The Differences Between Assignment and Sublease











Commercial Real Estate tenants have various choices during their tenure. With workplaces shutting down or downsizing because of the impacts of COVID-19, commercial tenants can start to investigate different renting conditions that they have. Subleasing and Assignment are two unique processes that tenants can use to suit their particular business needs.


Assignment

An assignment is the handover of the commercial tenant’s rights and responsibilities in the original rental agreement. This means the original tenant (the "assignor") will have to vacate the unit and allow the new tenant to take over all of the leased premises.


It’s important to check the clauses in the original rental agreement before going forward with an assignment arrangement. In some cases, the original tenant will remain responsible for the terms of the lease, especially if the new tenant defaults on the lease agreement or causes damage to the property. You may want to check your lease agreement for the option to pursue a permanent assignment so you won't be responsible for expenses or damages.


Sublease

When a tenant subleases space, the original tenant is shifting all or a portion of the premises for less than the entire term of the lease. A tenant will typically sublease to get a space already built out at a much lower rate than they could as a direct tenant. Alternatively, a tenant may want to sublease when his business either has gone down or if he has extra space that is not needed.


Do Both Options Need a Landlord's Consent?

Both require the consent of the landlord or representing agent. This is frequently explicitly shown in the rental agreement. In the case of assignment, a vetting procedure which usually includes credit checks may be completed before formalizing the arrangement with the related documentation.


Is Subletting or Assignment Right For My Company?

It totally depends on your business situation. By renting unused space, tenants can recuperate critical running expenses and even improve the viability of their business. The original tenant remains the tenant and is responsible for all clauses in the original lease


Assigning your commercial lease to a third party is a good idea if you want to terminate your tenancy before the end of your rental period and vacate the premises completely. This is often a good idea if you are planning to sell or relocate your business. With an assignment, you will be absolved of all responsibilities as the original tenant from the date of assignment.


In our offer to lease - these options are stated. So unless there is a good reason for the landlord not to grant these options, it is usually not a problem for a tenant to use either.



Source:

By Don Catalano - Reoptimizer

https://www.reoptimizer.com/real-estate-optimization-blog/the-differences-between-assignment-and-sublease

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