Real Estate Terms Dictionary
Assignment of Lease
Definition of "Assignment of Lease"
The Assignment of Lease is a title document (also referring to the process itself) whereby all rights that a lessee or tenant possesses over a property are transferred to another party.
What is an Assignment of Leases:
If a tenant wants to get out of a lease that is not expired, one of the legal options is to assign or transfer the lease to somebody else.
For example, if somebody signs a commercial lease for 12 months and the business stops working after 10 months, that person can still opt not to pay for the remaining 2 months by assigning the lease.
The document attesting the transfer (from the original tenant to the incoming tenant) is called an "Assignment of Lease Agreement".
Depending on the lease, there may be different requirements that need to be satisfied before the original tenant can be released of any lease-related responsibilities. The most important one is that, in most cases, the landlord needs to consent to the lease transfer through a document called "License to Assign".
It is important to have this form signed before moving on to the next steps of the "Assignment of Lease", otherwise the landlord might refuse to approve the assignment later. Other circumstances that may allow the landlord to withhold consent can usually be found under the "Alienation" section of the lease agreement.
Assigning a lease is not the same thing as subletting, although the two terms are often confused. In the case of an assignment of lease, there is a direct relationship established between the new tenant and the landlord, as the landlord collects rent directly from the new tenant after the latter's assumption of lease. In the case of a sublease, the original tenant is still responsible for all the conditions stated in the lease agreement even if there is a new tenant who pays the rent.
Here's a real-life example from one of the properties researched on PropertyShark:
The glossary is intended to provide real estate professionals and home buyers with a basic understanding of various specialized terms related to legal rights over a property. All terms appear in public records such as ACRIS. We do not take responsibility for the legal accuracy of the definitions provided and ask that use of these explanations in a legal setting be made only after checking with a lawyer or another specialist in the field.