deed of sublease vs deed of assignment

What is Assignment of Lease and How It Differs from Subletting

The assignment of lease (and rent) is a foggy topic that is often confused with subletting. Let's clear the air once and all right now. Learn the differences between a lease assignment and sublease so you can make the right choice.

What is Assignment of Lease? - The Important Basics

Let's begin by introducing the 3 players in a lease assignment - The landlord, the original tenant (assignor) and the new tenant (assignee). The original tenant has an unexpired lease agreement with the landlord and he wants out. Since the original tenant can't just break the agreement and walk off, what he does is to get a new tenant to swap places... and take over all his rights and obligations for the remainder of the lease period. So if the original tenant signs a 1 year commercial lease and the business goes bust after 8 months, the new tenant will be assigned a 4-month commercial lease (with the same terms and conditions as the original agreement). Now here's the big catch: Even though the original tenant has handed over all his duties and obligations to the new tenant, he is not off the hook... unless the landlord agrees to release him from all liabilities. If the new tenant stirs up trouble, our dear original tenant will find himself in hot soup as well. Of course, whether the original tenant is allowed to pull this assignment trick out of his hat is a whole new matter. Knowing for sure is actually simpler than most people think: First, examine your local landlord tenant laws for any lease assignment rules. Most of the time, landlords are given the right to allow or disallow assignments but once in a while, the local law let tenants have the final say instead. If there's no mention of lease assignments in your law text, then your rental lease agreement shall dictate the terms.

Difference Between Lease Assignment and Subletting

When it comes to subletting vs assignment of lease, there's often a massive mix-up. Sometimes even real estate professional get it wrong by assuming them to be one and same thing. However if you dig deeper, you will find that the differences are not just numerous, but important as well. Let's begin by dragging the landlord into the picture. An assignment of lease launches the new tenant into a direct relationship with the landlord - The landlord collects rent straight from the new tenant and deals with the new tenant directly on all lease issues. So in this case, the original tenant gets to take back seat and doesn't have to manage the new tenant actively. On the other hand, there's no direct relationship between the landlord and new tenant (subtenant) in a sublease. Instead the original tenant plays mother goose and is responsible for collecting rent from the subtenant and making sure that he's following the lease rules. When you compare the two, a sublease is a lot more hands-on for the original tenant. No matter which path you take, you will still want a good new tenant who pays the rent on time and follows the lease rules to the agreement. For the golden rules on screening tenants and running credit checks, Click here for our guide to running tenant credit checks. When you have a lease assignment, the terms and conditions of the lease remains largely unchanged - It's almost like taking the original lease agreement and swapping the tenant's name with another. With a sublease, there's more breathing space - The original tenant can decide how much rent to charge, how long the subtenant is going to stay or even collect security deposit... as long as it stays within the boundaries drawn by the original lease agreement between the landlord and original tenant.

Should You Choose Assignment of Lease or Sublease?

You are the Landlord - A lease assignment is recommended in most cases. You will have more control over your new tenant (instead of leaving matters in the original tenant's hands and hoping that he would do a good job)... plus you still have the original tenant to cover your back in case anything goes wrong. You are the Original Tenant - Now this is a tricky one. If you want to someone to take over the entire lease and property for its remaining duration (e.g. your business goes belly-up and you no longer need the office), then help yourself to a lease assignment. If the landlord's consent is required for assignment (and he doesn't give the nod), you can always try offering him a lease assignment fee as a deal sweetener. However, if you are looking for someone to share the place (and rent)... or perhaps you need someone to cover the rent while you are overseas for a few short months, then a sublease would be ideal. You are the New Tenant - An assignment of lease works better for you most of the time. You won't be at the mercy of the original tenant (for example if he screws up and the landlord terminates the original lease agreement, your sublease might also go up in flames). But if you only want to rent part of the property... or don't want to tie yourself down for the remaining lease duration, then you are better off sticking to a sublease. Now that we have covered the topic of assignment vs sublease, go ahead and take your pick - Click here for an assignment of lease form or Click here for a sublet agreement instead.

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Subleases and Assignments by Tenants & Related Legal Concerns

Some landlords allow a tenant to sublet their unit to a third party, while others do not. If you are considering this option, you should check your lease or rental agreement to make sure that it is permitted. Even if it is not explicitly prohibited, you should get your landlord’s permission in advance to minimize future disputes.

How a Sublease Works

A subtenant is not a co-tenant and does not have a direct relationship with your landlord. As their “landlord,” you can (and should) require them to pay rent directly to you and evict them if they fail to follow through. This differs from a co-tenant, who can be evicted only by your landlord. If you decide to evict your subtenant, you will need to follow the same procedures that would be required of a landlord. A month-to-month rental agreement may be better for a subtenant arrangement than a lease. Any agreement should clearly state the amount of the rent, the length of the tenancy, and any security deposit that may be required.

A tenant will usually need their landlord’s permission before subletting their unit, but some state or local laws may prevent landlords from unreasonably denying subleases.

You should be aware that any benefits that you give your subtenant must fit within the overall rules that the landlord imposes for the property and the people who live there. Even though the subtenant did not sign your lease with the landlord, its terms apply to them as well.

You should make sure that you are confident about the subtenant’s financial situation and ability to comply with the terms of the sublease and the landlord’s rules. If they fail to pay rent or damage the property, you will be on the hook to the landlord for all of your own rent and the cost of any repairs. In extreme situations, such as criminal activity by your subtenant, the landlord may evict you in order to remove the subtenant. You also may face an eviction if you get into a dispute with your subtenant. If they refuse to leave when you return, for example, it may be easier for the landlord to simply evict both of you.

Can a Subtenant Turn Into a Tenant?

A subtenant can turn into a tenant if the landlord and you start acting as though the subtenant is a co-tenant. The most common issue here is who receives rent from the subtenant. If they start paying the landlord rather than you, they will have a strong argument that they are the landlord’s tenant. To prevent your subtenant from gaining the rights of a co-tenant, you should make sure that they pay rent to you, and then you can send it to the landlord.

Assigning a Lease

While assignments are often discussed together with subleases, they should not be confused. An assignment transfers the rest of your lease to a new tenant, and it usually happens when you want to move out before the lease is over. While a sublease makes you the landlord of the subtenant, an assignment makes the assignee a tenant of your landlord. All of the terms of your existing agreement with the landlord most likely will apply to the assignee. (There is an exception if the agreement contains a personal term, such as handling errands for the landlord in exchange for reduced rent.) The original tenant, the assignee, and the landlord all will need to sign the assignment document for it to become valid.

The original tenant will remain liable for rent that the assignee does not pay unless the landlord agrees otherwise.

Assignments can be risky because the original tenant remains on the hook to the landlord for all of the remaining rent if the assignee fails to pay it. This essentially makes the original tenant a guarantor for the rent, so it may be more appealing to try to terminate the lease early and let the next tenant start a new lease. Sometimes, however, you can work around this default rule and get the landlord’s consent to take you off the hook for any rent that the assignee does not pay.

Vacation Rentals (Airbnb)

Many tenants try to earn extra money by listing a home as a short-term vacation rental on websites like Airbnb. You should make sure that your lease permits this type of rental, since you may face eviction if you use Airbnb without your landlord’s authorization. You should get any ensuing agreement with your landlord in writing. It should cover issues such as how much of your unit will be leased to the short-term renter, how often you can list on Airbnb, and financial considerations such as any amount of the Airbnb rent that the landlord receives.

In addition to getting your landlord’s permission, you will want to make sure that listing your home for a short-term vacation rental complies with any zoning or land use laws in your area. You must comply with any restrictions in these laws, even if your landlord does not require it.

Finally, you may want to purchase renters’ insurance, while being aware that it may not cover people in a vacation rental. Some insurance companies are extremely reluctant to provide policies to people who plan to list on Airbnb or similar services.

Last reviewed October 2023

Landlord - Tenant Law Center Contents   

• Landlord - Tenant Law Center
• Choosing a Place to Rent & Legal and Financial Concerns
• Understanding Leases and Rental Agreements & Their Legal Implications
• Changing a Lease or Rental Agreement
• Rent Rules and the Legal Rights & Obligations of Tenants
• Security Deposit Rules & Tenants' Legal Rights
• Inspecting a Rental Property Before Signing a Lease
• Co-Tenants' Legal Rights & Obligations on a Lease
• Subleases and Assignments by Tenants & Related Legal Concerns
• Major Repairs to Rental Property & Tenants' Legal Options
• Minor Repairs to Rental Property & Tenants' Legal Options
• Improvements, Alterations, and Fixtures on Rental Property
• Tenants' Legal Rights to Privacy
• Injuries to Tenants on Rental Property & Related Legal Claims
• Environmental Hazards on Rental Property & Enforcing Tenants' Legal Rights
• Inadequate Security at Rental Property & Tenants' Legal Options
• Terminating a Lease of Rental Property & Related Legal Rights and Obligations
• Abandoning Personal Property When Leaving a Rental Unit
• Recovering a Security Deposit When Leaving a Rental Unit
• Resolving Disputes With Your Landlord Without a Lawyer
• Responding to Legal Notices Terminating a Tenancy
• The Eviction Legal Process for Tenants
• Working With a Tenants' Rights Lawyer
• Tenants' Legal Rights & Duties — FAQs
• Landlords' Legal Rights & Duties
• Housing Discrimination Law
• Eviction Laws and Forms: 50-State Survey
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Assignment of Lease

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What is an assignment of lease.

The assignment of lease is a title document that transfers all rights possessed by a lessee or tenant to a property to another party. The assignee takes the assignor’s place in the landlord-tenant relationship.

You can view an example of a lease assignment here .

How Lease Assignment Works

In cases where a tenant wants to or needs to get out of their lease before it expires, lease assignment provides a legal option to assign or transfer rights of the lease to someone else. For instance, if in a commercial lease a business leases a place for 12 months but the business moves or shuts down after 10 months, the person can transfer the lease to someone else through an assignment of the lease. In this case, they will not have to pay rent for the last two months as the new assigned tenant will be responsible for that.

However, before the original tenant can be released of any responsibilities associated with the lease, other requirements need to be satisfied. The landlord needs to consent to the lease transfer through a “License to Assign” document. It is crucial to complete this document before moving on to the assignment of lease as the landlord may refuse to approve the assignment.

Difference Between Assignment of Lease and Subletting

A transfer of the remaining interest in a lease, also known as assignment, is possible when implied rights to assign exist. Some leases do not allow assignment or sharing of possessions or property under a lease. An assignment ensures the complete transfer of the rights to the property from one tenant to another.

The assignor is no longer responsible for rent or utilities and other costs that they might have had under the lease. Here, the assignee becomes the tenant and takes over all responsibilities such as rent. However, unless the assignee is released of all liabilities by the landlord, they remain responsible if the new tenant defaults.

A sublease is a new lease agreement between the tenant (or the sublessor) and a third-party (or the sublessee) for a portion of the lease. The original lease agreement between the landlord and the sublessor (or original tenant) still remains in place. The original tenant still remains responsible for all duties set under the lease.

Here are some key differences between subletting and assigning a lease:

• Under a sublease, the original lease agreement still remains in place.
• The original tenant retains all responsibilities under a sublease agreement.
• A sublease can be for less than all of the property, such as for a room, general area, portion of the leased premises, etc.
• Subleasing can be for a portion of the lease term. For instance, a tenant can sublease the property for a month and then retain it after the third-party completes their month-long sublet.
• Since the sublease agreement is between the tenant and the third-party, rent is often negotiable, based on the term of the sublease and other circumstances.
• The third-party in a sublease agreement does not have a direct relationship with the landlord.
• The subtenant will need to seek consent of both the tenant and the landlord to make any repairs or changes to the property during their sublease.

Here is more on an assignment of lease here .

Benjamin W.

Parties Involved in Lease Assignment

There are three parties involved in a lease assignment – the landlord or owner of the property, the assignor and the assignee. The original lease agreement is between the landlord and the tenant, or the assignor. The lease agreement outlines the duties and responsibilities of both parties when it comes to renting the property. Now, when the tenant decides to assign the lease to a third-party, the third-party is known as the assignee. The assignee takes on the responsibilities laid under the original lease agreement between the assignor and the landlord. The landlord must consent to the assignment of the lease prior to the assignment.

For example, Jake is renting a commercial property for his business from Paul for two years beginning January 2013 up until January 2015. In January 2014, Jake suffers a financial crisis and has to close down his business to move to a different city. Jake doesn’t want to continue paying rent on the property as he will not be using it for a year left of the lease. Jake’s friend, John would soon be turning his digital business into a brick-and-mortar store. John has been looking for a space to kick start his venture. Jake can assign his space for the rest of the lease term to John through an assignment of lease. Jake will need to seek the approval of his landlord and then begin the assignment process. Here, Jake will be the assignor who transfers all his lease related duties and responsibilities to John, who will be the assignee.

You can read more on lease agreements here .

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Assignment of Lease From Seller to Buyer

In case of a residential property, a landlord can assign his leases to the new buyer of the building. The landlord will assign the right to collect rent to the buyer. This will allow the buyer to collect any and all rent from existing tenants in that property. This assignment can also include the assignment of security deposits, if the parties agree to it. This type of assignment provides protection to the buyer so they can collect rent on the property.

The assignment of a lease from the seller to a buyer also requires that all tenants are made aware of the sale of the property. The buyer-seller should give proper notice to the tenants along with a notice of assignment of lease signed by both the buyer and the seller. Tenants should also be informed about the contact information of the new landlord and the payment methods to be used to pay rent to the new landlord.

You can read more on buyer-seller lease assignments here .

Get Help with an Assignment of Lease

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I am the Managing Partner of Adams Global Immigration, a Business Immigration Law firm focusing on nonimmigrant visa processing (H-1B, L-1, E-2, E-3, O-1, TN, etc.) and immigrant visa processing (EB-1, EB-2, EB-3, PERM, NIW, etc.). I have many years of business immigration experience, including legal work at Jackson and Hertogs, Fragomen, E&M Mayock, and as a Freelance Immigration Specialist. My specialization includes complicated Request for Evidence responses and high-volume nonimmigrant visa preparation. I can provide legal advice regarding employment visa preparation, unique international travel issues, and various other complex immigration matters. Prior to joining Jackson & Hertogs in 2018, I served as a Certified Law Clerk with the San Diego Public Defender office through Thomas Jefferson School of Law (TJSL). In this role, I argued over 40 hearings in state court for criminal juvenile matters, adult misdemeanors, and adult felonies. I subsequently joined the TJSL Removal Defense clinic, wherein I argued and won a full asylum trial in Federal Court for a Moroccan refugee fleeing severe LGBTQ persecution.

Attorney Steven Wax is ardent about helping his clients. Whether creating personalized estate plans, drafting and negotiating contracts or other legal matters. Steven’s goal is to assist and counsel his clients to protect them and their loved ones. Steven grew up on Long Island, New York. He attended the University of Massachusetts in Amherst earning a BS in Sport Management. He earned his paralegal certificate at Duke University and earned his Juris Doctorate from North Carolina Central University School of Law in Durham, NC. Steven has an extensive legal career in the life science sector, working for some of the world’s largest Contract Research Organizations since 2013. Steven has negotiated a broad range of contracts for both businesses and individuals. Steven participated in the NCCU Elder Law Project, where he prepared wills, durable powers of attorney, living wills, and health care powers of attorneys for low/fixed income clients in Durham and surrounding counties. Steven finds meaningful ways to share his skills and passion with his community. Steven volunteers his time to Wills for Heroes, which provides no-cost estate planning documents to first responders and their families, through the NC Bar Foundation.

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Deed of Assignment: Everything You Need to Know

A deed of assignment refers to a legal document that records the transfer of ownership of a real estate property from one party to another. 3 min read updated on January 01, 2024

Updated October 8,2020:

A deed of assignment refers to a legal document that records the transfer of ownership of a real estate property from one party to another. It states that a specific piece of property will belong to the assignee and no longer belong to the assignor starting from a specified date. In order to be valid, a deed of assignment must contain certain types of information and meet a number of requirements.

What Is an Assignment?

An assignment is similar to an outright transfer, but it is slightly different. It takes place when one of two parties who have entered into a contract decides to transfer all of his or her rights and obligations to a third party and completely remove himself or herself from the contract.

Also called the assignee, the third party effectively replaces the former contracting party and consequently assumes all of his or her rights and obligations. Unless it is stated in the original contract, both parties to the initial contract are typically required to express approval of an assignment before it can occur. When you sell a piece of property, you are making an assignment of it to the buyer through the paperwork you sign at closing.

What Is a Deed of Assignment?

A deed of assignment refers to a legal document that facilitates the legal transfer of ownership of real estate property. It is an important document that must be securely stored at all times, especially in the case of real estate.

In general, this document can be described as a document that is drafted and signed to promise or guarantee the transfer of ownership of a real estate property on a specified date. In other words, it serves as the evidence of the transfer of ownership of the property, with the stipulation that there is a certain timeframe in which actual ownership will begin.

The deed of assignment is the main document between the seller and buyer that proves ownership in favor of the seller. The party who is transferring his or her rights to the property is known as the “assignor,” while the party who is receiving the rights is called the “assignee.”

A deed of assignment is required in many different situations, the most common of which is the transfer of ownership of a property. For example, a developer of a new house has to sign a deed of assignment with a buyer, stating that the house will belong to him or her on a certain date. Nevertheless, the buyer may want to sell the house to someone else in the future, which will also require the signing of a deed of assignment.

This document is necessary because it serves as a temporary title deed in the event that the actual title deed for the house has not been issued. For every piece of property that will be sold before the issuance of a title deed, a deed of assignment will be required.

Requirements for a Deed of Assignment

In order to be legally enforceable, an absolute sale deed must provide a clear description of the property being transferred, such as its address or other information that distinguishes it from other properties. In addition, it must clearly identify the buyer and seller and state the date when the transfer will become legally effective, the purchase price, and other relevant information.

In today's real estate transactions, contracting parties usually use an ancillary real estate sale contract in an attempt to cram all the required information into a deed. Nonetheless, the information found in the contract must be referenced by the deed.

Information to Include in a Deed of Assignment

• Names of parties to the agreement
• Addresses of the parties and how they are binding on the parties' successors, friends, and other people who represent them in any capacity
• History of the property being transferred, from the time it was first acquired to the time it is about to be sold
• Agreed price of the property
• Size and description of the property
• Promises or covenants the parties will undertake to execute the deed
• Signatures of the parties
• Section for the Governors Consent or Commissioner of Oaths to sign and verify the agreement

If you need help understanding, drafting, or signing a deed of assignment, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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Navigating the assignment of a residential lease

A landlord can assign his leases to a new buyer of his building. Likewise, a tenant may be able to assign his lease if he needs to relocate. Find out how to assign your lease and what you can do to protect yourself when doing so.

by   Ronna L. DeLoe, Esq.

Ronna L. DeLoe is a freelance writer and a published author who has written hundreds of legal articles. She does...

Read more...

Updated on: December 4, 2023 · 3 min read

Assignment of lease by the tenant

Assignment of lease vs. sublease, assignment of lease by the landlord.

As a tenant, you may want to get out of your residential lease without paying the remaining rent. Likewise, if you're a landlord and sell your rental property, the buyer must now collect rent from the tenants, who may have no idea you sold the property. In both situations, assignment of a lease with a release for the tenant and assignment of leases with notice by the landlord accomplish these goals.

If you're the tenant and want to leave before the end of your lease term, you may be able to assign your lease to a third party if the landlord doesn't let you out of the lease. The third party then becomes the new tenant, who is bound by the terms of the original lease and pays rent to the landlord.

Most often, the lease won't permit assignment without the landlord's approval, but leases often state that the landlord cannot unreasonably withhold consent. As long as you produce a tenant who's shown a history of payment under prior leases and has been a model tenant, a landlord should consent to assignment.

The assignment of lease form should include places for the tenant-assignor, the new tenant-assignee, and the landlord to sign. If the master lease allows assignment, then the tenant doesn't need the landlord's permission; the tenant can sign an assignment of lease agreement without the landlord's signature.

If the landlord allows an assignment of the lease, you, as the tenant, also want him to sign a release stating that you're not responsible for the new tenant's failure to pay or for any damage she causes. Without such a release, you may still be liable for both.

When you, as the tenant, assign the lease, you sign an agreement that either reads “Assignment of Lease," “Lease Assumption Agreement," or “Assignment and Assumption Agreement." An assumption of the lease means that the new tenant assumes your obligations, such as paying rent and keeping the apartment in good condition.

An assignment of a lease transfers the tenant's entire rights in the property to a third party. With a sublease, on the other hand, the tenant transfers only a portion of the remaining lease. For example, if the original tenant has six months remaining on his lease and he gives the entire six months to a third party, the tenant is permanently assigning his rights to live on the property to the third party. If, however, the tenant allows that third party to stay at the premises for only three months, and the tenant intends to return after three months, he is subleasing the premises.

A landlord can assign the right to collect rent to someone who has purchased the property. An assignment of lease from the seller to the buyer allows the new landlord to collect rent from any and all current tenants in the building. The language in the landlord's assignment of lease agreement can include assignment of security deposits, if the parties agree to it. An assignment of leases by the landlord to the buyer affords protection to the buyer so he can collect rent.

An assignment of leases by the landlord to the buyer is meaningless if tenants aren't aware the landlord sold the property, which is why it's important for the assignor-landlord to give tenants proper notice. A notice of assignment of lease, which is a form signed by both the assignor-landlord and the assignee, or new landlord, is one way to give notice. Another way is to send a letter on the landlord's letterhead. Either way, the notice must include the new landlord's address and how rent is to be paid.

Both landlords and tenants who become assignors should sign a formal assignment of lease agreement, which an online service provider can prepare for you. If you're the tenant who has assigned your lease, try to get a release or you'll still be liable to the landlord. If you're the landlord, make sure you can count on the new tenant to pay the rent before you release the primary tenant from his obligations under the lease.

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Deed of Assignment (for Intellectual Property)

In the realm of intellectual property, a Deed of Assignment is a formal legal document used to transfer all rights, title, and interest in intellectual property from the assignor (original owner) to the assignee (new owner). This is crucial for the correct transfer of patents, copyrights, trademarks, and other IP rights. The deed typically requires specific legal formalities, sometimes notarization, to ensure it is legally enforceable.

To be legally effective a deed of assignment must contain:

• Title of the Document : It should clearly be labeled as a "Deed of Assignment" to identify the nature of the document.
• Date : The date on which the deed is executed should be clearly mentioned.
• Parties Involved : Full names and addresses of both the assignor (the party transferring the rights) and the assignee (the party receiving the rights). This identifies the parties to the agreement.
• Recitals : This section provides the background of the transaction. It typically includes details about the ownership of the assignor and the intention behind the assignment.
• Definition and Interpretation : Any terms used within the deed that have specific meanings should be clearly defined in this section.
• Description of the Property or Rights : A detailed description of the property or rights being assigned. For intellectual property, this would include details like patent numbers, trademark registrations , or descriptions of the copyrighted material.
• Terms of Assignment : This should include the extent of the rights being transferred, any conditions or limitations on the assignment, and any obligations the assignor or assignee must fulfill as part of the agreement.
• Warranties and Representations : The assignor typically makes certain warranties regarding their ownership of the property and the absence of encumbrances or third-party claims against it.
• Governing Law : The deed should specify which jurisdiction's laws govern the interpretation and enforcement of the agreement.
• Execution and Witnesses : The deed must be signed by both parties, and depending on jurisdictional requirements, it may also need to be witnessed and possibly notarized.
• Schedules or Annexures : If there are detailed lists or descriptions (like a list of patent numbers or property descriptions), these are often attached as schedules to the main body of the deed.

Letter of Assignment (for Trademarks and Patents)

This is a less formal document compared to the Deed of Assignment and is often used to record the assignment of rights or licensing of intellectual property on a temporary or limited basis. While it can outline the terms of the assignment, it may not be sufficient for the full transfer of legal title of IP rights. It's more commonly used in situations like assigning the rights to use a copyrighted work or a trademark license.

For example, company X allows company Y to use their trademark for specific products in a specific country for a specific period.  

At the same time, company X can use a Letter of Assignment to transfer a trademark to someone. In this case, it will be similar to the Deed of Assignment. 

Intellectual Property Sales Agreement

An IP Sales Agreement is a detailed contract that stipulates the terms and conditions of the sale of intellectual property. It covers aspects such as the specific rights being sold, payment terms, warranties regarding the ownership and validity of the IP, and any limitations or conditions on the use of the IP. This document is essential in transactions involving the sale of IP assets.

However, clients usually prefer to keep this document confidential and prepare special deeds of assignment or letter of assignment for different countries.

IP Transfer Declaration

In the context of intellectual property, a Declaration is often used to assert ownership or the originality of an IP asset. For example, inventors may use declarations in patent applications to declare their invention is original, or authors may use it to assert copyright ownership. It's a formal statement, sometimes required by IP offices or courts.

When assigning a trademark, the Declaration can be a valid document to function as a proof of the transfer. For example, a director of company X declares that the company had sold its Intellectual Property to company Y. 

Merger Document

When companies or entities with significant IP assets merge, an IP Merger Document is used. This document outlines how the intellectual property owned by the merging entities will be combined or managed. It includes details about the transfer, integration, or handling of patents, copyrights, trademarks, and any other intellectual property affected by the merger.

In all these cases, the precise drafting of documents is critical to ensure that IP rights are adequately protected and transferred. Legal advice is often necessary to navigate the complexities of intellectual property laws.

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Commercial leasing: assigning or subleasing – what’s the difference

The terms assigning and subleasing are often used in a commercial leasing context, to refer to when a tenant transfers their rights under a commercial lease to another party.  It is important to understand the distinctions between them and how they might be relevant in different situations, so that you can make sure you have the right arrangement in place in your circumstances.

Assigning a Lease

A tenant may want to sell their business or move to other premises, but if their lease has not come up for expiry yet they will not be able to terminate it.  Instead, they might need to assign their lease to the party who buys the business, or to a new tenant.

Landlord’s consent

Assigning a lease requires the landlord’s written consent.  Tenants often assume that it will be easy to get the landlord’s consent, but a landlord is likely to want to know (and is entitled to know) all about the new tenant including their financial situation, the nature of their business, and conducting reference checks. 

Essentially the landlord wants to make sure that the new tenant will be in a position to pay the rent and meet their obligations.  It is helpful for the original tenant to provide the landlord with as much information as possible about the prospective tenant when asking for consent.

Although they can conduct thorough due diligence on a prospective tenant, the landlord cannot unreasonably withhold their consent, nor can they ask for any extra payment in order to give their consent.  If a tenant has concerns about what their landlord wants in order to give consent, they should seek legal advice as soon as possible before agreeing to the landlord’s demands.

To formalise the assignment, a written Deed of Assignment of Lease needs to be completed and signed by all parties including the landlord. 

Original tenant’s liability

On a day-to-day basis the new tenant takes on all of the lease obligations.  However, the original tenant (and any guarantors to the lease) will remain liable under the terms of the lease until such time as it is terminated, varied, or renewed beyond the original renewal rights.

This means that should the new tenant fail to meet any of their obligations (for example if they get behind in their rent payments), the landlord could come after the original tenant and/or their guarantors.

What if the tenant does not have the landlord’s consent?

This can be very serious.  The original tenant will likely be in breach of their lease, as most leases will specifically require them to obtain the landlord’s consent to an assignment.  The landlord will be entitled to take action against the original tenant for the breach (for example to recover its losses). 

A sublease differs from an assignment of lease in that the original tenant (the “head tenant”) continues to be responsible for all of the lease obligations, but a subtenant is occupying the premises and paying a contribution towards the rent. 

Subleasing is common where a head tenant is not using all of their leased premises, and wants to make some additional money by subleasing a portion of the leased premises to a third party without giving up their own lease (the “head lease”) altogether.  By way of a Deed of Sublease, a subtenant agrees to pay rent for part of the premises, often a specific portion of a total area marked out on a floor plan, directly to the head tenant.

A head lease will often specify that the landlord must consent to a sublease.  It is best to ensure that this consent is recorded in writing in the Deed of Sublease.

If the subtenant is going to use the premises for a business use that differs from the head tenant’s as recorded in the head lease, then that new use must be disclosed to the landlord as part of obtaining their consent, and recorded in the Deed of Sublease as a variation of the head lease terms.

Head tenant’s liability

The head tenant remains liable to the landlord for the entire premises, even if a portion of that has been subleased. If a subtenant fails to make payments, the head tenant should take legal advice as soon as possible.   

The subtenant must comply with the terms of the head lease as well as their own sublease arrangement, so it is essential that they receive a copy of the head lease at the outset.  A subtenant should not sign a subleasing agreement without having reviewed the head lease first, otherwise they may find themselves with obligations they cannot fulfil.

Tenants wanting to sublease should make sure that their proposed subtenant is reliable and able to meet their obligations under the sublease arrangement.  This can include asking for financial information and conducting reference checks with the subtenant’s permission. 

Share responsibilities

If the head tenant is subletting only part of the premises, it may be necessary to consider how responsibilities relating to the lease are shared – for example access, insurance, and utilities.  Responsibilities may be shared between the landlord, head tenant and subtenant.  The agreed arrangement should be recorded in writing in the Deed of Sublease to avoid any doubt between the parties.

If you want to enter into an assignment or subleasing arrangement, or have concerns about your commercial lease, talk to your legal advisor to find out what is best for you.

Claire Tyler Commercial Lawyer Wellington

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SALE OF HOUSES BY REALTORS USING DEED OF SUB-LEASE: The Validity Of Transfer Of Title Using Deed Of Sub-Lease Over Properties Covered By A Single Certificate Of Occupancy

By Nakudu Law Partners.

Imagine living in big cities in Nigeria as a tenant? The landlord’s rent trauma can be unbearable; always counting down the time till the next rent. Most times, it appears that people work for the landlord and to keep the roof over their heads no matter how uncomfortable the roof may be. Of course, such persons may have no other option than to keep saving monies to pay their rent.

At some point in your life as a starter in a big city, you’ve either been served with a notice to quit, court summons or at the least, a reminder to pay rent. For lawyers who practice in Magistrate courts within those jurisdictions, the courts are almost like rent tribunals. Those who are familiar with the court proceedings will be sure to tell you that landlord/tenant disputes dominate the court’s cause lists.

The struggle sometimes appears to be over when one acquires a house, especially from realtors and in the form of estate houses. However, little attention is often paid to the documents transferring title from the said realtors to the individual housing estate subscribers and in some cases, these transactions only elevate their status to age-long tenants in their own houses, temporarily granting peaceful possession over a long time while the realtors retain the reversionary interest in the housing estate, unknown to the subscriber.

At the moment, it is estimated that Nigeria’s housing deficit is put at over 22Million. [1] With many Nigerians homeless, owning a house will invariably deflate the statistics of the housing deficit in Nigeria. Beyond solving the issue of shelter, owning a home provides a security to the home owner and with the asset, he can obtain facility to start a business or invest in an income-yielding venture.

In practice, what is often experienced is that some groups of persons or companies who are registered to carry on the business of real estate; acquire landed property or enter into some sort of arrangement with owners of land to build estates and ask interested persons to subscribe. Usually, it starts with the interested persons going to the realtor’s office to pick up an expression of interest form, and a subsequent letter of offer/allocation of a particular plot or houses to them. In most cases, they are required to pay the purchase price of the property and in return, they are handed over a ‘Deed of Sub-Lease’ to execute as the title document transferring some number of years to the lessee. The question that now arises therefore is the propriety of such transfers using a Deed of Sub-Lease.

Who owns the land?

Land ownership in Nigeria is undoubtedly vested in the Governor of each state who is to administer the land for the benefit of the people. Land in this context includes both developed and undeveloped land. Usually, the governor grants rights to occupy a land to Nigerians or corporate bodies registered in Nigeria for a particular period of time, normally 99years upon fulfillment of some conditions.

The Land Use Act equally provides that the holder of a Certificate of Occupancy can transfer or assign his interest in the Certificate of Occupancy to a third party subject to the governor’s consent [2] , whether or not such transfer is a total or partial transfer of interest, or legal or equitable transfer.  An agreement transferring interest in land must be written. This is why lawyers prepare transfer documents such as a Deed of Assignment, Deed of Partition or Deed of Sub-lease, Deed of Lease, Deed of Mortgage and so on, all transferring various interests in land. Those captions are not as important as the wordings of the transfer.

Can A Deed Of Lease/Sub Lease Transfer Title In Land?

A lease is said to exist when one party gives or lets out his property to another for use for a period, usually in consideration of payment of rent. It is a contract for the exclusive possession and profit of land for a definite period. [3] It is important to note that in lease relationships, title to the land is not conveyed; only the use and occupation of the property is conveyed by the lessor. This is so because, in leasehold, possession reverts to the lessor after the expiration of the term given.

More often, leases are either made orally or in writing or under seal. In practise, lease above three years are required to be by Deed, that is to say, it must be signed, sealed and delivered by both parties so as to satisfy the legal requirement under the Land Use Act, as well as to create legal interest over the property when the governor’s consent is obtained and the Deed registered.

One of the major characteristics of a lease agreement is that the property owner (Lessor) has the right to sell his property whenever he chooses to do so. Where a property is subject of a lease, the right of the lessee upon sale of the property depends on the agreed terms of the lease. [4] In other words, the subsequent purchaser purchases the said property subject to the leasehold.

Possessory interest in Lease as against Proprietary interest in assignment:

The central focus in lease relationships is that the Lessor conveys exclusive possession of the demised property and not the proprietary interest. Put simply, what the lessor has transferred in the property to the lessee is only the right to occupy the premises exclusively. It means that the legal ownership of the property still remains and belongs to the lessor. The exclusivity of possession by the lessee can be terminated and extinguished once another enters the land lawfully [5] .

Possessory rights exist or arise by virtue of the protection the law accords to an actual physical occupant of land, even if it is wrongful or adverse. The primary right which such physical occupation confers is the right to exclude others. So, a possessor can therefore exclude all those interfering with his possession except the person with a better right to immediate possession [6]

On the other hand, the term “proprietary interest” is defined as the interest held by a property owner together with all appurtenant rights [7] which explains why a tenant or lessee cannot question the proprietary right of his landlord [8] . That is to say, a lessee cannot challenge ownership of the lessor.

Also, a right of possession can be exercised or enforced by the party in actual possession against the whole world except the true owner. [9]

Status of a Sublease :

Generally speaking, a sublease is a minor lease proceeding from a major lease, in which the lessor of land grants part of the terms which he holds to another. Where the lessor grants the entire remainder, it will amount to assignment of the interest in the property, in other words, it will technically amount to sale of the property subject to legal requirements.

In essence, the right of the lessee is limited to the peaceful and quiet possession of the land/property during the term of the lease agreement. A landlord reserves the right to alienate or do with his land whatever he desires regardless of a pending lease agreement, except where such action interferes with the lessee’s interest in the land. [10]

Arguably, under the Land Use Act, Right of Occupancy has often been viewed as a sui generic (class of its own) interest in land, more appropriately called a statutory lease. This view appears to have been supported by Nigerian courts as the Court of Appeal in L.S.D.P.C vs. Foreign Finance Corporation [11] . In Osho vs. Foreign Finance Corporation [12] the court held that: “ The right of occupancy is in nature a hybrid between a licence and a lease… on terms and conditions which upon breach by a right holder is subject to revocation by the governor ”

Therefore, though the Right of Occupancy under the Land Use Act does not meet the common law requirement for a lease (that is certainty of time, object, execution, etc.), it can be described as a form of statutorily created lease peculiar to lands covered by the Land Use Act. This is because, the framers of the Act, (as can be deduced) clearly intended that the right contained in the Right of Occupancy should be in the nature of a lease out of which lesser interests could be created. However, in practise, given the peculiarity of leasehold, a Deed of Lease has never been an acceptable way of conveying the entire proprietary interest in land regardless of the inference that the nature of grant in Right of Occupancy by the governor appears to be leasehold. Interestingly, the Nigerian courts have always interpreted a lease agreement to only grant possessory interest of the property as against proprietary right, which means that the lessor reserves the right to convey his proprietary right to another buyer who can buy off the proprietary right of the lessor leaving the lessee with only the right of possession that will be extinguished at the expiration of the years granted.

Is using Deed of Sublease by realtors to transfer ownership of interest in estate houses a good practice?

As has been amply demonstrated above, assignment of entire interest in land cannot be achieved using a Deed of sublease. This is because the reversionary interest [13] in the land lies with the lessor once granted less one day. This is equally the case in a sublease that has been described as a lease under an existing lease.

Put simply, when the Deed of sublease (as currently used by real estate companies) is used as a title document transferring an interest in the land, at the expiration of the term granted in the sub-lease or even while the leasehold is existing, the sub lessor can validly assign or convey the remaining year or days in the head-lease to another person subject to the leasehold already granted to the lessee.

The above point can be demonstrated using two scenarios. Scenario A ; if Mr. A has a right of occupancy of 99years over a plot of land in Bompai Kano State, and he sub-lets 90years to Mrs. B , Mr. A reserves the proprietary right over the property while Mrs. B retains the possessory right. At the expiration of the 90years granted to Mrs. B, the reversionary right of the 9years reverses to Mr. A and he can assign or covey the remaining 9years to another person subject to statutory compliance. Scenario B, using the same property and parties, while Mr. A has sub-let 90years to Mrs. B, Mr. A can proceed in the same year to assign the remaining 9years to Mr C subject to the 90years sub-lease granted to Mrs. B. What it then means is that Mr. C will have to wait for the expiration of the 90years already granted to Mrs. B before he can take possession of the property.

The point being made is that; where the transfer of interest in land is done by way of a lease or a sublease as the case may be; the lessor or sub lessor will usually retain the reversionary interest in the property. In other words, whatever interest that has been transferred reverts to the lessor upon expiration of the lease.

It must be pointed out here that the case may be different where the lessor or sub-lessor sublets the entire remaining years, also referred to as unexpired residue, to the lessee or sub-lessee, in which case his reversionary right has been extinguished once the governor consents to such transfer. What it then means is that the governor can deal directly with the sub-lessee over the Right of Occupancy granted to the lessor over such property. However, the difficulty with this kind of practise usually lies with the uncertainty of the remaining years. If the years granted to the lessee is less, then the reversionary right is retained by the lessor, where it is more, we would argue that such grant over the remaining years in the certificate of occupancy is voidable on the doctrine of “Nemo dat quot non-habet” meaning granting what the lessor never had

What is then the proper practice of conveying interest in estate covered by a certificate of occupancy?

Understandably, realtors face the difficulty in determining the appropriate mode of conveying interest of houses or apartments purchased by individuals in real estate houses given that the land upon which the estate houses are built is often covered by a single certificate of occupancy. Ordinarily, preference would be given to both parties executing a Deed of assignment, but where an estate is built, using a single certificate of occupancy may present some technical legal challenges. However, the creative way to ensure that the interests of all the subscribers to the estate houses are protected is to do either of the following:

• Prepare a separate Deed of assignment for each building/purchaser together with As-Built Survey Plan (ABSP) and then obtain the consent of the governor and register the deed alongside with the ABSP at the Lands Registry. Alternatively, prepare a separate Deed of partition for each building together with As-Built Survey Plan (ABSP), obtain the consent of the governor and register the deed alongside with the ABSP at the Lands Registry. The documents should be accompanied with:
• A letter of authorization to register either the Deed of assignment and/or Deed of partition signed by the holder(s) of the certificate of occupancy.
• A valid means of identification (either national ID card, international passport, voter’s card, driver’s licence) of the holder of the certificate of occupancy.
• In the case of a company, the means of identification of the directors, certified true copy of CAC form7, certificate of incorporation, and company’s resolution authorizing the assignment and registration of the property.

Both Deeds (either assignment or partition) are acceptable for registration showing that interest over that particular portion purchased by the purchaser has been transferred. The certificate of occupancy will be provided for sighting in the course of the registration.

To succeed in a land dispute, a person in possession of title documents executed in his name will more often than not get judgement in his favour. We will rest our argument on decided cases where the courts have over and again emphasized that one of the modes of proving ownership of land in Nigeria, is the production of properly executed title documents to the land which is now the most authentic mode of proving title to land [14] , as against a deed of lease/sublease, a deed of assignment is a more reliable means to prove title in land.

We understand the position of the Land Use Act, particularly section 22 which makes the Governor/FCT minister a head-lessor over lands within their territory, however, the Conveyancing Act as applicable in Federal Capital Territory recognises and allows an assignment by way of Deed of Assignment.

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• Isimeme Andrew

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DISCLAIMER: This article is carefully drafted with the sole intention of providing general information on the subject matter. It does not in any way create a client/attorney relationship between readers and our Firm. We are always readily available to provide top-notch legal services.

[1] https://thenationonlineng.net/housing-deficit-now-22-million-says-fmbn/

[2] Section 34(2) of the Land Use Act 1978.

[3] Prudential Assurance Co Ltd v London Residuary Body (1992) 2 AC 286

[4] Registered Trustees of Master’s Vessel Ministries (Nig) Incorporated v. Emenike & Ors (2017) LPELR-42836(CA)

[5] Olukoya v Ashiru (2006) ALL FWLR part 322, p.1479 at 1514

[6] ANENE & ORS v. OKOYE (2013) LPELR-21877(CA)

[7] ENUN v. EKPO(2012) LPELR-19703(CA)

[8] AJIE & ORS v. AHUNANYA & ORS (2000) LPELR-10062(CA)

[9] Farajoye v. Hassan (2006) 16 NWLR (Pt. 1006) Pp. 499 para. G

[10] REGISTERED TRUSTEES OF MASTER’S VESSEL MINISTRIES (NIG) INCORPORATED v. EMENIKE & ORS (2017) LPELR-42836(CA)

[11] (1987) 1.N.W.L.R. (pt50) 413 at 444.

[12] (1991) 4. N.W.L.R. (pt184) 157 at197

[13] Reversionary interest is the interest that a person has in a property when a preceding estate ceases to exist Reversionary interest in the context of real property or wills and estates means a reservation created in a real property conveyance that the property will revert back to the original owner upon the happening of a certain event.

[14] BAZAMFARE & ANOR v. ADAMU & ANOR (2017) LPELR-CA/J/245/2016, IBETO v. NWANOSIKE & ORS

(2013) LPELR-CA/PH/128/99

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Deed of Assignment or Deed of Novation: Key Differences and Legal Implications of Novation and Assignment Contracts

Novation and assignment stand out as pivotal processes for the transfer of contractual rights and obligations. These legal concepts allow a party to the contract to adapt to changing circumstances, ensuring that business arrangements remain relevant and effective. This article explores the nuances of novation and assignment, shedding light on their distinct legal implications, procedures, and practical applications. Whether you’re a business owner navigating the transfer of service contracts, or an individual looking to understand your rights and responsibilities in a contractual relationship, or a key stakeholder in a construction contract, this guide will equip you with the essential knowledge to navigate these complex legal processes.

Table of Contents

• What is a Deed of Novation? 
• What is a Deed of Assignment? 

Key Differences Between Novation and Assignment Deeds

Need a deed of novation or assignment key factors to consider, selecting the right assignment clause for your contract – helping you make the right choice, what is a deed of novation.

Novation is a legal process that allows a new party to a contract to take the place of an original party in a contract, thereby transferring both the responsibilities and benefits under the contract to a third party. In common law, transferring contractual obligations through novation requires the agreement of all original parties involved in the contract, as well as the new party. This is because novation effectively terminates the original contract and establishes a new one.

A novation clause typically specifies that a contract cannot be novated without the written consent of the current parties. The inclusion of such a clause aims to preclude the possibility of novation based on verbal consent or inferred from the actions of a continuing party. Nevertheless, courts will assess the actual events that transpired, and a novation clause may not always be enforceable. It’s possible for a novation clause to allow for future novation by one party acting alone to a party of their choosing. Courts will enforce a novation carried out in this manner if it is sanctioned by the correct interpretation of the original contract.

Novation is frequently encountered in business and contract law, offering a means for parties to transfer their contractual rights and duties to another, which can be useful if the original party cannot meet their obligations or wishes to transfer their contract rights. For novation to occur, there must be unanimous consent for the substitution of the new party for the original one, necessitating a three-way agreement among the original party, the new party, and the remaining contract party. Moreover, the novation agreement must be documented in writing and signed by all involved parties. Understanding novation is essential in the realms of contracts and business dealings, as it provides a way for parties to delegate their contractual rights and responsibilities while freeing themselves from the original agreement.

What is a Deed of Assignment?

A deed of assignment is a legal document that facilitates the transfer of a specific right or benefit from one party (the assignor) to another (the assignee). This process allows the assignee to step into the assignor’s position, taking over both the rights and obligations under the original contract. In construction, this might occur when a main contractor assigns rights under a subcontract to the employer, allowing the employer to enforce specific subcontractor duties directly if the contractor fails.

Key aspects of an assignment include:

• Continuation of the Original Contract: The initial agreement remains valid and enforceable, despite the transfer of rights or benefits.
• Assumption of Rights and Obligations: The assignee assumes the role of the assignor, adopting all associated rights and responsibilities as outlined in the original contract.
• Requirement for Written Form: The assignment must be documented in writing, signed by the assignor, and officially communicated to the obligor (the party obligated under the contract).
• Subject to Terms and Law: The ability to assign rights or benefits is governed by the specific terms of the contract and relevant legal statutes.

At common law, parties generally have the right to assign their contractual rights without needing consent from the other party involved in the contract. However, this does not apply if the rights are inherently personal or if the contract includes an assignment clause that restricts or modifies this general right. Many contracts contain a provision requiring the consent of the other party for an assignment to occur, ensuring that rights are not transferred without the other party’s knowledge.

Once an assignment of rights is made, the assignee gains the right to benefit from the contract and can initiate legal proceedings to enforce these rights. This enforcement can be done either independently or alongside the assignor, depending on whether the assignment is legal or equitable. It’s important to note that while rights under the contract can be assigned, the contractual obligations or burdens cannot be transferred in this manner. Therefore, the assignor remains liable for any obligations under the contract that are not yet fulfilled at the time of the assignment.

Choosing Between Assignment and Novation in a Construction Contract

Choosing between a deed of novation and an assignment agreement depends on the specific circumstances and objectives of the parties involved in a contract. Both options serve to transfer rights and obligations but in fundamentally different ways, each with its own legal implications, risks, and benefits. Understanding these differences and considering various factors can help in making an informed decision that aligns with your goals.

The choice between assignment and novation in a construction project scenario, where, for instance, an employer wishes to engage a subcontractor directly due to loss of confidence in the main contractor, hinges on several factors. These are:

• Nature of the Contract:  The type of contract you’re dealing with (e.g., service, sales) can influence which option is more suitable. For instance, novation might be preferred for service contracts where obligations are personal and specific to the original parties.
• Parties Involved: Consent is a key factor. Novation requires the agreement of all original and new parties, making it a viable option only when such consent is attainable. Assignment might be more feasible if obtaining consent from all parties poses a challenge.
• Complexity of the Transaction: For transactions involving multiple parties and obligations, novation could be more appropriate as it ensures a clean transfer of all rights and obligations. Assignment might leave the original party with ongoing responsibilities.
• Time and Cost: Consider the practical aspects, such as the time and financial cost associated with each option. Novation typically involves more complex legal processes and might be more time-consuming and costly than an assignment.

If the intention is merely to transfer the rights of the subcontractor’s work to the employer without altering the subcontractor’s obligations under a contract, an assignment might suffice. However, if the goal is to completely transfer the main contractor’s contractual role and obligations to the employer or another entity, novation would be necessary, ensuring that all parties consent to this new arrangement and the original contractor is released from their obligations.

The legal interpretations and court decisions highlight the importance of the document’s substance over its label. Even if a document is titled a “Deed of Assignment,” it could function as a novation if it transfers obligations and responsibilities and involves the consent of all parties. The key is to clearly understand and define the objective behind changing the contractual relationships and to use a deed — assignment or novation — that best achieves the desired legal and practical outcomes, ensuring the continuity and successful completion of the construction project.

Understanding the distinction between assignment deeds and novation deeds is crucial for anyone involved in contractual agreements. Novation offers a clean slate by transferring both rights and obligations to a new party, requiring the consent of all involved. Assignment, conversely, allows for the transfer of contractual benefits without altering the original contract’s obligations. Each method serves different strategic purposes, from simplifying transitions to preserving original contractual duties. The choice between novation and assignment hinges on specific legal, financial, and practical considerations unique to each situation. At PBL Law Group, we specialise in providing comprehensive legal advice and support in contract law. Our team is dedicated to helping clients understand their options and make informed decisions that align with their legal and business objectives. Let’s discuss!

Authored By Raea Khan

Director Lawyer, PBL Law Group

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Commercial Leases: Key differences between an Assignment of Lease and a Sublease

Commercial Law

Oct 10 2022.

Similar to the trend seen overseas, working remotely has become a more common and standard practice, which has impacted the way some businesses now operate in New Zealand. Accordingly, when tenants under commercial leases are reviewing their leasing requirements they may decide that they no longer require the same area of premises. This may lead to a tenant transferring their rights under a commercial lease to another party by way of an assignment or sublease. In order to determine which arrangement is best for your business and circumstances, it is important to understand the differences between the two.

A sublease is where the tenant (commonly referred to as the sublandlord) transfers part or all of the tenancy under the sublandlord’s existing lease to a third party. It is important to note that the sublandlord retains an interest in the premises and there is no direct contract between the headlandlord and the subtenant. As a result, the sublandlord is still responsible for all lease obligations but the subtenant pays a contribution for the part of the premises that they sublease from the sublandlord. The subtenant is responsible to the sublandlord for the lease obligations under the sublease. This type of arrangement is particularly common when the sublandlord no longer requires all of the leased premises and wishes to recover some of the costs under the headlease. It is vital to ensure that the timeframe for the sublease arrangement does not extend beyond the term under the headlease. If you are considering subleasing part of your premises, the first step would be reviewing your headlease terms to see if there are any restrictions on the area or any parts within the premises that can or cannot be sublet.

An assignment of a lease involves the new tenant (commonly referred to as the assignee) agreeing to take on all of the existing tenant’s (commonly referred to as the assignor) lease obligations. The transfer of the interest is for the remaining duration of the lease. While the assignment of lease terminates the assignor’s right to possession, the assignor’s liability under the lease commonly continues to the expiry of the current lease term unless provisions are included within the Deed of Assignment of Lease or negotiated with the landlord to provide otherwise. This liability also extends to any guarantors provided. However, the standard ADLS Deed of Assignment of Lease includes an indemnity from the assignee in favour of the assignor against any claims the landlord may raise against the assignor or the assignor’s guarantors.

Once you have established which option is best suited for your business’s circumstances you need to ensure that the headlease allows for an assignment or a sublease to be granted and approach your landlord for their consent to the assignment or sublease.

If you want to assign or sublease your commercial lease or have queries about your lease, please contact us to find out which option is best for you.

Emily Merrill

John Mackay

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Apr 07, 2021

The differences between assignment and sublease.

By Don Catalano

An assignment is the transfer of the commercial tenant’s entire responsibilities in a lease. When a corporate tenant assigns its lease, the assignee takes over the tenant’s responsibilities under the lease and communicates directly with the landlord.

When a tenant decides to assign a lease, all his rights and responsibilities in the original lease agreement are released to the third-party assignee. Hence, the original tenant (the "assignor") will have to leave the unit and allow the new tenant to take over all of the leased building.

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

When a corporate tenant subleases an office , the tenant is transferring all or a portion of the premises for less than the entire term of the lease. Subletting is when a corporate tenant gives another tenant the right to occupy a portion of the entire rental unit for a specific period.

Corporate tenants often sublease when market rents have fallen and parties needing space typically sublease to get space already built-out at a much lower rate than they could as a direct tenant.

Do Both Options Need a Landlord’s Consent?

Both subletting and assigning a commercial lease require the permission of the landlord or a representing agent; this is often expressly indicated in the lease agreement itself. Although most state laws prohibit landlords from withholding consent unreasonably. If the landlord objects to the sublet or assignment, then they must do so on reasonable grounds.

In the case of assignment, a vetting procedure which usually includes credit checks may be completed before formalizing the arrangement with the associated documentation.

Is Subletting or Assignment Right For My Company?

Whether to sublet your commercial property or assign a commercial lease depends entirely on your business situation. By subletting unused space, tenants can recover vital running costs and even improve the viability of their own business. Also, the original tenant remains the tenant and is responsible for all clauses in the original lease.

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

Here are a few other articles to check out:

8 working from home tips you should know, 4 site selection tips when looking for office space, 5 tips when moving your office from big cities to the suburbs, subscribe for more great cre tips hbspt.cta._relativeurls=true;hbspt.cta.load(121314, 'cd3ad71f-75e1-4533-9c5a-8e82767e7aba', {"usenewloader":"true","region":"na1"});.

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What Is the Difference Between Subletting and Assigning Your Lease?

By Sarah Roberts Head of Client Success

Updated on September 1, 2020 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 .

Why Would I Need to Assign or Sublet?

• What is an Assignment? 
• What is Subletting? 
• How Do I Assign or Sublet? 
• Which Option is Best for Me? 

Assigning and Subletting Retail Premises

Key takeaways.

If you are looking to exit your lease before the date set out in the lease agreement, it is important to understand the options available. Understanding the difference between subletting and assigning the lease is important because it can have an ongoing impact on your obligations to the landlord. This article will outline the differences between subletting and assigning your lease.

There are a number of reasons you may want to assign or sublet your lease. This includes because you are:

• selling your business; 
• needing to move to a new premises; 
• winding down your business; or 
• looking for extra revenue through a sublease. 

What is an Assignment? 

An assignment of lease usually occurs when you want to assign your interest in the lease to another party – the assignee. 

For example, this could mean assigning the whole of the shop or leased space.

When you assign your lease, you are transferring your entire proprietary interest to the assignee. Once the lease is properly assigned, the assignee will assume your obligations under the lease, and you should be released from these obligations.

What is Subletting? 

Subletting occurs when you transfer  part  of your interest in the property to another party. This party is known as the ‘sub-tenant’. Here, you can sublease part of the property, like a room or section of the tenancy. This means you do not have to give up the entire property. Alternatively, you can sublet the entire premises for a fixed period of time within the lease period.

Usually, the sub-tenant will pay you rent under a sublease agreement and treat you as their landlord. As the head-tenant, you will assume liability on behalf of the subtenant for any damage or loss that may occur.

It is important to understand that a sublease does not release you from your obligations under the lease. You still retain your lease with the landlord, irrespective of any issues that may arise with the sublease.

How Do I Assign or Sublet? 

The process for assigning or subletting your lease should be set out in your lease agreement. Unless otherwise stated, you will need the written consent of the landlord before you can assign or sublet your lease.

In the case of an assignment, the landlord usually has the right to approve the new assignee. The landlord is likely to request information such as:

• financial statements;
• a CV or business history; and
• identity documents of the proposed assignee.

This way, they can determine whether or not they think they will be suitable to maintain the lease.

In both cases, it is a good idea to have either a:

• deed of consent and assignment; or 
• deed of consent to sublease and a sublease drafted.

Ensuring that the terms of the sublease or assignment are in writing can be key in ensuring your lease is properly assigned or subleased. 

Which Option is Best for Me? 

Your reason for needing to assign or sublet will determine what the best option for you is. Assignment is best when you want to completely release yourself from your obligations under the lease. Conversely, subleases are more suitable when you still want to retain your interest in the property or are unable to assign. 

Subleasing can be an effective way of managing some changes in business needs and may be the best option for you if you want to temporarily vacate your premises or are looking to downsize. Subleasing can also be a good option for businesses seeking to earn extra revenue, or for growing businesses leasing premises larger than what they currently need.

If your premises are considered retail premises, the relevant retail leases legislation in your state likely governs the conditions of your assignment or sublease. This is likely to include laws:

• stipulating what is required to gain the landlord’s consent;
• preventing landlord’s from unreasonably withholding consent; and 
• outlining what happens if the landlord fails to respond to a request for consent.

It is important to understand the difference between assigning and subletting a lease, so you can choose the best option for your business.

The key differences are that:

• assignments transfer your entire interest in the property and usually releases you from your obligations;
• subleases do not release you from your obligations and allow you to transfer part of your interest in the property and retain your entire interest;
• in both cases, your lease will set out when and how you can assign or sublet. 

If you need assistance with assigning or subletting your lease, contact  LegalVision’s leasing lawyers  on 1300 544 755 or fill out the form on this page. 

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THE COCA-COLA COMPANY VS. BISLERI INTERNATIONAL PVT.LTD

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The petitioner, Coca-Cola, is the largest company of soft drinks functioning in 200 countries. The respondent is a famous Indian company which is highly considered for its bottled water. On September 18, 1993, the respondent sold the Trade Marks, Formulation Rights, Intellectual Property Rights, and Goodwill, etc. of their products (thumbs up, Limca, gold spot, Citra, and Maaza, etc) to the petitioner. This case is regarding the MAAZA only. In November 1993, the parties entered into an agreement of assignment by which the following agreements regarding MAAZA were settled. In October 1994 the Licensing Agreement of MAAZA between petitioner and Golden Agro Products Pvt. Ltd. was entered and executed. It is the petitioner’s case that by this deed all the trademarks, formulation rights, etc. were irreversibly conveyed to the petitioner. In March 2008, the respondent came to know that the petitioner filed for registration of MAAZA’s trademark in Turkey. In September 2008 the respondent sent the petitioner a notice rejecting the Licensing Agreement and hence stopping the petitioner from manufacturing MAAZA and using its trademark, directly or indirectly, by themself or through its associates. As per the petitioner, the notice claimed that the petitioner breached the deed by attempting to register MAAZA in Turkey as the deed between them allowed the petitioner to use MAAZA in India alone. The notice also said that the respondent’s intention to start using the trademark MAAZA in India. The petitioner filed a lawsuit.

• Does the Delhi High Court have jurisdiction to deal with the subject of this case?
• Is the petitioner eligible to get a permanent injunction and compensations for violation of the trademark and passing off?

Court decision

1.       The respondent requested the vacation of the court order of October 15, 2008. The objection was mainly due to the factor that the court lacks jurisdiction to hear the suit. The reason for the petitioner to state that the court has jurisdiction is that the respondent is carrying on business within the jurisdiction of the court, the petitioner has further added to his submissions by adding that the license agreement of 13th May 2004 has originated within the jurisdiction of this Court. A newspaper report showing the respondent’s intention to use the trademark MAAZA in India has been published in the Delhi publication of Times of India.

The respondent has a factory in Delhi from where they are operating a sales and distribution infrastructure similar to the one in Mumbai and has an extensive market share in and around Delhi. Further, it was said that Ramesh Chauhan, the person with whom the correspondence was exchanged, is residing in New Delhi. The court has jurisdiction to use the suit for infringement of trademark under Section 134 (2) of the Trademark Act, 1999, and Section 20 (c) of the Code of Civil Procedure, 1908.

Hence, there is no bar under the provision as the petitioner is carrying on business by selling and advertising their products within the territory of this court. The petitioner has claimed that no one can dispute that the product of the petitioner is available in every nook and corner in an extensive manner in Delhi under the trademark MAAZA. Since the court has to take the prima facie view of the matter and see the statement made in the complaint. Hence in view of the order of Section 134 (2) of the Act, there is no ban against filing the suit in Delhi and having jurisdiction. Similar jurisdiction disputes were dealt with in the case of Tata Iron & Steel Co. Ltd. v. Mahavir Steels & Ors and LG Corporation & Anr. v. Intermarket Electroplasters(P) Ltd. and Anr.  

2.       The petitioner’s argument that the respondent has a factory at Shivaji Marg, New Delhi states the misconduct. In agreement with its own admission in the application, the respondent also has a place of business in Delhi where it is bottling water there and that the registered office is in Mumbai are facts of no consequence. The invoices filed by the Local Commissioner which showed that they been exporting MAAZA products to Pars Ram Fruit and Spices in Australia. The Local commissioner also filed documents issued by MAAZA Beverages Inc., New York relating to the purchase of MAAZA drinks that is addressed to Parle Bisleri Pvt. Ltd. They admitted that during the course of the trial, the Australian company has been receiving orders for the production of beverages under the trademark MAAZA and the respondent has regularly been exporting products under the mark MAAZA on a large scale. It is stated that the respondent had the intention to use the trademark MAAZA.

It is clear that exporting goods from a country is to be considered as sale within the country from where the goods are exported and it amounts to infringement of trademark according to Section 29 of the Trade Marks Act, 1999.

The Court granted an interim injunction against the defendant. The Bench said that there is a prima facie case in favor of the petitioner and the balance of convenience lies in favor of the petitioner. If the injunction is not issued the petitioner will suffer irreparable loss and injury. Therefore the denial of the agreement by the respondent was nullified by the court of law and all the trademark rights of MAAZA were given back to the petitioner.

Trademark is a unique symbol or word(s) that used to signify a business or its products. Once registered, it cannot be used by any other organization, as long as it remains in use with proper accounts. The case is an explanation of the definition of Trademark. If a trademark is licensed by a company, no other establishment may use it, or it may institute as an infringement. The case made it clear that a trademark of any business can be registered anywhere once there is a deed discussing the rights, either within the country or outside of it. The judgment helped for several other decisions where different companies that have rights over the same goods in different countries will supply products to the same producers.

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