Some commercial lease agreements may permit the commercial tenant to either sublet or assign the lease to a third party. When the commercial tenant assigns the lease to a third party, they are transferring their entire interest in the lease with the landlord to a third party. The original lease agreement may stipulate that irrespective of an assignment or subletting of the lease, the original tenant shall continue to be liable for the performance of the obligations of the tenant set out under the original lease agreement. A clause permitting the tenant to assign or sublet the lease usually requires the consent of the landlord who may want additional information about the third-party assignee. The tenant should consider inserting a clause into the original lease agreement to the effect that the landlord shall not “unreasonably” withhold consent regarding the assignment or subletting of the lease to a third party. If the commercial tenant chooses to sublet their lease to a third party, they retain the original lease with the landlord and create a new sublease with the third party. Like an assignment, the landlord’s consent is usually required before the tenant can proceed to sublet the property to a third party.

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Disclaimer:The information contained in this article is not to be construed as legal advice. The content is drafted and published only for the purpose of providing the public with general information regarding various real estate and business law topics. For legal advice, please contact us.

About the Author:

Shahriar Jahanshahi is the founder and principal lawyer at Jahanshahi Law Firm with a practice focus on representing business star-ups and investors in the province of Ontario. For further information about Shahriar Jahanshahi, click here.

Assigning and Subletting Commercial Leases