We often enter long-term leases with specific plans for the future. Whether the lease is for commercial or residential property, unforeseen circumstances may result in a need to get out of a lease before it expires. Your business may shut down, or you may want to expand into a bigger shop, or you may be considering a company relocation. You could be moving to another state because of a new job and need to move out of your apartment earlier than anticipated. Regardless of what the situation may be, a lease assignment is a great way to transfer your lease to somebody else, ending any future relationships with your landlord.
Let’s explore what a lease assignment agreement will entail, what the differences are between a lease assignment agreement and a sublet, and give you a FREE lease assignment agreement form to get you started.
A lease assignment occurs when a tenant transfers their interests and all the rights they possess in a lease to a new tenant. A lease assignment is different from the more commonly known sublease. With a lease assignment, the tenant transfers the name of the lease to someone else. The ‘assignee’ (new tenant), takes the ‘assignor’s (old tenant) place in the relationship between landlord and tenant. The old tenant may still be liable to the landlord for overdue rent payments, property damages, or any other lease violations, but will hold no future obligations regarding the rental property.
A lease assignment allows a tenant to get out of their lease legally before it’s expiration by transferring the rights of the lease to another person.
If your lease expires in six months, but you need to move out in the next month, you can assign the lease to a third-party tenant.
Three parties are involved in a lease assignment:
The assignee takes on all the responsibilities and rights of the assignor, which are detailed under the original lease agreement between the assignor and the landlord.
What you should include in a lease assignment agreement will depend on a few factors:
It is important to specify the type of lease being transferred, ensuring the new tenant understands before signing the lease. There are many types of leases. Some examples include a fixed-term lease, month-to-month lease, automatic renewal lease, and vacation rental agreements. It is important to state this in the lease assignment agreement for the benefit of all three parties involved to avoid any confusion.
Identifying the details of any property involved in an agreement is essential. This includes the location of the property. Doing this will help avoid any ambiguities about which of the landlord’s properties the new tenant has a right to access.
There are many other details you may set out in your lease assignment agreement. However, there are just a couple of important details you should not miss. You should include the original lease term, the start date of the lease transfer, and any other details you may consider important. All the parties involved must sign the agreement.
The key difference between a sublease and a lease assignment is the involvement of the landlord in the agreement. While a lease assignment expressly involves the consent of a landlord to transfer all rights and responsibilities of the assignor to the assignee, a sublease is possible without this express consent where it is stated in the original lease agreement that the tenant is allowed to sublet the rental property.
Subleases are a new contract between the original tenant who is referred to as the sublessor, and the new tenant who is referred to as the sublessee. In a sublet, the original lease agreement between the landlord and the old tenant still stands. The old tenant is still liable to the landlord, and the new tenant is liable to the old tenant by signing the subletting agreement.
The assignment of a lease is beneficial to the original tenant because:
A lease assignment agreement is unlikely to have any major effect on the landlord. However, the biggest benefit to them is the monthly rent continuing to be paid for the time they had planned, leaving them with no losses. By consenting to the lease assignment, they can indirectly choose the replacement tenant. It is important to note that landlords can generally only refuse consent in reasonable circumstances. What is deemed reasonable may vary from state to state.
It is an important first step to ensure that all the parties involved in the lease assignment agreement are on the same page. As stated above, you should get your landlord’s consent (which is legally required), before you shake hands on the assignment with the new tenant. Doing this will help avoid any disputes.
The old and new tenants should certainly agree on when the lease assignment will begin. This is important because it will determine when payments from the assignor stop and payments from the assignee begin. The parties will want to come to an understanding on any other terms that they consider important, and agree on issues that may be controversial, such as whether or not the original tenant will be refunded the security deposit paid at the outset of the original lease.
You can download a sample assignment of a lease agreement to give you a thorough idea of how to go about executing the transfer of your lease through a lease assignment contract. It is always advisable to contact a licensed attorney who can adequately advise you to ensure that your assignment complies with state laws, especially if you have any uncertainty about it.
Download this FREE assignment of lease agreement PDF to get you started!
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Frequently Asked Questions
If you are unsure on how to go about using an assignment of lease agreement, you should contact a property lawyer you trust to help you make your transfer properly. You can also download a free lease assignment agreement template to give you a fair understanding of what you will need to agree on with the other parties, and then speak to your lawyer to make sure your agreement complies with any applicable state laws.
Yes, you require a landlord’s consent prior to assigning your lease. Your landlord is able to refuse consent. However, they will need to provide a reasonable basis for why they will not allow you to assign your lease. Landlord’s are typically minimally affected by lease assignments, so you are unlikely to run into this issue.
The party who is liable in an assigned lease depends on the landlord. The landlord must expressly state that they are relieving the assignor of all liabilities. If this is not done, the assignor remains responsible if the assignee defaults.