8.1(11) Assignment vs. Sublease

An assignment is the transfer of a tenant's [..1..] remaining interest in the lease to a third party, a.k.a the [..2..]

entire

assignee

After an assignment:

• The assignee becomes primarily liable to the [..1..] for rent, based on [..2..]

• The original tenant (assignor) remains [..3..] liable to the landlord for rent, based on [..4..]

1. landlord

2. privity of estate

3. secondarily

4. privity of contract

To release the original tenant from secondary liability after an assignment, a […]—which is a three-party agreement—is required.

novation

To be effective, a novation requires the landlord's explicit agreement to […] the original tenant.

release

T/F: An assignment automatically extinguishes the original tenant's privity of contract with the landlord.

F (privity of contract remains, making the assignor secondarily liable)

A sublease is when a tenant transfers […] than their entire interest in the lease to a third party.

less

When a tenant creates a sublease, they retain a […] interest in the property.

reversionary interest

In a sublease arrangement, the original tenant is known as the [..1..], and the third party is the [..2..]

sublessor, sublessee

A sublessee pays rent to the [..1..] and is generally not in [..2..] with the landlord.

original tenant, privity of contract

A sublessee is generally not directly liable to the landlord for rent because there is neither [..1..] nor [..2..] with the landlord.

privity of estate

privity of contract

In a sublease, the original tenant (sublessor) remains […] liable to the landlord for rent and all other lease covenants.

primarily

T/F: In a sublease, the landlord can sue the sublessee directly for unpaid rent.

F (the landlord's recourse is against the original tenant, who is primarily liable)

Lease clauses that prohibit an assignment or sublease are strictly construed against the […]

landlord

By itself, a lease covenant that prohibits an assignment does not prohibit a […]

sublease

By itself, a lease covenant that prohibits subleasing does not prohibit an […]

assignment

T/F: A lease clause prohibiting "any transfer" will be interpreted narrowly by the courts.

F (while clauses against specific transfers are construed strictly, a broad prohibition is generally effective)

Under the modern trend for commercial leases, if a lease requires the landlord's consent to assign or sublease, the landlord may not […] withhold that consent.

unreasonably

If a landlord sells the property, the tenant must continue to pay rent to the […] until receiving notice of the assignment.

original landlord

A tenant is protected from liability to a new landlord if they pay the original landlord before receiving […] of the sale.

notice

In an assignment, privity of […] is created between the landlord and the assignee.

estate

In an assignment, privity of […] remains between the landlord and the original tenant, unless there is a novation.

contract

The key difference between an assignment and a sublease is whether the tenant transfers the […] remaining term of the lease.

entire

Assignment: the primary liability for rent shifts to the [..1..]

Sublease: the primary liability for rent remains with the [..2..]

assignee

original tenant