The Importance of Subletting and Subleasing Clauses

Having an idea of what subleasing (subletting) and assignment entails is important. This enables the tenant to be aware of options for future purposes in case there is a need to utilize free spaces. The easy way for the commercial tenant with excess space is to assign the lease or sublet a portion of the leased premises to another tenant.

Most tenants don't take the subletting and subleasing clauses to be of primary importance when negotiating a commercial lease. This happens as a result of not foreseeing any financial difficulties that could result in subleasing or assignment situations.

Difference Between Subleasing and Assignment

Subleasing and assignment are intertwined. They are common real estate terms that have different meanings. Subleasing (Subletting) is a situation where a new tenant shares the rented space with the original tenant. In a subletting situation, both the original and the new tenant become obliged under the same master lease.

Assignment is a circumstance whereby a corporate tenant relinquishes all his rights and obligations under the master lease to the new tenant. Therefore, this means that once the new tenant agrees to accept the assignment terms, they become solely obliged under that lease.

Consideration in Subleasing and Assignment

A large number of landlords are always reluctant and unwilling to agree to sublease and assignment requests, especially if the original tenant presents the desire to sublet or assign without former discussions about the same.

Certain aspects have to be discussed before the master lease is signed to ensure that there will be a smooth process in case a subletting or assignment situation arises. This has to be decided:

Should the new tenant require advancement; who would be accountable?
Who is to handle the subleasing (subletting)and assignment rental amounts
What should happen in the event of a merger between an original tenant and a new tenant
How should deposits and tenant liens be Managed and by who
If the original rights and obligations of both landlord and the tenant will change after the space is sublet or assigned to a new tenant
Does the landlord have a recapture right and what aspect will trigger him to exercise those rights
The landlord's consent is of high importance whether he agrees or disagrees with subleasing or assignment arrangements.

Discussing these aspects beforehand makes it at ease for all parties involved when subleasing and assignment circumstances arise.

If the landlord and tenant are not on the same page of what should happen when the need to sublet and assignment arises, the tenant stands to lose. All terms and conditions should be favorable to the parties involved keeping in mind that a commercial lease is a legally binding document.

Tenant reps do this day in and day out, while corporate tenants go through the process once in a while. By letting a tenant rep guide you through your sublease or assignment process, you can focus more time on your business. A tenant rep helps you to able to assign or sublet excess space with minimal interference from the landlord and minimal liability for the default of the new tenant.