This commercial lease assignment is between
On or about
The Lease covers the commercial property located at
The Original Tenant wishes to assign to the New Tenant its rights in, and delegate all of its obligations under, the Lease, and the New Tenant wishes to accept this assignment.
The parties therefore agree as follows:
1. ASSIGNMENT.
The Original Tenant assigns to the New Tenant of all its rights in, and delegates to the New Tenant all of its obligations under, the Lease. This transfer will become effective as of
2. ASSUMPTION OF RIGHTS AND DUTIES.
3. REIMBURSEMENT.
On or before the Effective Date, the New Tenant shall pay $
- (a) The security deposit held by the Landlord under the Lease; and
- (b) The rent or other deposits paid in advance by the Original Tenant for any period after the effective date of this assignment.
4. INDEMNIFICATION.
- (a) The Original Tenant shall indemnify the New Tenant against any award, charge, claim, compensatory damages, cost, damages, exemplary damages, diminution in value, expense, fee, fine, interest, judgment, liability, settlement payment, penalty, or other loss (a "Loss") or any attorney's or other professional's fee and disbursement, court filing fee, court cost, arbitration fee, arbitration cost, witness fee, and each other fee and cost of investigating and defending or asserting a claim for indemnification (a "Litigation Expense") arising out of the Original Tenant's breach of its obligations under the Lease before the Effective Date.
- (b) The New Tenant shall indemnify the Original Tenant against all Losses or Litigation Expenses relating to the Lease, except if those Losses or Litigation Expenses arise from the Original Tenant's failure to perform its obligations under the Lease before the Effective Date.
- (c) The New Tenant shall indemnify the Original Tenant against all Losses or Litigation Expenses attributable to the acts or omissions of the New Tenant or its agents, contractors, or employees with respect to the Premises or any activities on the Premises. This indemnification will survive the termination of the Lease and this assignment.
5. CONTINUING EFFECTIVENESS OF LEASE.
This assignment is made on the understanding that all other terms of the Lease remain in full effect, including the prohibition against further assignments and subleases without the Landlord's express written consent.
6. ORIGINAL TENANT'S REPRESENTATIONS.
The Original Tenant represents that it:
- (a) has the power and authority to enter into and carry out this assignment;
- (b) has not previously assigned its rights under the Lease;
- (c) is the lawful and sole owner of the interests assigned under this assignment;
- (d) the interests assigned under this assignment are free from all encumbrances;
- (e) except for the Landlord and the Original Tenant, there are no parties in possession or occupancy of the Premises or any part of them, and there are no parties with possessory rights on the Premises or any part of them; and
- (f) has performed all obligations and made all required payments under the Lease.
7. CONDITION OF PREMISES.
The New Tenant has examined and inspected the Premises and accepts them "as is" and in their present condition with all faults. Except as provided in this assignment, the Original Tenant makes no representations, covenants, or guaranties about the status, nature, or condition of the Lease or the Premises.
8. INTERPRETATION.
In interpreting the language of this assignment, the parties shall be treated as having drafted this assignment after meaningful negotiations. The language in this assignment will be construed as to its fair meaning and not strictly for or against either party.
9. GOVERNING LAW.
- (a) Choice of Law. The laws of the state of
govern this assignment (without giving effect to its conflicts of law principles). - (b) Choice of Forum. Both parties consent to the personal jurisdiction of the state and federal courts in
, .
10. AMENDMENTS.
No amendment to this assignment will be effective unless it is in writing and signed by a party or its authorized representative.
11. COUNTERPARTS; ELECTRONIC SIGNATURES.
- (a) Counterparts. The parties may execute this agreement in any number of counterparts, each of which is an original but all of which constitute one and the same instrument.
- (b) Electronic Signatures. This agreement, agreements ancillary to this agreement, and related documents entered into in connection with this agreement are signed when a party's signature is delivered by facsimile, email, or other electronic medium. These signatures must be treated in all respects as having the same force and effect as original signatures.
12. SEVERABILITY.
If any one or more of the provisions contained in this assignment is, for any reason, held to be invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability will not affect any other provisions of this assignment, but this assignment will be construed as if those invalid, illegal, or unenforceable provisions had never been contained in it, unless the deletion of those provisions would result in such a material change so as to cause completion of the transactions contemplated by this assignment to be unreasonable.
13. NOTICES.
- (a) Writing; Permitted Delivery Methods. Each party giving or making any notice, request, demand, or other communication required or permitted by this assignment shall give that notice in writing and use one of the following types of delivery, each of which is a writing for purposes of this assignment: personal delivery, mail (registered or certified mail, postage prepaid, return-receipt requested), nationally recognized overnight courier (fees prepaid), facsimile, or email.
- (b) Addresses. A party shall address notices under this section to a party at the following addresses:
- If to the Original Tenant:
/ , - If to the New Tenant:
/ , - (c) Effectiveness. A notice is effective only if the party giving notice complies with subsections (a) and (b) and if the recipient receives the notice.
14. WAIVER.
No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this assignment will be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy will be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, and no waiver will constitute a continuing waiver, unless the writing so specifies.
15. ENTIRE AGREEMENT.
This agreement constitutes the final agreement of the parties. It is the complete and exclusive expression of the parties' agreement about the subject matter of this agreement. All prior and contemporaneous communications, negotiations, and agreements between the parties relating to the subject matter of this agreement are expressly merged into and superseded by this agreement. The provisions of this agreement may not be explained, supplemented, or qualified by evidence of trade usage or a prior course of dealings. Neither party was induced to enter this agreement by, and neither party is relying on, any statement, representation, warranty, or agreement of the other party except those set forth expressly in this agreement. Except as set forth expressly in this agreement, there are no conditions precedent to this agreement's effectiveness.
16. HEADINGS.
The descriptive headings of the sections and subsections of this assignment are for convenience only, and do not affect this agreement's construction or interpretation.
17. EFFECTIVENESS.
This assignment will become effective when all parties have signed it.The date this assignment is signed by the last party to sign it (as indicated by the date associated with that party's signature) will be deemed the date of this assignment.
18. NECESSARY ACTS; FURTHER ASSURANCES.
Each party shall use all reasonable efforts to take, or cause to be taken, all actions necessary or desirable to consummate and make effective the transactions this assignment contemplates or to evidence or carry out the intent and purposes of this assignment.
[SIGNATURE PAGE FOLLOWS]
Each party is signing this agreement on the date stated opposite that party's signature.
| Date: _____________________________ | By: _________________________________________________________ |
| Name: |
|
| Date: _____________________________ | By: _________________________________________________________ |
| Name: |
|
[PAGE BREAK HERE]
LANDLORD'S CONSENT
As Landlord under the Lease, I hereby consent to this assignment of the Lease, and to the New Tenant's assumption of the Original Tenant's obligations under the Lease, including the obligation to pay rent when it is due.
| Date: _____________________________ | By: _________________________________________________________ |
| Name: |
|
[PAGE BREAK HERE]
EXHIBIT A
Attach copy of Lease
How-to guides, articles, and any other content appearing on this page are for informational purposes only, do not constitute legal advice, and are no substitute for the advice of an attorney.
Assignment of commercial lease: How-to guide
Occasionally, tenants wish to leave a rental property before the end of their lease. Individuals may take new jobs in new cities, and companies may go out of business or sell their enterprises to a third party.
Whatever the reason, tenants can transfer their original commercial lease to new parties by completing an assignment of the lease.
An assignment transfers one party's interest and obligations under a lease to another party.
During these tenant transfers, the new tenant takes on the lease responsibilities, including paying rent and property maintenance of the leased premises, and the original tenant is released from most of their duties.
Successful property management begins with good documentation and a properly drafted, executed assignment:
- Ensures that all parties involved understand the obligations being transferred
- Defines the responsibilities that each party will have under the new arrangement
- Lays the foundation for a long-lasting landlord and new tenant relationship
Important aspects to consider when drafting commercial leases
1. Laws about the original commercial lease agreement
State laws governing real estate, renting, leasing, and assignments vary widely and can tremendously affect your arrangement.
Since the tenant is legally responsible for this document, they must include specific information like financial statements in the commercial lease assignment. Consider your state and local laws for additional information required in your area.
2. Criteria for commercial landlords in providing consents
A landlord may consider only proper factors when deciding whether or not to consent to an assignment.
Some criteria will be regarded as impermissible by courts, such as refusal based on race or sex of the proposed new tenant. If your landlord doesn't consent to your attempted assignment, ensure they give you clear written reasons for the decision. Failure to provide such reasons can itself be deemed unreasonable.
3. Consequences of not providing consent
It is essential to seek the landlord’s permission for the proposed transfer of the duties.
Depending on your jurisdiction or the terms of your original lease, a landlord’s failure to respond to your request for consent to assignment within a specific time may be deemed consent. Sometimes, it may give the assigning tenant grounds to terminate the lease. Review the original lease and your state’s laws for additional details.
Although a landlord isn't required to consent to a lease assignment agreement, in some cases, your lease will state that a landlord’s consent won't be “unreasonably” withheld. This is more common in commercial leases than in a residential lease. What is considered unreasonable varies from jurisdiction to jurisdiction, and you should review the laws in your area (and the assignment clause in your original lease agreement) for additional information. On the other hand, if the lease states that the landlord may use their “sole discretion” to evaluate the new tenant, they can veto this assignment without any reason.
4. Rights of the original tenant
The original tenant can't assign more rights than the original lease. For example, if the lease term is one year, the assignment term can't be two years.
5. Review the lease assignments before signing
Most leases require the landlord’s written consent before an assignment becomes effective. Review the assignment provisions and the original lease agreement for additional information and see if other requirements must be met to make the lease assignment agreement valid.
6. Get the assignment signed
Sign three copies of the assignment, one for you, the other party, and the landlord. Depending on the nature of its terms, you may decide to have the document witnessed or notarized. This will limit later challenges to the validity of a party’s signature.
Be sure the assignee gets a copy of the original lease by attaching it to the assignment. Its terms will bind them, and they should know their new obligations and rights.
If your agreement is complicated, contact an attorney to help draft a document that meets your needs.
Key components of a commercial lease assignment
The following instructions will help you understand the terms of your assignment.
1. Introduction
In this section, identify the parties and, if applicable, what type of organization(s) they are. Write down how the document identifies each party. For example, the current tenant can be addressed as the “original tenant” or “assignor” as they assign the lease to the new tenant, and the new tenant can be called the “new tenant” or “assignee.”
Furthermore, add the date on which the assignment will become effective—when it is signed.
2. Recitals
The “whereas” clauses, referred to as recitals, define the world of the agreement and offer essential background information about the parties.
In this assignment, the recitals include a simple statement of the parties’ intent to assign the original tenant’s interest in the lease and the new tenant’s intent to assume it. Provide a brief description of the rented property and the landlord’s name under the lease.
You don't need to include a complete legal description for the property description, but provide enough information to identify it. For individual houses, the address will usually be sufficient. If the property has a specific name (e.g., “Lincoln Towers”), include that as well. If only a section of the premises is assigned, clarify that in this description.
3. Assignment
This section mentions the assignor’s assignment of their right and interest in the lease to the assignee. This assignment clause allows you to determine whether all of the assignor’s interest in the lease is being assigned or only part of it. For example, if interest in only one-half of the premises is being assigned, the document should note this.
4. Assumption of rights and duties
This section clarifies the assignor’s responsibilities for the duties listed under the lease (e.g., rent, maintenance of property, etc.). For example, whether:
The assignor is ultimately released from any liability they had under the lease. For example, if the assignee defaults, the landlord can't seek payment from the assignor.
OR
The assignor will be liable to the landlord if the assignee defaults.
In any event, the assignor will remain responsible for any obligations that occurred before the assignment. In other words, if the damage happened to the apartment before the transfer or the assignor didn't fulfill another obligation under the lease, the assignor remains responsible for the building occupied.
5. Reimbursement
In many rental relationships, amounts are paid in advance or deposited as security for the landlord.
At the end of the lease, this security deposit (with deductions subtracted or interest added) is returned to the tenant. If an entire interest is assigned, the lease doesn't end, and the assigning party can't get this money back. This paragraph requires the assignee to pay those amounts to the assignor, and any later return of that money by the landlord will be made to the assignee.
6. Indemnification
In such clauses, the assignee promises to bear the financial cost of any injury the assignor suffers due to its assignment and any lawsuits arising from its activities on the premises. Note that there is an exception for things done by the assignor before the effective date of the assignment—the assignor remains responsible for those actions.
7. Continuing effectiveness of lease
Here, emphasize that the original lease terms are still effective to the assignee, except for the assignment.
8. Assignor’s representations and warranties
List the assignor’s promises under the assignment. Note that this isn't a detailed list of services to be provided. Instead, this is the assignor’s assurance that the lease and the rental interest it’s providing are helpful (i.e., no one else lives or has an interest in the place, the lease is still in effect, the assignor isn't behind in rental payments, etc.). If there are additional representations the assignor should be making, feel free to include those here.
9. Condition of premises
Here, mention that the premises aren’t warranted to be perfect or valuable in a particular way. Instead, the assignee takes the rented property for what it is and accepts it in that state.
10. Additional terms of assignment
This optional provision allows the assignor and the assignee to include any representations, warranties, or other provisions particular to their situation.
11. Interpretation
This section provides information that both parties were on equal footing in negotiating the consent to assignment. In many cases, a contract is interpreted favorably by the individual who didn't draft it. This clause clarifies that both parties were involved in the drafting, so the document shouldn't be read in favor of (or against) either.
12. Notice
Here, list the addresses to which all official or legal correspondence should be delivered. This can be the tenant’s business address or the mailing address for both the assignor and the assignee.
13. Modification
This section indicates that any changes to the document are only effective if they're made in writing and signed by both parties.
14. Governing law
This section allows the parties to choose the state laws used to interpret the document.
15. Counterparts; electronic signatures
This section explains that even if the parties sign the assignment in different locations or use electronic devices to transmit signatures (e.g., fax machines or computers), the separate pieces will be considered part of the same agreement. In a modern world where signing parties aren’t often in the same city—much less the same room—this provision ensures that business can be transacted efficiently without sacrificing the validity of the agreement as a whole.
16. Entire agreement
This clause mentions that the document parties are signing is “the agreement” about the issues involved. Unfortunately, the inclusion of this provision won't prevent a party from arguing that other enforceable promises exist, but it can provide you some protection from these claims.
17. Landlord’s consent and release
Review the terms of the original lease agreement to determine whether or not the landlord’s consent is required to make the assignment effective. This is usually the case. If so, have the landlord sign the document.
Whether you need to get the landlord’s consent or request permission to make changes to your agreement, LegalZoom offers a library of business and professional templates for an affordable price. Choose a sample agreement template based on your requirements and follow the simple drafting process. If you’re looking to assign a residential lease to another party, you can use LegalZoom’s assignment of residential lease template.
Frequently asked questions
What is the purpose of an assignment of lease?
Whether it's because it's time to move to a new space or city, business isn't booming, a company gets sold, or otherwise, sometimes commercial tenants must leave a lease before it ends. And sometimes, they may want to transfer the responsibilities of their lease to someone new. A lease assignment occurs in this case.
Here's the information you'll need to have handy to complete your assignment of commercial lease:
- Who the old tenant is: Have their name and contact information ready
- Who the new tenant is: Have their information available
What is the difference between an assignment and a sublease?
An assignment transfers one party's interest in an agreement to a third party. In this case, the original tenant gives all their interest to a new tenant. That new tenant steps into the shoes of the old tenant, and the old tenant is released from most of their obligations under the lease (although this can be changed by agreement).
This isn't the same as a sublease. Under a sublease, a third party is granted only those specific rights provided in the sublease. The original tenant remains ultimately liable for residual obligations under the lease or any failures of the new tenant to meet their obligations. This means that the original tenant will be responsible (in equal measure with the new tenant) for any skipped rent payments or damage to the property.
Free Assignment of Commercial Lease Template
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