This article discusses the provisions related to the assignment of a lease by the tenant. When an existing lease is transferred by the tenant for a sub-lease to a sub-tenant this is called assignment.
The tenant who assigns the property is called assignor and the prospective sub-tenant is called assignee or buyer. The concept of assignment arises mainly in two contexts;
a) Residential: An assignment of a short-term residential lease is not allowed in the lease. Assignments are thus a feature of only long-term leases of flats and houses because these properties have a capital value that can be sold in the market. The house or flat can be sold to a buyer in the same way as a freehold property is sold.
b) Commercial: Leases of commercial property is allowed for assignment. But since the tenant pays the market rent for the property, this lease does not have any market value. Hence he does not pay any purchase price to the assignee for the assignment. More often than not, there are special conditions attached before special conditions are fulfilled.
Before understanding the specifics of assignments, it is important to understand the relationship that exists between an assignor and an assignee. The assignor sells his lease in the same manner as an owner of a freehold property would sell his property. Although, the assignee buys the remaining term (of the lease), he is also liable for the covenants that are attached to the property. Since a lease is already in place, its terms and conditions are not open to discussion and the assignee will have to accept the lease as it is or leave it. The only way by which these terms can be altered is by speaking to the landlord and renegotiating the terms. The process of assignment is very similar to that of a sale of freehold property.
Photo courtesy: d’n’c
