Saturday, February 19, 2011

Sublease v. Assignment of Lease

Let's discuss a tenant that occupies a 5,000 square foot space and has three years of term remaining on his lease. Say this tenant wishes to dispose of a part, or all, of his space. Should he use a sublease or a lease assignment.
If the tenant subleases any amount of space less than 5,000 square feet or subleases for anything less than the entire three years of remaining term, then he should use a sublease. If, however, he subleases the entire space for the entire remaining term, he should use an assignment form.

Rules of Thumb:
  • Less than entire space= Sublease
  • Less than entire term= Sublease
  • Less than entire space and less than entire term= Sublease
  • Entire space for entire remaining term= Assignment
Keep in mind that subletting and/or assigning a lease does not relieve the original tenant of their obligations to the landlord under the original lease.

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