CRE glossary
Assignment
An assignment is a complete transfer of the tenant's rights and obligations under a commercial lease from the original tenant (the assignor) to a new party (the assignee). After the assignment, the assignee steps into the original lease as if it had signed it on day one. The original tenant is typically released from future obligations, though landlords often require continuing liability.
Assignments are most common in M&A, when a company is acquired and the buyer takes over the leased space, or in corporate restructuring (entity conversion, asset sale). The mechanics differ from sublease: an assignment transfers the entire lease, not just possession; the assignee deals directly with the landlord, not through a sublessor.
Like subleases, assignments require landlord consent. The same reasonable-vs-sole-discretion battle applies. Many landlord-friendly leases distinguish between 'permitted transfers' (no consent needed for affiliates / wholly-owned subsidiaries / mergers) and 'consent transfers' (everything else). Push hard for permitted-transfer language covering the common corporate-event categories, M&A, IPO, debt refinance.
The biggest negotiation point on assignment is whether the original tenant gets released. Landlord-friendly default: original tenant remains jointly liable for the full term, even after assignment. Tenant-friendly: original tenant is released upon assignment if assignee meets defined credit standards. The middle ground (most common): original tenant remains liable for 12–24 months post-assignment as a backstop, then released.
Example
- Tenant signs lease
- Acme LLC, 12,500 SF, 7-year term
- Year 4: Acme acquired
- By BigCorp Inc.
- Acme assigns lease to BigCorp
- Landlord consent required (or permitted transfer)
- Post-assignment
- BigCorp is the tenant; Acme released subject to lease language
Broker perspective
When you're representing a tenant who might be acquired, push hard for permitted-transfer language at LOI. Without it, an acquisition can be blocked by a landlord at the moment leverage is at zero. Specifically include: same-control transfers, wholly-owned-subsidiary transfers, mergers, asset sales involving the entire business unit, and conversions to different entity forms.
Frequently asked
People also ask
Sublease vs assignment, what's the difference?
Sublease: original tenant retains the lease and rents to a third party. Assignment: original tenant transfers the entire lease to a new tenant.
What's a 'permitted transfer'?
Pre-approved transfer category that doesn't require landlord consent. Typically affiliate transfers, M&A, and IPO. Negotiate at LOI.
Am I released after assignment?
Depends on lease terms. Landlord-friendly: not released. Tenant-friendly: released if assignee meets credit standards. Negotiate at LOI.
Does the new tenant get original lease terms?
Yes. The lease transfers as-is, same rent, term, options, restrictions. The assignee can negotiate amendments separately.
Related terms
Sublease
An existing tenant rents space to a new occupant under the umbrella of the original lease, common when companies downsize.
Letter of intent (LOI)
A non-binding outline of the major business terms, rent, term, TI, options, that becomes the basis for the binding lease.
Good guy guaranty
A limited personal guaranty that protects the landlord against unpaid rent only if the tenant doesn't surrender the space cleanly.
Estoppel certificate
A signed statement from the tenant confirming the lease terms, used by the landlord during sale or refinance.
See assignment extracted from a real lease.
Drop a 60-page lease, get a 38-field abstract in 90 seconds, every value cited back to the source page.