Assignment vs. Sublease: What's the Difference?

Leases - whether commercial or residential - often have clauses like this one prohibiting a tenant from assigning or subletting the property.

The Tenant shall not assign this Lease, in whole or in part, nor sublet all or any part of the Premises, without the prior written consent of the Landlord in each instance, which consent may be conditioned or withheld at the discretion of the Landlord, but not unreasonably withheld.

But what’s the difference between an assignment or a sublease?

In an assignment, the new tenant steps into the shoes of the original tenant, assuming all the responsibilities of that original tenant. The new tenant agrees to take over all the obligations of the lease - be it maintenance, repair, or most importantly, rent. The new tenant would pay rent directly to the landlord. 

In a sublease, the new tenant is not assuming all of the responsibilities of the original tenant. For example, a sublease is often created for a shorter period of time (such as when one college student rents her room in her apartment to another student for the summer); when the sublease ends, the original tenant’s rights in the property remain. A sublease also creates a second lease on the property - the landlord rents to the tenant, who in turn rents to the new tenant. The new tenant pays rent to the original tenant, and the original tenant pays rent to the landlord as before.

Whether you are considering an assignment or sublease, it’s important to remember two important things, First, the landlord is usually required to consent to either a sublease or an assignment. (A lease may vary as to whether that landlord can withhold that consent for any reason, or only in reasonable circumstances.) Second, if the new tenant defaults on its obligations, the original tenant is likely still liable. Most significantly, this means that if the new tenant doesn’t pay rent, the landlord could bring a claim against either the original tenant or the new tenant for that failure to pay.

As always, it’s important to review your lease carefully before attempting to assign or sublet the property. For more information about drafting or reviewing a sublease or assignment, contact our office today.