Lease Assignment

A lease assignment is the transfer of a tenant’s entire remaining leasehold interest — the rest of the lease term, its rights, and its obligations — to a new party, who steps directly into the original tenant’s shoes under the existing lease. That’s different from a sublease, where the original tenant re-lets the space to a subtenant but remains primarily liable to the landlord. An industrial tenant leasing 8,000 square feet at $9/sq ft NNN with four years left on the term ($72,000 a year) can assign that lease when it sells its business; the buyer now owes the landlord the same $72,000 a year directly, and the original tenant is typically released or only secondarily liable, depending on the lease.

Most commercial leases require landlord consent to assign, sometimes qualified as “not to be unreasonably withheld,” and sometimes paired with a recapture right letting the landlord take the space back rather than approve a weaker assignee. For a borrower, this clause is a direct lever on collateral quality: a single-tenant net-leased property is only as good as the credit behind the rent check, and a lease that permits assignment without a credit test lets a strong original tenant hand the lease to a materially weaker one with little the landlord can do about it. Lenders reviewing a net-lease refinance read the assignment and change-of-control language as closely as the rent roll, and loan documents on these deals often require lender consent or notice before a landlord signs off on any assignment.

Assignment and recapture terms live in the lease itself, not in anything we publish, but they’re exactly the kind of fine print that determines how much protection an “in-place” tenant credit is really offering — worth reading before assuming two similarly quoted net-lease deals carry the same risk.