Commercial Leases: Assignment vs. Sublet

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Assigning a Commercial Lease

Assignment takes place when one party of the lease transfers all the interest and obligations of the lease to a third party. Typically, a tenant will assign his interest in the lease to another tenant. It is also possible for a landlord to assign his interest in the lease to another landlord.

Many commercial leases will include restrictions on the ability to assign. Most consumer protections laws that apply to residential leases do not apply commercial leases, subsequent modifications and assignments. However, depending on the state law, restrictions on assignment of commercial leases may be valid if such restrictions are "reasonable."

Subletting a Commercial Lease

When subletting, the original tenant (the sublessor) is still obligated to the landlord for the terms of the lease. In legal jargon, the sublessor maintains privity of estate and privity of contract with the landlord. The sublessee, however, is only liable to the original tenant and not to the landlord.

What Are Some Advantages of Commercial Subleases?

Here are several reasons why a commercial lease may be a good option to look into:

What Are Some Disadvantages of Commercial Subleases?

The following disadvantages may be associated with commercial leases:

Seeking Legal Advice

Commercial lease agreements can be very complex. You should consider contacting a qualified real estate lawyer to help you understand your options for assigning or subletting a lease.

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Last Modified: 04-02-2014 03:39 PM PDT

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