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Assignment vs subletting: know the difference.
Two ways to transfer occupancy rights. Very different legal and financial implications. Getting this wrong can leave you exposed to unexpected liability.
For many businesses, leasing commercial premises is one of the most significant commitments they make. But what happens if your circumstances change? You might want to transfer your lease to someone else or bring in a subtenant to share the space.
Understanding the difference between assignment and subletting, and the legal implications of each, is crucial for both tenants and landlords. Getting this wrong can leave you exposed to unexpected liability.
How the relationships work.
Assignment
The assignee steps into your shoes. They deal directly with the landlord. You exit the picture (subject to any ongoing liability).
Subletting
You remain the head tenant. The subtenant pays you. You continue paying the landlord and remain fully responsible.
Assignment vs subletting compared.
| Aspect | Assignment | Subletting |
|---|---|---|
| Your role after | Out of the picture (subject to liability) | Remain as head tenant |
| Who pays landlord | Assignee pays directly | You continue paying landlord |
| Ongoing liability | Possible unless released | Full liability continues |
| Landlord relationship | Transfers to assignee | No direct landlord-subtenant relationship |
| Consent required | Yes, cannot be unreasonably withheld | Usually required per lease terms |
| Best for | Exiting the lease entirely | Sharing space or temporary arrangements |
Warning: Ongoing liability after assignment
Even after assigning a lease, the original tenant may remain liable if the assignee defaults, unless the landlord agrees in writing to release you. Seeking a deed of release is strongly recommended.
Do not assume you are off the hook just because you have assigned the lease. Get the release in writing.
Why it matters.
For Tenants
You could still be liable if:
Always get landlord consent in writing, understand your ongoing responsibilities, and consider negotiating a deed of release when assigning.
For Landlords
Assignments and subleases affect:
Carefully review proposed assignees and subtenants, request financial information and guarantees where needed, and approve subleases to maintain control over tenant mix.
Steps to take.
Get landlord consent in writing
Whether assigning or subletting, formal written consent protects all parties and provides clarity about what has been agreed.
Understand ongoing responsibilities
Know exactly what obligations continue after assignment or during a sublease. Do not assume you are off the hook.
Negotiate a deed of release for assignments
If assigning, ask the landlord to release you from future liability. This is not automatic and must be specifically agreed.
Review draft documents carefully
Whether you are the assignor, assignee, sublessor, or subtenant, ensure the documents accurately reflect the agreed terms.
Key Takeaways
Assignment transfers your entire interest; subletting keeps you on the lease
Landlord consent is almost always required for both
Original tenants may remain liable after assignment unless released
Sublessors remain fully responsible to the landlord
Landlords cannot unreasonably withhold consent
Always get consent and any releases in writing
Related Guide
Looking to understand key lease terms? Our guide explains what different clauses mean and how to negotiate the right deal.
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