Assignment of lease

About this document

Use this agreement to transfer a commercial property lease (often called a business lease or a business tenancy) between an outgoing and a new tenant. If you try and pass obligations without a formal agreement such as this one, you may be in breach of the terms and the landlord may take action against you or forfeit the lease. More information about this can be found here.

Commonly, a lease would be assigned from the seller to the purchaser when a business is sold, but there are many other situations when this document could be used.

The document is structured as a deed and obtains consent from the landlord as well as the tenants, ensuring a successful transfer.

Why a deed of assignment?

This document has been drawn as a deed rather than a contract. This is for two reasons.

First, a lease is a deed, so to transfer it requires a deed.

Secondly, in law, a contract requires consideration (something in return for the assignment). The landlord could ask for nothing for the consent, then change his mind later. A deed requires no consideration, so it is a more certain way of achieving the required purpose.

How to assign a lease

Start by looking at the permission and conditions in your agreement. You must comply. Either the lease will require the consent of your landlord, or it will be silent on the question, or it will say you may not assign. In the two latter cases, of course you should approach the landlord informally first.

He will want full information about your proposed assignee so that he can be sure the next tenant is as strong financially as you are.

If you are already in breach of some term of the agreement, or the landlord is under no obligation to agree, he may ask for payment of a fixed sum or an increase in the rent. Alternatively, at assignment some other change may be agreed.

After agreeing terms with both the landlord and your assignee, you use this document to record the deal and formally assign the lease to the new tenant.

Using this agreement does not affect the original lease. What it does is to move the entitlement to occupation and the obligations in the lease to someone else, with the permission of the landlord.

Features and contents

• Ensures a legal transfer as it is drawn as an agreement between all parties

• Comprehensive and easy to use

• Drawn as a deed

The document contains the following sections:

• Details of the parties

• Identification of liabilities of the out-going tenant including those of which the landlord may not be aware

• The assignment: the assignee takes over the liability for compliance with every term of the lease

• Payment: including alternative payment provisions in case the parties want to arrange for payment by the assignee to the assignor, or even, rarely, the other way round

• Landlord consent

• Changes to the terms of the original lease agreement

• Provision for agreement on publicity in case the transfer attracts unwanted attention

• Other usual legal provisions in plain English