Question

Use your favorite internet search engine and locate a lease agreement. Find the clause dealing with assignment of the lease and answer these questions about that clause:

1. What is the URL for the lease that you found?
2. What does the assignment clause say?
3. What would happen under the contract if the lessee assigned the lease?
4. What would happen under the common law if the lessee assigned the lease?

Answer 1

A lease agreement is an arrangement between two parties – lessor or the land lord or the owner and lessee, by which the lessee is given rights in the property owned or managed by the lessor for a specified period of time, for some periodic payment known as rent. The agreement does not provide any ownership rights to the lessee for the said property. The lease agreement outlines the conditions of the arrangement to make a clear understanding of the rights and obligations of lessor and the lessee under the said lease. Normally it contains description of Names of the lessor and lessee or their agents, description of the property, Amount of rent and due dates, grace period if any, late charges and mode of rent payment. Modes to terminate the agreement premature and their conditions, security deposit, utilities and facilities on the premises and their related charges and any other conditions.

The following format can give a clear idea of lease agreement between land lord and the tenant which has been extracted from the URL

https://northbaybiz.com/General_Articles/General_Articles/Sample_Commercial_Lease_Agreement.php

SAMPLE COMMERCIAL LEASE AGREEMENT

This Lease is made this ______ day of __________ (Month), _____ (Year) by and between _________________________________________________ (hereinafter "Landlord") and ________________________________________________ (hereinafter "Tenant"). In consideration for the mutual promises and covenants contained herein, and for other good and valuable consideration, the parties hereby agree as follows:

1. The Landlord leases to the Tenant, and the Tenant rents from the Landlord the following described premises: _________________________________________________________________________________

2. The term of the Lease shall be for _______________commencing _________ and ending _________.

3. The Tenant shall pay to Landlord as rent $____________ per year in equal monthly installments of $ _________ payable in advance ___________________ (Time Period).

4. This Lease is subject to all present or future mortgages affecting the premises.

5. Tenant shall use and occupy the premises only as a _________________________ (Tenant Rental Status) subject at all times to the approval of the Landlord.

6. The Tenant shall not make any alterations, additions or improvements to the premises without the prior written consent of the Landlord.

7. The Landlord, at his own expense, shall furnish the following utilities or amenities for the benefit of the Tenant: ______________________________________________________________________________
______________________________________________________________________________

8. The Tenant, at his own expense, shall furnish the following: ______________________________________________________________________________ ______________________________________________________________________________

9. The Tenant shall purchase at his own expense public liability insurance in the amount of $ _________________ as well as fire and hazard insurance in the amount of $ _____________ for the premises and shall provide satisfactory evidence thereof to the Landlord and shall continue same in force and effect throughout the Lease term hereof.

10. The Tenant shall not permit or commit waste to the premises.

11. The Tenant shall comply with all rules, regulations, ordinances codes and laws of all governmental authorities having jurisdiction over the premises.

12. The Tenant shall not permit or engage in any activity that will effect an increase in the rate of insurance for the Building in which the premises is contained nor shall the Tenant permit or commit any nuisance thereon.

13. The Tenant shall not sublet or assign the premises nor allow any other person or business to use or occupy the premises without the prior written consent of the Landlord, which consent may not be unreasonably withheld.

14. At the end of the term of this Lease, the Tenant shall surrender and deliver up the premises in the same condition (subject to any additions, alterations or improvements, if any) as presently exists, reasonable wear and tear excluded.

15. Upon default in any term or condition of this Lease, the Landlord shall have the right to undertake any or all other remedies permitted by Law.

16. This Lease shall be binding upon, and inure to the benefit of, the parties, their heirs, successors, and assigns.

Signed this _______ day of ________________ (Month) ________ (Year).


_____________________________ _____________________________

Tenant                                                         Landlord

---- here the clause no 13 in (bold letters) clearly prohibits the assignment or subletting of the premises without prior written consent of the landlord otherwise on default ,the landlord reserves all legal rights as permitted by law (point 15)

----Very often it is realized that a property which is taken on a leased agreement from any land lord is in excess of the need and is unutilized and in such situations an assignment of the lease or the subletting of the extra space seems an attractive way of earning extra by saving on unproductive expenses. But before making any decision whether to assign , the tenant should first carefully look at its lease to determine whether the lease contains any provisions which prohibit or restrict further assignment . Leases, like any other contracts, are governed by their terms. Therefore, whether a tenant has the right to assign a lease to another party depends on the terms and conditions of the tenant’s lease with the landlord. If the lease does not contain prohibiting or restricting clause for the assignment of any interest, a tenant is free to assign or transfer all or part of its interest. A tenant is not required to seek prior consent of the landlord, unless the lease contains language requiring the tenant to obtain prior consent of the landlord. So if the tenant assigns his interest to any other assignee if there is a prohibiting condition then it will be null and void and the lease can be cancelled by the land lord and a claim can also be made for some compensation. But if there is no such condition in lease then the tenant is free to assign to third party but in no case he is absolved of his original liabilities towards the landlord. To be on safer side it is advisable to get consent of the landlord for such assignment. In assignment the land lord has all rights to enforce the terms of lease against the tenant or the assignee tenant but in case of sublet it is not possible against the subtenant.

In common law the term landlord refers to a person who owns property and allows another person to use it for a fee. The person using the property is called a tenant. The agreement between a landlord and a tenant is called a lease or rental agreement. A tenant may give his or her rights as a tenant to another person. This is called an assignment, and it is permissible unless the landlord objects or unless it is prohibited in the rental agreement. If a tenant assigns his or her rights, the tenant is still responsible for the payment of rent. In essence the recipient of the rental rights, or assignee, is a tenant of the original tenant, and there is no legal relationship between the assignee and the landlord.