Definition
An Assignment of Lease is a legal agreement in which a tenant transfers their lease rights and obligations to another party (assignee) for the remainder of the lease term. The original tenant may still be partially responsible for the lease if the assignee fails to fulfill its terms.
Explanation
In a lease assignment, the original tenant (assignor) transfers their entire interest in the lease to a new tenant (assignee). The assignee takes over all lease responsibilities, including rent payments and property maintenance. However, in many cases, the original tenant remains liable for the lease obligations unless the landlord explicitly releases them.
Key aspects of lease assignments include:
- Landlord Approval – Many leases require written consent from the landlord before an assignment can occur.
- Full vs. Partial Assignment – The original tenant can either transfer all rights or retain partial responsibility (e.g., in a sublease).
- Liability Considerations – If the assignee defaults on rent, the original tenant may still be held financially responsible.
This differs from a sublease, where the original tenant remains actively involved, collecting rent from a subtenant while maintaining responsibility for the lease.
Example
A tenant signs a 3-year commercial lease for office space but sells their business after 1 year. Instead of terminating the lease early, they assign the lease to the new business owner, who assumes all lease obligations. However, if the new tenant defaults on payments, the original tenant may still be legally responsible for unpaid rent unless released by the landlord.