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Subletting vs. Assigning for Commercial Tenants: Which to Choose When You Want to Get Out of Your Lease

NYC-based boutique law firm Pardalis & Nohavicka brings the latest legal updates from the world of real estate to PropertyShark. Pardalis & Nohavicka handles an eclectic array of matters, representing individuals and business owners in civil litigation, criminal cases and business transactions, currently litigating and representing clients throughout the United States and around the world.

Tenants of commercial or residential spaces who find that their lease no longer suits their needs have the option to sublease or assign the premises. Although these options are similar in function, the conditions differ for each.

Often, lease agreements between tenants and landlords include a section on subletting or assigning terms. That’s because tenants feel a sense of freedom when they know that they have the option to sublet or lease; then, if they’re unhappy in their space or their needs change, they can always find another occupant who can be responsible for the rent.

However, this creates concern for some landlords because they want to ensure that the lessee doesn’t sublet or assign the apartment to unreliable or rowdy individuals. As a result, landlords may include a screening process in which they have the right to pre-approve a subletter or assignee prior to move-in. Meanwhile, some landlords don’t allow any type of subletting or assignments in order to avoid potential conflicts.

Conditions of Sublease & Assignment

Subleasing is when a tenant gives another person the right to occupy the space as long as they pay them rent. If an apartment is subleased, a sublease agreement will usually be drawn up; this means that both parties agree that the sublessee will pay rent to the sublessor, and the sublessor will be responsible to make payments to the landlord. Under this agreement, the sublessor is not fully relieved of his or her duties, and written consent by a landlord may be required.

Conversely, in an assignment, the assignor agrees to give up any and all rights to the leased premises. Depending on the wishes of the landlord, the assignor may also be relieved from any liability under the lease; if not, the assignor will still be liable. Consequently, some assignors attempt to implement a permanent assignment in order to relieve themselves of any damages or unpaid rent by the assignee.

Whether you’re a landlord, tenant or even a prospective assignee or sublessee, it might be helpful to explore the different options involved in subletting or assigning. This information could open the door to negotiations and allow for various alternatives within a lease.

Authors:

Taso Pardalis

Taso Pardalis is a founding partner of the Law Offices of Pardalis and Nohavicka, a leading full- service NYC law firm with offices in Manhattan, Queens and WeWork. Taso may be a well-known attorney with many cases making headlines in major media outlets, but at heart, he is a true entrepreneur that believes in supporting the small business community. His areas of concentration are: Intellectual Property, Trademarks, Corporate, Business Law and Real Estate Law.
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Sofia Stefanou

Sofia Stefanou is a law clerk at Pardalis & Nohavicka. She is currently a student at NYU’s Schack School of Real Estate. Sofia is a member of NYU’s Undergraduate Real Estate Club, Women in Real Estate Club, and Hellenic Heritage Association. She is currently a member of the real estate law team at Pardalis & Nohavicka.

Eliza Theiss

Eliza Theiss

Eliza Theiss is a senior writer reporting real estate trends in the US. Her work has been cited by CBS News, Curbed, The Los Angeles Times, and Forbes among others. With an academic background in journalism, Eliza has been covering real estate since 2012. Before joining PropertyShark, Eliza was an associate editor at Multi-Housing News and Commercial Property Executive. Eliza also writes for CommercialEdge. Reach her at [email protected]