A Brief Introduction of Assignment of Lease Agreement
We all know how important a lease agreement is when a landlord wants to give responsibility for his or her house to a tenant. A Lease Agreement contains all the information pertaining to the lease, from basic details to complicated laws. In most cases, a landlord finds a tenant and makes him or her sign a lease agreement. However, there is also a provision of the tenant assigning or transferring interest to a new tenant.
It should be noted that this procedure is different from subleasing, where the main tenant still holds a part of the interest or has liability on him. Transfer of interest is known as a Lease Assignment, and the agreement signed by the new tenant and old tenant is known as a Lease Assignment Agreement. It should also be noted that the landlord should be aware of such a transfer, and he should give his full permission to the old tenant to transfer. This agreement also needs to have the details of the main lease agreement. This is also the reason why many people don’t find this agreement to be very solid or robust.
Another name for a Lease Assignment Agreement is Assignment of Lease Agreement or Assignment of Lease Form.
When Do You Need the Assignment of Lease Agreement?
what is an assignment of lease agreement? This agreement is needed when the old tenant, also known as an assignor, in this case, transfers the lease or liabilities to a new tenant, also known as an assignee. A lease agreement by the owner can also suffice in most situations, but if the owner of the house is okay with the old tenant transferring the lease to someone else, then a Lease Assignment Agreement is needed. You can use this agreement if you want to take over a lease or you want to transfer a lease. It is a legal document that protects all the parties involved.
Inclusions in the Assignment of Lease Agreement
Like any other lease agreement, an Assignment of Lease Agreement should include the basic details of both parties, in this case, the assignor and assignee. Basic details include the parties’ names, their addresses in full, phone numbers, identification details, details of the assets that are being leased, confirmation of assignment of the lease to the other party, consent expressed unconditionally for effecting the lease and the termination clauses for the agreement. Further, the agreement must include the consent of the assignor, acceptance by the assignee, details of the length of the assignment, terms of assignment, etc. It is really important to add the details of the landlord in the agreement.
One must also ensure that the landlord signs on an agreement like this to avoid any conflict or confusion. Landlord’s consent is the most important aspect of this agreement. All the other terms of the main lease are also another very crucial aspects of the agreement. Parties have to ensure that all key terms are added and understood well by each of them.
How to Draft the Assignment of Lease Agreement?
Before signing the agreement, you must understand if the lessor wants a new lease agreement for the new lessee, or if he wants an assignment of the existing lease either at the continuing terms or with additional clauses. Any assignment of lease agreement should include the details of the assets that are being assigned. This helps in identifying the scope of rights and responsibilities that a lessee will take on.
To avoid disputes and to provide a suitable grievance redressal, you should put in place any provisions for breach of contract. Your agreement should also include the governing laws and the liability of the assignment. Identifying the liabilities of assignees is important because it defines the compensation and termination clauses in the event of incapacity of performance by the assignee.
The details of the cut-off dates after which the liability transfers from the assignor to the assignee should be made clear. The contract should also include if further assignments are permissible to sub-assignees, and if so, the extent of their liability to the lessor.
Benefits & Drawbacks of the Assignment of Lease Agreement
In the presence of the main lease agreement, the need for an assignment of lease form is not very crucial. However, a well-drafted agreement doesn’t have any drawbacks too. If the owner is okay with lease transfer, then the old tenant must take this route and transfer the lease to a new tenant.
Parties should ensure that they understand all the rules and clauses, and follow them religiously to avoid any conflict. There are many benefits of using this agreement such as
- It ensures smooth transfer of a lease
- It ensures the main tenant is not subletting but transferring
- It ensures that the new tenant gets to know about liabilities and responsibilities from the old tenant
- It ensures there are no misunderstandings and conflicts
- It makes the process of transferring lease legally binding
Key Terms/Clauses in Assignment of Lease Agreement
The main terms and clauses are already added in the main lease, so a Lease Assignment Agreement only has details of the assignment. However, terms such as governing laws, responsibilities of the assignee, miscellaneous, etc. should be added in the agreement. As we know, such a lease can be of two types, Assignment of Commercial Lease Agreement or Assignment of Residential Lease Agreement. The terms may vary a little, depending on the lease we are talking about.
What Happens in Case of Violation?
Depending on the state that you live in, the governing laws are applied for a transfer of lease agreement. As per your state’s governing laws, the results of a breach or violation are decided. Both parties are well within their rights to seek legal remedies. The owner is always the first person to approach when a breach takes place. However, in some cases, the owner can violate the agreement too. To save time and energy, parties should try to sort an issue among themselves by referring to the agreement before they approach the court.
Lease Assignment Agreement is a popular document. Many owners wish that the main tenant transfer the lease. This agreement should be drafted carefully and with full precision. All parties are advised to sign the agreement once they have read and understood all the terms and conditions. One must remember that this transfer of lease is not the same as subletting.
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Sample for Agreement of Assignment of Lease
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