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Lease Assignment Agreement

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A Lease Assignment Agreement is a short document that allows for the transfer of interest in a residential or commercial lease from one tenant to another. In other words, a Lease Assignment Agreement is used when the original tenant wants to get out of a lease and has someone lined up to take their place.

Within a Lease Assignment Agreement, there is not that much information included, except the basics: names and identifying information of the parties, assignment start date, name of landlord, etc. The reason these documents are not more robust is because the original lease is incorporated by reference , all the time. What this means is that all of the terms in the original lease are deemed to be included in the Lease Assignment Agreement.

A Lease Assignment Agreement is different than a Sublease Agreement because the entirety of the lease interest is being transferred in an assignment. With a sublease, the original tenant is still liable for everything, and the sublease may be made for less than the entire property interest. A Lease Assignment transfers the whole interest and puts the new tenant in place of the old one.

The one major thing to be aware of with a Lease Assignment Agreement is that in most situations, the lease will require a landlord's explicit consent for an assignment. The parties should, therefore, be sure the landlord agrees to an assignment before filling out this document.

How to use this document

This Lease Assignment Agreement will help set forth all the required facts and obligations for a valid lease assignment . This essentially means one party (called the Assignor ) will be transferring their rights and obligations as a tenant (including paying rent and living in the space) to another party (called the Assignee ).

In this document, basic information is listed , such as old and new tenant names, the landlord's name, the address of the property, the dates of the lease, and the date of the assignment.

Information about whether or not the Assignor will still be liable in case the Assignee doesn't fulfill the required obligations is also included.

Applicable law

Lease Agreements in the United States are generally subject to the laws of the individual state and therefore, so are Lease Assignment Agreements.

The Environmental Protection Agency governs the disclosure of lead-based paint warnings in all rentals in the States. If a lead-based paint disclosure has not been included in the lease, it must be included in the assignment. Distinct from that, however, required disclosures and lease terms will be based on the laws of the state, and sometimes county, where the property is located.

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A guide to help you: Tenants and Subtenants Obligations under a Sublease Agreement

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WTO / Real Estate / Lease Agreements / Free Assignment of Lease Forms | Word – PDF

Free Assignment of Lease Forms | Word – PDF

Do you need to move out of your rental for a job or to go to school? Is your family expanding, or do you need to cut down on some of your bills to downsize? When you are in the middle of your lease, it may seem like you are stuck and can’t get out of the agreement. But an assignment of lease can be the trick you need to get ahead.

What is Assignment of Lease?

It is a tool that a tenant can utilize if they wish to get out of their lease ahead of time and assign it to another tenant.

Not all landlords will allow this, and if they do, they often have specific rules about how it can occur. When the landlord allows it, the tenant can move out of the rental and not worry about the penalties of breaking their lease.

Different names are used for an assignment of lease. Some of these include:

• Lease transfer
• Assignment agreement
• Lease assignment agreement
• Lease assignment form

No matter the name it goes under, it will serve the same purpose. This agreement will be useful to a tenant who wishes to leave the rental property ahead of the end of the lease. If they want to leave after six months and the lease is for one year, they may need to do a lease assignment with their landlord to help fill the rental before leaving.

This will help them solve this problem. With the permission of the landlord, the tenant can transfer their obligation under the lease over to another person. Once the landlord agrees , the new tenant (assignor ) can move in and follow the same rules that the original tenant ( assignee ) did, including property maintenance and any rent obligations. This will then release them from the obligations under the lease, allowing them to move and sign a new lease without a bad recommendation.

Most states require the landlord to be reasonable when it comes to a lease assignment. They do not have to accept each person you bring to them, especially if that person has a bad rental payment history or another problem that the landlord would not usually tolerate in their properties. But the landlord is not allowed to make things unnecessarily difficult, and they can’t refuse a tenant only to keep you on the property.

Both parties must have sufficient paperwork to help keep things organized. This should start with a properly drafted assignment so that all parties, including the landlord, new tenant, and old tenant, can understand which obligations are being transferred and who will be part of the new lease. This agreement can make the new tenant and landlord relationship run smoothly.

Types of Lease Assignment

The type of lease assignment the tenant will sign depends on the type of lease agreement the tenant has from the start. They may live in a residential home and need to do a lease assignment that works for that, or they could be a major business that will need assignment to leave the commercial property.

Residential lease assignment

When a tenant lives in an apartment, duplex, single-family home, or another place that they call home and need to move out before the end of the lease, they can do an assignment of lease. This allows them to find another tenant for the landlord, someone who will take their place and continue with the terms of the lease.

When the original tenant chooses to do a lease assignment, they will contact their landlord. The landlord can then screen the tenant to make sure their background, credit, and past rental history match up with who the landlord is comfortable renting out to. After these checks are done, the landlord can write the assignment and sign it with both the original and new tenant before the new agreement begins.

Commercial lease assignment

Some leases are between landlords and commercial businesses. The business utilizes the building in order to run their day to day operation. The business may decide that they no longer want to rent that property in the middle of their lease. The business can use the lease assignment form to help them get out of the lease with a new business in their place.

Assignment Vs. Sublease

Some tenants may be confused about the differences between a sublease and a lease assignment. Both of these will involve the original tenant finding someone new to take over the property, but they are different processes. If the tenant wants to do an assignment of lease, they need to do it the proper way to make sure it is done the right way.

The assignment will occur when the tenant works with the landlord to transfer their lease over to a new tenant. The new tenant must agree to take over the lease, keeping the property maintained and paying the rental amount each month. The previous tenant will no longer have their name on the lease and is free to move on to a new property without having to keep up with the obligations of the lease. The landlord will be part of this agreement as they do screenings and need to approve the new tenant.

The sublease will be when the tenant chooses to hand over the obligations of the lease to someone else through a subleasing agreement. The landlord is not part of this agreement, and they often do not approve of subleasing because it can allow an unknown person into the property without the landlord’s approval. The tenant will be held responsible for the original lease and all of its terms, so it can be a risky thing to work on.

You must look through the original lease agreement to see what rules are in place for subleasing or doing an assignment of lease. Most lease agreements will include whether one or both of these are allowed and will list out the specific steps that the tenant must follow for both of them.

What to Include

Each lease assignment will be a little different, and it may depend on the unique components that were in the original lease from the start.

Some of the items that you should include in your document include the following:

Type of lease

List out details about the type of lease that this letter should concern. The type of lease is usually either commercial or residential.

Location of property

Write out the physical location or complete address of the property to make sure there is no confusion in understanding the document. Make sure that the address includes the city name, the state, and the zip code along with it.

Parties’ details

There are three parties who will agree to the assignment of lease, including the landlord, the assignor or the original tenant, and the assignee or the proposed new tenant. Include relevant details about each individual, including their names and addresses.

Original lease term

The original tenant will need to include the terms of the original lease. They can pull out the lease and include information like the start and the end dates of that lease. The landlord could look these up, but it is helpful to have them in place to avoid confusion.

Start date of the lease transfer

Everyone should agree on the date that the lease transfer will occur. This will be the date that the current tenant need to be out of the property, and the new tenant will take over. Most leases will stipulate a certain amount of notice for the landlord, with 30-days being the standard. So make sure there is enough time for all parties involved to get ready for the change in the lease.

Assignor’s continuing liability

The lease assignment needs to list out the amount of liability the original tenant will have for the property and the lease when they move out. This will point out whether the assignor is still liable to the landlord after the lease is assigned.

Lead paint disclosure

Lead paint disclosure is only required in certain areas, but if it is, then the disclosure will also need to be included in the lease assignment.

This assignment also needs to have a copy of the master lease, or the original lease that the assignor and landlord worked on together. A copy needs to be given to the new tenant, so they understand the rules and obligations of moving into the rental.

Given below are lease templates:

Who is Liable in an Assigned Lease?

When the original tenant is looking to do an assignment of lease so they can move out, they need to take a look at who is liable. The original master lease will often give some clues about who will be liable here. If this is not listed out in the master lease, then the landlord will get to decide whether it is the original tenant or the new tenant who will be liable for the property.

The lease assignment can help to tell who is liable here. Make sure to list out the specific situations when the assignor or the assignee will be the ones responsible for property damages, fines for non-compliance, or missed rental payments. If the assignor has been legally released from this kind of liability, the landlord will not be able to come back at them later on for repayment or damages to the property.

It is possible that the assigner will be liable, even after they leave the property and do the assignment of the lease. In this situation, the landlord can get payments from the assignor if the assignee does not make payments on time or damages the property. Utilizing the assignment agreement can help make things safe. This can be done through a release from liability.

Many landlords do not want to release the assignor from their liability. This protects the landlord more because they get the chance to go after two people, rather than one, to help with late payments or damages. The tenant will need to understand the laws and regulations in their state and add in clauses to the assigned lease to help figure out whether they can excuse themselves from liability when they move out.

Even with a release from liability or a clause that releases the tenant if there is a change in ownership of the property, there are certain expenses that the original tenant may still be responsible for. Therefore , the assignor needs to be very careful about the assignee they choose for the property to ensure that they won’t have any large, unexpected fees to deal with later.

Important Considerations

There are a few things that the assignor needs to consider before they decide to write out an assignment for the lease.

Some of the things to consider include:

Get legal assistance from a professional

Before you write out an assignment of lease, you should consider talking to a lawyer who specializes in real estate or contracts in general. They will make sure that your letter is written legally and follows the rules of your lease. It is possible that the landlord will not be open to this agreement, but the real estate lawyer can help you see whether there are other options available. With the help of a real estate lawyer, you will be able to work with them to make sure the legal language protects the assignor and that the landlord will accept the agreement.

Give assignee a copy of the original lease

The asignee needs to receive a copy of the original lease to look over before they agree to the lease assignment. This helps them see the terms of the lease, the amount they owe each month, and any other requirements they must follow if they take over the lease. Therefore, attaching the master lease to your new lease assignment is necessary.

Review your local and state laws

Each area is a little different in terms of the rules you need to follow for your assignment of lease. In some areas, you may need to notarize the assignment of the lease or have witnesses when you sign, or it will not be legal. Having these witnesses will make it take a little more time, but will help prevent challenges to the validity of the document later.

The local and regional laws on renting, leasing, and real estate will vary, and the exact ones will tell you what can be included in the assignment and what your own legal obligations are. Even the language that you include or keep out of the lease assignment will vary based on where you live. So always look up the real estate laws in your area or work with a professional to make sure you do this right.

Is a Landlord’s Consent Required for a Lease Assignment?

As you take a look through your master lease, you will usually find a clause that states any lease assignments need to have the landlord’s written consent before they become effective. The landlord may also list other requirements that the tenant needs to follow in order to have a valid transfer of the terms of the original lease. You must follow the instructions in the original lease before proceeding with the assignment of the lease to make sure that the landlord will not fight it later.

You can’t have someone move into the apartment without telling your landlord. This can be a breach of the lease and can land you in some legal trouble. It is important to have the consent of the landlord. The landlord is not able to unreasonably withhold permission for this either. As long as you choose a good tenant to replace you (one who can pass the background and income check of the landlord), most landlords will agree to this, unless the exact terms of the original lease say it is not allowed.

In some jurisdictions, the landlord may consent to the change by not responding. If they do not respond to your assignment of lease by a certain date, the assignor is allowed to consider that consent and can proceed with the transfer, them moving out of the rental and the new tenant moving in. The assignor should check their local laws to see whether this applies to them or not.

If the landlord decides that they will not accept your assignment of lease, then ask for the reasons in writing. The landlord may not withhold consent based on the race or sex of your assignee, but they can refuse if the assignee has an eviction history or does not make enough income to pay the rent on that property.

Final Thoughts

There are different reasons why a tenant will need to leave their rental before the end of the lease, and they want a way to get out of it without breaking the terms of their lease or having larger fees imposed upon them. An assignment of lease is a great way to help with this. When approved, the landlord agrees to let the assignor put an assignee into the property, someone who will take over the lease and finish it out. By understanding a lease assignment, you could help keep the landlord happy while being able to move on to the next chapter of your life.

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Navigating the assignment of a commercial lease

Special circumstances can require a tenant or a landlord to assign a commercial lease. Find out the most common situations for a commercial lease assignment and whether it's right for your situation.

Find out more about real estate and business

by   Ronna L. DeLoe, Esq.

Ronna L. DeLoe is a freelance writer and a published author who has written hundreds of legal articles. She does...

Read more...

Updated on: January 9, 2024 · 3 min read

• Tenant's assignment of a commercial lease
• Getting the landlord's consent
• Contents of a tenant's assignment agreement
• Landlord's assignment of a commercial lease

If you're running a business, you may find yourself in a situation where you need to break a commercial lease. As a tenant, one option is to assign the lease, which means removing yourself completely from the lease and transferring it to a third party.

There are also instances when a landlord may need to assign a commercial lease, such as when a property is sold. In doing so, you sell the building with any leases intact, which requires assigning your right to collect rent to the new owner.

Tenant's assignment of a commercial lease

There are many reasons a tenant may want to get out of a commercial lease, including not being able to afford the rent and needing less or more space. Because it's unlikely a landlord will simply let you walk away from your commitment, you should check what your lease says about early termination. Most commercial leases require the tenant to pay rent for the rest of the term and possibly additional fees for breaking the lease.

Assignment of the lease is another alternative to breaking it. In doing so, you give the new tenant, known as the assignee, the right to occupy the premises in your place for the remainder of your lease term.

Getting the landlord's consent

Almost all assignments of commercial leases by the tenant need the landlord's consent, so check your original lease for any such language. As with a residential lease, a landlord cannot unreasonably withhold consent for you to assign the lease. However, it's up to you as the assignor, or original tenant, to ensure that your assignee is reliable, responsible, and can pay the rent—or you may end up being held financially liable.

If the tenant assigns a commercial lease to a new tenant without the landlord's permission, the landlord can sue the original tenant for breaking the lease. The landlord can also collect damages against one or both tenants if he can show that the assignee isn't a good-paying tenant or doesn't have the type of business he wants in the building. He can also end the lease and evict the new tenant.

Contents of a tenant's assignment agreement

Assignment of a commercial lease is almost always accompanied by a written agreement to preserve both the tenant's and landlord's rights. Some states require written assignment agreements . Many commercial assignment agreements contain provisions for the:

• Payment of fees to the landlord for having another business substitute for yours
• Assignor's and assignee's names, addresses, and business names
• Landlord's name, address, and business name
• Amount of the new tenant's rent and the dates for payment
• Date of the agreement
• Date the assignment is effective
• Date the lease ends
• The landlord's, assignor's, and assignee's signatures

Assignment agreements usually don't contain a provision releasing the assignor from paying rent, meaning that you, as the assignor, are held responsible for payment. Even so, assignment can be a financially responsible option for a tenant who's going out of business or who needs new space immediately.

Landlord's assignment of a commercial lease

Sometimes a commercial landlord needs to sell his property. After the new owner, or assignee-buyer, buys the property subject to existing leases, the assignor-landlord assigns the leases to the new owner, who can then collect rent. The assignor-landlord notifies tenants by sending a notice of sale, a notice of assignment of lease, or a notification on letterhead listing the assignee-buyer's address for payment of rent.

Unless the lease states otherwise, you, as landlord, can sell your property to anyone, but make sure to get a hold harmless clause , also known as an indemnity clause, in your contract of sale. Such clauses protect you from liability to the tenant if the buyer doesn't perform her duties as a landlord. Otherwise, as the original landlord, you're still liable for your obligations to the tenant, such as keeping the premises habitable.

Under the right circumstances, assignment of a commercial lease can work for both landlords and tenants. If you need assistance with your assignment agreement, consider using an online service provider to prepare it for you.

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A Full Guide to Commercial Lease Assignment (Lease Transfer)

Dealing with a fixed-term lease agreement and looking to move offices or downsize? The topic of commercial lease transfer can be confusing to navigate, particularly when you are unsure of your rights and obligations under the lease.

If you’re renting a commercial property, you signed a contract at the beginning of your tenancy called a lease agreement , which contains all the details of your rights and obligations while occupying and conducting business operations at the commercial property. Your agent is required by law to give you a copy of the lease agreement if you don’t already have one.

The following article will serve as a full guide to commercial lease assignment, providing business owners with an overview of the legal considerations and elements required for an assignment of lease.

• 1 What is a Commercial Lease Assignment?
• 2 Current Market Conditions Boosting Lease Transfers and Flexible Arrangements
• 3 What is the Difference Between Commercial Lease Assignment and Subleasing?
• 4 Why Would You Want to Transfer a Lease?
• 5 How to Go About Transferring Your Commercial Lease
• 6.1 Goals and obligations of the original lessee and new tenant
• 6.2 Starting date of lease assignment
• 6.3 Pitfalls and consequences
• 7.0.1 Further Insights

What is a Commercial Lease Assignment?

Also known as a lease transfer, a commercial lease assignment involves a tenant transferring all of their interests and rights in a lease to a new party. This new tenant will take on the responsibilities of the existing lease, including rent and any other obligations, leaving the original tenant free to exit the agreement.

Commercial lease assignment often occurs when tenants want to leave their commercial property prior to the end of a fixed-term agreement. This often happens when a business quickly needs to upsize or downsize their space, move to a new city, or go out of business.

State law dictates whether tenants require their landlord’s consent prior to transferring a lease or subletting a part of their space. However, most lease agreements will clearly outline full transfer provisions prior to being signed and, whilst it is possible for lease assignment to be forbidden, the vast majority of agreements allow for transfers.

Current Market Conditions Boosting Lease Transfers and Flexible Arrangements

There has been a marked increase in the number of lease transfers and sublets of commercial properties in recent years, largely as a result of increased instances of remote work and downsizing seen across multiple industries. This reduced need for workspace has persisted, as many workers have continued to show a preference for remote and hybrid work arrangements if and when suitable.

Changing employee priorities have forced many businesses to reconsider their existing lease agreements, resulting in an increase in both commercial lease assignments and sublease agreements .

Landlords have adapted their offerings in the face of this changed market demand. Many are now offering flexible, month-to-month leases, allowing tenants to rest easy knowing that they won’t be stuck in a long-term lease agreement if their situation changes.

However, in the case of premium office spaces in highly sought-after locations or warehousing facilities close to major transport links, traditional leases are still very much the norm. In these cases, landlords may have realized that fully reconfiguring their offerings for flexible-usage is financially unrealistic. This may be due to a number of factors, including high-levels of existing demand for traditional leases, the saturation of the flexible workspace market, and the requirements of their typical target tenants.

So, if you’re leasing long-term commercial property and need out of the agreement, or at least to downsize, a lease transfer is a great solution that can leave all contracted parties satisfied. 

What is the Difference Between Commercial Lease Assignment and Subleasing?

A commercial sublease, which is a type of lease transfer, occurs when a tenant who currently leases property agrees to let another tenant use the space concurrently. The agreement involves all three parties: the original tenant, the new tenant, and the property owner.

When you sublease your space, you become the sub-lessor (or sub-landlord), and your new tenant is now the sublessee (or subtenant). Your agreement with them will normally allow them to reside in your space – or a specified portion of it – for either the remaining term of your lease or some other pre-determined length of time. 

It’s important to keep in mind that, as the original lessee, you’re still liable and responsible for making monthly lease payments on a sublet agreement. Therefore, you must collect rent from your subtenant each month while continuing to make rental payments directly to your landlord.

Why Would You Want to Transfer a Lease?

Lease transfers can be done to adjust the leased property size and monthly rent. A business owner may decide that they need to upsize or downsize their leased premises prior to the end of their original lease term.

Also, a lease transfer may be sought because the current tenant wants to vacate the rental property entirely, with no plans to lease elsewhere. This may be due to outside factors (e.g. a global pandemic) or the forced closure of a business.

A lease transfer, or a sublease arrangement, may also be desired so that two businesses with complementary strengths can share a workspace and mutually benefit from their operational proximity. No matter how complementary the proposed new tenant is to the existing tenant, this new business relationship will require the landlord’s permission (unless they have been given prior written consent providing them with sole discretion over subletting)

How to Go About Transferring Your Commercial Lease

The only necessary requirement for lease transfer is to identify a new lessee. In the vast majority of cases, your landlord cannot deny your request for a lease transfer unreasonably , yet it’s still in your best interest to find a new tenant with an established rental history and who can financially afford the rent on time. The only situation in which a commercial landlord can instantly deny a lease transfer request is if this provision was established in the initial lease agreement, however, this type of provision will often scare off prospective tenants.

If you’re looking to transfer your lease, most agents will request that the new tenant apply as if they were renting any other property as a primary lessee. Be sure that, in addition to their application , the prospective tenant provides documentation like company financials and past rental receipts to support your transfer request. This way, there’s no doubt of their ability to be a reliable tenant. 

If you wish to transfer your lease, you must have written consent from your landlord – mere verbal agreement will not suffice. Without your landlords’ express permission in writing, any attempted transfer of lease will be considered null and void. You will then need to fill out a lease assignment agreement, outlining the proposed assignee, current tenant, landlord, and existing lease term.

Important Things to Keep in Mind

To avoid any unnecessary stress or surprises, it helps to understand your rights and responsibilities before beginning the commercial lease transfer process.

Goals and obligations of the original lessee and new tenant

When considering a lease transfer, it is crucial to first identify the goal you hope to achieve through this deal. Most commercial leases have restrictions on transferring the lease, so before beginning any negotiations, all rights and obligations of the involved parties must be closely analyzed. If everyone’s interests are clear from the start, then agreement upon terms should run much more smoothly.

Starting date of lease assignment

In most cases , tenants need to pay their rent a month before move-in date. Confirm that the party being assigned the lease understands when they are responsible for making their first rent payment, so there are no delayed payments. This is also important for sublease agreements, because existing tenants are often liable for any missed rental payments made by the sublessee.

Pitfalls and consequences

Depending on the terms of the lease transfer and the legal documentation, the original lessee may find themselves responsible for any actions or defaults of the new leaseholder. 

As commercial leases often last several years, this could result in a heavy financial burden and significant legal consequences. Careful negotiation at the outset will always lead to a more positive outcome, so it’s important to tick all appropriate procedural and legal boxes when pursuing a commercial lease assignment.

Wrapping up

Before you begin subletting or transferring/assigning a lease, be sure that you understand the objectives of both parties and identify the correct method of altering the lease. Both lessors and lessees should also review all clauses in the lease and negotiate based on everyone’s incentives and interests. If there is any confusion about preparing or reviewing documents related to this process, it’s important to consult with legal advisors for the sake of all parties concerned.

Further Insights

Looking for more articles about the US office market and general office matters? You can find a number of recent posts below! Alternatively, if you’re a business or freelancer looking for flexible workspace in the US, we can help to connect you to a wide range of serviced offices and coworking spaces in highly sought-after locations such as New York City , Los Angeles , Houston , Atlanta , Miami , Chicago , and Dallas . You can also call us to have a discussion about your requirements on 972-913-2742 .

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Tags: 2022 , commercial lease assignment , commercial property , guides , landlords , lease transfer , Office Space , subleasing , tenants This entry was posted on Tuesday, November 8th, 2022 at 8:46 am and is filed under 2022 , Business Advice , Leases , Office Talk .

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Legal Templates

Home Lease Agreement Commercial

Commercial Lease Agreement Template

Use our free Commercial Lease Agreement to rent business property to a tenant.

Updated June 17, 2024 Written by Josh Sainsbury | Reviewed by Susan Chai, Esq.

A commercial lease agreement is a legal document that allows a tenant to rent a property, such as an office, store, or warehouse, for business purposes. It outlines the tenant’s right to use the property in exchange for rent and possibly other fees like operating costs, taxes, maintenance, and parking. The agreement details the rights and responsibilities of both the landlord, who owns the business property, and the tenant.

As long as the tenant adheres to the terms specified, they are permitted to conduct business on the premises. Additionally, it’s common for a commercial lease application to be completed prior to finalizing the agreement. This application process helps the landlord assess the potential tenant’s creditworthiness and suitability for the commercial space.

What to Include in a Commercial Lease Agreement

A commercial lease agreement should cover essential details, including:

• Landlord: Owner offering commercial space for rent.
• Tenant: Business seeking commercial space to rent.
• Term: Lease length, with specific start/end dates or renewal options.
• Demised Premises: Specific rented space, including amenities and size.
• Real Property: Whole property, including shared areas like parking.
• Base Rent: Initial cost of leasing, set monthly, annually, or periodically.
• Operating Costs: Shared expenses for building and common area upkeep.
• Security Deposit: Funds to secure tenant’s lease compliance and care.
• Usage: Defined permissible uses of the property and restrictions. Improvements: Terms for property alterations and responsible costs.
• Connecticut
• District of Columbia
• Massachusetts
• Mississippi
• New Hampshire
• North Carolina
• North Dakota
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• West Virginia

Commercial Lease Payment Structures

Types of commercial property, how to lease a commercial property, how to write a commercial lease agreement, frequently asked questions.

Use this template if you’re renting out an office space where the tenant will operate a business.

Office Space

Use a coworking space lease agreement to outline the terms and conditions under which a tenant rents a workspace from a landlord.

Coworking Space

Use to rent a multi-purpose workspace.

Outlines the terms for renting a garage parking space.

Garage (Parking)

Use to rent a space for an event.

Venue (Event Space)

Use our Salon Booth Rental Agreement template to enable a stylist to temporarily rent a space in your salon.

Booth (Salon)

Enables massage professionals to lease a booth and operate independently.

Massage Therapist Booth

Use it to lease out your restaurant space to tenants or culinary professionals.

Use it to easily rent out kitchen space to tenants or food professionals.

Use an equipment lease agreement to enable another party to temporarily rent your equipment.

Use to require the tenant to pay all property expenses, including real estate taxes, building insurance, maintenance, and rent and utilities.

Use to establish a landlord-tenant relationship in commercial real estate, covering all costs including taxes, insurance, and maintenance to prevent unforeseen expenses for businesses.

Use to balance landlord and tenant interests in commercial leases by sharing property expense responsibilities through a combination of gross and net lease elements.

Modified Gross

Use it to extend an existing lease beyond its original end date.

Use it to effortlessly renew the lease for a commercial property.

Let a tenant rent their leased property to a subtenant.

Commercial Sublease

Use it to rent a warehouse to a business tenant.

Use to allow tenants to rent and potentially purchase their ideal commercial property, providing flexibility and a path to ownership.

Lease-To-Own

There are four main types of payment structures in commercial lease agreements based on how the tenant pays base rent and operating expenses.

Full Service or Gross Lease

The rental rate includes all property operating expenses in a full-service or gross lease. Operating expenses such as utilities, maintenance, and real estate taxes are already factored into the rent.

However, the landlord can add clauses to reserve the right to pass down any future increases in operating expenses to the tenant.

• What Landlords Pay:  All property operating expenses, including utilities, maintenance, and real estate taxes.
• What Tenants Pay:  The rental rate, which includes all operating expenses. If stipulated by the lease agreement, tenants might also pay for any increases in operating expenses.
• Common Uses:  Often used in office buildings and some retail spaces where landlords want to offer tenants a simple, all-inclusive rental rate.

Net Lease‌

In a net lease, none of the operating expenses are included in the rental rate.

Therefore, in addition to the base rent, the tenant must also pay its pro-rata portion of the three “net” operating expenses – property taxes, property insurance, and standard area maintenance (CAM).

• What Landlords Pay:  Landlords typically pay for the structural maintenance of the building.
• Triple Net Lease: Tenant pays a portion of the property taxes, property insurance, and CAM
• Double Net Lease: Tenant pays a part of the property taxes and property insurance
• Single Net Lease: Tenant pays a part of the property taxes
• Common Uses:  Common in commercial real estate, particularly for single-tenant properties like industrial sites or standalone retail buildings.

Modified Gross Lease

A modified gross lease (or modified net lease) is a hybrid of gross and net leases. In a modified gross lease, the landlord and the tenant negotiate and share the operating expenses.

Usually, the tenant is responsible for the base rent and CAM, and the landlord handles the property taxes and insurance.

Sometimes, the tenant pays base rent only at the beginning of the lease and then pays a portion of the operating expenses later.

• What Landlords Pay:  Generally, the property taxes and insurance.
• What Tenants Pay :  The  base rent and sometimes CAM.  The specifics can vary significantly based on what  is negotiated  in the lease.
• Common Uses:  This type of lease is versatile and can be used across various commercial properties, depending on the negotiation between the tenant and the landlord.

Percentage Lease

In a percentage lease, the tenant pays the base rent on the property and a monthly percentage of the gross revenue from the business operating the rented space.

• What Landlords Pay:  Similar to other lease types, landlords might pay for the property’s structural maintenance and, depending on the lease agreement, some operating expenses.
• What Tenants Pay:  Base rent plus a percentage of the  gross revenue of the business  operating within the rented space.
• Common Uses:  Primarily used in the retail sector, especially in malls and shopping centers where the success of the tenant’s business directly benefits the landlord.

1. Industrial Space

Industrial real estate mainly encompasses properties used for making, storing, or shipping goods, and they generally fall into three categories: manufacturing, storage and distribution, and flex space.

Many industrial properties can have multiple uses. For instance, a company might use a single large facility for assembling and distributing products and researching product improvements. In such cases, the property is usually classified based on its primary function.

Office spaces are categorized into three classes, known as Class A, Class B, and Class C, depending on their appearance, age, amenities, and building infrastructure.

A prime location near transportation and business districts is essential. Moreover, the availability of amenities like parking, fitness centers, and modern technology infrastructure enhances the appeal of office spaces.

Retail properties are places where businesses sell goods or services to consumers. They can take the form of shopping centers, malls, stores, or restaurants.

Leasing a commercial property involves several steps, from deciding how to market the property to finalizing the lease agreement. Follow this step-by-step guide to navigate the leasing process effectively.

Step 1: Decide on a Leasing Strategy and Market the Property

You can choose between hiring a broker to assess your property’s value, listing it, managing negotiations, or leasing the property yourself.

Use online platforms like LoopNet and Crexi for visibility. Regardless of the method, be ready to provide detailed information to prospective tenants and arrange property showings.

Step 2: Screen Potential Tenants

To ensure tenant reliability, request the following:

• Completed commercial lease application
• Photocopy of their driver’s license
• EIN Number (for businesses)
• Bank references
• Current credit reports/scores from all three reporting bureaus
• Previous/current landlord references (for an existing business moving to a new location)
• Personal and corporate financial statement(s)
• Copy of business plan
• Business bank statement(s)
• Prior tax returns

Step 3: Negotiate the Rent and Agree to Terms

Discuss rent, typically calculated per square foot, taking into account common area maintenance expenses, real estate taxes, insurance, and specific landlord improvements. 

Once a mutual agreement is reached, draft a commercial letter of intent to outline significant terms, setting the stage for the formal lease agreement.

Step 4: Finalize Rent and Property Expenses

Set the commercial rent based on a price per square foot annually. Discuss with the tenant who will bear the property expenses, such  as insurance, taxes, and maintenance. This decision affects how the property  is marketed and  the lease  is negotiated .

Step 5: Draft the Commercial Lease and Measure the Available Space

Have a qualified individual draft the commercial lease , meeting all legal requirements and clearly outlining responsibilities. Accurately measure your commercial space to ensure correct listing information and rent calculation.

Step 6: Lease Signing and Occupancy

Complete the leasing process by signing the lease, with the tenant taking occupancy on the agreed start date. The tenant is then responsible for monthly rent payments and maintaining the property as per the lease terms.

If you’re looking to lease a commercial property for your business, learn about the commercial lease process as a tenant .

After covering the basics such as landlord and tenant information, lease term, premises details, cost, and usage guidelines, it’s also important to delve into the following aspects to ensure a comprehensive agreement:

Additional Clauses

• Custom Terms:  Include clauses tailored to your specific arrangement, like allowances for improvements, policies on lease transfer, and methods for calculating rent increases.

Further Considerations

• Utilities:  Clarify who is responsible for utilities such as sewage disposal.
• Disaster Management:  Outline procedures for handling damage from fires or other disasters.
• Dispute Resolution:  Define where and how disputes will be resolved, and the governing laws.
• Inspection and Repairs:  Specify conditions under which the landlord may access the premises for inspections or repairs.
• Business Failure:  Address the lease’s fate if the tenant’s business fails.
• Eminent Domain:  Discuss how situations of government requisition of the property will be handled.

Key Legal Considerations

• Commission Rates: While variable and legally capped, they typically range from 4-6% for the initial 5 years, dropping to 1-3% annually thereafter. ( Sherman Act (15 U.S. Code § 1) & § 2 )
• Hazardous Waste Compliance: Tenants must agree to adhere to all federal, state, and local environmental regulations. ( 42 U.S. Code § 6901 )
• Americans With Disabilities Act (ADA) : Requires commercial leases and properties to ensure accessibility for individuals with disabilities, impacting building accessibility, tenant improvements, and lease negotiations. ( 42 U.S. Code § 12183 )

Does ADA Apply to Commercial Leases?

Yes, if the commercial property tenant operates a business open to the public and hires more than 15 people, the ADA applies and requires doors to be widened and ramps installed.

Ensuring ADA compliance in commercial properties involves both landlords and tenants, but the specifics can vary based on lease agreements. Generally, landlords are responsible for the accessibility of common areas and the structural aspects of the building.

Tenants, on the other hand, must ensure their leased spaces are accessible and comply with ADA standards, which might include modifications like widening doors or installing ramps. The allocation of responsibilities and costs for these modifications should be clearly outlined and agreed upon in the lease agreements.

Both parties must work together to ensure the property meets ADA requirements, safeguarding accessibility for all customers and employees.

Before you write your agreement, indicate the state you are contracting in.

Step 1 – Write the Effective Date

Effective Date . Provide the effective date of the agreement.

Step 2 – Fill in Landlord and Tenant Information

Landlord Information – Enter the landlord’s full name or company name, whether the landlord is an individual or entity, and the landlord’s address. If the landlord is a company, provide the full name and title of the company’s representative who will sign the agreement.

Tenant Information – Provide the tenant’s full name or company name, whether the tenant is an individual or entity, and the tenant’s address.

If the tenant is a company, write the full name and title of the company’s representative who will sign the agreement.

Step 3   – Identify Premises

Demised Premises – Specify the type of commercial property being leased. If none of the options provided describe the property type, you can write one in.

If the commercial building or complex has a name, give that name (e.g., Westfield Mall). Provide the street (physical) address of the commercial property. Include a suite number if applicable.

You can also choose to include a map of the property, which will be attached to the end of the agreement as Exhibit A.

Parking Spaces – State what kind of parking privileges the tenant may use, if any. If parking privileges exist, specify whether or not they include any parking spaces or only a specific number.

You can also write additional information, such as where the parking spaces are located, whether or not the tenants can assign or sublet their parking spaces, and whether or not tenants must pay a fee to park.

Step 4 – Describe Lease Terms

Term of Lease – Provide the start and end date for the lease term. The term is the length of time the tenant will rent the space.

Renewal – Indicate whether or not the tenant may renew the lease. If yes, state the number of years for the renewal term. Also, specify whether or not the rent will increase if renewed. If yes, state whether the base rent will increase by a percentage or dollar amount.

Step 5 – Note Rental Terms

Base Rent . Specify the dollar amount of the base rent (starting cost) and how often the tenant will pay the rent (i.e., monthly or annually).

Specify the maximum percentage of the total operational costs for the tenant’s share and the percentage of the expenses reserved for significant repairs and renovations.

Step 6 – Choose the Tax Option

Step 7 – Discuss Past Due Payments

Past Due Payments – Provide the grace period (number of days) before a late charge is due if the tenant is late with rent payments. Specify whether the late charge will be a percentage of the monthly rent or a dollar amount per day.

Step 8 – Note Security Deposit

Security Deposit – Write the total dollar amount of the security deposit the tenant shall pay the landlord. Specify whether or not the security deposit will accrue interest.

Step 9 – Enter Holdover Details

Holding Over – If there is a holdover (the tenant stays on the property past the end of the lease term), the landlord may charge a specific amount over the base rent for the period past the expiration of the lease term.

Step 10 – Describe the Use, Occupancy, and Condition of the Premises

Use and Occupancy . Enter the commercial or business purpose and the tenant’s use of the property.

Specify whether or not the landlord will provide janitorial services. Indicate whether or not the tenant agrees to these statements by selecting the appropriate and relevant statements.

Additionally, If the tenant agrees to the statement regarding no smoking within a certain distance from the property, state the length in feet.

Condition and Acceptance of Premises . The tenant has a specific number of days after moving in to notify the landlord of any defects discovered on the property. State the number of days the tenant has to provide notice.

Step 11 – Indicate Property in Demised Premises

Right to Leasehold Improvements . Choose whether or not the tenant may make improvements to the property. If yes, state whether or not the tenant may remove their trade fixtures and equipment at the lease end.

Fixtures and Furnishings Provided by Landlord . Specify whether or not the landlord will provide any fixtures or furnishings. If yes, state the fixtures and furnishings supplied. You can write on any of your own.

Personal Property Taxes of Tenant . Specify whether the landlord or tenant will pay the personal property taxes on the fixtures and furnishings.

If the tenant is responsible for the taxes and needs to pay back the landlord for such taxes, state the number of days the tenant has to pay after receiving notice from the landlord.

Step 12 – Enter Repairs and Maintenance Details

Landlord’s Obligation to Repair and Maintain . Choose the items the landlord must repair and maintain on the property. You can write any other items.

Also, state whether or not the tenant is responsible for the costs of any maintenance, repairs, or replacements the tenant’s actions cause.

Tenant’s Obligation to Repair and Maintain . State the items the tenant is responsible for repairing and maintaining on the property. You can write any additional items.

Remodeling . State whether or not the tenant must obtain the landlord’s permission before painting, remodeling, or installing equipment, wires, or displays.

Liens . Specify the number of days after actual notice of the filing of a lien; in the event, the landlord files a lien on the property, the tenant has to release the lien.

Step 13 – Discuss Insurance and Indemnification

Tenant’s Public Liability and Property Damage Insurance . The tenant must buy public liability and property damage insurance for the leased property. State whether or not the tenant must add the landlord as an additional insured on the policy.

Write if the policy will have a minimum aggregate policy or a limit of liability per occurrence.

Specify the minimum aggregate amount or minimum liability amount per occurrence. Also, state the required maximum deductible dollar amount.

Certificate of Insurance . Indicate the number of days the tenant has to provide written notice to the landlord that the insurance policy is facing cancelation.

Landlord’s Insurance . State whether or not the landlord’s property insurance on the building includes operating costs.

Step 14 – Address Signage

Exterior Sign . State whether or not the landlord must approve the tenant’s exterior business sign before installation. Specify whether the landlord or tenant is responsible for the cost of the business sign.

Other Signs . Note whether or not the landlord must approve any other signs, banners, or advertising visible from the outside of the property before installation.

Step 15 – Choose Utility Services

Utilities . Specify the utilities the tenant must pay. You can write any other utilities not listed. Also, note the utilities the landlord will pay. You can write any utilities not listed.

Step 16 – Document Access, Surrender, and Assignment

Fixtures and Equipment Installed by Tenant . State whether tenants, upon lease end, can remove the trade fixtures and equipment they installed.

Assigning and Subletting . Specify whether or not the tenant can sublease the property with the landlord’s prior approval.

Step 17 – Discuss Damage to Premises

Substantial Damage . Provide whether or not the cost of repair or replacement for substantial damage in the event of a fire or another disaster is measured by a percentage or dollar amount.

Specify the amount that the replacement value must exceed the cost of repairs.

Additionally, state the days after fire or disaster, the parties have to end the lease.

Partial Damage . State whether or not the landlord or tenant is responsible for repairs in the event of partial damage due to fire or another disaster.

Also, specify the days after receiving insurance payments; if fire insurance proceeds are insufficient to repair the premises, the landlord must end the lease.

Step 18 – Enter Eminent Domain Details

Condemnation of Demised Premises . State the percentage of the property or common area that must be taken if a part of the property is subject to eminent domain for the landlord to end the lease early.

Additionally, specify the number of days after the receipt of the compensation; in the event, the landlord is insufficiently compensated, the landlord has to end the lease early.

Step 19 – Fill in Default Information

Rights in the Event of Default of Tenant . Specify the number of days after receipt of the landlord’s written notice the tenant has to pay rent or fix a problem.

Default of Landlord . State the number of days after receipt of the tenant’s written notice the landlord has to fix a problem.

The landlord must make a reasonable faith effort to start fixing an issue that would reasonably take longer than a specific number of days. State the number of days to cure the problem.

Step 20 – Write Miscellaneous Details

Governing Law . Choose the state’s laws that will govern the construction of this commercial lease agreement.

Dispute Resolution . Note whether the tenant and landlord will resolve disputes if there are any disputes through court litigation, binding arbitration, mediation, or mediation then arbitration.

How to Send a Commercial Lease Agreement

After you’ve finished writing your commercial lease agreement, save it as a PDF to finalize it and email it to the other party to sign. You can also print it out to have the tenant sign in person.

The following is an example of a commercial lease agreement. You can also download our template in PDF or Word format and complete it yourself.

Download: PDF or Word

Does a Commercial Lease Have to be in Writing?

Depending on where you live, the length of the lease term, and the property’s rental value, a commercial lease may not have to be in writing to be enforceable.

However, even if it’s not required by law, we recommend always using a written lease agreement to help protect you if a dispute arises.‌

Do I Need to Get a Commercial Lease Agreement? What Happens if I Don’t?

Even if you can legally rent a business property without a lease agreement in your state, you take a significant risk by not creating a written commercial lease agreement.

The agreement helps you clearly define all the lease terms and have proof of exactly what you and the other party agreed upon in case a dispute arises.

Remember that running a business out of a rental property using a Residential Lease Agreement is illegal in many situations.

If you have any questions about the terms of your commercial lease agreement, talk to the other party or seek legal advice.

What is the Most Common Type of Commercial Lease?

The most common commercial lease is the percentage lease, often used in shopping and strip malls. This type of commercial lease charges the tenant base rent plus a percent of their monthly sales.

Does a Commercial Lease Agreement Need to be Notarized?

No, commercial lease agreements do not require notarization to be legally valid. Nonetheless, having the lease notarized can provide added security and credibility, particularly in resolving any potential disputes or questions regarding the agreement’s authenticity.

How to Cancel A Commercial Lease Agreement?

To cancel a commercial lease, first, check your lease for an early termination option and its requirements. Then, write and send an early termination letter to your landlord, stating the vacate date, following the timeline and method specified in your lease.

If you don’t wish to renew your commercial lease when it expires, you can use a commercial lease termination letter to end it.

What Costs go into a Commercial Lease?

Renting a commercial property can get expensive. In addition to paying rent, you may be responsible for additional costs , including:  

• Insurance. A commercial property insurance policy covers damage and loss to property from certain unforeseeable events, such as fire, theft, natural disasters, etc. The average small business will  pay between $1,000 to $3,000 [lt_source id="2"] per year for coverage. 
• Property taxes. Taxes paid to the state and/or municipality for property owners are assessed as a certain percentage of the property’s market value. You may be asked to pay a share or all of the property taxes.
• Maintenance. Costs associated with the upkeep of the commercial property’s interior and exterior. Depending on the lease terms, you may also be responsible for a portion of the maintenance costs of the property’s common areas.
• Repairs. Costs of repairing broken equipment and/or damage to property. 
• Security. Depending on the property and the nature of your business, you may need to invest in a security system or hire security guards.
• Parking. Most commercial lease agreements will include parking spaces. But if none are included, or you need more, adding parking can cost thousands.
• Local nuisance laws. If your business emits noise, scent, or other matter that runs afoul of local laws against nuisance, you may be subject to fines or other penalties.  
• Utilities.  Includes gas, water, electricity, sewer, trash collection, etc. Depending on the property and the lease agreement, you may have to pay for your utilities or a portion of the entire property’s total utilities. 
• Modifications. Costs associated with interior or exterior adjustments you make to the property to fit your business needs.

To get a complete picture of the costs involved in a commercial lease, don’t forget to consider and forecast costs beyond just the monthly rental payment.

Legal Templates uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial guidelines to learn more about how we keep our content accurate, reliable and trustworthy.

• Who has responsibility for ADA compliance in leased places of public accommodation, the landlord or the tenant?. https://adata.org/faq/who-has-responsibility-ada-compliance-leased-places-public-accommodation-landlord-or-tenant

Related Documents

• Lease Amendment : A written document that details changes or modifications to the terms of a previously executed lease or rental agreement.
• Lease Renewal Agreement : Extends the term of an existing lease agreement between a landlord and a tenant.
• Rent Increase Notice Letter : A written letter from the Landlord to the Tenant that officially communicates a change in the amount of money due.
• Property Management Agreement : A property management agreement is a contract between a property owner and the company or person hired to manage the property.
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Assignment of Commercial Lease by Tenant

Assign your business lease over to a new tenant with this assignment of commercial lease by tenant form..

Surrender of Commercial Lease | Canada

Use this template to prepare a surrender of commercial lease for a business or retail lease in canada., arizona commercial sublease agreement, az commercial tenants, sublet all or part of your space to a subtenant with this arizona commercial sublease agreement., assignment of business assets, assign and transfer ownership of the assets of a small business from a seller to a purchaser with this downloadable assignment of assets form., asset purchase agreement | canada, purchase the assets of a canadian business with this comprehensive asset purchase agreement..

Assignment and Consent Standards in Commercial Leases

Mar 6, 2020

Assignment provisions in commercial leases are heavily negotiated and very important to both landlords and tenants. This article presents a brief overview of the assignment provision in commercial leases, both office and retail.

Assignment provisions in commercial leases are heavily negotiated and very important to both landlords and tenants. When a tenant’s interest in a lease is assigned, the tenant is transferring its entire leasehold interest and 100% of the leased premises to a third party for the entire remaining term of the lease. For the tenant, the assignment provision represents a potential exit strategy, dependent of course on the local market, and increased flexibility for future needs. For the landlord, the assignment offers greater security for its revenue stream and hopefully the avoidance of a tenant bankruptcy or default while keeping its building occupied. The tenant’s desire for flexibility and the landlord’s need for control is where the negotiations are focused. This article presents a brief overview of the assignment provision in commercial leases, both office and retail, with particular attention on the laws of Maryland, Virginia and the District of Columbia. The landlord’s standard for providing consent to a request to an assignment will be reviewed, and we will conclude by offering suggested language.

What If The Lease Does Not Contain An Assignment Provision?

The law traditionally favors the free alienation of property. Therefore, under the laws of almost every state, if the lease is silent on whether the landlord’s consent to an assignment is required, then the commercial tenant has the right to assign its interest. This is true in Maryland, Virginia and the District of Columbia. Given this baseline, almost every lease form will have a detailed provision setting forth the assignment process. Note also, however, that in most states it is also enforceable for a commercial lease to have an outright prohibition against assignments. Such a provision would likely be a non-starting deal point for most sophisticated tenants.

What Does Reasonable Mean?

If a lease simply provides that the tenant requires landlord’s consent to an assignment, but does not include the standard for giving or withholding that consent, then in many states the implied standard is that the landlord’s consent may not be unreasonably withheld. Historically this was the minority view, with the historical rule allowing the landlord to withhold consent for any reason. The implied duty of reasonableness is now more the norm as more states adopt this position when presented with the issue. There is express case law establishing this rule in Maryland, and most courts in Virginia and Washington, DC will imply such a covenant of good faith and fair dealing. Most states, though, do allow a landlord the sole right to grant or withhold its consent if the lease clearly expressly provides, and in Maryland the lease must specifically state that the landlord’s consent may be granted or withheld in the sole and absolute subjective discretion of the landlord. Again though, a sophisticated tenant with any leverage should never agree to such a provision.

Most negotiated leases will instead contain a provision requiring that landlord’s consent to an assignment is required, but such consent will not be unreasonably withheld. The tenant will likely also try to include landlord’s obligation to not unreasonably delay or condition its consent. A short clause without further defining what constitutes “reasonableness” generally favors the tenant, and landlords typically prefer including specific standards as to the criteria it can consider when reasonably deciding whether or not to consent to an assignment. Without such specificity, defining “reasonable” is difficult as the landlord and tenant clearly will have differing viewpoints and it may be left as a factual question to be decided in litigation. The typical definition (set forth in the Restatement (Second) of Property) would be that of a reasonably prudent person in the landlord’s position exercising reasonable commercial responsibility.

Absent a detailed provision listing the criteria a landlord can consider when reasonably reviewing a request to assign, a landlord is typically found to be considered reasonable if it considers certain general broad factors. First, the landlord reviews the assignee’s proposed use. In a retail setting, the landlord will be concerned whether the proposed use fits with the existing center and/or violates any existing exclusives or insurance requirements. In an office setting, the landlord might review the expected traffic and wear and tear on the building. Second, the landlord will consider the creditworthiness of the assignee. The landlord (and the assignor) will want to be confident that the assignee is capable of performing tenant’s obligations under the lease and a large creditworthy tenant increases the value of the asset. The assignor might argue that a strict financial test (such as a minimum net worth, for example) is unfair since the assignor is likely not being released upon the assignment and the landlord can still pursue the assignor in the event of a default. Third, the landlord will review the experience and history of the assignor. As mentioned above, landlords instead prefer a detailed list setting forth the many factors that they can include as part of reasonably reviewing a request for a lease assignment.

Without further establishing the criteria, the landlord puts itself at risk of a challenge by the tenant that a denial of a consent is unreasonable.

In defining “reasonable,” courts typically do not allow a landlord to deny or condition consent to an assignment based purely on economic reasons where the landlord results in substantially increasing what it was entitled to under the lease. In Washington, DC, there is well established case law holding that it is unreasonable for a landlord to withhold consent solely to extract an economic concession or improve its economic position. For example, a court would not consider it reasonable for a landlord to condition its consent on the assignee paying a greatly increased rent. Instead, as discussed below, landlords should look to protect their interests in a market of increasing rents by providing for either the sharing of excess rentals or a right to recapture.

What Are Typical Provisions In an Assignment Clause?

As discussed above, tenants generally prefer a short assignment provision simply requiring the landlord to not unreasonably withhold, condition or delay its consent to an assignment. But most leases are drafted by landlords, and over the years the assignment provisions have evolved to contain many typical provisions in addition to further defining “reasonableness,” including the following below.

• Sharing of Excess Rents. Since many states do not permit a landlord to condition its consent on improving its economic position (e. g. , by increasing the rent), most leases instead contain a provision where the landlord is entitled to all or a portion of the profits. The profits may mean increased rent, or it may even be construed more broadly to consider the value of the location in a sale of the tenant’s business. The landlord’s argument is that it doesn’t want the tenants competing in the real estate market. The tenant should push back here, and certainly try to lower the percentage shared, carve out any consideration received in the sale of tenant’s business, and only share profits after all of the tenant’s reasonable costs incurred in connection with the assignment were first deducted.
• Corporate Transfers. Since a purchase of the entity constituting tenant is likely not deemed an assignment under the law, most leases make clear that any such corporate sale, including the sale of either a controlling interest in the stock or substantially all of the assets of the tenant, is deemed an assignment for purposes of the lease. The tenant should carve out permitted transfers for typical mergers and acquisitions under certain conditions, and also carve out routine transfers of stock (or other ownership interests) between existing partners or for estate planning purposes. The landlord will likely accept a permitted transfer concept provided they receive adequate notice and the successor entity succeeds to all of the assets of the original tenant with an acceptable net worth.
• Assignment Review Fee. Most landlords include in their form lease the requirement that the tenant reimburse them for legal and administrative expenses incurred in reviewing the request for consent and preparing the assignment. The tenant clearly wants to keep these fees reasonable and in keeping with the local market.
• Recapture Rights. Landlords like to include the express right to recapture the premises in the event the tenant comes to it to request a consent for an assignment. A recapture clause allows the landlord to terminate the lease if market rents have increased or if it needs the space for another use. Sophisticated tenants should push back here as much as leverage allows, try to limit the time periods, and if nothing else try for the right to nullify the recapture by rescinding its request for the consent.
• Tenant’s Remedy. To protect themselves from claims for damages from the tenant if the landlord withholds its consent to a requested assignment, landlords often include a provision where the tenant waives its rights to monetary damages in such a situation and can only seek injunctive relief. The tenant should try to delete this provision, or at least, if leverage permits, provide for the right to seek damages if the landlord is subsequently found to have acted in bad faith.

Assignment provisions are heavily negotiated and both the commercial landlord and tenant need to be advised to the applicable local law and know the market for a comparable transaction. ( Note: The author represents office and retail landlords and tenants throughout Virginia, Maryland and the District of Columbia.) Sample reasonableness provisions for both office and retail uses are copied below for reference.

Retail Lease

Landlord and Tenant agree, by way of example and without limitation, that it shall be reasonable for Landlord to withhold its consent if any of the following situations exist or may exist: (i) In Landlord’s reasonable business judgment, the proposed assignee lacks sufficient business experience to operate a business of the type permitted under this Lease and to a quality required under this Lease; (ii) The present net worth of the proposed assignee is lower than that of Tenant’s as of either the date of the proposed assignment or the date of this Lease; (iii) The proposed assignment would require alterations to the Premises affecting the Building’s systems or structure; (iv) The proposed assignment would require modification to the terms of this Lease, or would breach any covenant of Landlord in any other lease, insurance policy, financing agreement or other agreement relating to the Shopping Center, including, without limitation, covenants respecting radius, location, use and/or exclusivity; (v) The proposed assignment would conflict with the primary use of any existing tenant in the Shopping Center or any recorded instrument to which the Shopping Center is bound; and/or (vi) The proposed assignment or subletting would result in a reduction in the Rent collected by Landlord during any portion of the term of this Lease.

Office Lease

Without limitation as to other reasonable grounds for withholding consent, the parties hereby agree that it shall be reasonable under this Lease and under any applicable law for Landlord to withhold consent to any proposed Transfer where one or more of the following apply: (i) The Transferee is of a character or reputation or engaged in a business which is not consistent with the quality of the Building; (ii) The Transferee intends to use the Premises for purposes which are not permitted under this Lease; (iii) The Transferee is a governmental agency; (iv) The Transfer occurs prior to the first anniversary of the Lease Commencement Date; (v) The Transferee has a net worth of less than $10,000,000.00; (vi) The proposed Transfer would cause a violation or trigger a termination right of another lease for space in the Building; or (vii) Either the proposed Transferee, or any person or entity which directly or indirectly, controls, is controlled by, or is under common control with, the proposed Transferee, (i) occupies space in the Building at the time of the request for consent, or (ii) is negotiating with Landlord to lease space in the Building at such time, or (iii) has negotiated with Landlord during the six (6)-month period immediately preceding the Transfer Notice.

Reprinted with permission from the March edition of the Commercial Leasing Law & Strategy© 2020 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or [email protected] .

• John G. Kelly

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Russian Company OOO "PREDPRIIATIE "ELTEKS"

Brief profile.

active Commercial

Facts to Consider

In its reporting the organization specified that audit is mandatory, but failed to submit the auditor’s opinion to Federal Tax Service.

The manager is also a CEO in 6 organizations.

There was an enforcement proceeding against the legal entity

Over the past two years, the main type of activity has changed

show 2 more significant facts

A significant amount of the taxes paid (676 mln. RUB.).

The organization has registered trademarks

show 3 more positive facts

Complete Profile

• 1. General Information
• 2. Registration in the Russian Federation
• 3. Company's Activities
• 4. Legal Address
• 5. Owners, Founders of the Entity
• 6. OOO "PREDPRIIATIE "ELTEKS" CEO
• 7. Entities Founded by Company
• 8. Number of Employees
• 9. Company Finance
• 10. Timeline of key events
• 11. Latest Changes in the Unified State Register of Legal Entities (USRLE)

General Information

Full name of the organization: OBSHCHESTVO S OGRANICHENNOI OTVETSTVENNOSTIU "PREDPRIIATIE "ELTEKS"

TIN: 5410108110

KPP: 541001001

PSRN: 1025403911818

Location: 630020, Novosibirsk Oblast, Novosibirsk, ul. Okruzhnaia, 29 v

Line of business: Computer programming activities (OKVED code 62.01)

Organization status: Commercial, active

Form of incorporation: Limited liability companies (code 12300 according to OKOPF)

Registration in the Russian Federation

The tax authority where the legal entity is registered: Mezhraionnaia inspektsiia Federalnoi nalogovoi sluzhby № 23 po Novosibirskoi oblasti (inspection code – 5410).

Registration with the Pension Fund: registration number 064004003284 dated 11 November 1992.

Registration with the Social Insurance Fund: registration number 540500037154031 dated 20 January 1995.

Company's Activities

The main activity of the organization is Computer programming activities (OKVED code 62.01).

Additionally, the organization listed the following activities:

OOO "PREDPRIIATIE "ELTEKS" holds licenses entitling to carry out the following activities:

The organization has 1 registered trademark 691157 .

The organization is included in the Roskomnadzor registry as a personal data processing operator .

Legal Address

OOO "PREDPRIIATIE "ELTEKS" is registered at 630020, Novosibirsk Oblast, Novosibirsk, ul. Okruzhnaia, 29 v. ( show on a map )

The following organizations are also registered at this address:

• OOO "TRANZIT-TELEKOM"

Owners, Founders of the Entity

The founders of OOO "PREDPRIIATIE "ELTEKS" are

Below are the former founders:

OOO "PREDPRIIATIE "ELTEKS" CEO

The head of the organization (a person who has the right to act on behalf of a legal entity without a power of attorney) since 15 December 2002 is director Chernikov Aleksei Nikolaevich (TIN: 540208308989).

Chernikov Aleksei Nikolaevich is the head of 6 more organizations

• «TELEKOM-LOGISTIK» LTD
• OOO "ELTEKS"

According to the to the tax service criteria, this is a sign of a mass director.

Also Chernikov Aleksei Nikolaevich is a founder of 5 organizations:

• OOO "IN-SOFT"

Entities Founded by Company

Previously the organization was listed as a founder in:

• ASSOTSIATSIIA "NPPA" (Novosibirsk Oblast, Novosibirsk) - until 12/15/2021
• NP KONSORTSIUM "OKB "MKS" (Moscow) - until 01/03/2022
• NKTS "ISTOK" (Moscow) - until 12/15/2021

Number of Employees

There is no data available on the number of employees in the organization for 2023 in the tax authorities; in 2020 the staff totaled 578 people .

Company Finance

The Authorized capital of OOO "PREDPRIIATIE "ELTEKS" is 100 thousand RUB.

The net assets of OOO "PREDPRIIATIE "ELTEKS" as of 12/31/2021 totaled 4 billion RUB.

The OOO "PREDPRIIATIE "ELTEKS"’s operation in 2021 resulted in the profit of 731 million RUB. This is by 3.8 times more than in 2020. Please note that the financial performance is given for 2021; no data available for 2023.

The organization is not subject to special taxation regimes (operates under a common regime).

Information about the taxes and fees paid by the organization for 2021

The organization had no tax arrears as of 05/10/2024.

Enforcement proceedings

In relation to a legal entity, the database of the Federal Bailiff Service contains the following enforcement proceedings as of 09/28/2024:

Timeline of key events

• is no longer listed as the founder in the Unified State Register of Legal Entities.
• Bogdanov Vladimir Grigorevich is no longer listed as the founder in the Unified State Register of Legal Entities.
• The new founder – Malov Viktor Konstantinovich .
• The new founder – .
• Information about the founder was entered – Chernikov Aleksei Nikolaevich .
• Information about the founder was entered – Mokhov Aleksandr Evgenevich .
• Information about the founder was entered – Aidagulov Valerii Irikovich .

Latest Changes in the Unified State Register of Legal Entities (USRLE)

• 04/27/2023 . Change of information about a legal entity contained in the Unified State Register of Legal Entities.
• 02/27/2023 . Provision by the licensing authority of information on the assignment of a previously issued license number in ERUL.
• 02/13/2023 . Change of information about a legal entity contained in the Unified State Register of Legal Entities.
• 11/03/2022 . Submission of information on the issuance or replacement of documents proving the identity of a citizen of the Russian Federation on the territory of the Russian Federation.
• 07/01/2022 . Representation by the licensing authority of information about the grant of a license.
• 05/13/2022 . Submission of information on the issuance or replacement of documents proving the identity of a citizen of the Russian Federation on the territory of the Russian Federation.
• 03/28/2022 . Change of information about a legal entity contained in the Unified State Register of Legal Entities.
• 05/05/2021 . Change of information about a legal entity contained in the Unified State Register of Legal Entities.
• 09/25/2020 . Changes to the information about a legal entity contained in the Unified State Register of Legal Entities due to errors made by the registration authority.
• 05/14/2020 . Submission of information on the issuance or replacement of documents proving the identity of a citizen of the Russian Federation on the territory of the Russian Federation.

* The date of change in the Unified State Register of Legal Entities is shown (may be different from the actual date).

The data presented on this page have been obtained from official sources: the Unified State Register of Legal Entities (USRLE), the State Information Resource for Financial Statements, the website of the Federal Tax Service (FTS), the Ministry of Finance and the Federal State Statistics Service.

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