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Assignment Of A Commercial Lease Agreement

By Zach Arnold | December 3, 2020

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The former tenant who wishes to transfer the lease is called Assignor and the new person who wishes to obtain the remainder of the lease is designated as an agent. The owner stays the same. The existing lease is handed over or transferred to the agent. Most commercial tenancy agreements prohibit the tenant from awarding the tenancy agreement without first obtaining the agreement of the reference lessor: landlord and tenant agree, that it is reasonable to deny the lessor his consent if there is or may exist one of the following situations: (i) the proposed agent does not, in the reasonable opinion of the lessor, have sufficient commercial experience to enable a business venture. (ii) the proposed assignee`s present net assets are less than that of the tenant at the time of the transfer or at the time of the proposed transfer; (iii) The proposed divestiture would require changes to the premises affecting the building`s systems or structure; (iv) the proposed assignment would involve a change in the terms of the lease or would contraviate any agreement reached by the lessor in other leases, insurance, financing contract or other agreement concerning the shopping centre, including, but not limited to, agreements that respect the radius, location, use and/or exclusivity; (v) the proposed assignment would conflict with the primary use of an existing tenant in the shopping centre or a registered instrument to which the shopping centre is bound; and/or vi) The proposed transfer or sublease would result in a reduction in the rent recovered by the lessor for part of the term of the tenancy agreement. If premises are allocated without the landlord`s consent, the landlord may not recognize the new tenant, i.e. the agent, and make the original tenant, i.e. the pointer, responsible for the rent and all other provisions of the tenancy agreement, including possible breaches of the tenancy agreement by the agent. A rental agreement contains basic information: leases are quite simple because they refer to the original lease. This means that all the terms of the old lease will be automatically included in the new contract.

The divestment provisions are heavily negotiated and both the commercial landlord and the tenant must be informed of the local legislation in force and know the market for a similar transaction. (Note: the author represents office tenants and retailers and tenants throughout Virginia, Maryland and the District of Columbia.) The standard adequacy provisions for both office and retail use are copied as a reference. The transfer of leasing should indicate whether the assignee is responsible for the behaviour of the assignee (for example. B for the payment of property damage, the lack of payment for rents, fines for non-compliance with noise regulations, etc.). If the assignee is exempt from liability, the lessor can only require the assignee to replace property damage or other violations of the rental rights. The information contained in this blog is only used for general information purposes and does not purport to be exhaustive or provide legal advice. While every effort is made to ensure that the information and law are up to date at the time of publication, it should be noted that over time, this does not necessarily reflect the current legal situation.

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