What Is an Assignment of Leases and How Can a Real Estate Lawyer Help?

When all the rights of someone that is on a lease or a tenant of a residence are transferred to another person, an assignment of lease is accomplished. These are title documents as well as the process, and it is the rights of possession that are moved to the other individual.

This usually occurs when someone has the need or wants to leave a lease that hasn’t expired. This provides the leaseholder the ability to transfer the still active lease to another party. This may be necessary when a commercial lease is still active and the business is no longer viable. The feasibility of remaining on the property negatively impacts the previous company owner. He or she may then seek someone else to take over the lease.

An assignment of leases is useful when someone would like the rental space or land that another is leasing and the current leaseholder cannot continue to support himself or herself on the property. The legal transfer of the lease permits the individual to give the rights of the agreement to the other person. There are often different requirements necessary depending on the type of lease in effect, and these must be satisfied before the transfer may be accomplished. Usually, the landlord must be amenable to the transfer and accept the new tenant with a lease transfer document of a License to Assign. This is used to move the rights over to the new leaseholder.

Assigning a Lease

When the lease has been assigned to the new individual, this process is not similar to subletting or similar circumstances. However, many individuals confuse these terms and situations. With the assignment of a lease, the relationship between the new tenant and the landlord is direct with rent being collected from the new person leasing the property once the assumption of the lease has commenced. The previous leaseholder is no longer part of the association. However, he or she is tasked with keeping the building or land maintained no matter if someone else pays the rent to the landlord.

While an assignment of leases may be necessary, many landlords permit the leaseholder to move out before the lease agreement is set to end. This often is possible even without accruing a financial loss, and someone else could be used to sublet the place for a temporary amount of time. However, if the person must leave permanently, the best option is to cancel the lease. This course of action is frequently not what a landlord would like to do, and this means that subletting or an assignment is the next best option. It is important to consider all the possible stipulations that may apply before pursuing the action.

Assignments Explained

Assignments are especially important when the landlord of the property will not permit a cancellation of the lease, a sublease or similar circumstances. This then means the person could assign the lease to another person. All the remaining interests in the property are then transferred to the other person that is interested in the building, land or asset. This individual is the assignee, and he or she become the new tenant with fewer responsibilities. The remaining time left on the lease is then taken over, but if the assignee causes any damage to the building, he or she is accountable. Additionally, the assignee may pursue action against the landlord if he or she fails to make repairs that are needed to the property.

Unfortunately, the original tenant may still be responsible for certain conditions and terms. Unless there is a specific stipulation in place between the assigner and the landlord, the rent that is not paid by the assignee could fall on the shoulders of the previous person that sought the assignment of leases. This may be why a landlord could be more interested in an assignment than a sublease. When this document has been agreed upon, it is crucial that the tenant choose the assignee very carefully. He or she should be financially secure and responsible with real estate transactions.

More Information on Assignments

When considering an assignment, it is important to contact a real estate lawyer that understands these and other contractual documents. If the landlord is not amenable to this, it is possible that another option may be open. Other details must be understood such as clauses about remainder of payments if the assignee leaves and similar concerns. The legal professional may assist throughout the entire process.

Provided by HG.org

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.
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