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Lease assignments and subleases are not uncommon. Often, a tenant needs to get out of a lease early, maybe because of a job relocation, or a landlord needs to pay a debt and gives his or her right to receive rent to a creditor. There are numerous reasons for transferring your interests in a residential lease.
But, any such transfer shouldn’t be made hastily. Under the terms of most leases, as well as the state and local landlord-tenant laws in most areas, both landlords and tenants still have obligations and duties with respect to the leased premises even after there’s been an assignment or sublease.
So, before you try to transfer your interest in a lease, be certain to read your lease carefully and check the laws in your area, or get some help from an experienced real estate lawyer.
What Are Assignments & Subleases Exactly?
A sublease is when you transfer less than all of your rights to use and enjoy the premises and you keep some right to re-enter or re-take the premises. For example, when you let someone else (called the “sub-tenant” or “sub-lessee”) live on the premises for the first 11 months of your 12-month lease with your landlord, which is called the master lease, at the end of the 11th month, you have the right to re-enter the premises. During those 11 months, you’re known as the “sub-lessor” or “sub-landlord.”
An assignment is when you transfer all of your remaining interests in the lease to someone else, called the “assignee”. In the example above, it’s when you give the assignee the right to live on the premises for the entire 12-month term of the master lease.
For a landlord, an assignment usually entails you giving your right to receive rent from your tenant to the assignee, which is usually a creditor to whom you owe some debt.
Many leases prevent tenants from assigning or subleasing (or subletting) the lease, primarily because the landlord wants to ensure the payment of rent and know who his or her tenant is at all times. Some leases allow assignments and subleases only when the landlord consents, and some state laws prohibit them unless the landlord consents.
When consent is necessary, the laws in almost every state require the landlord to act reasonably, that is, he or she can’t refuse consent just because he or she doesn’t “like” the original tenant. Nor can the refusal be based on discriminatory reasons, such as the sub-lessee or assignee’s gender or race. But, refusal can be based upon the new tenant’s inability to pay the rent or bad credit history.
Effects of the Transfer
Generally, unless the subtenant or assignee agrees, either as part of the assignment or sublease agreement or in a separate agreement, to assume, or accept, the original tenant’s obligations under the original lease, the landlord can’t enforce any of the lease provisions against the assignee or subtenant.
But, an assumption agreement does not release the original tenant from his or her obligations under the master lease unless the original landlord expressly agrees to such a release.
So, for example, under any residential lease, the tenant has the obligation to pay rent. After a sublease or assignment is made, the tenant still has that obligation, even if there was an assumption agreement. So, unless the landlord releases the tenant, the landlord can look to the tenant for rent payments if the subtenant or assignee fails to pay the rent.
As a tenant, you’ll want to get a release from the landlord and an assumption agreement from the subtenant or assignee. As the landlord, in order to best guarantee rent payments, you’ll want to insist on an assumption by the assignee/subtenant, and you don’t want to release the tenant.
Generally, an assignment of a lease results in the assignee stepping into the shoes of the original tenant. The original tenant loses his or her right to live on the premises, and the assignee and the landlord are bound by the lease covenants or promises that run with land, that is, covenants that benefit the land, such as the covenants to pay rent and to make repairs.
Usually, the assignee can’t avoid its responsibilities, especially liability for rent, by assigning the lease to someone else, and the original tenant is liable on the lease, including payment of rent, unless he or she was released from those obligations by the landlord
In a sublease, unless the subtenant assumes the obligations of the master lease, there’s no legal relationship between the subtenant and the landlord, and so the subtenant doesn’t have to pay the landlord rent and the landlord doesn’t have to respond to the subtenant’s request or demand for repairs.
Rather, the landlord-tenant relationship is actually between the original tenant and the subtenant. Typically, you, as the original tenant, remain liable for rent: the subtenant will pay you rent, and you’re responsible for paying the landlord on time. Also, you’re obligated to perform all other covenants under the lease, such as making sure the property is not damaged.
The sublease should spell-out how various problems reported by the subtenant will be handled. For example, if the subtenant finds a problem with the premises, such as a leaky roof, he or she can’t force the landlord to fix it, unless the subtenant assumed the lease. What will typically happen here is the subtenant would notify you, and you would have to fix the problem or enforce the landlord’s obligation to fix it.
As practical matters, sublandlords and subtenants should protect themselves as any primary landlord and tenant would, such as having a detailed written lease that spells-out each party’s rights and responsibilities and requires the payment of a security deposit.
Questions for Your Attorney
- What are my options if my landlord won’t let me assign or sublease? What can happen if I do so anyway and she finds out?
- Can I charge a subtenant more rent than the landlord charges me?
- I sublet my apartment last month, and an old neighbor told me that my subtenant is growing marijuana in the apartment. Can I go in there without the subtenant’s consent to see if that’s true?
- I assigned the remainder of my lease to another student after I graduated and left town. Now, the student wants to change schools and leave before the lease expires. Can the landlord make me pay the rent for the balance of the lease?