assignment of lease plc

.

Assignment Of Leases And Rents

Jump to section, what is an assignment of leases and rents.

The assignment of leases and rents, also known as the assignment of leases rents and profits, is a legal document that gives a mortgage lender right to any future profits that may come from leases and rents when a property owner defaults on their loan. This document is usually attached to a mortgage loan agreement.

Assignment of leases and rents allows lenders to a degree of financial protection in case a loan default occurs. This document is an agreement made between a borrower and a lender of mortgage loans. It often details an exact amount the lender will be entitled to if a default happens.

Common Sections in Assignments Of Leases And Rents

Below is a list of common sections included in Assignments Of Leases And Rents. These sections are linked to the below sample agreement for you to explore.

Assignment Of Leases And Rents Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.9 10 d368735dex109.htm ASSIGNMENT OF LEASES AND RENTS , Viewed October 4, 2021, View Source on SEC .

Who Helps With Assignments Of Leases And Rents?

Lawyers with backgrounds working on assignments of leases and rents work with clients to help. Do you need help with an assignment of leases and rents?

Post a project  in ContractsCounsel's marketplace to get free bids from lawyers to draft, review, or negotiate assignments of leases and rents. All lawyers are vetted by our team and peer reviewed by our customers for you to explore before hiring.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

Meet some of our Assignment Of Leases And Rents Lawyers

Ferraro Law Firm was founded by Dean C. Ferraro. Dean earned his Bachelor's Degree from California State Polytechnic University, Pomona ("Cal Poly Pomona") in 1992 and his J.D. Degree from the University of Mississippi School of Law ("Ole Miss") in 1996. He is licensed to practice law in the State Courts of Colorado, Tennessee, and California. Dean is also admitted to practice before the United States District Courts of Colorado (District of Colorado), California (Central District), and Tennessee (Eastern District). Shortly after earning his law license and working for a private law firm, Dean joined the District Attorney's office, where he worked for five successful years as one of the leading prosecuting attorneys in the State of Tennessee. After seven years of practicing law in Tennessee, Dean moved back to his birth state and practiced law in California from 2003-2015. In 2015, Dean moved with his family to Colorado, practicing law in beautiful Castle Rock, where he is recognized as a highly-effective attorney, well-versed in many areas of law. Dean's career has entailed practicing multiple areas of law, including civil litigation with a large law firm, prosecuting criminal cases as an Assistant District Attorney, In-House Counsel for Safeco Insurance, and as the founding member of an online law group that helped thousands of people get affordable legal services. Pursuing his passion for helping others, Dean now utilizes his legal and entrepreneurial experience to help his clients in their personal and business lives. Dean is also a bestselling author of two legal thrillers, Murder in Santa Barbara and Murder in Vail. He currently is working on his next legal thriller, The Grove Conspiracy, set to be published in 2023.

Jason is a self-starting, go-getting lawyer who takes a pragmatic approach to helping his clients. He co-founded Fortify Law because he was not satisfied with the traditional approach to providing legal services. He firmly believes that legal costs should be predictable, transparent and value-driven. Jason’s entrepreneurial mindset enables him to better understand his clients’ needs. His first taste of entrepreneurship came from an early age when he helped manage his family’s small free range cattle farm. Every morning, before school, he would deliver hay to a herd of 50 hungry cows. In addition, he was responsible for sweeping "the shop" at his parent's 40-employee HVAC business. Before becoming a lawyer, he clerked at the Lewis & Clark Small Business Legal Clinic where he handled a diverse range of legal issues including establishing new businesses, registering trademarks, and drafting contracts. He also spent time working with the in-house team at adidas® where, among other things, he reviewed and negotiated complex agreements and created training materials for employees. He also previously worked with Meriwether Group, a Portland-based business consulting firm focused on accelerating the growth of disruptive consumer brands and facilitating founder exits. These experiences have enabled Jason to not only understand the unique legal hurdles that can threaten a business, but also help position them for growth. Jason's practice focuses on Business and Intellectual Property Law, including: ​ -Reviewing and negotiating contracts -Resolving internal corporate disputes -Creating employment and HR policies -Registering and protecting intellectual property -Forming new businesses and subsidiaries -Facilitating Business mergers, acquisitions, and exit strategies -Conducting international business transactions ​​ In his free time, Jason is an adventure junkie and gear-head. He especially enjoys backpacking, kayaking, and snowboarding. He is also a technology enthusiast, craft beer connoisseur, and avid soccer player.

Maigan is a registered nurse and attorney with tech law experience, specifically in Web3, including NFTs. Maigan acted as general counsel for a NFT platform for two years and speaks and understands smart contracts. As a registered nurse, Maigan is in a unique position to understand health law issues and graduated with a concentration in health law distinction. Maigan is happy to help you create a business entity, draft and negotiate contracts and agreements, apply for trademarks, draft terms of service and privacy notices, draft terms of sale for NFT drops, draft web3 licenses, and act as a consultant for other attorneys looking for someone who understands web3 and NFTs. Maigan speaks conversational Spanish.

Founder David W. Weygandt, the Singing Lawyer, is passionate about helping families and businesses stay in tune with what they care about and avoid conflict. When injustice has been done, David is proud to stand up to the modern Goliath and vindicate your rights on your behalf. David lives and practices law in The Woodlands, Texas, and assists clients all across Texas.

Attorney Nicole B. Phillips is a northwestern Iowa native and devotes her practice to the area of Family Law. She is an experienced trial attorney with over 12 years of family law experience. ​ Nicole graduated from The University of South Dakota with a degree in Criminal Justice, and attended Oklahoma City University School of Law to obtain her law degree. Prior to establishing Phillips Law Firm, P.C., Nicole built her first successful law practice in Oklahoma City, Oklahoma, where she focused on Family Law, Estate Planning and Personal Injury Law, and her second successful law practice in Sherman, Texas, focusing primarily on Family Law. ​ Nicole has one daughter, Arabella. In addition to enjoying time with her daughter, Nicole enjoys reading, family dinners, traveling, spending time with friends, and game nights.

Ari is a transactional attorney with substantial experience serving clients in regulated industries. He has worked extensively with companies in regulated state cannabis markets on developing governance documents (LLC operating agreements, corporate bylaws, etc...), as well as drafting and negotiating all manner of business and real estate contracts.

I'm a knowledgable and experienced New York licensed attorney with strong contract drafting and negotiation skills, a sophisticated business acumen, and a background working in entertainment and technology law.

Find the best lawyer for your project

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

How It Works

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

Real Estate lawyers by top cities

• Austin Real Estate Lawyers
• Boston Real Estate Lawyers
• Chicago Real Estate Lawyers
• Dallas Real Estate Lawyers
• Denver Real Estate Lawyers
• Houston Real Estate Lawyers
• Los Angeles Real Estate Lawyers
• New York Real Estate Lawyers
• Phoenix Real Estate Lawyers
• San Diego Real Estate Lawyers
• Tampa Real Estate Lawyers

Assignment Of Leases And Rents lawyers by city

• Austin Assignment Of Leases And Rents Lawyers
• Boston Assignment Of Leases And Rents Lawyers
• Chicago Assignment Of Leases And Rents Lawyers
• Dallas Assignment Of Leases And Rents Lawyers
• Denver Assignment Of Leases And Rents Lawyers
• Houston Assignment Of Leases And Rents Lawyers
• Los Angeles Assignment Of Leases And Rents Lawyers
• New York Assignment Of Leases And Rents Lawyers
• Phoenix Assignment Of Leases And Rents Lawyers
• San Diego Assignment Of Leases And Rents Lawyers
• Tampa Assignment Of Leases And Rents Lawyers

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Find lawyers and attorneys by city

Assignment of Lease Explained

• December 1, 2023

Understanding the complexities surrounding the assignment of a lease is crucial for both tenants and landlords. Within the UK, various situations might compel a tenant to transfer their lease to another party. In this guide we will delve into the essentials, helping you understand every facet of a lease assignment.

What is an Assignment of Lease?

In the world of property management and real estate, the concept of an “assignment of lease” is fundamental. It involves a tenant, known as the assignor, transferring their entire legal interest in a property to another individual or entity, called the assignee. This process is common in both residential and commercial contexts and plays a significant role in maintaining the fluidity of property interests, especially in a dynamic market.

When a tenant signs a lease, they agree to specific commitments, including paying rent and maintaining the property, which are enforceable for a set period. However, various circumstances may prompt a tenant to vacate the property before the lease term expires. Herein lies the importance of the assignment of lease.

Through lease assignment, the original tenant can exit the property and pass on the responsibility to a third party, who then assumes the role of the tenant with all its incumbent responsibilities. It’s important to note that while the new tenant steps into the shoes of the original tenant, the lease terms remain unchanged.

For instance, if an individual rents a flat and later decides to move out before the lease’s expiration due to reasons such as relocating for a job or changing living situations, they may opt for an assignment of the lease. This strategy allows another person to take over the living space and adhere to the responsibilities under the original lease, ensuring that the flat does not remain unoccupied and the landlord continues to receive rent payments. This seamless transition can be especially beneficial in residential areas with high demand for housing, as it minimises financial instability for the landlord and provides immediate accommodation for those in need of a home.

Key Components of Lease Assignment

• Assignor and Assignee: The existing tenant (assignor) and the new tenant (assignee) are the primary parties in this agreement. Their willingness to transfer and assume the lease’s obligations, respectively, drives the assignment process.
• Landlord’s Role: While not a direct party to the assignment, the landlord plays a pivotal role. Most lease agreements stipulate that landlords must provide consent before any assignment takes place. This clause protects the landlord’s interests, ensuring the new tenant is reliable and meets the required standards.
• Legal Documentation: The process requires several legal documents, including the initial lease agreement and a deed of assignment. The latter must clearly articulate that all rights and responsibilities have been transferred to the new tenant. This precision prevents future disputes regarding the terms of the lease.
• Liabilities: The assignment of lease doesn’t inherently absolve the original tenant of responsibilities. Depending on the agreement’s terms, the assignor might remain liable if the assignee fails to fulfil the lease obligations. This potential continued liability underscores the importance of thorough assignee vetting.

The Legal Ground

The legality surrounding the assignment of a lease is rooted in UK property law. It necessitates compliance with various statutory requirements and often involves complex legal procedures. Consequently, parties usually engage solicitors to ensure that the assignment aligns with legal protocols, protecting the interests of all involved parties.

The assignment of a lease is a nuanced process, influenced by factors unique to each situation. Whether prompted by personal, business, or financial changes, lease assignments facilitate flexibility in property occupancy and use. Understanding this concept is crucial for tenants seeking an early exit from a lease, individuals looking for established lease properties, and landlords wishing to maintain continuous tenancy and income streams.

Understanding the Deed of Assignment of Tenancy

A “deed of assignment tenancy” is a legal document that evidences the transfer of lease obligations from the current tenant to another. It is an essential part of the lease assignment process, binding the new tenant to the terms stated in the original lease.

Landlord’s Checks Before Permitting Assignment of a Lease

The assignment of a lease, while beneficial in maintaining continuous occupancy and consistent rent payments, necessitates thorough due diligence on the part of the landlord. Before consenting to an assignment, it’s imperative for landlords to conduct comprehensive checks, mirroring the depth of evaluation done during the initial tenant screening process. These checks are crucial in mitigating potential risks and safeguarding the landlord’s investment.

Detailed Assessment of the Prospective Assignee

Landlords should ascertain the financial stability and reliability of the assignee. This assessment often involves:

• Credit Checks: This allows landlords to have a clearer understanding of the prospective assignee’s credit history, highlighting their ability to keep up with regular rent payments and financial commitments.
• Employment Verification: Landlords typically require proof of ongoing, stable employment. This verification helps ensure that the new tenant has a consistent income stream capable of covering the rent and other associated costs.
• References: Previous landlords or property managers can provide insights into the assignee’s behaviour, paying habits, and overall reliability. Personal references might also be necessary to form a more comprehensive view of the prospective tenant.

Review of the Assignee’s Intent

Understanding the prospective tenant’s reasons for seeking the property and their long-term intentions can provide reassurance. For instance, landlords should feel more comfortable knowing that the assignee plans to reside in the property for an extended period and doesn’t intend to sublet without permission or engage in unlawful activities.

Examination of Financial Documentation

Landlords may request documentation such as bank statements or savings accounts to further verify the assignee’s ability to afford the property. This scrutiny is particularly pertinent in higher-rent areas or for properties with higher maintenance costs.

Ensuring Contractual Compliance

It’s important for the landlord to confirm that the assignee understands and agrees to the terms set out in the original lease. The assignee must comply with all existing conditions, and any deviation needs to be negotiated with and approved by the landlord.

Legal Considerations

Given the legal complexities surrounding lease assignments, landlords often seek legal advice during this process. Lawyers can help ensure that the assignment adheres to local property laws, the original lease’s terms, and that the landlord’s interests are thoroughly protected throughout the transition.

By conducting these comprehensive checks, a landlord exercises due diligence, significantly reducing the likelihood of issues arising from the assignment of the lease. This meticulous approach helps maintain the property’s revenue stream, upholds community standards, and ensures the continued preservation and value of the property investment. It’s a proactive measure, providing the landlord with peace of mind that they are handing over their property to a reliable and responsible assignee.

Costs Involved in Lease Assignment

The process of lease assignment, while a practical solution for tenants looking to transfer their lease obligations, does entail various costs that both the assignor (original tenant) and assignee (new tenant) need to consider. These expenses contribute to a seamless transfer process, ensuring all legalities are properly managed, and all parties are adequately protected. Understanding these costs is essential as it prevents unexpected surprises and allows for a more transparent transaction.

Costs for the Assignor

• Advertising Costs: If the landlord does not immediately have a new tenant, the original tenant may need to advertise the property. This could involve online listings, printed materials, or hiring an estate agent to expedite the process, all of which incur costs.
• Tenant Screening Costs: The assignor might opt to conduct preliminary screenings of potential assignees, which include credit checks, reference checks, and other background investigations to ensure they’re presenting a reliable tenant to the landlord.
• Legal Fees: The legal intricacies of transferring a lease require the involvement of legal professionals. The assignor typically bears the cost for legal consultations, drafting the deed of assignment, and any related legal documentation.
• Landlord’s Administrative Fees: Some landlords charge an administrative fee for processing a lease assignment, covering the time and resources they expend to conduct their checks and modify their records.
• Potential Liability Costs: If the assignee fails to meet the lease obligations, and depending on the terms of the assignment, the original tenant may remain partially liable. This contingent liability could lead to future costs.

Costs for the Assignee

• Security Deposit: It’s standard practice for the new tenant to provide a security deposit before moving in. In some cases, the assignee reimburses the original tenant for the initial deposit, depending on its condition and any agreement between the parties.
• Advance Rent: The assignee may need to pay the first month’s rent in advance, similar to standard leasing arrangements.
• Legal Fees: Assignees also incur legal fees. They need legal counsel to review the terms of the lease, ensure the assignment is conducted correctly, and understand their new responsibilities and liabilities.
• Stamp Duty: Depending on the property’s value and the lease’s remaining duration, the assignee might need to pay Stamp Duty Land Tax (SDLT) on the premium or the rent of the lease.

Shared Costs

In some instances, both parties negotiate and equally share specific costs, such as those for legal consultations, to ensure fairness and mutual satisfaction in proceeding with the transaction.

Both assignors and assignees must factor in these expenses to accurately assess whether a lease assignment is a financially viable option. It is advisable to consult with real estate professionals and legal advisors to understand all potential charges fully. Having a clear, upfront understanding of these costs allows both parties to make informed decisions, ensuring a smooth, transparent, and fair transition process.

Does Assignment Create a New Tenancy?

No, an assignment does not create a new tenancy. It merely transfers the existing tenant’s rights and obligations to the new tenant, who then steps into the shoes of the original tenant under the same lease terms.

The Necessity of Legal Assistance

It is highly advisable to engage a solicitor during the assignment of a lease. A solicitor can provide necessary legal advice, prepare the deed of assignment of lease, and ensure compliance with various property and contract laws.

Deed of Assignment vs Tenancy Agreement

While they might sound similar, a deed of assignment is not the same as a tenancy agreement. The former refers to the document transferring existing lease rights to a new tenant, while the latter is a contract outlining the terms between a landlord and tenant for new occupancy.

Parties Involved in Signing the Deed of Assignment

The deed of assignment of lease is typically signed by the outgoing tenant, the incoming tenant, and sometimes, the landlord, especially when their consent is a prerequisite for the lease transfer.

Landlord’s Consent to Lease Assignment

A landlord can refuse to consent to assign a lease, but this refusal must be reasonable. Scenarios for justifiable refusal might include the prospective tenant’s inability to meet financial commitments or proposed use of the property that violates lease terms.

Lease Assignment vs Subletting

• Lease assignment involves the complete transfer of the tenant’s rights to another party.
• Subletting occurs when the tenant temporarily hands over the property rights to another party but retains some rights or eventually plans to return.

Financial Responsibilities in Lease Assignment

Typically, the outgoing tenant or the incoming tenant covers the costs related to the assignment of lease, such as legal fees, administrative charges, and any leasehold improvements. The specific arrangements may vary based on mutual agreements.

Assigning a Lease Without a Deed: Is It Possible?

No, a lease assignment must be evidenced by a deed to be legally binding. The deed of assignment tenancy is crucial as it protects the interests of all parties involved and provides legal clarity.

The Meaning of ‘Assignment’ in Rent Context

In the context of renting, ‘assignment’ refers to transferring the existing tenant’s lease obligations and rights to another party. The assignee assumes responsibility for rent payments and adherence to the lease terms.

Advantages of Assigning a Lease

There are several benefits associated with the assignment of a lease, including:

• Flexibility for the tenant needing to vacate the property before lease termination.
• Minimal interruption in rent payments for the landlord.
• Opportunity for another tenant to occupy the premises without having to negotiate a new lease.

Stamp Duty and Lease Assignment

Stamp duty on assignment of lease may apply depending on the premium paid and the lease’s yearly rent. It’s important to consult a solicitor to understand any potential tax implications.

Post-Assignment Liabilities for Tenants

After the assignment of a lease, the original tenant is generally released from future liabilities. However, they may remain liable if the new tenant defaults, depending on specific lease terms or if guarantees were provided.

Essential Documents for Lease Assignment

In the process of a lease assignment, several critical documents must be prepared, reviewed, and signed to ensure a legally binding transfer of rights and responsibilities from the original tenant (assignor) to the new tenant (assignee). These documents are crucial in defining the terms of the assignment, protecting the interests of all parties involved, and complying with legal standards. Here are the essential documents required for a successful lease assignment:

1. The Original Lease Agreement

• Before any transfer, all parties must review the original lease. It’s vital to understand any clauses or terms that could impact the assignment, such as conditions requiring the landlord’s consent for any lease transfer.
• The original lease agreement serves as the foundation for the assignment, outlining the terms and obligations that the assignee will need to adhere to.

2. Deed of Assignment of Lease

• This legal document formally transfers the lease obligations from the assignor to the assignee. It must clearly state the terms under which the lease is assigned, including any continuing liabilities of the assignor, if applicable.
• It should be comprehensive, detailing the rights and responsibilities of all parties and any guarantees provided by the assignor.
• The deed is usually drafted by a solicitor to ensure that it complies with legal standards and adequately protects everyone’s interests.

3. Landlord’s Consent to Assignment

• Most leases require the landlord’s formal approval for any assignment to occur. This document is the landlord’s written agreement, permitting the transfer from the current tenant to the new one.
• It may come with conditions the assignee must satisfy, which should be clearly outlined in the consent form.

4. Assignee’s Letter of Acceptance

• This document is proof that the assignee understands and agrees to the terms set out in the original lease and the deed of assignment.
• The letter may restate key lease terms for clarity and will affirm the assignee’s commitment to abide by all the lease conditions and responsibilities.

5. Legal Advisories

• Though not a formal part of the lease assignment, documentation of legal advice received by both the assignor and assignee (and possibly the landlord) is crucial.
• These advisories ensure each party has been informed of their legal rights and obligations, potentially offering protection in the event of future disputes.

6. Inventory List

• If relevant, an inventory list detailing the condition of the property, especially for furnished rentals, would be necessary. This document helps manage expectations and responsibilities concerning the property’s state and contents at the time of the assignment.

7. Proof of Assignee’s Financial Stability

• While not always formally part of the assignment documentation, evidence of the assignee’s ability to meet financial commitments (like bank statements or employment confirmation) often needs to be submitted to the landlord during the assignment process.

The process of assigning a lease is a complex legal transaction that requires strict adherence to procedural standards. These essential documents ensure that the assignment progresses smoothly, with clear understanding and agreement from all parties involved. Both assignor and assignee should seek legal counsel to ensure their interests are protected, and all documents are in order, further underscoring the importance of each document’s role in this pivotal real estate process.

Energy Performance Certificate (EPC) Requirements

Yes, an EPC is generally required for a lease assignment, especially if the building is to be sold or rented out. This certificate ensures that the property meets the necessary energy efficiency standards.

Registering an Assignment of Lease

Registration of an assignment of lease is crucial. It validates the change of tenant under the lease, making it legally binding and enforceable. This process usually involves submitting the deed of assignment to the appropriate land registry.

Timeframe for Assigning a Lease

Assigning a lease can take anywhere from a few weeks to several months, depending on factors like obtaining the landlord’s consent, the new tenant’s credibility, and the speed of legal processes.

Embracing the Benefits of Lease Assignment

Whether you’re a tenant seeking flexibility or a landlord desiring continued occupancy, lease assignment offers solutions that can cater to your individual needs, promoting ease and continuity in the leasing process.

If you’re considering a lease assignment, it’s paramount to seek professional advice to navigate the complexities involved. The information contained in this article should be used for information purposes only and should not be relied upon in place of specific legal advice.

Related Blog Posts

Increase in Homes For Sale

As the UK embraces the vibrancy of Spring, its property market is showing signs of significant growth, offering promising opportunities for potential homebuyers

Buy To Let Investor Hotspots in the UK

Let’s explore the top cities that are currently defining the UK’s buy-to-let landscape and why they hold the promise of being wise investment choices in the coming years.

Home Energy Model Set to Replace SAP and EPC in 2025

In 2025, the UK housing sector will experience a significant shift as the Home Energy Model (HEM) replaces the Standard Assessment Procedure (SAP) for the energy rating of dwellings.

Commercial lease assignments: A guide for businesses

Business owners often consider commercial lease assignments to enhance flexibility, mitigate financial burdens, or adapt to evolving operational requirements. 

The work landscape, particularly in cities like London, is also evolving with the widespread adoption of remote and hybrid models, with many tenants seeking to streamline their footprints and reduce overhead costs.

Whether your business is looking for a more suitable space or navigating market fluctuations, this article will give you an overview of the lease assignment process and the essential legal aspects to consider.

What is the assignment of a lease?

The assignment of a lease refers to the legal process through which a tenant transfers their lease obligations and rights to another party, known as the assignee. This strategic move allows businesses to exit their premises before the lease term ends, with the assignee assuming responsibility for complying with the lease terms and obligations.

Businesses may consider lease assignment for various reasons, such as relocation, financial constraints, or changes in business needs. For instance, a company experiencing rapid growth may seek more extensive premises, making lease assignment an attractive option to exit the current arrangement.

What role does a solicitor play?

Understanding the legal complexities is vital when considering the assignment of a commercial lease. In this process, solicitors offer expert advice and can negotiate with the landlord to secure favourable terms within the assignment agreement, safeguarding the client's interests. 

Their pivotal role extends to drafting and finalising essential legal documents associated with lease assignments, such as:

• Licence to assign: A solicitor can assist in drafting this document, ensuring that it covers all necessary conditions and terms for the assignment, meets legal requirements, and protects the interests of both parties.  
• Rent deposit deed: Solicitors can draft the rent deposit deed, specifying the details of the deposit arrangement, its purpose, and the conditions under which the landlord can use the deposit, providing legal clarity for both parties.  
• Authorised guarantee agreement (AGA): Solicitors are instrumental in creating an AGA, outlining the legal commitment by the outgoing tenant to guarantee the new tenant's performance. They ensure that the agreement is comprehensive and legally sound, protecting the interests of the landlord and the outgoing tenant.

Avoiding the legal pitfalls of lease assignments

While every commercial lease assignment is unique, several legal aspects require careful consideration.

1. Leasehold covenants: Ensuring compliance 

Understanding leasehold covenants is essential in the lease assignment process as it involves recognising and complying with the agreed-upon obligations and restrictions outlined in the lease agreement. These covenants dictate how the property can be used, any alterations or improvements allowed, and other conditions the current and potential tenants must adhere to. 

For example, if a leasehold covenant stipulates that the premises can only be used for office purposes, you cannot assign the lease to a manufacturing company.

Failure to understand and meet these covenants could lead to complications, including the landlord's refusal to consent to the assignment or potential legal issues. Comprehending these covenants is essential for a smooth and legally compliant lease assignment.

2. Securing the landlord's consent: A prerequisite

Before proceeding with a lease assignment, obtaining the landlord's consent is paramount. This process involves submitting a formal request providing details about the proposed assignee and their financial stability.

While landlords cannot unreasonably withhold consent, specific lease terms may give them grounds to do so. Understanding the particular conditions for refusal is crucial, so it is important to seek legal advice as soon as possible.

3. Liabilities when assigning a commercial lease

Understanding liabilities when assigning a lease is crucial for business owners as it directly impacts their ongoing responsibilities and potential financial obligations. Transferring a lease doesn't automatically absolve the original tenant of all liabilities; they may still be held accountable if the new tenant defaults on payments or breaches lease terms. 

An authorised guarantee agreement (AGA) is a legal commitment often used in the context of commercial lease assignments. When a tenant assigns its lease to a new tenant, the outgoing tenant (assignor) may be required to provide an AGA. This agreement serves as a guarantee by the original tenant to the landlord, ensuring that the obligations of the new tenant (assignee) under the lease will be fulfilled.

The AGA means that if the new tenant defaults on the lease obligations, the outgoing tenant remains liable, guaranteeing the landlord a level of financial security. The original tenant can be pursued for any unpaid rent or other breaches of the lease terms by the new tenant. The AGA provides a legal mechanism for the landlord to seek redress from the outgoing tenant if issues arise with the assigned lease. 

Clear comprehension of these liabilities ensures informed decision-making and risk mitigation during the lease assignment process.

4. Navigating regulatory changes

The evolving regulatory landscape, particularly factors like Energy Performance Certificates (EPCs), can add additional challenges to lease assignments. For example, if you took on a lease before Minimum Energy Efficiency Standards (MEES) came into effect on April 1, 2018, the regulations did not apply at the time of the lease's inception. However, if you are now considering assigning the lease, MEES regulations would be applicable. 

A landlord may be less willing to agree to the lease assignment if it becomes essential to ensure that the property meets the required EPC standards to comply with the current regulations. 

5. Formalising with Land Registry: A vital step

Registering an assignment with the Land Registry is an important step in the lease assignment process. If a lease is granted with a term of over seven years, it must be registered to record the change of tenant officially. 

Failure to complete this registration can have significant consequences, including potential challenges to the validity and enforceability of the assignment. 

What are the alternatives to assigning a commercial lease?

When considering an exit from a commercial lease, it's crucial to recognise that assignment is just one of several options. Exploring these options is vital, and seeking guidance from a solicitor ensures a comprehensive understanding of the available choices.

• Assignment vs. subletting: Assignment involves permanently transferring your lease obligations to a new tenant. On the other hand, subletting a commercial property allows you to lease a part of your space to another party, retaining your responsibility for the entire lease.  
• Taking advantage of a 'break clause': A break clause is a provision in the lease allowing either party to terminate the agreement early, typically at predefined intervals. It provides a strategic exit, but conditions and notice periods must align with the lease terms.  
• Early termination with landlord's consent: Seeking your landlord's agreement to terminate the lease prematurely can be challenging. It requires negotiations and may involve financial considerations. Legal advice is essential to navigate this complex process and safeguard your interests.

Business owners can make informed decisions that align with their strategic objectives by understanding the intricacies, exploring alternatives, and leveraging legal expertise.

Commercial lease expertise

Our team of experienced commercial property solicitors is dedicated to guiding you through the lease assignment process. Every business has unique needs, so we offer tailored advice that aligns with your objectives. 

In addition to lease assignments, we can provide guidance on alternative options for ending a commercial lease, such as subletting, break clauses, and lease termination. 

With solicitors in London, Brighton, East Sussex, and Cumbria, we assist commercial landlords and tenants nationwide.

Looking to assign a commercial lease?

You might also like to read:

Subletting strategies: maximising flexibility in commercial leases, how to surrender a commercial lease: a guide for landlords and tenants.

How to end a commercial lease early: A quick guide

Repair clauses in commercial leases: what tenants need to know.

Legal Services

• Brain Injury
• Cerebral Palsy
• Child Birth
• General Medical Negligence
• Misdiagnosis Of Cancer
• Wrongful Birth
• Bridging Loans
• Freehold and Leasehold to Buy and Sell
• Purchases and Sales of Business Premises
• Transfers/Assignments of Existing Leases
• Catastrophic Injury Claims
• Contentious Probate
• Contractual Disputes
• Housing Disrepair
• Landlord & Tenant disputes
• Military Claims
• Other Litigation
• Employment Tribunal Claims
• Restrictive Covenants
• Settlement Agreements
• Contracts, Policies and Procedures
• Defending Employment Tribunal Claims
• Disciplinary, Capability and Grievance Procedures
• EDI and Harassment Policies
• Flexible Work Requests
• Protected Conversations and Settlement Agreements
• Restrictive Covenants and Employee Competition
• Children Advice
• Cohabitation Agreements
• Collaborative Law
• Divorce and Separation
• Domestic Violence
• Financial Arrangements
• Inheritance Act Claims
• Pre and Post Nuptial Agreements
• Property Claims for Unmarried Couples
• Business Visas
• Relationship and Family Visas
• Refusals and Appeals
• Settlement Visas
• Student Visas
• UK Citizenship
• Visitor Visas
• Bills of Costs
• Costs Budgeting and Management
• Costs Negotiations and Advice
• Costs Training and Seminars
• Court of Protection
• Group Litigation
• Points of Dispute
• Replies to Points of Dispute
• Solicitor and Client Disputes
• Auction Sales and Purchases
• Buying a House
• Lease Extensions
• Lifetime Mortgages (Equity Release)
• Remortgaging
• Selling a House
• Transfer of Equity
• Court of Protection Applications
• Declarations of Trust
• Estate Planning
• Inheritance Tax Advice
• Powers of Attorney

Further Information

• Accreditations
• Free Online Enquiry
• News, Events and Articles

Assignment Of A Lease: Everything You Need To Know! 📃

May 08, 2024 | Laura Everitt

There are are plenty of reasons why you might want to exit your commercial lease early. Perhaps your current premises are no longer suitable for the needs of your growing business, or maybe your business is in financial difficulty and you need to find a lease with more favourable terms.

There are also plenty of options when it comes to deciding how to exit a lease before the specified end date. Some of the most common include: assignment of a lease, which involves passing the lease onto another business; terminating the lease, with the help of a break clause if your contract contains one; or subletting your premises and adopting the role of landlord yourself.

Unfortunately, exiting a lease early is not always a simple process. A lease is a legal contract, and if you break it your landlord could take you to court. Opting to pursue a process such as assigning the lease to a new tenant can make exiting a lease early possible, but there are many factors that should be considered before beginning this process.

If you are thinking of trying to leave your lease early, it is advisable to obtain independent legal advice from an appropriately experienced commercial property solicitor before taking any action.

If you require legal advice or assistance on getting out of a commercial lease please call us on 0800 086 2929 , email [email protected] or complete our Free Online Enquiry Form .

In addition to office meetings, we also offer remote meetings via telephone and video conferencing software so can assist you wherever you are based.

What is assignment of a lease?

The process of assignment of a lease is essentially selling the lease to a third party (the “assignee”).

If you are a commercial property tenant, your contract likely contains a clause that allows you to assign your lease to a new tenant. To do this, you will need to find a potential new tenant yourself. Your landlord will expect this new tenant to meet the same expectations they originally set for you, and you will probably need their consent before the assignment can be completed.

While your landlord cannot reasonably withhold their consent for the assignment, they are under no obligation to give their consent if the new tenant doesn’t meet the terms set out in your contract – so it’s wise to be picky yourself about the tenant you select.

There are likely to be restrictions around when and if you can assign your lease specified in your contract. Some common restrictions include not allowing lease assignments if the contract is for a short period, and not allowing the lease to be assigned if the lease is ending within a few years.

Once a lease as been assigned, the assignee will become the new tenant and will be responsible for ensuring compliance with all of the tenant’s obligations in the lease.

What checks will a landlord make before permitting assignment of a lease?

Financial status

Your landlord will want to see evidence – usually in the form of business bank account statements – that the new tenant is in a strong financial position

Statements from previous landlords that the tenant has leased property from will be required to show that the tenant is reliable and doesn’t have a history of missing payments or otherwise neglecting their responsibilities as a tenant

Proposed use of the premises

Your landlord will probably be looking for a new tenant to intend to use the premises in broadly the same way as you have done in the past as the lease will specify what use is allowed.

Likelihood of requesting alterations to the building

As above, your landlord will require advanced notice of any alterations the new tenant may wish to make to the premises, and in some cases written permission in the form of a Licence to Alter will be required. It is likely that they may withhold their consent for assigning the lease to any tenant intending to make large-scale changes depending upon the type of premises involved.

What liabilities will you have when assigning a lease?

It is important to recognise that the assignment of a lease to a new tenant does not automatically exempt you from all liabilities related to that tenancy going forwards. In fact, once the lease assignment is complete you can still be liable should the new tenant miss any payments or otherwise break the terms of their contract.

Exactly what you will be liable for depends on when your lease began. If your lease began before January 1996 you will remain liable for all payments by any subsequent tenants – even if the lease is assigned several more times after you. This is called “privity of contract”.

For leases that began after January 1996, you will be required to sign an Authorised Guarantee Agreement . This means you guarantee payments for the next tenant, but not any further tenants.

Landlords can only claim payments of rent within six months of the money being due, and only after full notice has already been served to the former tenant.

What does lease assignment cost?

On the other hand, if the rent under the new lease is below the market rate, the new tenant may instead want to pay you a premium. If this is the case, you’ll need to make a decision on whether to charge VAT – or “opt to tax” – something that’s worth getting professional advice on.

A final charge to be considered is the cost of this advice. It is highly recommended to involve your solicitor when opting to pursue a lease assignment so as not to inadvertently break the terms of your contract and leave yourself open to court action. You should therefore also factor solicitors’ fees into your calculations when considering the cost of exiting your lease.

How to get out of a commercial lease – what are the alternatives?

Assignment of a lease is not the only way to get out of a commercial lease and depending on your circumstances and the contract you have with your current landlord, it may not always be the best option.

Some alternative ways to get out of a commercial lease early include:

Using a break clause

Some lease contracts include a “break clause” which offers both parties the opportunity to end the lease early in certain circumstances. Read your contract carefully to check if it contains a clause like this, and if it does, what terms and conditions are involved. Any time limits specified in the lease for giving of notice must be strictly followed.

Negotiating a lease exit

If your contract does not include a break clause, your landlord may still be open to you exiting the lease early. You would need to negotiate the specific terms of your exit and your landlord may require a pay-out to offset the inconvenience of having to market the property again.

Compared to lease assignment, negotiating an exit from your lease should provide a clean break with no further liabilities, but we would recommend seeking legal advice to confirm that you were exiting the contract cleanly.

Subletting the premises

A final option to consider when looking at how to get out of your commercial lease early is subletting. If your contract allows it, you can take on the role of landlord by finding and leasing your property to a new tenant.

You can use the rent payments from your new tenant to cover your own obligations, but in return you’ll be expected to take a hands-on role managing the property and dealing with the sub-tenant directly.

Need assistance with assignment of lease?

Exiting a lease early can be a complex process, whether you choose to do so by arranging the assignment of your lease or by one of the other means mentioned above.

Lease assignment is an effective way for tenants to get out of a commercial lease early. However, this can be a slow process and you will incur costs.

Contacting a solicitor at an early juncture is advisable so that you are appropriately advised at the outset of any key considerations and potential pitfalls. For example, even though you are selling the lease, you could potentially remain liable afterwards; this will depend on the age of the lease and whether you have entered into an authorised agreement or not.

Laura Everitt is the Head of our Property Department and has many years of experience in dealing with lease assignment.  Laura assists and advises clients all over the country.  In addition to office meetings, Shakeel offers remote meetings via telephone or video conferencing software so can assist you wherever you are based.

Make a Free Enquiry

If you are considering how to get out of a commercial lease or have any queries relating to any of the issues discussed in this article, please get in touch with our of our experienced property lawyers by calling 0800 086 2929 , emailing [email protected] or completing our Free Online Enquiry Form .

The content of this article is for general information only. The information in this article is not legal or professional advice. If you require legal or professional advice you should obtain independent expert advice from qualified commercial property solicitors such as those within our firm .

Call us 24/7 on 0800 086 2929 , email  [email protected] , or complete our Free Online Enquiry Form to arrange a free, no-obligation discussion and let us explain your legal rights and options.

Call us 24/7 on 0800 086 2929 or complete our Free Enquiry Form below

Please leave this field empty.

Amersham (Head Office):

57 Hill Avenue Amersham Buckinghamshire HP6 5BX DX: 400002 Amersham 3 Tel: 01494 722326

Ebbsfleet Office:

Kent Space Fleet House Springhead Enterprise Park Springhead Road Northfleet, Kent DA11 8HJ Tel: 01494 722326

Guildford Office:

Units A-J Austen House Station View Guildford Surrey GU1 4AR Tel: 01483 924758

Hove Office:

71 Church Road Hove East Sussex BN3 2BB Tel: 01273 056720

• Our Services
• Cookie Policy
• Privacy Policy
• Disclaimer and Legals
• Free Enquiry

Contact Details

• 24/7: 0800 086 2929
• [email protected]

Elite Law Solicitors is a trading name of Elite Law Solicitors Limited, Registered in the UK, Registration Number: 09050473

Registered office: chalfont court, 1-5 hill avenue, amersham, buckinghamshire, hp6 5bd., we are authorised and regulated by the solicitors regulation authority no: 617591..

• Disclaimer, Legal & Complaints

copyright 2020. all rights reserved.

• Clinical Negligence
• Commercial Property
• Dispute Resolution
• Employment Law
• Family Law and Divorce
• Immigration
• Legal Costs
• Residential Conveyancing
• Wills, Trusts and Probate
• Amersham Office
• Brighton Office
• Ebbsfleet Office
• Elstead Office
• Hitchin Office
• Leighton Buzzard Office
• Raunds Office
• Southampton Office
• St Albans Office
• Surbiton Office

Privacy Overview

• News, Events & Articles
• Online Payments
• Transfers/Assignments of Leases
• Landlord & Tenant disputes
• For Employees:
• For Employers:
• Divorce And Separation
• Costs Budgeting And Management
• Buying a Property
• Halal Mortgages
• Lifetime Mortgages
• Re-Mortgaging
• Selling a Property
• Bedford Office

The Importance of Registering a Lease Assignment in the UK

By Paul Loccisano Senior Associate

Updated on 25 September 2023 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

• Assignment  

Registering a Lease Assignment

Key takeaways, frequently asked questions.

A cornerstone provision in commercial lease agreements is the lease term. The lease term refers to the time period in which the commercial tenant agrees to occupy commercial premises. Commercial tenants, for a host of reasons, may need to exit their commercial lease sooner than they anticipated. Lease assignment is one of the most common ways for commercial tenants to exit their lease early . Commercial tenants, via this method, obtain their landlord’s consent to transfer the existing lease to another business owner. This article will explain the importance of registering a lease assignment in the UK.

Assignment  

Commercial lease assignment is when a tenant transfers their existing lease to a new tenant. The existing tenant is the outgoing tenant or assignor, and the incoming tenant is the assignee. Lease assignment means that the commercial lease does not end but the tenant is merely substituted. The assignee takes on all the outgoing tenant’s lease obligations and enjoys the tenant’s rights in the lease agreement. Ultimately, the incoming tenant will enjoy sole possession of the commercial property as their commercial premises. The incoming tenant will also start making rent payments for the commercial property.

The assignor starts the process of lease assignment. Leases between the outgoing tenant and the landlord which have less than several years before the conclusion of the lease term will need to go through a formal process of assignment. The assignor will need to execute a deed of assignment to transfer the lease to the incoming tenant.

The assignor or the assignee may need to register a lease assignment. The assignor or assignee may be required to register the lease assignment instead of using a deed of assignment. A lease assignment will generally need to be registered in two instances. The assignor will need to register the lease assignment if the commercial lease has seven years or more left on the lease term.

Also, the assignor is required to register the lease assignment if the lease has already been registered with the HM Land Registry Office . They must complete and submit a TR1 form to the HM Land Registry Office for a lease assignment to be valid. Once the Land Registry receives this, they will process the lease assignment and place the incoming tenant’s name as the titleholder to the lease in the Land Register. 

Importance of Registering a Lease Assignment

When you enter or exit a commercial lease through assignment, the process of registering the lease assignment is a crucial part of assigning a lease. This is because until this is complete, the assignee is not legally the new tenant for the commercial lease. Therefore, the lease assignment process is not fully complete. The assignor’s failure to register the lease assignment with the Land Registry Office adversely impacts the assignee. Due to the lease assignment process not being legally complete, the assignee has none of the rights usually granted to them in a commercial lease. The assignee will not have the right to sole occupation of the commercial premises. The assignor will also continue to be responsible for all the lease obligations in the commercial lease agreement. Had the lease assignment been validly registered, the assignee would be responsible for the lease obligations thereafter.

It is essential to have a solicitor to see you through the lease assignment process. The outgoing tenant’s solicitor will usually draft the transfer for the Land Registry Office. However, you as the assignee will want your solicitor to confirm the lease assignment is correct and complete.

Land registration is time-consuming. The assignor should register the lease assignment as soon as possible. Legal rules concerning the timeframe for registration of a lease assignment also impact the expediency of registering land. As the assignor, you can only register the lease assignment for up to two months from the lease completion date. The law will deem the lease to be void if not registered within this timeframe. You are then reliant on a discretionary agreement with the Land Registrar. The Land Registrar may extend the timeframe for you to register the lease with the use of an order.

Break Clause Within a Commercial Lease

It is important for the assignor to register the lease assignment with the Land Registry Office. The assignor’s act of registering the lease assignment ensures the law considers the lease assignment process to be complete. Further, the assignor registering the lease assignment protects the incoming tenant’s ability to rely on a break notice provision in the commercial lease agreement. A break clause simply allows the incoming commercial tenant to terminate the lease agreement before the lease term ends. The assignor typically needs to register the commercial lease assignment for the incoming tenant to rely on the break clause.

If the assignor has not registered the lease assignment with the Land Registry Office, the incoming tenant will be left in a precarious position. The assignee may need to end the lease early but cannot rely on the break clause. 

This cheat sheet outlines what you should be aware of in your lease agreement.

Lease assignment is where commercial lease transfers from the existing commercial tenant to a new tenant. The assignor must register the lease assignment with the Land Registry Office in two situations. Where the commercial lease being assigned has seven years or more left on the lease term, the lease assignment will need to be registered. Likewise, registration of a lease assignment is required if the commercial lease is registered. Registration of a lease assignment is essential for assigning a commercial lease. Without it, the assignment is not legal, and it is crucial that registering the lease assignment is done within the correct time frame. Registering a lease assignment may also allow the assignee to exercise the break clause in the lease agreement if necessary. 

If you need help understanding the importance of registering a lease assignment in the UK, contact our experienced leasing lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page .

Lease assignment is where the existing tenant to a commercial lease, the assignor,  transfers it to a new tenant, the assignee. The lease continues between the assignee and the current commercial landlord.

Registering a lease assignment is often part of the lease assignment process and requires a TR1 form to be completed with the Land Registry Office.

We appreciate your feedback – your submission has been successfully received.

Register for our free webinars

Understanding your business’ new employment law obligations, a roadmap to business success: how to franchise in the uk, contact us now.

Fill out the form and we will contact you within one business day

Related articles

Benefits of Engaging a Property Solicitor When Leasing Commercial Property in the UK

4 Ways to End Your Commercial Lease Early in the UK

Assigning vs Subletting Your Commercial Lease in the UK

Five Key Points a UK Commercial Tenant Should Look Out for When Signing a Lease Agreement 

We’re an award-winning law firm

2023 Economic Innovator of the Year Finalist - The Spectator

2023 Law Company of the Year Finalist - The Lawyer Awards

2023 Future of Legal Services Innovation - Legal Innovation Awards

2021 Fastest Growing Law Firm in APAC - Financial Times

• Business Legal Services
• Banking & Finance Law
• Business Disputes
• Business Immigration Law
• Commercial Law
• Commercial Property Law
• Construction Law
• Corporate Law
• Data Protection & Privacy Law
• Employee Share Schemes
• Employment Law
• Financial Services Regulation
• Funding & Investment
• Insolvency & Corporate Recovery
• Intellectual Property
• IT & Commercial Technology Law
• Overview   
• Acquisition & Leveraged Debt   
• Asset Finance & Asset Based Lending   
• Construction & Development Finance   
• Debt Finance   
• Financial Services Regulation   
• Funding & Investment   
• Trade Finance   
• Alternative Dispute Resolution   
• Business Dispute Case Assessment   
• Commercial Contract Disputes   
• Commercial Property Disputes   
• Construction & Engineering Disputes   
• Defending Employment Tribunal claims   
• Shareholder Disputes   
• Intellectual Property Disputes   
• Litigation & Arbitration   
• Partnership Disputes   
• Professional Negligence Claims   
• Public Procurement Challenges   
• Agency Agreements   
• Commercial Contracts   
• Confidentiality & Non-Disclosure Agreements   
• Franchise Law   
• Intellectual Property in Commercial Contracts   
• Joint Venture Agreements   
• Sale & Distribution Agreements   
• Service Agreements   
• Subcontractor Agreements   
• Supply of Goods Agreements   
• Terms of Business   
• Commercial Leases   
• Corporate Transactions   
• Property Development   
• Property Finance   
• Sale and Purchase   
• Unregistered Land   
• Construction & Engineering Contracts   
• Banking & Finance Law   
• B Corp Conversion Lawyers   
• Cap Table Creation & Management   
• Company Secretarial Services   
• Corporate Governance   
• Corporate Restructuring   
• Employee Share Schemes   
• Exits & Disposals   
• LLP Agreements   
• Mergers & Acquisitions (M&A)   
• Share Capital   
• Cybersecurity   
• Data Breaches & Incident Management   
• Data Governance   
• Data Protection Health Check   
• Data Protection Impact Assessments   
• GDPR Compliance   
• GDPR Training   
• Outsourced DPO   
• Support for DPOs   
• EMI Share Options   
• Employee Ownership Trusts (EOTs)   
• Flowering Shares   
• Growth Shares   
• Hurdle Shares   
• Phantom Share Schemes   
• Non Tax-Advantaged Share Plans   
• Absence & Sickness Management   
• Discipline & Grievance Procedures   
• Discrimination Claims   
• Employment Contracts   
• Employment Status and IR35   
• HR & Employment Law Training   
• HR Compliance Audit   
• Redundancies & Business Reorganisations   
• Senior Employee Exits   
• Settlement Agreements   
• Transactions & TUPE   
• Consumer Credit & Hire   
• Payment Services   
• Regulated Banking & Finance Activities   
• Crowdfunding   
• EIS & SEIS   
• Investment Agreements   
• Pre-Seed & Seed Funding   
• Private Equity   
• Series A, B & C Funding   
• Term Sheets   
• Venture Capital   
• Director Disqualification Solicitors   
• Copyright Lawyers   
• Design Rights   
• Intellectual Property Audits   
• Intellectual Property Licensing   
• Intellectual Property Strategy   
• Online Brand Protection   
• Patent Litigation   
• Patent Protection & Management   
• Trade Marks   
• Utility Models   
• Cloud Service Agreements   
• SaaS Agreements   
• Software Licence Agreements   
• The big idea   
• Getting started   
• Getting on with it   
• Scaling up   
• Looking to exit   
• Creative Industries
• Energy, Utilities & Environment
• Life Sciences
• Manufacturing & Engineering
• Public Sector
• Retail & Luxury Brands
• Enterprise Plan
• On-Demand Plan
• Fixed Fee Products

• Meet Our Team
• Press & Media
• What Our Clients Say
• Company News
• Client Stories
• Events & Webinars
• Podcasts & Videos
• Thoughts & Opinions
• Knowledge Hub
• Make An Enquiry
• Request A Call Back
• Birmingham   
• Cambridge   
• London   
• Manchester   
• Oxford   
• Sheffield   
• Southampton   

Knowledge Hub for Growth

Assigning a commercial property lease to another business.

In order to grow or react to market conditions your business may need to quickly leave its current premises. If your business rents the premises but there is still time left to run on the lease, what can you do?

A common solution is to transfer your lease to someone else. This process is called ‘assigning a lease’. In this article, we describe how this process operates and what potential problems you may need to overcome. If you need help in this area, our friendly commercial property experts can help.

Traps for the Unwary

How to assign a lease.

‘Assigning’ a lease simply means transferring your lease to another person so that they become the new tenant. Once the assignment has taken place the lease continues to exist and the new tenant becomes liable for all of the tenant’s obligations in the lease.

The first step is to find someone who may want to take over the lease (they are known as ‘the assignee’). Aside from being happy with the rent that is being charged, the assignee will want to review the lease to ensure that it does not contain any onerous or unacceptable terms. This process will be very similar to the one your solicitor carried out when you negotiated the lease in the first place, except that as the assignee will be taking over the existing lease they will have little or no opportunity to change its terms and will therefore have to be happy with it as it stands.

If the lease contains terms which are generally unacceptable in commercial property leases or specifically adversely affect the ability of the new tenant to use the property as they wish, you may have problems in assigning the property. It is therefore worth knowing before you start marketing your lease just what it does or does not allow. For example, it is no good marketing a warehouse to factory owners if it specifically forbids industrial use.

In addition, most tenants will want to carry out the same due diligence process as if it were purchasing a commercial property or negotiating the lease at outset. This usually involves raising queries with the local authority and utility companies as well as finding out about environmental and similar issues. This takes time so do not expect to be able to transfer the lease instantly.

The second step, once an assignee is found and they are happy to take on the lease, is to actually transfer (‘assign’) the lease. Generally this will be done using a Land Registry form known as a TR1 . If the lease is for less than 7 years, then the lease can be assigned by using a deed of assignment. Both these documents have the same effect and will generally be executed by both you as the current tenant and the assignee.

In theory, you can assign your lease to whoever and whenever you like. However, most landlords are not willing to allow the tenant such freedom and therefore write into the lease restrictions on to whom a lease can be assigned and on what basis. In most cases, the landlord will be required to consent to the assignment before it can go ahead. This is where most of the practical problems arise as we explore in more detail below.

When and why to assign a lease

A tenant will generally look to assign its lease when it no longer requires use of the property but there is still some time before the lease comes to an end. For example, your business may have taken a five-year lease, but after two years you need to move. Unless the lease includes break clauses , you would have to continue to pay the rents and comply with the lease terms for the remaining three years of the lease term. By assigning the lease you can dispose or at the very least reduce that liability. 

If there is less than a year remaining of the lease to run, it may be more difficult to find someone who wants to take the lease for a short period of time, so in those circumstances it may be worth continuing to trade from the existing property until the lease comes to an end itself.

A few common examples of why you may wish to assign your lease are that:

• You may have agreed to sell your business and the structure of the transaction requires the lease to be assigned to the purchasers;
• Your business may not be trading as well as hoped and you are unable to keep up with rent payments or you may simply need smaller premises;
• You may find that the property is no longer situated in a convenient place and may wish therefore to relocate the business; or
• Your business may have grown faster than anticipated and requires bigger premises from which to trade.

Is a licence to assign needed?

Most landlords are primarily concerned with the income they earn from the properties they rent out. It is important to them that the tenants they rent to:

• Are able to pay the rent in full and on time;
• Keep the property in a good state of repair so that the property can be easily relet when the tenant leaves; and
• Behave in such a way as not to adversely affect the landlord’s ability to rent other properties it may own nearby.

It is for this reason that most landlords will seek to control who you can assign your lease to and prevent you from assigning your lease without your landlord’s consent.

Whether your landlord’s consent to an assignment (by way of a licence to assign) is required depends on the terms of the lease you are seeking to assign. Most leases will have some restrictions. It is only if the lease does not include any restriction on assignment, or includes restrictions but no requirement to obtain the landlord’s consent to an assignment, that no licence to assign will be required.

Although the detailed provisions can look intimidating, most assignment clauses simply require the landlord to agree that it believes the assignee to be able to meet its obligations and if it does so to formally consent to the assignment. The landlord is also usually required by statute not to unreasonably withhold or delay giving that consent. A licence to assign is the document used to evidence that the landlord has granted its consent to an assignment as required.

Note: if you feel your landlord is not co-operating, you should explore the options for tenants in our article on landlords unreasonably withholding consent .

You should ask for the landlord’s consent as soon as possible so as not to delay matters, as the landlord only has to deal with your request within a reasonable time and even then only once you have provided all the information the landlord needs in order to reach its decision on whether or not to give its consent. This may evidence of your assignee’s good standing such as bank and previous landlord references, and copies of audited accounts and bank statements.

If your proposed assignee is not of sufficient standing to satisfy the landlord consent may be granted if the assignee agrees to provide a guarantor for its liabilities or a rent deposit that can then be used if it fails to pay. What the landlord is permitted to insist on will depend on the specific wording of the lease and the specific set of circumstances.

You should also be aware that most landlords will insist that whatever the financial state of the assignee, you, as the outgoing tenant, will be required to guarantee the assignee’s obligations under the lease by what is called an authorised guarantee agreement. You should not make the error of assuming that by assigning your lease you can just walk away from any responsibility. The one thing that the law requires you to is to find someone who can pay the rent and comply with the lease terms. If you do not do this, then the landlord will most probably be able to recover any arrears from you.

If your lease expressly prohibits assignments without containing a requirement for consent to be given by the Landlord, then the starting point is that you cannot assign it at all. However, the landlord may still agree to an assignment taking place. This would still be documented by way of a licence to assign but in this case, the landlord would be under no obligation to grant its consent even if it would be reasonable to do so or to act promptly when considering your request to give that consent.

Actual assignments and virtual assignments

Most transfers of the ownership of a lease are carried out by an ‘actual assignment’ where the tenant assigns its interest in the lease to an assignee as explained above.

In a few cases you may seek to use a virtual assignment whereby you remain liable under the terms of the lease, but enter into a contract with a third-party transferring the economic benefits and burdens of the lease, without actually assigning the lease itself. These can be used when the lease contains overly restrictive assignment clauses. You could, for example, declare a trust or enter into a contract in favour of a third-party, effectively transferring the economic benefits and burdens of the lease to them. However, beware of clauses in the lease which prevent this sort of arrangement.

If a tenant is a company and the shares in that company are transferred to someone else, then the lease would remain unaffected and the tenant would still be the company. Although not strictly a virtual assignment this change of ownership can be a concern to some landlords and as a result, some leases include express provisions restricting changes in the shareholding of the tenant company. However, they are unusual and arguably onerous.

Registering an assignment

If the lease is registered at the Land Registry or has more than 7 years of its term remaining, and you are the assignee, you must register the assignment at the Land Registry. The Land Registry will then process the application and update the title register for the lease so that it is in your name.

It is very important that the assignee does indeed register the lease as, until it does, the assignment is not fully complete and legally you have not yet become the tenant. This has practical implications as, depending on the wording of the lease, you may not be able to serve a valid break notice until it is registered at the Land Registry. As registration can in some circumstances take a long time, you may find yourself unable to end the lease when you expected. If you forget to register you are unlikely to complete your registration in time to take the steps you need to take.

If you do not apply for registration within 2 months of the date of completion of the lease, the lease becomes void and can only be registered is the Land Registrar agrees to make an order extending the 2 month period.

In addition to registering the lease with the Land Registry most leases include an obligation to notify the landlord that an assignment has taken place and to send them a copy of the assignment document and pay them a fee for noting the transaction. Sometimes the lease sets out the specific notice fee, but more often than not the lease merely sets out a minimum fee. In theat case, you should ask the landlord to confirm the notice fee before completing the assignment.

Access legal support from just £145 per hour

Speak to our commercial property solicitors if you need practical legal advice on drafting, negotiating or terminating a lease agreement.

Get in touch

The effect of an assignment on a lease

In most cases, once a lease has been assigned, the assignee steps into the shoes of the tenant and all the rights and duties that the previous tenant had pass over to the new tenant. Occasionally there are rights in the lease which are personal to the original tenant. Again, this often affects the break clause. If the right to end the lease early is personal to the original tenant, you cannot do so if the lease is assigned. In such circumstances it may be better to sublet the property rather than assign the lease itself.

As most leases require the previous tenant to guarantee the performance of the new tenant, the assignment also has the effect of rearranging the liabilities for payment of the rent. Any previous guarantor under an authorised guarantee agreement will have been automatically released by the assignment and rent deposits may become repayable by the landlord.

Assignment v sub-letting

Is it preferable to assign a lease or sub-let it (retain your lease but grant a lease of the property for a slightly shorter term to another party)? The answer very much depends on your specific requirements and the particular circumstances.

Assigning the lease means that you no longer have any interest in the property. It is quite common that a tenant will still remain ‘on the hook’ for the lease obligations after an assignment, as the landlord will likely have insisted that they enter into an authorised guarantee agreement to guarantee the assignee complies with the lease. However, a landlord will not always insist on an authorised guarantee agreement and, even if one is in place, the obligations on it cease if/when the assignee assigns the lease itself to another party. Therefore, most tenants regard an assignment as the best option where they have no current use or interest in the property and do not think they will do at any point in the future.

As already noted you may have to keep the lease in your name if you wish to rely on any personal rights in the lease by granting a sub-lease. This will allow you to retain your interest in the lease, but it also means that you are still liable to pay the rents due under the lease and comply with all of the lease obligations. As the sub-tenant is likely to be in occupation of all or part of the property, you must manage them to ensure that the sub-tenant does not place you in breach of your duties under the lease.

Other reasons for sub-letting include:

• Using the sub-lease as an income stream.
• If you think you may wish to use the property later.
• If you want to dispose of only part of the property and keep the rest for your own use (most landlords are extremely unlikely to allow you to assign part only of your lease).

Transfer of the landlord’s interest in the building

Only a tenant can assign the lease. If the landlord wishes to dispose of its interest in the lease it does so by selling the freehold interest in the building to a new party who then automatically becomes the landlord. Subject to your receiving proper notification you are then required to pay the rent to the new building owner. If you intend to serve a notice (e.g. bringing the lease to an end or requesting a new lease) make sure that you serve the title on the legal owner otherwise you may find your notice to be of no effect. Beware the registration gap mentioned above. You may think that your apparent landlord is the legal owner but legally he may not be.

In addition to the points set out above that relate to the terms of the lease, there are other issues which can cause difficulties when trying to assign it. These include:

• In any circumstance where the landlord is required to consent to a transaction, make sure that all your rent and similar payments are up to date as often leases state that no consent will be given if payments are outstanding.
• The Minimum Energy Efficiency Standards (MEES) Regulations mean that you cannot assign your lease (or sublet it) if the Energy Performance Certificate (EPC) (most likely provided by your landlord when you took the lease) has expired. You cannot even market the property without providing an EPC.
• While they may not actually prevent an assignment, breaches of health and safety law or fire safety regulations or the rules around monitoring and managing asbestos may cause delays or scare your assignee away. If compliance with the rules is your responsibility under the lease, your landlord may refuse to consent to the assignment until you do so.

About our expert

Samantha Paxton

Areas of expertise, recent content.

If you have any questions about assigning a lease, or would like our expert commercial property solicitors to help you through the process, please get in touch.

Call us on 0800 689 1700 , or fill out the short form and we’ll contact you to discuss your situation and legal requirements. There’s no charge for your initial consultation, and no obligation to instruct us. We aim to respond to all messages received within 24 hours.

Your data will only be used by Harper James Solicitors. We will never sell your data and promise to keep it secure. You can find further information in our Privacy Policy .

Explore related resources

Our offices, a national law firm.

Our commercial lawyers are based in or close to major cities across the UK, providing expert legal advice to clients both locally and nationally.

We mainly work remotely, so we can work with you wherever you are. But we can arrange face-to-face meeting at our offices or a location of your choosing.

Head Office

Regional spaces, like what you’re reading, get new articles delivered to your inbox.

Join 8,153 entrepreneurs reading our latest news, guides and insights.

How can we help?

To access legal support from just £145 per hour arrange your no-obligation initial consultation to discuss your business requirements.

Make an enquiry

Watch for free

Webinar series: Legal essentials demystified

Unlock valuable insights for your business growth in our webinar series. Whether you’re an HR professional, business owner, or in-house counsel, our webinars explain essential topics and common challenges.

Register for upcoming events or watch previous recordings.

Home Our Specialisms Lease Advisory Assignments & Subletting Assignment of a Lease

Assignment of a Lease

When a tenant wants to assign its lease, it will usually need to obtain consent to the proposed assignment from its landlord. If a lease is assigned without obtaining the required consent, the assignment will normally be valid, but the tenant will remain liable to the landlord for the rent and to comply with the obligations in the lease.

Where the assignment of a lease is a standalone transaction, the correct procedures are usually followed. However, where the assignment takes place in the context of a wider business transaction, such as the sale of a business, it is easy to overlook the technical details. The recent case of E.On UK plc v Gilesports Ltd [2012] EWHC 2172 (Ch) illustrates some of the pitfalls.

In this case, an application for landlord’s consent had been sent by e-mail by the tenant’s solicitors to the landlord’s managing agents. Normally, where the landlord receives an application for consent, it is under a statutory duty to consider the application within a reasonable period of time and, if it objects to the assignment, to give its reasons in writing to the tenant. In the E.On case, the court held that service of the tenant’s request by e-mail to the landlord’s managing agents was not sufficient to trigger the landlord’s statutory duty to consider the application. The tenant’s lease contained provisions stipulating how notices should be served. The application for consent should have been served in accordance with those provisions in order to trigger the landlord’s statutory duties.

Eleven days after providing accounts for the proposed assignee, the tenant assigned the lease to the new owner (the assignee), without having obtained landlord’s consent. The assignee ceased to pay rent, and the landlord therefore sought to recover it from the tenant, on the basis that as no consent had been obtained, the tenant was still liable under the lease.

The tenant tried to argue that the landlord had unreasonably delayed giving consent and it should therefore be deemed to have consented to the assignment. The court rejected this argument both on the basis that the statutory duty to consider the tenant’s request had not arisen and, even if the duty had arisen, eleven days was too short a period to expect the landlord to reach a decision on the tenant’s request.

The lesson to be drawn from this is that successfully assigning a lease cannot be taken for granted. There are various formal steps that need to be put in place, and a tenant that assigns without waiting for the landlord’s consent needs to be sure of the legal implications of doing so.

ENQUIRE NOW | 0161 429 1670

If you are landlord and your tenant has made an application to assign or sublet, then you have an obligation to deal with matters in within a reasonable time and action may be taken against if you fail to do so.

Our commercial sublease team can advise you on your lease obligations and on how you should proceed.

• Area of Interest * Agency Services Auctions Building Surveys Business Rates Capital Allowances

view lease consultancy services

Privacy Overview

• Sustainability
• Client Login

• Built Environment
• Energy & Natural Resources
• Financial Services
• Government & Public Sector
• Technology, Media & Communications

Legal Services

• Commercial, Regulatory & Data
• Dispute Resolution
• Employment and Pensions
• Finance and Restructuring
• Real Estate
• Tax & Private Capital
• India Group

Legal Operations

• Contracts Management
• Cyber Incident Services
• Legal Analytics
• Legal Operations & Consulting
• Litigation and Investigations

Business Services

• Claims Management & Adjusting
• Corporate Governance & Compliance
• DWF Chambers
• Regulatory Consulting
• Class Actions
• Economic Crime & Fraud Hub
• Sustainable Business & ESG
• Data Protection and Cyber Security
• News and Insights
• Reports and Publications
• News and Press
• DWF onDemand
• Brave New Law
• DWF Link: Business leaders of the future
• Consumer Duty Hub

Unreasonably withholding consent to assign a lease

How unreasonable does a landlord have to be?

Leases will usually require a landlord’s consent before a tenant can assign, sublet, or otherwise part with possession of premises. This is understandable as a landlord needs the ability to protect their interest in their premises. In the current market however, a tenant’s need for premises can change quickly and often, particularly in retail units where customer preferences and footfall are vital.

Section 19(1) of the Landlord and Tenant Act 1927 says that for all leases where there is a requirement on a tenant to obtain a landlord’s consent before assigning, underletting or in any way changing possession of all or part of the premises, consent is not to be unreasonably withheld. As a result, a landlord must always act reasonably – although reasonable doesn’t necessarily mean correctly or justifiably – just what a reasonable person would do in those circumstances. The decision must be based on the relationship of the landlord and tenant and a landlord cannot look to better their position by refusing consent.

When can a landlord refuse consent?

It may be reasonable to withhold consent if the assignee does not appear able to make the rental commitments required under the lease. A profit level of ‘three times the annual rent’ is often used as a benchmark to show that a tenant can make the rental payments. That is not a hard and fast rule though and a landlord refusing consent on the basis that a tenant’s profit levels do not meet that criteria will not necessarily be reasonable. It would be reasonable to refuse consent where the proposed assignee would use the premises for a use which would be a breach of the user covenant. Similarly, the landlord can refuse consent if it wants to maintain a good tenant mix, for example in a shopping centre. It is also reasonable for a landlord to refuse to assign a lease to an assignee who would be in direct competition with their business.

However, it is unreasonable for a landlord to refuse consent where they look to obtain a variation to the lease to improve their position as a condition of granting consent or on any grounds which are discriminatory to the proposed assignee or sub-tenant. Also, a landlord cannot reasonably withhold consent to an underletting on the basis that to do so may set a low rent comparable for forthcoming rent reviews.

Less clear cut examples are where a landlord refuses consent to sub-let due to concerns about the long term viability of the sub-tenant. The landlord’s direct covenant with the tenant remains and so the landlord’s ability to collect rent should not be affected. However, it is possible that the market will perceive the sub-letting as a reduction in the value of the property and that could affect the landlord’s reversionary interest. Similarly if the landlord refuses consent to assign or sub-let on the basis of existing breaches of covenant by the tenant, it will depend on the severity of the breaches and the likelihood of the assignee or sub-tenant to remedy them. It would be unreasonable for a landlord to refuse consent to assign on the basis of minor disrepair works, but it may be reasonable to refuse consent to assign where there are substantial dilapidations and the assignee does not appear to have the means to remedy the defects. In cases like this whether or not refusal is unreasonable will depend on all the facts in that particular case.

Timing of applications

The timing of a landlord’s response is also covered by statute. The Landlord and Tenant Act 1988 Section 1(3) states that a landlord owes a duty to a tenant to respond to any application for consent within a reasonable time. What constitutes a reasonable time will depend on each set of circumstances and it would be impossible to set down hard and fast rules. However, case law does give us some indications as to what is and isn’t reasonable. The time period will run from when a landlord receives a complete formal application from the tenant and ends when the landlord’s decision is notified to the tenant. The time period between those two will need to be as short as is sensibly possible It will be weeks and not months, but holiday periods will be taken into account as will the complexities of the deal.

Ultimately it is for the tenant to demonstrate that the landlord is acting unreasonably rather than the landlord to prove its behaviour is reasonable. As such, a tenant making a formal application needs to provide as much information as possible at the time of making the application and provide all relevant details. It will be far easier for a tenant to prove that the landlord is unreasonably withholding consent where the application included complete and comprehensive supporting information, rather than where information has been provided piecemeal and reactively.

Landlords receiving applications need to act promptly as the time limits explained above will apply once the application is made. If you are unsure whether you need to treat the communication from a tenant as a formal application for consent to assign, then ask the question. Correspondence from a tenant saying that you are out of time to withhold consent will put a landlord on the back foot – even if consent would have been granted in any event.

When considering an application to assign, sublet or part with possession, or if you are a landlord you receive one, it is worth taking advice to ensure you are aware of your rights and the likely consequences of consent being refused.

If you require any further information please contact a member of our expert Real Estate Litigation  team.

DWF, the global provider of integrated legal and business services, has signed on to the AI Code of Conduct for the insurance claims industry.

In this webinar, DWF's grant funding experts, Sean Caldwell and Claira Rodden, delivered an overview of the key elements of grant funding agreements. 

The Competition and Markets Authority ("CMA") is seeking feedback from interested parties on the Public Transport Ticketing Schemes Block Exemption, which exempts certain forms of agreements between transport operators from the prohibition on anticompetitive agreements in the Competition Act 1998. Responses will inform its decision on whether to extend or replace the Block Exemption before its expiry date in February 2026.

• 01992 300333

Make an enquiry

• --> Pay online -->