Commercial leases can be assigned or sublet to third parties. For commercial tenants, this can be a great way to get out of a rental agreement that no longer works for them without breaking the commercial lease, outright. For commercial landlords, allowing assignments or sublets can be beneficial, or can be a headache with little benefit.
COMMERCIAL LEASES CAN BE SUBLET OR ASSIGNED
Unless there is a lease provision that says otherwise, commercial leases in Massachusetts can be assigned or sublet by the tenant to a third party. The third party is then bound by the terms of the lease and legally obligated to pay rent. Depending on their agreement with the original tenant, they may make those payments directly to the landlord, or they may pay the original tenant, who then forwards the money to the commercial landlord.
WHAT'S THE DIFFERENCE BETWEEN AN ASSIGNMENT AND A SUBLET?
The difference between subletting and assigning a commercial lease is whether the original tenant is still legally responsible under the lease.
A lease that is sublet still holds the original tenant responsible. If the subletter damages the property, the original tenant can still be liable for the costs. Technically, when the subletter moves out, they pass the property back to the original tenant, who then relinquishes it to the landlord.
When a commercial lease has been assigned, though, the new tenant – called the assignor – stands in for the original tenant for the remainder of the lease. The original tenant no longer has any rights or obligations under the lease, unless the landlord and tenant have agreed, otherwise.
LEGAL RIGHTS FOR SUBLETS AND ASSIGNMENTS
When it comes to assignments and subletting, though, there are several important limitations to a tenant's legal rights. Most important among them is the landlord's right to include a provision in the lease that controls how, or whether, the tenant can assign or sublet the commercial lease. Landlords have a range of options. They can:
- Forbid assignments or sublets, outright
- Permit them, but only at the sole and unfettered discretion of the landlord
- Permit them with the landlord's prior consent, which cannot be unreasonably withheld
Tenants, meanwhile, cannot assign or sublet rights that they do not have, themselves. If the lease only lasts another six months, they cannot assign it to someone else for a year.
A POSSIBLE SOLUTION IN LEASE NEGOTIATIONS
Lease sublets or assignments are common solutions to commercial lease disputes. These often arise if the tenant is looking to break the commercial lease, but wants to negotiate with the landlord to avoid the penalties of doing so. Landlords can also recommend assignments or sublets as an alternative to evicting a commercial tenant.
MASSACHUSETTS REAL ESTATE LITIGATION LAWYERS AT THE KATZ LAW GROUP
Sublets and assignments are important aspects of commercial leasing. The real estate lawyers at the Katz Law Group help commercial landlords and tenants protect their rights and interests in Worcester, Framingham, Marlborough, Middlesex and Norfolk Counties, and the rest of Massachusetts.
Contact them online or call them at (508) 480-8202.