{"id":185697,"date":"2024-01-12T00:00:34","date_gmt":"2024-01-12T00:00:34","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=185697"},"modified":"2024-01-12T00:00:36","modified_gmt":"2024-01-12T00:00:36","slug":"assign-or-sublet","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/commercial-lease-property\/assign-or-sublet\/","title":{"rendered":"Should I Assign or Sublet My Commercial Lease?"},"content":{"rendered":"\n

As a tenant in commercial property, there may be a time before the lease term ends when you no longer need the premises. Where this occurs, you may assign or sublet<\/a> your commercial lease if it allows. These actions will fall under the alienation provisions<\/a> in your lease agreement. However, despite this, assignment and subletting are quite different lease terms and actions on the original lease. Therefore, you must decide which one suits your situation best. This article will explore how commercial tenants can assign or sublet a commercial lease. <\/p>\n\n\n

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Cheatsheet for UK Leasing Terms<\/div>\n
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This cheatsheet includes practical tips to understand key clauses and avoid disputes in leasing agreements.<\/p>\n <\/div>\n \n\nDownload Now<\/a> <\/section>\n <\/div>\n\n\n\n\n

What is an Assignment?<\/h2>\n\n\n\n

Assignment<\/a> is when a commercial tenant transfers the lease to a third party. They act as an assignor, and the new tenant is the assignee. Another term for this is the outgoing tenant and the incoming tenant. <\/p>\n\n\n\n

If your lease end-term date is still some time away and you no longer wish to occupy the property, an assignment may be an option for you. Assigning your commercial lease may suit you when you no longer need the commercial premises, perhaps because you cannot afford it. Your business may be in trouble, and rent is unaffordable. <\/p>\n\n\n\n

Lease Obligations<\/h3>\n\n\n\n

When you assign your lease, the lease continues to exist. However, you are no longer a party to it and, therefore, usually no longer responsible for the lease obligations. You also no longer have an interest in the property. Instead, the incoming tenant or assignee takes on lease obligations. <\/p>\n\n\n\n

However, your landlord may require you to enter an Authorised Guarantee Agreement (AGA) before you can assign the lease. Accordingly, you are liable for the lease obligations if the assignee does not comply with them. Consider this when selecting an assignee and reviewing their financials. If they default on paying rent, you may be responsible for this payment. <\/p>\n\n\n\n

Your Assignee<\/h3>\n\n\n\n

When you look for an assignee for your lease, both the assignee and your commercial landlord will want to satisfy themselves that the assignment is suitable. This means your landlord will want to ensure that the incoming tenant is financially able to take on the lease. Equally, the incoming tenant will want to check that the commercial lease terms and property type work for their business. <\/p>\n\n\n\n

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Additionally, your landlord will need to consent for the assignment to proceed. Therefore, an assignment may not be suitable for you if you want to quickly part with your lease obligations.<\/p>\n<\/div>\n\n\n\n

What is Subletting? <\/h2>\n\n\n\n

When you sublet your commercial lease, you grant a further lease to a third party. It will often be shorter than your current lease term and will cover the whole or part of the premises. Therefore, you maintain your original commercial lease and interest and still have personal rights on the commercial premises. <\/p>\n\n\n\n

When subletting your commercial lease, you can return to the premises later in the lease term or retain part of it as your business premises. If you are happy with your commercial space but find the whole amount unmanageable, subleasing may be the right option. Also, if you do not need your commercial premises for a short period, it may suit you.<\/p>\n\n\n\n

Lease Obligations <\/h3>\n\n\n\n

Unlike assignment, you retain the lease obligations if you choose to sublet your commercial lease. For example, you are the only one liable to pay rent and carry out repairs. As the tenant with the head lease, the subtenant will need to pass you their share of the rent, which you will use to pay the overall rent for your commercial lease, the head lease. <\/p>\n\n\n\n

A sublease offers you extra income, which may be helpful if your business is not doing well or you require money for business development. However, you must also manage the subtenant and ensure they stick to their obligations in the sublease. <\/p>\n\n\n\n

Like assignment, whilst you need to get your landlord’s consent to sublease, they do not need to check the tenant’s suitability. This process is up to you. Therefore, subleasing may be suitable for you as it avoids the barrier of your landlord in progressing the lease action. However, your landlord still needs to check the terms and conditions in the underlease. <\/p>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\n

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