Lease Assignment and Sub-letting Issues

No one knows for sure what their future holds and there could be some circumstances where you cannot continue to operate your business and need to sell it. When you get sound legal advice a commercial lawyer will be sure this eventuality is provided for in the lease. There should be a clause stating that the landlord cannot reasonably stop you from assigning your lease to someone else.

You will need to do this if you sell the business before the lease is up, or sub-let it to another person. However, if this happens it is essential to ensure that in the original lease there is a clause to say that you will not be held responsible if the person to whom you assign the lease defaults on the  payments. Otherwise you can be held responsible for the cost of the lease when you are no longer running the business.

Grounds for refusing assignment

Reasonable grounds for refusing the assignment of your lease would be if the tenant had a poor credit history or if they intend to use the business for another purpose. Another reason could be if the potential tenant was not likely to be able to run the business properly. If the business failed, the tenants would not be able to pay the rent so the landlord would either lose the money owed to him or have to go to court to get it – a costly and time consuming process.