Assignment & Subletting – Commercial Leasing

Most commercial leases prohibit a tenant from assigning or subleasing the leased premises to another party without first obtaining the landlord’s consent.  Often, a commercial tenant will execute a lease failing to insert language that a landlord will act reasonably when a tenant requests the landlord’s consent to an assignment or sublease.  A tenant, at the very least should negotiate that a landlord’s consent to an assignment or sublease should “not be unreasonably withheld, conditioned or delayed.” 

A tenant needs to be concerned with this clause because most tenants do not realize that they could be in default under a lease simply because of (i) the death of a shareholder; (ii) the sale of the company and/or (iii) the reorganization of their company.  I have known landlords to hold up the sale/merger of a company because the landlord wants to renegotiate the lease as a condition to granting an assignment. 

A tenant should attempt to have the lease permit certain assignments or subleases without obtaining the landlord’s consent, such as assignments to an affiliate company. 

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