Glossary / Lease terms and deal stages
Also known as: Lease assignment
An assignment of lease is the transfer of a tenant's entire remaining interest in a lease to a new tenant, the assignee, who then deals directly with the landlord. Whether the original tenant stays liable, and what happens to commissions, depends on state law, the lease, and the agreements involved.
Cornell LII explains that in a landlord-tenant setting, the assignor can transfer the entire remaining lease term to a new tenant. Unlike a Sublease, which covers a limited period, an assignment gives the assignee "privity of estate with the landlord." LII notes that the original assignor generally remains secondarily liable unless there is a novation, which requires the landlord's consent to release the assignor.
The SIOR lease glossary describes an assignment as a transfer by the tenant of its entire leasehold estate, with the duties assumed by the assignee. Rules vary by state and by contract, so this is not legal advice.
An assignment of a lease is different from an Assignment of commission, where a broker assigns the right to be paid. When a lease is assigned, your right to future commission installments depends on your commission agreement and who is obligated to pay. If installments are still due from the landlord after an assignment, check that the agreement survives the change in tenant.
If you represent the new tenant or the departing tenant, the fee for the assignment itself is set by a separate agreement. A Grubb & Ellis commission agreement, for example, excluded rentals credited to a tenant because of a lease takeover from its commission base.
Because the landlord's consent and any release of the original tenant are matters of contract, ask for copies of the consent and any assumption agreement if you are still owed money under the original deal.
If any installments are unpaid when a lease is assigned, confirm in writing who now owes them.
