Assignments and Subleases

Assignment v. Sublease

Absent an express restriction in the lease, a tenant may freely transfer her leasehold interest, in whole or part. A complete transfer of the entire remaining term is an assignment. If the tenant retains any part of the remaining term (other than a right to reenter upon breach), the transfer is a sublease.

Covenants Against Assignment or Sublease

Lease covenants restricting assignment and sublease are strictly construed against the landlord so if there is a covenant prohibiting assignment it does not prohibit sublease. Waiver: A valid covenant against assignment is considered waived if the LL was aware of the assignment and did not object. Once the LL consents to one transfer, he waives the covenant as to future transfers unless he expressly reserves it Transfer in Violation of Lease: If a tenant assigns or sublets in violation of a lease provision, the transfer is not void. he landlord may terminate the lease or sue for damages

Condemnation of Leasholds

If the entire leasehold is taken by eminent domain then the liability is extinguished but if the taking is temporary or partial then the tenant is not discharged from rent obligation but is entitled to compensation for the taking

Assignments by Landlords

A landlord may assign the rents and reversion interest he owns. This usually is done by deed when the landlord conveys a building to a new owner. The tenant's consent is not required Rights of Assignee Against Tenants-Attornment: Once tenants are given reasonable notice of the assignment they must recognize and pay rent to the new owner as their landlord. The b Liabilities of Assignee to Tenants: The burden of the landlord's covenants that touch and concern the land runs with the landlord's estate to the assignee; thus, the assignee is liable for the performance of those covenants. The original landlord also remains liable on all of the covenants he made in the lease

Consequences of a Sublease-Sublessee Not in Privity with the Landlord

A sublessee is the tenant of the original lessee and usually pays rent to the original lessee who then pays the landlord. A sublessee is not personally liable to the landlord for rent for the performance of any of the covenants in the main lease unless the sublessee expressly assumes the covenants Landlord Remedies: The landlord may terminate the main lease for nonpayment of rent or breach of other covenants f the lease so states or the power is given by statute. The sublease automatically terminates with the main lease Rights of Sublessee: A sublessee cannot enforce any covenants made by the landlord in the main lease, except a residential subblessee may be able to enforce impliedwarranty of habitability against the LL

Consequences of Assignment

An assignee stands in the shoes of the original tenant in a direct relationship with the landlord, both landlord and assignee are liable to the other on all covenants in the lease that run with the land Covenants that Rune With the Land: A covenant that runes with the land if the original parties to the lease so intended and if the covenant touches and concerns the land Rent Covenants: Because a covenant to pay rent runs with the land, the assignee owes rent directly to the landlord. After assignment, the original tenant is no longer in privity of estate with the landlord but remains liable on the original contractual obligation to pay rent. if the assignee reassigns the leasehold interest, his privity of estate with the landlord ends and he has no liability for the subsequent assignee's failure to pay rent