Assignment of Lease
We act for the outgoing tenant, the incoming tenant or the landlord when a lease moves to a new tenant, usually on the sale of a business.
Enquire Online NowWhat is an assignment of lease?
An assignment transfers the tenant’s interest in a lease to a new tenant for the rest of the term. The incoming tenant takes over the rent and the other obligations. The outgoing tenant usually wants to be released.
It most often happens when you sell a business that trades from leased premises. The buyer needs the lease, so the sale contract is usually conditional on the landlord consenting to the assignment.
Landlord consent
Most commercial leases say the tenant can’t assign without the landlord’s consent. The lease sets out what the landlord can ask for, usually:
- a written request
- financial information and references for the incoming tenant
- evidence of the incoming tenant’s experience in the business
- new guarantees, and a new bond or bank guarantee
- payment of the landlord’s legal costs
- all rent paid and any breaches remedied
Consent can take several weeks. Ask for it as soon as you have a buyer, and allow for it in your settlement date.
The deed of assignment
The deed of assignment is usually signed by the outgoing tenant, the incoming tenant, the landlord and the guarantors. It records the landlord’s consent, the date the lease changes hands, how rent and outgoings are split at that date, what happens to the bond, and any release.
If the lease is registered on title, the transfer of the lease must be registered too.
Releasing the outgoing tenant and guarantors
Under many commercial leases, the outgoing tenant stays liable after the assignment if the new tenant stops paying. Guarantors can stay liable too. Read our guide to the personal guarantee on a commercial lease for how that works.
You can ask for a release in the deed of assignment. Some landlords agree, particularly once the incoming tenant has given new guarantees and a new bond.
Questions
Something else? Enquire online or email us.
Can the landlord refuse to consent to the assignment?
Yes, on the grounds the lease allows, for example if the incoming tenant can't show the financial standing or business experience the lease asks for. In some states, legislation also stops a landlord from unreasonably withholding consent.
Am I still liable after I assign the lease?
Often, yes. Many commercial leases keep the outgoing tenant and its guarantors liable for the rest of the term if the new tenant defaults. Ask for a release in the deed of assignment.
Who pays the landlord's legal costs?
The lease usually says the tenant pays the landlord's reasonable costs of considering and documenting the consent. For retail shop leases, the state's Act may limit what the landlord can charge.
What is the difference between an assignment and a sublease?
In an assignment, you transfer the whole lease and step out. In a sublease, you stay the tenant and grant a separate lease to the subtenant, so you stay responsible to the landlord.
How long does it take?
We generally send the deed of assignment within 24–72 hours of receiving the documents. The landlord's consent can take longer, so start early.
Selling a business with a lease?
Send us the lease and your settlement date. We'll confirm the fixed fee before we start.
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