A lease provision governing whether and how a tenant can transfer its lease rights and obligations to another party. Most commercial leases require landlord consent for assignments.
An assignment transfers the tenant's entire interest in the lease to a third party (the assignee), who assumes all rights and obligations. The original tenant may remain secondarily liable unless the landlord provides a release. Assignment clauses typically require landlord consent, which may be at the landlord's sole discretion or subject to a "reasonableness" standard. Key negotiation points include: the standard for consent (sole discretion vs. not unreasonably withheld), recapture rights (landlord's ability to terminate the lease instead of consenting), and profit-sharing on any assignment premium.
A tenant attempts to assign its below-market lease to a qualified buyer. The landlord withholds consent, exercising a recapture clause to terminate the lease and re-lease the space at current market rates, capturing the below-market spread for itself.
Negotiate for "consent not unreasonably withheld" rather than "sole discretion." Remove or limit recapture rights, especially for assignments to affiliates or in connection with a sale of your business. These protections preserve the value of your lease.
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Find My OverchargesThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.
