A sublease, also known as a sublet, occurs when a tenant having a lease agreement with a landlord permits another person, known as a subtenant, to use the rented space for a certain time.
The original renter is still liable to the landlord and is responsible for the lease agreement; however, the subtenant is answerable to the original tenant.
In contrast, an assignment occurs when a tenant transfers their lease agreement to another individual, known as an assignee. In this instance, the assignee assumes the lease agreement and becomes the new tenant, with all of the former renter’s rights and duties.
Subleases and assignments are often utilized in a commercial lease agreement when a tenant no longer needs or can afford the rented space or when a tenant wishes to leave before the lease term expires. The tenant may reclaim part of their lease expenses and avoid paying for idle space by subleasing or assigning the space.
Subleasing and assignment terms are often included in business lease agreements. These clauses may require the tenant to acquire the landlord’s permission before subletting or assigning the space, or they may outright ban subleasing or assignment.
Some business leasing agreements demand the landlord’s consent to assignments, while others do not. Reading the lease agreement is essential to understand subletting and assignment criteria and limits. If the lease agreement needs the landlord’s approval, the tenant must get it before continuing with a sublease or assignment.
Furthermore, before providing approval, most landlords want to know the subtenant or assignee and the details of the sublease or assignment, such as the rent amount.
Can I Sue If My Commercial Landlord Refuses to Allow a Sublease or Assignment?
If the landlord refuses to approve a commercial sublease, the tenant has many choices.
- Examine the lease agreement: The first step is to examine the lease agreement to determine whether it has any provisions for subleasing. If the lease agreement expressly bans subleasing, the tenant may be without legal grounds to seek a sublease.
- Talk with the landlord: The tenant may attempt to negotiate with the landlord to see if there is a way for both sides to agree. This might involve suggesting modifications to the lease agreement, such as raising the rent or adding extra security measures.
- Seek legal counsel: If the tenant thinks the landlord’s reluctance to grant a sublease is unfair or in breach of the lease agreement, they should seek legal counsel. A lawyer may assist in reviewing the lease agreement and advising the tenant on their rights and alternatives.
- Find a new tenant: If the landlord is unwilling to contemplate a sublease, the renter may explore finding a new tenant to take over the lease. However, most commercial lease agreements will include a “no assignment or subletting” provision, which indicates that the tenant cannot transfer or sublease the lease without the landlord’s permission.
- Early termination: If the tenant is unable to identify a subtenant or the landlord refuses to allow a sublease, the tenant may consider terminating the lease early. In this scenario, however, the renter may be required to pay a penalty fee or additional costs as specified in the lease agreement.
Finally, if a landlord refuses to authorize a commercial sublease, the tenant should analyze the lease agreement, attempt to negotiate with the landlord, and obtain legal counsel as needed. The renter must balance the advantages and disadvantages of each choice and choose which course of action is best for their circumstance.
What Remedies Exist If I am Successful?
If the terms of the commercial lease are violated, the landlord’s remedies will be determined by the facts of the case as well as the provisions of the lease itself. The following are some popular remedies:
- Lease termination: If the tenant violates a material provision of the lease, the landlord may be able to terminate the lease and order the tenant to evacuate the property.
- Monetary damages: The landlord may be entitled to monetary damages for any losses incurred due to the tenant’s lease violation. This might include rent, repair charges, or any expenditures incurred due to the infraction.
- Injunctive relief: The landlord may seek an injunction compelling the tenant to take particular activities to rectify the infringement, such as repairing the property or correcting a zoning violation.
- Self-help remedies: If a tenant violates the lease, certain jurisdictions may enable landlords to adopt certain self-help remedies, such as re-entering the property and completing required repairs. These remedies, however, should be used with care since they may be unlawful in certain areas and may result in additional legal action against the landlord.
- Mediation and arbitration: Some leases may include conditions mandating mediation or arbitration to settle disputes, which may be less formal and less costly than going to court.
If the landlord cannot address the violation via the options mentioned above, they may need to take legal action to enforce the lease, such as filing a lawsuit for breach of contract.
It should be noted that the remedies will differ based on the lease agreement, jurisdiction, and the exact infraction committed by the tenant. It is always advisable to get legal advice to understand your alternatives properly.
Are There Any Defenses?
The tenant may have numerous viable defenses in commercial lease issues involving a sublease or assignment. Among these defenses are the following:
- Implied consent: The tenant may claim that by receiving rent from the subtenant or keeping quiet after the sublease or assignment happened, the landlord impliedly agreed to the sublease or assignment.
- Estoppel: If the landlord was aware of the sublease or assignment but did not protest, the tenant may claim that the landlord is barred from objecting to the sublease or assignment.
- Waiver: If the tenant can show that the landlord relinquished their right to object to the sublease or assignment, the tenant may have a defense.
- Necessity: If the tenant can demonstrate that the sublease or assignment was required to avoid hardship or financial disaster, the tenant may utilize this as a defense.
- Good faith: If the tenant can demonstrate that they entered into the sublease or assignment in good faith, they may be able to utilize this as a defense.
- Right of first refusal: If the lease contains a right of first refusal provision and the landlord had the option to accept the sublease or assignment but did not, the tenant may use this as a defense.
- Improper notice: If the lease contains a requirement for notice, the tenant may claim that the landlord did not give appropriate notice of the breach or did not get notice.
- Illegality: If the sublease or assignment is prohibited by municipal, state, or federal law, the tenant may use this as a defense.
It is crucial to remember that the defenses will differ based on the lease agreement, jurisdiction, and the precise infraction claimed by the landlord. Getting legal advice to comprehend the various defenses better is usually advisable.
Do I Need an Attorney?
Yes, you should contact a real estate attorney if you are engaged in a business lease dispute. An attorney can assist you in understanding your lease’s rights and duties and the potential remedies and defenses.
They may also advise you on the legal procedure and, if required, represent you in court. An attorney may also assist you in negotiating a favorable settlement or arrangement. They may also analyze the lease agreement and any sublease or assignment arrangements and advise on their legal ramifications.