Did you know... April 3, 2017

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.

We are here to help you and your clients. For more information:

Contact: Sue Young, Director of Commercial Real Estate Leasing & Property Management: sueyoung@cbbain.com (email) or 425-636-4272 (direct)

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