Information about lease assignments
This is usually because the tenant is selling their business, or the tenant wishes to exit the lease and has found another party who will take on the already existing lease instead of entering into a new lease with the landlord.
Before a lease can be assigned, the existing lease document must be examined to identify if the lease is able to be assigned and the conditions under which the landlord will give their consent for the assignment to take place. Commercial leases often include a clause stating that the landlord cannot ‘unreasonably withhold’ consent for the assignment to occur. After this examination has occurred, the assignee (the new tenant) will contact the landlord and provide their financial information.
Generally, a commercial lease will contain a provision relating to the notice required to be given to the landlord when assigning the lease. If this notice is not given, or the existing tenant does not seek the consent of the landlord, the existing tenant may be in breach of their lease and it may be terminated.
When selling a business, an assignment of lease can be beneficial as it allows for continuity of the business premises and reduces fit-out costs. In addition, the business will stay recognisable to customers even if the management has changed.
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