware that the other party will rely on such signature, and hereby waive any defenses to the enforcement of the terms of this Agreement based on the form of the signature.

17.            Notices .  For purposes of this Agreement, the notice addresses for Assignee and Assignor shall be as follows:

_____________________

Attn: ________________

18.            Warranty and Authority .  Each party represents that this Agreement has been executed by its duly authorized representative.

19.            Condition Precedent .  This Agreement is not and shall not be effective unless and until each of Landlord and Landlord provides its consent to this Agreement.  If either Landlord or Landlord fails to consent to this Agreement with thirty (30) days after delivery of this Agreement to Landlord and Landlord then either Assignor or Assignee may terminate this Agreement by written notice thereof to the other party at any time prior to receipt of Landlord’s and Landlord’s consent and in such event neither Assignor nor Assignee shall have any obligations to the other party under this Agreement.  Assignee shall reasonably cooperate with Assignor to obtain Landlord’s and Landlord’s consent, including providing Landlord and Landlord with financial information and other information requested by Landlord and Landlord

IN WITNESS WHEREOF, this Agreement has been executed as of the Effective Date set forth above.

LANDLORD’S CONSENT

By its execution below, Landlord consents to this assignment of the Lease to Assignee and acknowledges the continuance of the Lease by and between Assignee and Landlord.  Landlord is not a party to the assignment and executes this document for the limited purpose of granting its consent.  The consent to this assignment shall not act as or be deemed as a waiver of Landlord’s right to consent to any subsequent assignment or lease in accordance with the terms of the Lease.  Notwithstanding the foregoing, so long as Assignee delivers to Landlord a letter of credit which satisfies the requirements of Section 21 of the Lease then within three (3) business days following Landlord’s receipt of such Letter of Credit from Assignee, Landlord shall return the original Letter of Credit to Assignor and thereafter such original Letter of Credit shall be void and of no further force or effect.

Landlord, Inc.

By:                                                      

Its:                                                       

LANDLORD CONSENT TO ASSIGNMENT OF LEASE

By its execution below,  Landlord consents to this assignment of the Lease to Assignee and acknowledges the continuance of the Lease by and between Assignee and Landlord.  Landlord is not a party to the assignment and executes this document for the limited purpose of granting its consent.  Landlord’s consent shall not relieve or discharge Landlord from any of its obligations under the Master Lease, whether or not such Default should occur by fault of the Assignee.  The consent to this assignment shall not act as or be deemed as a waiver of Landlord’s right to consent to any subsequent assignment or lease in accordance with the terms of the Master Lease.

Landlord’s consent is conditioned upon payment by Landlord of all Rent and any other charges due under the Master Lease at the time of the assignment (notwithstanding that such charges may be billed following the date of the assignment).

a ________________ corporation

By:                                               

Its:                                               

(see attached)

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Assignment and Consent Standards in Commercial Leases

Mar 6, 2020

Assignment provisions in commercial leases are heavily negotiated and very important to both landlords and tenants. This article presents a brief overview of the assignment provision in commercial leases, both office and retail.

Assignment provisions in commercial leases are heavily negotiated and very important to both landlords and tenants. When a tenant’s interest in a lease is assigned, the tenant is transferring its entire leasehold interest and 100% of the leased premises to a third party for the entire remaining term of the lease. For the tenant, the assignment provision represents a potential exit strategy, dependent of course on the local market, and increased flexibility for future needs. For the landlord, the assignment offers greater security for its revenue stream and hopefully the avoidance of a tenant bankruptcy or default while keeping its building occupied. The tenant’s desire for flexibility and the landlord’s need for control is where the negotiations are focused. This article presents a brief overview of the assignment provision in commercial leases, both office and retail, with particular attention on the laws of Maryland, Virginia and the District of Columbia. The landlord’s standard for providing consent to a request to an assignment will be reviewed, and we will conclude by offering suggested language.

What If The Lease Does Not Contain An Assignment Provision?

The law traditionally favors the free alienation of property. Therefore, under the laws of almost every state, if the lease is silent on whether the landlord’s consent to an assignment is required, then the commercial tenant has the right to assign its interest. This is true in Maryland, Virginia and the District of Columbia. Given this baseline, almost every lease form will have a detailed provision setting forth the assignment process. Note also, however, that in most states it is also enforceable for a commercial lease to have an outright prohibition against assignments. Such a provision would likely be a non-starting deal point for most sophisticated tenants.

What Does Reasonable Mean?

If a lease simply provides that the tenant requires landlord’s consent to an assignment, but does not include the standard for giving or withholding that consent, then in many states the implied standard is that the landlord’s consent may not be unreasonably withheld. Historically this was the minority view, with the historical rule allowing the landlord to withhold consent for any reason. The implied duty of reasonableness is now more the norm as more states adopt this position when presented with the issue. There is express case law establishing this rule in Maryland, and most courts in Virginia and Washington, DC will imply such a covenant of good faith and fair dealing. Most states, though, do allow a landlord the sole right to grant or withhold its consent if the lease clearly expressly provides, and in Maryland the lease must specifically state that the landlord’s consent may be granted or withheld in the sole and absolute subjective discretion of the landlord. Again though, a sophisticated tenant with any leverage should never agree to such a provision.

Most negotiated leases will instead contain a provision requiring that landlord’s consent to an assignment is required, but such consent will not be unreasonably withheld. The tenant will likely also try to include landlord’s obligation to not unreasonably delay or condition its consent. A short clause without further defining what constitutes “reasonableness” generally favors the tenant, and landlords typically prefer including specific standards as to the criteria it can consider when reasonably deciding whether or not to consent to an assignment. Without such specificity, defining “reasonable” is difficult as the landlord and tenant clearly will have differing viewpoints and it may be left as a factual question to be decided in litigation. The typical definition (set forth in the Restatement (Second) of Property) would be that of a reasonably prudent person in the landlord’s position exercising reasonable commercial responsibility.

Absent a detailed provision listing the criteria a landlord can consider when reasonably reviewing a request to assign, a landlord is typically found to be considered reasonable if it considers certain general broad factors. First, the landlord reviews the assignee’s proposed use. In a retail setting, the landlord will be concerned whether the proposed use fits with the existing center and/or violates any existing exclusives or insurance requirements. In an office setting, the landlord might review the expected traffic and wear and tear on the building. Second, the landlord will consider the creditworthiness of the assignee. The landlord (and the assignor) will want to be confident that the assignee is capable of performing tenant’s obligations under the lease and a large creditworthy tenant increases the value of the asset. The assignor might argue that a strict financial test (such as a minimum net worth, for example) is unfair since the assignor is likely not being released upon the assignment and the landlord can still pursue the assignor in the event of a default. Third, the landlord will review the experience and history of the assignor. As mentioned above, landlords instead prefer a detailed list setting forth the many factors that they can include as part of reasonably reviewing a request for a lease assignment.

Without further establishing the criteria, the landlord puts itself at risk of a challenge by the tenant that a denial of a consent is unreasonable.

In defining “reasonable,” courts typically do not allow a landlord to deny or condition consent to an assignment based purely on economic reasons where the landlord results in substantially increasing what it was entitled to under the lease. In Washington, DC, there is well established case law holding that it is unreasonable for a landlord to withhold consent solely to extract an economic concession or improve its economic position. For example, a court would not consider it reasonable for a landlord to condition its consent on the assignee paying a greatly increased rent. Instead, as discussed below, landlords should look to protect their interests in a market of increasing rents by providing for either the sharing of excess rentals or a right to recapture.

What Are Typical Provisions In an Assignment Clause?

As discussed above, tenants generally prefer a short assignment provision simply requiring the landlord to not unreasonably withhold, condition or delay its consent to an assignment. But most leases are drafted by landlords, and over the years the assignment provisions have evolved to contain many typical provisions in addition to further defining “reasonableness,” including the following below.

• Sharing of Excess Rents. Since many states do not permit a landlord to condition its consent on improving its economic position (e. g. , by increasing the rent), most leases instead contain a provision where the landlord is entitled to all or a portion of the profits. The profits may mean increased rent, or it may even be construed more broadly to consider the value of the location in a sale of the tenant’s business. The landlord’s argument is that it doesn’t want the tenants competing in the real estate market. The tenant should push back here, and certainly try to lower the percentage shared, carve out any consideration received in the sale of tenant’s business, and only share profits after all of the tenant’s reasonable costs incurred in connection with the assignment were first deducted.
• Corporate Transfers. Since a purchase of the entity constituting tenant is likely not deemed an assignment under the law, most leases make clear that any such corporate sale, including the sale of either a controlling interest in the stock or substantially all of the assets of the tenant, is deemed an assignment for purposes of the lease. The tenant should carve out permitted transfers for typical mergers and acquisitions under certain conditions, and also carve out routine transfers of stock (or other ownership interests) between existing partners or for estate planning purposes. The landlord will likely accept a permitted transfer concept provided they receive adequate notice and the successor entity succeeds to all of the assets of the original tenant with an acceptable net worth.
• Assignment Review Fee. Most landlords include in their form lease the requirement that the tenant reimburse them for legal and administrative expenses incurred in reviewing the request for consent and preparing the assignment. The tenant clearly wants to keep these fees reasonable and in keeping with the local market.
• Recapture Rights. Landlords like to include the express right to recapture the premises in the event the tenant comes to it to request a consent for an assignment. A recapture clause allows the landlord to terminate the lease if market rents have increased or if it needs the space for another use. Sophisticated tenants should push back here as much as leverage allows, try to limit the time periods, and if nothing else try for the right to nullify the recapture by rescinding its request for the consent.
• Tenant’s Remedy. To protect themselves from claims for damages from the tenant if the landlord withholds its consent to a requested assignment, landlords often include a provision where the tenant waives its rights to monetary damages in such a situation and can only seek injunctive relief. The tenant should try to delete this provision, or at least, if leverage permits, provide for the right to seek damages if the landlord is subsequently found to have acted in bad faith.

Assignment provisions are heavily negotiated and both the commercial landlord and tenant need to be advised to the applicable local law and know the market for a comparable transaction. ( Note: The author represents office and retail landlords and tenants throughout Virginia, Maryland and the District of Columbia.) Sample reasonableness provisions for both office and retail uses are copied below for reference.

Retail Lease

Landlord and Tenant agree, by way of example and without limitation, that it shall be reasonable for Landlord to withhold its consent if any of the following situations exist or may exist: (i) In Landlord’s reasonable business judgment, the proposed assignee lacks sufficient business experience to operate a business of the type permitted under this Lease and to a quality required under this Lease; (ii) The present net worth of the proposed assignee is lower than that of Tenant’s as of either the date of the proposed assignment or the date of this Lease; (iii) The proposed assignment would require alterations to the Premises affecting the Building’s systems or structure; (iv) The proposed assignment would require modification to the terms of this Lease, or would breach any covenant of Landlord in any other lease, insurance policy, financing agreement or other agreement relating to the Shopping Center, including, without limitation, covenants respecting radius, location, use and/or exclusivity; (v) The proposed assignment would conflict with the primary use of any existing tenant in the Shopping Center or any recorded instrument to which the Shopping Center is bound; and/or (vi) The proposed assignment or subletting would result in a reduction in the Rent collected by Landlord during any portion of the term of this Lease.

Office Lease

Without limitation as to other reasonable grounds for withholding consent, the parties hereby agree that it shall be reasonable under this Lease and under any applicable law for Landlord to withhold consent to any proposed Transfer where one or more of the following apply: (i) The Transferee is of a character or reputation or engaged in a business which is not consistent with the quality of the Building; (ii) The Transferee intends to use the Premises for purposes which are not permitted under this Lease; (iii) The Transferee is a governmental agency; (iv) The Transfer occurs prior to the first anniversary of the Lease Commencement Date; (v) The Transferee has a net worth of less than $10,000,000.00; (vi) The proposed Transfer would cause a violation or trigger a termination right of another lease for space in the Building; or (vii) Either the proposed Transferee, or any person or entity which directly or indirectly, controls, is controlled by, or is under common control with, the proposed Transferee, (i) occupies space in the Building at the time of the request for consent, or (ii) is negotiating with Landlord to lease space in the Building at such time, or (iii) has negotiated with Landlord during the six (6)-month period immediately preceding the Transfer Notice.

Reprinted with permission from the March edition of the Commercial Leasing Law & Strategy© 2020 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or [email protected] .

• John G. Kelly

Related Practices Areas

• Commercial Leasing
• Real Estate

Related Industries

• Bank & Lender Services
• Real Estate Development & Investment
• Small, Emerging & Growing Businesses

Lease Assignment Agreement

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ContractsCounsel has assisted 197 clients with lease assignment agreements and maintains a network of 157 real estate lawyers available daily. These lawyers collectively have 19 reviews to help you choose the best lawyer for your needs.

A lease assignment agreement is a legally binding contract outlining the terms and conditions of transferring a lease from one party to another in one place. This means the assignee becomes the new tenant and assumes all the rights, obligations, and liabilities under the original lease. Lease assignments are commonly used in real estate transactions when a tenant wants to transfer their lease to another party before the lease term expires. We will discuss the lease assignment agreements' purpose, key elements, and other relevant aspects.

Key Elements of a Lease Assignment Agreement

A lease assignment agreement includes several key elements outlining the terms and conditions of the lease transfer. These elements may vary depending on local laws and specific circumstances but generally include the following:

• Parties: The lease assignment agreement should clearly identify the parties involved, including the original tenant (assignor), the new tenant (assignee), and the landlord.
• Property: The agreement should specify the property subject to the lease assignment, including the address, unit number, and relevant details.
• Terms: The agreement should state the lease assignment's effective date, the original lease's remaining term, and any renewal or termination provisions.
• Rights and Obligations: The agreement should outline the rights and obligations of the assignor, assignee, and landlord, including rent payments, maintenance responsibilities, and any other lease terms that will carry over to the assignee.
• Consent: In most cases, the lease assignment agreement requires the landlord's written consent. The agreement should specify the conditions and process for obtaining landlord consent.
• Indemnification: The agreement may include provisions for indemnifying the landlord against any losses or damages resulting from the lease assignment.
• Governing Law : The agreement should specify the governing law and jurisdiction applicable to any disputes or legal matters related to the lease assignment.

Legal Implications of Lease Assignment Agreements

Lease assignments have legal implications for all parties involved. It is important to understand the potential legal risks and obligations associated with lease assignments. For tenants, it may be necessary to review the original lease agreement and seek legal advice to ensure compliance with the terms and conditions of the lease assignment. Landlords should carefully review and approve lease assignments to protect their rights and interests. In some jurisdictions, landlords may have the right to reject a proposed lease assignment for valid reasons.

Muhammad Yar L.

Practical Tips for Managing Lease Assignment Agreements

Lease assignments can be complex, and it is important for tenants and landlords to approach them with caution. Here are some tips for navigating lease assignments:

For Tenants

• Review the Original Lease Agreement: Understand the terms and conditions of the original lease before entering into a lease assignment agreement.
• Seek Legal Advice: Consider consulting with a real estate attorney to ensure compliance with local laws and protect your rights and interests.
• Obtain Written Consent from the Landlord: Follow the process outlined in the lease assignment agreement to obtain written consent from the landlord before proceeding with the assignment.
• Communicate with all Parties Involved: Keep open communication with the assignee, assignor, and landlord throughout the process to avoid misunderstandings or disputes.
• Fulfill Obligations under the Original Lease: Even after the lease assignment, the assignor may still be responsible for fulfilling their obligations under the original lease until the effective date of the assignment.

For Landlords

• Review the Lease Assignment Carefully: Carefully review the proposed lease assignment agreement, including the terms and conditions, rights and obligations of the assignor and assignee, and any indemnification provisions.
• Require Written Consent: Insist on obtaining written consent from the assignor and assignee before allowing the lease assignment to proceed, as this protects your rights and interests as a landlord.
• Verify Financials and Credentials of Assignee: Conduct thorough due diligence on the proposed assignee's financials and credentials to ensure they can fulfill the lease obligations.
• Update Lease Documentation: Once the lease assignment is approved, update the lease documentation to reflect the new tenant (assignee) and provide copies to all parties involved.
• Communicate with all Parties Involved: Maintain open communication with the assignor, assignee, and any property management or legal professionals involved in the lease assignment process to ensure a smooth transition.

Potential Risks and Considerations

There are potential risks and considerations that tenants and landlords should be aware of when it comes to lease assignments. These may include:

• Non-Compliance with the Original Lease: If the assignee fails to comply with the terms and conditions of the original lease, the assignor may still be held liable for any breaches.
• Landlord's Right to Reject: In some jurisdictions, landlords may have the right to reject a proposed lease assignment for valid reasons, such as the assignee's inability to meet financial obligations or lack of appropriate credentials.
• Indemnification Provisions: The lease assignment agreement may include indemnification provisions that hold the assignor and assignee responsible for any losses or damages resulting from the lease assignment.
• Legal Disputes: Disputes may arise during the lease assignment process, such as disagreements over the terms and conditions, consent requirements, or other related matters.
• Local Laws and Regulations: Lease assignments are subject to local laws and regulations, which may vary by jurisdiction. It is important to ensure compliance with applicable laws and seek legal advice.

Key Terms for Legal Assignment Agreements

• Consideration: Refers to the value or benefit each party receives in exchange for entering into the assignment agreement.
• Assignment: The transfer of rights or obligations from one party (assignor) to another (assignee) as agreed upon in the assignment agreement.
• Consent: The requirement for obtaining permission or agreement from relevant parties, such as the original contracting parties, for the assignment to occur.
• Indemnity : The legal protection provided by the assignor to the assignee against any potential losses, liabilities, or claims arising from the assignment.
• Governing Law: The jurisdiction or legal system that governs the interpretation, validity, and enforcement of the assignment agreement, which is typically specified in the agreement itself.

Final Thoughts on Legal Assignment Agreements

A lease assignment agreement is a legally binding contract allowing tenants to transfer their lease rights and responsibilities to another party. It is important for both tenants and landlords to carefully review and understand the terms and conditions of a lease assignment, seek legal advice if needed, and maintain open communication throughout the process. By following the appropriate steps and considering potential risks and considerations, lease assignments can be a useful tool for tenants and landlords to manage their lease agreements effectively.

However, you need the help of a professional lawyer to ensure you do not end up messing up a lease assignment agreement. So, ensure you approach an experienced attorney who is well-versed in the field.

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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

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Navigating Assignments, Subleases, and Landlord Consent in Commercial Leases

Major shifts in how businesses operate (remote work, business digitalization, and e-commerce are just a few examples), coupled with interest rate increases that haven’t been seen in decades, require that commercial lease tenants remain as flexible as possible to better navigate the fast-changing business landscape. Two tools available to tenants in this regard are assignment rights and sublease rights. Whether the need is to downsize, expand, or relocate, negotiating favorable assignment and sublease rights in a commercial lease can serve as a crucial lifeline for a business should the need arise.

With a lease assignment, the original tenant, the “assignor,” transfers all of its rights and interest and delegates its obligations in and under the lease to a third party, the “assignee.” The assignee, in turn, accepts such transfer and assumes the original tenant’s obligations under the lease, essentially stepping into the shoes of the original tenant for the remainder of the lease term. Thus, the assignment creates a direct relationship between the assignee and the landlord, and the assignee has the exclusive right to use and occupy the premises under the lease. It’s important to note, however, that absent an express release from the landlord, the original tenant (and any guarantors) will typically remain liable to the landlord under the lease. Moreover, tenants should bear in mind that certain rights contained in the original lease, such as renewal and expansion options, may not automatically extend to an assignee.

In the case of a sublease, the original tenant retains some of its interest in the lease and “subleases” all or a portion of the premises to a new “subtenant.” A sublease creates a sublandlord-subtenant relationship between the original tenant and the subtenant. It does not, however, create a contractual relationship between the landlord and the subtenant. The original relationship between the landlord and the sublandlord (i.e., the original tenant) remains intact, and the original tenant remains liable for its obligations under its lease, including rent payments.

Landlord’s Consent

Generally, if a lease does not contain any restrictions on the tenant’s ability to assign the lease or sublease the space, the tenant has the unrestricted right to do so at will. Practically speaking, most leases will contain restrictions limiting such ability. Some common examples of these restrictions include a financial review of the proposed assignee or subtenant, landlord fees, the landlord’s right to recapture the premises, profit-splitting arrangements, and, perhaps the most common, the landlord’s written consent requirement. Leases may contain any number of assignment and sublease restrictions, and they are often included as conditions to the landlord giving its consent. It should be noted that assignment and sublease, though often paired together in a lease, are distinct concepts, and a restriction on one will not necessarily restrict the other.

If the lease requires the landlord’s written consent for assignments and subleases, absent any limiting language, the landlord may arbitrarily withhold its consent for any or no reason. To counteract this, a tenant should, at a minimum, try to negotiate for the landlord’s consent not to be “unreasonably withheld, conditioned, or delayed.” To the extent that a landlord’s consent may not be “unreasonably withheld,” a landlord may only deny consent based on objective factors (e.g., the financial responsibility of the proposed assignee or subtenant, the legality of the proposed use, or the nature of the occupancy). If the lease is silent on what constitutes “reasonable,” what is “reasonable” will ultimately be decided by a court based on the facts.

Another variable, among many, that must be considered is the timing of the consent. In today’s fast-paced world, a landlord’s delay in giving its consent could derail a deal or cause a potential assignee or subtenant to move on to other opportunities. To provide a level of certainty, a tenant may want to request a specific timeframe within which the landlord must respond. Of course, as with every negotiation point, the leverage of the tenant will determine whether the landlord accepts such a term and the specified timeframe.

While this article provides a quick introduction to commercial lease assignment and sublease rights, as one might expect, there are a host of factors that must be considered when entering into a commercial lease and, likewise, planning for possible exits. Trusted counsel can assist in planning for these considerations and contingencies. If you have further questions related to assignments, subleases, or other facets of commercial leases, please contact Timothy Byon .

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Demystifying Assignment of Lease: Your Go-To Guide

LegalGPS : July 29, 2023 at 8:17 AM

When you’re talking about property leasing, it’s important to understand that there are a lot of terms and concepts that you may have never heard before. One of them is the assignment of lease, which refers to a situation where a tenant transfers their rights and responsibilities under the lease agreement to another party.

What is an Assignment of Lease, and why is it so crucial?

An Assignment of Lease is a term you may have heard thrown around, especially if you're involved in rental properties. It’s a pretty important document. But what exactly is it? Well, in simple terms, an Assignment of Lease is an agreement where the original tenant of a property transfers their leases and all of its rights and obligations to a new tenant. Now, you might be wondering, "When would this scenario ever occur?"

Let's imagine you're a tenant who signed a three-year lease for an office space. However, two years in, you need to relocate due to unprecedented growth of your business. Instead of breaking the lease, you might choose to assign your lease to another business looking for office space. This means that you, as the original tenant, no longer have any obligations under the lease. The new tenant is now responsible for paying rent and complying with all of the terms of the previously signed agreement.

Now that you understand, let's get into the step-to-step guide on how to create an Assignment of Lease!

Steps to Write an Assignment of Lease

Creating a thorough Assignment of Lease agreement doesn't need to be an overwhelming task. Simply follow these steps to ensure your agreement is both comprehensive and legally binding:

Step 1: Identify the Parties

The information of each party should be included. For the existing tenant (the assignor), make sure to include:

Full legal name or business name

Postal mailing address

Phone number and email address

Do the same for the new tenant (the assignee). Make sure all the information is up-to-date and accurate to avoid any unnecessary confusion or disputes. For example, if the assignor is a business, make sure they have updated their mailing address with the post office to reflect their new building location. If a party has multiple addresses, be sure to list them all.

Step 2: Specify the Lease

This section requires exact information from the original lease agreement, including:

Property address and description

Lease start and end date

A reference to the original lease agreement (for instance, a sentence like "the lease agreement dated...")

Remember to include a copy of the original lease as an attachment to ensure the assignee understands the terms they're adhering to. If not already included in the original lease agreement, be sure to add the following information: Description of rental property, Lease term (how long the lease is good for), Rent amount, and Security deposit amount.

Step 3: Detail the Assignment

State that the assignor is transferring all their interests and obligations in the lease to the assignee. Here, write something like:

"The Assignor hereby assigns, transfers, and conveys to the Assignee all of the Assignor's rights, title, and interest in and to the Lease, together with all the Assignor's obligations, liabilities, and duties under the Lease."

This means that the assignor is transferring all of their interests and obligations in the lease to the assignee. This includes any future rent payments, repairs and maintenance responsibilities, notices of default by either party, and so on.

Step 4: Landlord's Consent

Many leases require the landlord's consent to assign the lease. The assignor should request written consent from the landlord and include a clause like:

"The assignment of the lease is not valid unless and until the landlord provides written consent."

This is followed by a place for the landlord to affirm consent by signing or initialing. This is important because the landlord can elect to withhold consent and the assignment will not be valid. If this is the case, you may need to provide additional consideration for your landlord's assent (for example, an increase in rent).

Step 5: Assignee Acceptance

Include a statement in which the new tenant agrees to the assignment and the terms of the lease. It may look like:

"The Assignee hereby accepts this assignment, assumes all duties and responsibilities under the Lease, and agrees to perform all of the Assignor's obligations under the Lease."

You need to do this because the new tenant needs to have an affirmative acceptance of the assignment in order for it to be valid. This is typically done through a letter from the assignee stating that they agree to perform all of your obligations under the lease.

Step 6: Signature and Date

Every binding legal document needs a date and a signature. Make sure that there is a proper place for the assignor and the assignee to sign and print their names, with a line for the date.

By following these clear, actionable steps, you'll be able to construct an effective Assignment of Lease agreement. Remember, every situation is unique, so adjust the template as necessary, being sure to include all relevant details.

Clear so far? Great! Now, let's focus on the tips to draft a perfect Assignment of Lease.

Tips to Draft a Perfect Assignment of Lease

Accurate Dates: Be sure to include the date when this agreement will take effect. Precision avoids any confusion about durations, when the assignee takes over, or when the assignor's obligations end.

Clear Terms: This document should restate the terms of the original lease. The assignee needs a clear understanding of what they're stepping into. Bit ambiguous? Think of it like this: the assignee should be able to step into the assignor's shoes comfortably.

Specify Rent Terms: Stating the rent amount, due dates, and method of payment in the assignment helps create a record of the agreed-upon rent terms, ensuring no misunderstanding arises in the future.

Specify the Term: The assignment should state how long the new lease lasts. For example, if the original lease is for one year, then the assignee will assume only a one-year term.

Specify Other Conditions: If there are other conditions in place—such as tenant improvements or utility allowances—then specify these too.

An assignment of lease doesn't have to be a formidable task to overcome. With a cautious and considered approach, these documents can be a smooth and seamless part of managing a successful lease transition.

Our contract templates can offer you even more support, empowering you towards crafting an excellent and individualised Assignment of Lease ready for your task. So why not take your next step towards leasing success and check them out today? Click here to get started!

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Set 11 conditions for consenting to shopping center assignments and subleases.

As retail and restaurant businesses contract and struggle to survive, many shopping center tenants are looking for ways to get out of their leases. One common exit strategy is for tenants to assign their lease interest or sublease some or all of the leased space to a third party. Tenants are generally allowed to do this, as long as the landlord gives consent to the arrangement. Retaining the right to consent to assignments and subleases is crucial, particularly in shopping centers where landlords face the challenge of maintaining optimal tenant mix, maximizing percentage rents, and policing exclusives and other restrictions governing different tenants’ “use” of the space.

However, there are also legal limitations on how landlords exercise their consent rights. In many states (and under most leases), a landlord’s denial of consent to a proposed commercial lease assignment or sublease must be “reasonable.” Of course, like beauty, “reasonableness” is in the eye of the beholder. In the context of landlord rejection of proposed assignments and subleases, the key beholder is the court that may second-guess the decision.

The good news is that you can minimize these risks by establishing clear ground rules for reasonable rejections. Strategy: Require tenants to meet certain conditions for you to even consider assignment and sublease requests, and make failure to do so reasonable grounds for rejecting the arrangement. Here’s how to draft a lease clause to implement this strategy.

SET 11 CONDITIONS FOR CONSIDERING

Assignment and sublease requests.

Specify that the tenant may assign its interests in the lease or sublease its space with your prior, written consent. While promising that you won’t unreasonably withhold, delay, or condition consent, the lease should also list 11 conditions that the tenant must meet to get your consent.  

1. Tenant Must Not Be in Breach or Default

Specify that tenants may only assign or sublease if they’re not in breach or default of the lease, both at the time of the request for consent and the effective date of the proposed arrangement. Use of the word “breach” extends your leverage to the extent that, unlike a “default,” it may encompass any lease violation, including one that doesn’t require notification and the opportunity to cure [Clause, Sec. 1(a)].

2. Tenant Must Provide Key Documentation

Require the tenant to give you key documents relating to the arrangement, including copies of the final, executed assignment or sublease agreement within 10 days of its proposed effective date. This will give you time to vet the agreement and decide whether to approve it.

The tenant should also submit “reasonably detailed information” about the proposed assignee or subtenant’s character, reputation, and business experience along with certified statements, bank references, and other information about its finances [Clause, Sec. 1(b)].

Practical Pointer: You might also want to ask the tenant for an affidavit affirming that what it’s provided is a true copy of the agreement.

3. Sublease Must Be for All of the Leased Space

If the tenant is a small store, consider ensuring that it doesn’t subdivide the space by requiring that the sublease be for the entire and not just a part of the leased premises. Protections against subdividing the space may be unnecessary and unwise if the tenant leases a large portion of the shopping center [Clause, Sec. 1].

4. Lease Terms Govern Assignment or Sublease Agreement

The last thing you want is for the new third party to take over the tenant’s space under totally different lease terms. So, ensure that any assignment or sublease is subject to all the terms and conditions of the underlying lease. In the case of an assignment, the agreement should require the assignee “to assume” all of the tenant’s obligations under the lease so you can hold it liable for any violations it commits once the assignment takes effect [Clause, Secs. 1(c) and (d)].

5. You Can Keep Subtenant If Prime Lease Ends Early

Recognize that if the lease ends early due to a default committed by the tenant, the sublease will also come to an early end. Result : You’ll lose the subtenant and have a vacant space on your hands. To prevent this, you can require the subtenant to “attorn” to you, at your option, if the prime tenant’s lease ends before both the lease and sublease are due to expire. Explanation : Attorning to you means the subtenant becomes your tenant, creating a direct relationship governed by the terms of the sublease [Clause, Sec. 1(d)].  

6. Use of Premises Must Remain the Same

Specify that the “use” clause from the underlying lease (assuming, of course, that you’re happy with what it currently says) applies to the arrangement and that the agreement must require the assignee or subtenant to use the property for the same purposes [Clause, Sec. 1(c)].

7. Agreement Must Be Subject to Existing Center Tenants’ Exclusives

Sticking with the underlying-lease-terms-govern theme, be clear that any assignment or sublease agreement is subject to, and the assignee or subtenant must comply with, the exclusive use and other applicable lease rights of other tenants in the shopping center [Clause, Sec. 1(f)].   

8. Tenant Must Pay You Fee to Process Assignment/Sublease Request

Processing requests for assignments and subleases can cost you time and money, especially if you hire an attorney to review the proposed agreement. So, consider requiring tenants to pay a processing fee. In addition to compensating you for your costs, fees may discourage tenants from wasting your time with what’s-the-harm-in-trying arrangements that they think you’re likely to reject [Clause, Sec. 1(e)].  

9. You Can Require Tenant to Post Additional Security

Chances are, you won’t have as much confidence in the proposed assignee/subtenant’s finances as you did with the prime tenant that signed the underlying lease. That’s why you should reserve the right to require a larger security deposit or other form of extra security as a condition of consenting to the assignment or sublease. If the tenant objects, you can compromise by establishing limitations or a formula for calculating extra security, for example, to a specified percentage or multiplier of the base rent or original security deposit [Clause, Sec. 1(h)].

10. Tenant Can’t Compete Against You for Potential Tenants

Guard against the possibility that the tenant’s efforts to line up assignees or subtenants will directly compete with your own tenant recruitment and marketing activities by banning tenants from assigning or subleasing shopping center space:

• For less than what you’re currently charging for comparable space; and
• To anyone currently leasing space in the center.

Strong tenants may push back on this demand. Potential compromise : Let the tenant ask for a lower rate than on comparable center spaces as long as it doesn’t, or allow anyone else to, advertise it at that rate [Clause, Secs. 1(f) and (g)].

11. Landlord’s Lender Must Approve Assignment/Sublease

Be sure to account for your lenders and their potential right to approve any proposed assignment or sublease of the space. Explanation : Many landlords with mortgages on their shopping centers have signed “collateral assignments of leases and rents” giving their lenders certain rights in leases for space at the center. Such collateral assignments may bar the landlord from consenting to an assignment or sublease without the lender’s prior approval [Clause, Sec. 1(i)].  

Establish Substantive Grounds for Reasonable Denial

Meeting all 11 of the above conditions is just the first part of the consent process, the gateway through which a tenant must pass for you to even consider an assignment or sublease request on its substantive merits. You should still be allowed to reject the proposed arrangement if it doesn’t meet your reasonable standards. The lease should clarify this and explain what your reasonable standards are. Specifically, it should get the tenant’s acknowledgement that it wouldn’t be unreasonable for you to reject a proposed assignee or subtenant that:

• You don’t believe will be able to generate sufficient percentage rent;
• You don’t believe will fit your shopping center’s tenant mix and character; or
• Will use the space to engage in certain forbidden uses, such as governmental or quasi-governmental functions.

While tenants may accept these terms in principle, they probably won’t want to give you broad discretion to decide how much percentage rent a proposed assignee/subtenant will generate or whether it will fit your tenant mix. Rather than a subjective opinion, they’ll likely insist that you establish and apply clear and objective criteria for making such determinations [Clause, Sec. 2].

Beyond Consent

Keep in mind that consent is just one of the leasing issues that comes into play with assignments and subleases. Examples of other things you need to look after in these situations include:

• Ensuring the tenant remains responsible for lease obligations after an assignment (which, unlike a sublease, involves some degree of discharge from lease duties);
• What happens if the underlying lease is terminated early via default or bankruptcy; and
• Whether to insist on a cut of the tenant’s profits, if any, from the assignment or sublease.

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Proceed with Caution When Rejecting a Subtenant’s Proposed Sublease Assignment

Our leasing team recently encountered a somewhat unique scenario in the commercial leasing arena involving an office sublease between affiliates and the potential pitfalls of a spinoff of the subtenant into its own independent entity. The tenant/sublandlord was particularly concerned about the prospect of one of its competitors acquiring the subtenant after the spinoff is completed. The tenant/sublandlord posed the question whether it could block the assignment of the sublease to its competitor. To answer this question, our leasing team researched and analyzed an interesting corner of leasing law involving the ins and outs of a landlord’s/sublandlord’s analysis when determining whether to approve or reject a lease/sublease assignment. We found that the ability to reject in this context is limited under applicable law, and therefore, we urge any party considering a rejection to proceed with caution.

We started our research looking at possible antitrust issues due to the potential for the sublandlord to be able to reject the assignment of the sublease to a competitor. Our research disclosed that, generally speaking, the risk of triggering antitrust liability through this type of rejection is minimal. As a preliminary matter, most (if not all) of the antitrust case law addressing this type of scenario (i.e., where a landlord disapproves of a lease assignment to a competitor) involves retail real estate. Because the corporate office location of competitors does not typically implicate anticompetitive practice and has no impact on the relevant market, it is very unlikely that a sublandlord’s rejection of a sublease assignment to a competitor presents antitrust risk.

That said, the rejection of a sublease assignment to a competitor does present other potential problems. A small handful of cases has dealt with this issue and, for the most part, the courts have held that a lease assignment that is otherwise acceptable but for the fact that the proposed assignee is a competitor of landlord must be approved. Courts assess these refusals to consent under a “commercial reasonableness” standard, but this standard is applied in a bit of a “landlord vacuum.” That is, the fact that a party assessing a proposed lease/sublease assignment may also have motivations or concerns associated with its primary business is irrelevant to the analysis; courts will only assess whether the rejecting party acted reasonably in its capacity as landlord/sublandlord. Some select language on this point from the case law as follows:

When a commercial lease provides that the landlord will not unreasonably withhold consent to its assignment, the landlord may refuse to consent to an assignment based only on consideration of objective factors, such as the financial responsibility of the [proposed assignee], the [proposed assignee’s] suitability for the particular building, the legality of the proposed use and the nature of the occupancy, i.e., office, factory, retail….Thus, subjective concerns and personal desires cannot play a role in a landlord’s decision to withhold its consent to an assignment of a lease. Logan & Logan, Inc. v. Audrey Lane Laufer, LLC , 824 N.Y.S.2d 650, 651 (2006).

When determining the reasonableness of a landlord’s refusal to consent to an assignment of a lease, the standard is that of a reasonable prudent man and, in applying that standard, the personal taste and convenience of the landlord should ordinarily not be considered….In determining whether a landlord’s refusal to consent was reasonable in a commercial context, only factors that relate to the landlord’s interest in preserving the leased property or in having the terms of prime lease performed should be considered….the landlord’s objection must relate to ownership and operation of leased property, not lessor’s general economic interest. Tenet HealthSystem Surgical, L.L.C. v. Jefferson Par. Hosp. Serv. Dist. No. 1 , 426 F.3d 738, 743 (5th Cir. 2005).

So, for example, if a law firm subleases a portion of its office space to an insurance brokerage, and the insurance brokerage proposes an assignment of the sublease to a competing law firm, the sublandlord/law firm can only assess the assignment of the sublease through the sublandlord prism. This being the case, if the competing law firm is financially capable of performing under the sublease and is a suitable office tenant, the commercial reasonableness standard will almost certainly mandate that the sublandlord/law firm approve the assignment of the sublease, even if the prospect of bringing a new law firm into the office building presents a threat to the sublandlord/law firm’s more general economic interests. 1

All said, from an antitrust perspective, concern is minimal. But, a landlord/sublandlord must be prepared to accept a lease/sublease assignment to a competitor, as refusing to do so could lead a court to find that such refusal is commercially unreasonable if the sole basis for the refusal is that the assignee is a competitor.

In addition to the “commercial reasonableness” issue, this scenario also presents some tricky issues on the confidentiality front. In our client’s situation, if the newly spun-off subtenant is to be acquired by a competitor of the client, the client would almost certainly need to see sensitive financial information of its competitor to assess (i) the proposed subtenant’s financials or (ii) whether the proposed subtenant/assignee is sufficiently capitalized such that sublandlord’s consent to the assignment is not required because the proposed subtenant falls into the “Permitted Transferee” category. In either scenario, concerns arise pertaining to the sharing of sensitive information with a competitor and also possible SEC Rule 10b-5 issues if the party acquiring the subtenant is publicly traded, such that the sublandlord would be made aware of the acquisition before the news is public.

To address these issues and protect the parties, the following protocol can be followed and memorialized in a written agreement: 2

• Permitting only a small group of employees in sublandlord’s real estate department to be privy to the sensitive information in assessing the proposed replacement subtenant;
• Ensuring that all sensitive information is destroyed or returned to the proposed subtenant after completion of the sublandlord’s review and assessment;
• Refraining from saving/storing sensitive information locally on any computer system/network/server/etc. of sublandlord;
• Prohibiting sublandlord from printing, photocopying, or otherwise replicating the sensitive information; and
• Conspicuously “watermarking” all sensitive information as “CONFIDENTIAL”.
• Provide the materials needed to assess the proposed subtenant, at which time sublandlord may still exercise its right to disapprove of the sublease assignment per the contract terms (in other words, the subtenant can roll the dice in hopes that sublandlord approves the assignment post-merger/acquisition); or
• If the prospective replacement subtenant believes that the assignment falls into the typical “Permitted Transfer” category due to sufficient capitalization, then, after the closing of the merger/acquisition, the subtenant shall tender the requisite materials to the sublandlord to confirm the “Permitted Transfer” categorization. If, upon receiving the post-closing disclosures, sublandlord determines that the capitalization thresholds for a “Permitted Transfer” were not met, then sublandlord can exercise its contract remedies due to the unpermitted transfer without consent.

In summary, landlords and sublandlords that are presented with a prospective assignment or sublease to a competitor must proceed carefully. Unwary parties can succumb to the hazards identified herein, which can lead to litigation and liability. But, those landlords that address these scenarios with knowledge of these potential pitfalls and employ these practices, will reap the benefits of greater insulation determines that the capitalization thresholds for a “Permitted Transfer” were not met, then sublandlord can exercise its contract remedies due to the unpermitted transfer without consent.

1 The authors recognize that lease exclusivity provisions, declarations, and/or covenants, conditions, and restrictions may give way to justified and lawful rejection of a lease/sublease assignment. But, in scenarios in which no such instruments/provisions are in play, acceptance may be the only safe option.

2 We use the identifiers “sublandlord” and “subtenant” in the following paragraphs, if only because the facts presented to our leasing team fell into the sublease context. That said, these analyses and recommendations apply equally in the context of a landlord assessing a proposed lease assignment or sublease to a competitor.

—————–

Samuel J. Schumer is a partner in the Chicago office of Meltzer, Purtill & Stelle LLC and focuses his practice in the real estate and lending industries. Laura M. Carroll is a law clerk in the firm’s Chicago office and currently in her third year of law school at Loyola University Chicago. To receive more articles like this one delivered directly to your inbox, join MPS Law’s email list today .

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This page can't be displayed. Contact support for additional information. The incident ID is: N/A. 408 IMAGES ASSIGNMENT of LEASE SEC Gov Form FREE 9+ Sample Assignment of Lease Templates in MS Word FREE 8+ Lease Form Samples in PDF How to Fill a Lease Assignment Form Lease Assignment Agreement Lease Assignment Agreement: Templates & Samples VIDEO [FREE] *HARD* Playboi Carti + Ken Carson + F1lthy + wlr type beat "STANDOUT" 3 beautiful border design for copy For rent, Noida One, Sec-62, Fully furnished Office space, 960 Sq. ft. Cont: 9871755309 Chapter 2 Assignment (Sec 1 2022 syllabus) Preleased KFC Shop| 365sqfts @ Rs1.11Cr.| Rent 58900/m| ROI- 6.38%| 9yrs Leased How To Calculate LEASE EXTENSION PRICE on Short Lease Agreements COMMENTS ASSIGNMENT OF LEASE AGREEMENT WHEREAS, Landlord has provided its further written consent dated October 7, 2007 to an Assignment of said Lease by Global Casinos to Doc Holliday Casino II, LLC; and, WHEREAS, Assignor desires to assign all of its right, title and interest in the Lease to Assignee and Assignee desires to assume Assignor s obligations under the Lease. AGREEMENT. Assignment and Assumption of Lease Assignment and Assumption. Effective as of the Effective Date, Assignor hereby assigns, transfers and sets over unto Assignee all of Assignor s right, title and interest in, under and to the Lease. Assignor will deliver possession of the Premises to Assignee on the Effective Date. Assignee hereby accepts the foregoing assignment and hereby ... Lease Assignment and Assumption Agreement Consent and Agreement of Landlord [to Assignment, Assumption and Amendment of Lease pertaining to Premises known as Suite 400, 7115 Northland Terrace, Brooklyn Park, Minnesota 55428 demised pursuant to that certain Lease Agreement dated as of February 6, 2009, as amended by First Amendment of Lease May 31, 2011] PDF Exhibit F Assignment and Assumption of Lease Agreement and Landlord's the Assignee and the Assignee desiresto assume the Lease from the Assignor.D. T. e Landlord is willing to consent to the assignment and assumption o. but only upon the terms and conditions set forth in this Agreement. Now, therefore, in consideration of the premises and the mutual covenants set forth in this. s. Understanding How a Commercial Lease Assignment Works Lease Assignment 101. In basic terms, a lease assignment occurs when the current tenant to an existing lease agreement (known as the "assignor") assigns the lease rights and obligations to a third party (known as the "assignee"). A lease assignment should not be confused with a sublease, in which the existing tenant transfers by a ... PDF ASSIGNMENT AND ASSUMPTION AGREEMENT isions of the Underlying Agreement. This Assignment and Assumption Agreement shall inure to the benefit of, and be binding upon, the permitted successor. and assigns o. the parties hereto.Counterparts. This Assignment and Assumption Agreement may be executed in counterparts, each of which shall be an original, but all of which together con. for the assignment of a lease between tenant and assignee The terms of assignment, consent of the lessor, and acceptance by the assignee are covered in this Lease Assignment, including the length of the assignment, consent of the person taking over the lease, and acceptance by you, the current lease holder. A Lease Assignment transfers the rights and obligations of an existing lease from one tenant to ... Assignment of Lease: Definition & How They Work (2023) An assignment ensures the complete transfer of the rights to the property from one tenant to another. The assignor is no longer responsible for rent or utilities and other costs that they might have had under the lease. Here, the assignee becomes the tenant and takes over all responsibilities such as rent. PDF Assignments and Collateral Assignments Of Commercial Leases han it normally pos-sesses.Collateral assignments of leaseSeparate from a traditional as-signment of lease is a collateral assignment and assumption of lease whereby a landlord and ten-ant agree that a certain third party has a secu. ity interest in the lease pursuant to a separate agreement. Typically, this scenario will arise when a tenant ... Assignment and Consent Standards in Commercial Leases The law traditionally favors the free alienation of property. Therefore, under the laws of almost every state, if the lease is silent on whether the landlord's consent to an assignment is required, then the commercial tenant has the right to assign its interest. This is true in Maryland, Virginia and the District of Columbia. Practical Tips for Commercial Lease Assignments Practical Tips for Commercial Lease Assignments. When representing a Landlord or a Tenant in a lease assignment transaction, as part of a sale of a business or otherwise, there are many issues to identify and address. First and foremost, a thorough review of lease documents should be performed to identify all consents that are required and any ... 5.2 Accounting for a lease modification 5.2.1 Lessee accounting for a lease modification. As illustrated in Figure LG 5-1, a lessee's accounting treatment of a lease modification depends on the type of modification made to the lease. A lease modification can result in either a separate new contract that is accounted for separate from the original contract or a single modified ... Assignment of Lease and Consent to Assignment Assignor wishes to assign the Lease to Assignee and Assignee wishes to assume the Lease and they have requested the consent of Landlord. NOW, THEREFORE, the parties agree as follows: 1. Assignment and Assumption. As of the Effective Date (defined below), Assignor does hereby assign and transfer to Assignee all of Assignor s right, title and ... PDF Assignments and Subletting in Commercial Lease Transactions 3. Assignment of Sublease Rent. If the tenant is collecting sublease rent from the subtenant, the landlord should obtain an assignment of that rent (similar to the rights of a lender under a loan) to protect itself should the primary tenant default under the master lease. Lease Assignment Agreement: All You Need to Know A lease assignment agreement is a legally binding contract outlining the terms and conditions of transferring a lease from one party to another in one place. This means the assignee becomes the new tenant and assumes all the rights, obligations, and liabilities under the original lease. Lease assignments are commonly used in real estate ... PDF Decisions Applying the Reasonable Consent Standard to Assignments A. Definitions. Various definitions of "reasonableness" used by courts in the assignment and subleasing context include "reasonable commercial grounds";2 a reason that is "objectively sensible and of some significance";3 that the assignee is acceptable by "reasonable commercial standards";4 and objective grounds, not subjective ... Navigating Assignments, Subleases, and Landlord Consent in Commercial With a lease assignment, the original tenant, the "assignor," transfers all of its rights and interest and delegates its obligations in and under the lease to a third party, the "assignee." The assignee, in turn, accepts such transfer and assumes the original tenant's obligations under the lease, essentially stepping into the shoes of ... Demystifying Assignment of Lease: Your Go-To Guide Step 1: Identify the Parties. The information of each party should be included. For the existing tenant (the assignor), make sure to include: Do the same for the new tenant (the assignee). Make sure all the information is up-to-date and accurate to avoid any unnecessary confusion or disputes. Assignment of Lease 3. Assumption of Lease Obligation. Assignee assumes and agrees to perform and fulfill all of the terms, covenants, conditions, and obligations required to be performed and fulfilled by Assignor as tenant under the Lease first arising or occurring on or after the Effective Date. Assignor agrees to perform and fulfill all of the terms, covenants ... Set 11 Conditions for Consenting to Shopping Center Assignments and Sticking with the underlying-lease-terms-govern theme, be clear that any assignment or sublease agreement is subject to, and the assignee or subtenant must comply with, the exclusive use and other applicable lease rights of other tenants in the shopping center [Clause, Sec. 1(f)]. 8. Tenant Must Pay You Fee to Process Assignment/Sublease Request Proceed with Caution When Rejecting a Subtenant's Proposed Sublease When a commercial lease provides that the landlord will not unreasonably withhold consent to its assignment, the landlord may refuse to consent to an assignment based only on consideration of objective factors, such as the financial responsibility of the [proposed assignee], the [proposed assignee's] suitability for the particular building ... PDF A comprehensive guide Consolidation authoritative guidance, the SEC's guidance is widely applied by public and nonpublic companies. Judgment is required to determine whether common control exists in situations other than those described above. 8 Comments by Donna L. Coallier, SEC Professional Accounting Fellow, at the 1997 AICPA National Conference on SEC Developments. PDF Information and Procedures Transferring Oil and Gas Lease Interests Sec. 20: S2, Operating rights from the surface to 900 feet . Sec. 22: SW, Operating rights from 800 feet to a depth of 1000 feet . ASSIGNMENT OF OVERRIDING ROYALTY -You must convey overriding royalty interest on either an Assignment of Record Title Interest (Form 30003), a Transfer of Operating - Rights (Form 3000-3a), or on a private assignment. Assignment and Assumption of Lease Landlord has consented to such assignment and assumption of the Lease pursuant to that certain Landlord Consent to Assignment and Assumption of Lease of even date herewith made and entered into by and among Landlord, Teachscape and Tenant. D. Landlord and Tenant now desire to amend the Lease in accordance with the following terms and conditions. PDF State of Nevada Department of Taxation 2004-2005 Personal Property Manual Sec. 3. At least one month prior to the manual being presented for Commission approval, the Department must disclose any proposed modifications to the manual and must hold a public workshop on the proposed modifications. Sec. 4. Each county assessor shall use the personal property manual to determine the taxable value of personal property. SEC.gov Assignment of Lease . 1. Names . This lease assignment is made by ATG HOLDINGS LLC, Assignor, and MJ HOLDINGS INC, Assignee. 2. Assignment . For valuable consideration, Assignor assigns to Assignee all of Assignor's rights in the attached lease dated November 1, 2017, which covers the premises located at 3275 South Jones, Suite 104, Las Vegas ... PDF 53004 Federal Register /Vol. 89, No. 122/Tuesday, June 25 ... (e) Standard lease terms and conditions. All tenants occupying rental CMF Units shall be required to enter into a written lease or rental agreement setting forth the terms and requirements which are, but not limited to, compliance with applicable State and local law. (f) Tenant income determination. (1) At the time of each initial lease and XBRL Viewer Please enable JavaScript to use the EDGAR Inline XBRL Viewer. assignment essay homework paper phd report resume review speech