How Does a Commercial Lease Assignment Work? (w/Examples) + FAQs

A commercial lease assignment is a legal transfer in which the original tenant (the assignor) hands over all of its rights and obligations under a commercial lease to a new tenant (the assignee) for the remainder of the lease term. The governing framework comes from state contract and property law, the Restatement (Second) of Property: Landlord and Tenant §15.2, and the specific assignment clause inside the lease itself. When tenants skip the landlord’s written consent requirement, they trigger an immediate default and can face eviction, a draw on the security deposit, and personal liability on any guaranty.

According to a 2025 NAIOP Research Foundation report on office and industrial leasing, roughly 1 in 6 commercial leases signed during the past five years is assigned or subleased before the natural expiration date, a sharp rise from the pre-pandemic rate of about 1 in 11.

Here is what you will learn in this guide:

• 📝 How a commercial lease assignment actually works, step by step, from offer to closing.
• ⚖️ The difference between assignment, subletting, and novation under U.S. law.
• 💼 How landlord consent rules work, including the Kendall v. Ernest Pestana reasonableness standard.
• 💰 How assignment fits into business sales, M&A deals, and SBA-backed transactions.
• 🚫 The seven biggest mistakes tenants and landlords make, and how to avoid each one.

What Is a Commercial Lease Assignment?

A commercial lease assignment is a complete transfer of a tenant’s leasehold interest to another party for the entire remaining term of the lease. The assignor gives up possession and, in most cases, keeps some form of residual liability unless the landlord signs a release. The transfer is governed by the Statute of Frauds, which requires any lease transfer longer than one year to be in writing and signed by the party against whom it will be enforced. Without that writing, the deal is voidable, and the landlord can refuse to recognize the new tenant.

The assignment instrument itself is usually a short three-party document called an Assignment and Assumption of Lease, signed by the assignor, the assignee, and the landlord. The landlord’s signature is not always required for the assignment to be valid between the two tenants, but the landlord’s consent is almost always required under the lease for the assignment to be effective against the landlord. Most modern commercial leases contain an anti-assignment clause, which is enforceable under common law principles summarized by the American Bar Association.

The practical effect is that a tenant who wants to exit a lease early rarely has a unilateral right to do so. The tenant must look inside the four corners of the lease, find the assignment clause, and follow the exact procedure it lays out. Missing one step, such as failing to deliver the assignee’s financial statements in the required format, gives the landlord a lawful basis to withhold consent.

Assignment vs. Sublease vs. Novation

People confuse these three tools all the time, but they produce very different legal outcomes. An assignment transfers 100% of the tenant’s remaining interest, while a sublease transfers only a portion, either in time or in space, and the original tenant stays as the landlord’s direct counterparty. A novation goes further than an assignment because it fully releases the original tenant from future liability, which only happens when the landlord signs an express release.

The plain-English rule is this: assignment moves the whole lease, sublease slices off a piece, and novation erases the old tenant from the paperwork. The consequence of mixing them up is massive. A tenant who thinks it has assigned its lease but actually signed a sublease remains liable for every dollar of rent through the final day of the term, even if the subtenant walks out in year two. A real-world example is a Denver yoga studio owner, Marisol Trent, who “assigned” her lease to a Pilates operator using a one-page form pulled from the internet. Because the form lacked a landlord release, the court treated it as a sublease, and when the Pilates operator defaulted eleven months later, Marisol was on the hook for $184,000 in remaining rent.

A common misconception is that getting the landlord’s consent automatically releases the assignor. It does not. Consent and release are two separate legal acts, and the Uniform Commercial Landlord and Tenant Act commentary makes that distinction explicit.

Why Commercial Tenants Assign Leases

Tenants assign commercial leases for a handful of predictable reasons, and understanding the reason changes the negotiation strategy. The most common driver is a business sale, where the buyer wants the seller’s location and must step into the lease to keep the goodwill attached to that address. The second most common driver is downsizing or relocation, where the tenant no longer needs the space but cannot afford to pay rent on an empty box for the rest of the term.

A third driver is franchise transfers, where a franchisee sells the franchise unit and the new franchisee takes over the same storefront. A fourth is corporate restructuring, including mergers, spin-offs, and internal reorganizations that move assets between affiliated entities. Each scenario triggers different landlord concerns, and the International Council of Shopping Centers leasing guidance notes that landlords scrutinize business-sale assignments far more closely than intra-family or intra-corporate transfers because the credit profile of the new tenant is genuinely unknown.

The consequence of not matching the reason to the paperwork is wasted legal fees and delayed closings. A tenant who uses a standard assignment template for a franchise transfer, for example, will almost certainly fail to address the franchisor’s tri-party consent, which can stall the deal for weeks. A concrete example is Devon Asante, a quick-service restaurant operator in Atlanta who listed his store for sale without first reviewing the franchise agreement’s transfer section. The franchisor’s 60-day review window pushed his closing from March to June and cost him one full quarter of buyer financing.

The Legal Framework Governing Lease Assignments

Commercial lease assignments live at the intersection of three bodies of law: state real property statutes, state contract law, and the common law of landlord-tenant relations. Federal law plays a limited but important role in two areas: bankruptcy under 11 U.S.C. §365 and anti-discrimination under the Fair Housing Act and ADA Title III. Outside those niches, the governing rules are set at the state level, which is why assignment outcomes vary so sharply across jurisdictions.

The lease itself is the first source of law you must consult. Courts treat commercial leases as arms-length contracts between sophisticated parties, which means the written terms almost always control over default statutory rules. The American College of Real Estate Lawyers commentary emphasizes that silence in a commercial lease on assignment generally means the tenant may assign freely, because the common law default permits assignment unless the lease restricts it.

The consequence for landlords is that an old or poorly drafted lease can leave them with no veto power over a new tenant. The consequence for tenants is the opposite: a modern, well-drafted lease almost always contains a tight anti-assignment clause, and the tenant must negotiate consent on the landlord’s terms.

Federal Law Touchpoints

Federal bankruptcy law overrides almost every anti-assignment clause. Under 11 U.S.C. §365(f), a debtor-tenant in Chapter 11 may assign its lease notwithstanding any clause that prohibits, restricts, or conditions assignment, as long as the assignee provides adequate assurance of future performance. This rule exists because Congress wanted to preserve the value of the estate for creditors, and leases in good locations are often the estate’s most valuable asset.

The consequence of this federal override is that shopping center landlords have limited ability to block a bankrupt tenant from selling its lease to a competitor, though §365(b)(3) gives shopping center landlords extra protections tied to tenant mix and use clauses. A mini-scenario: Priya Okonkwo, a regional bookstore operator, filed Chapter 11 and sought to assign three mall leases to a national discount chain. Two mall landlords objected under §365(b)(3) because the discount chain violated the exclusive-use clauses of anchor tenants, and the bankruptcy court sustained those objections while allowing the third assignment to close.

A common misconception is that bankruptcy erases the assignor’s guaranty. It does not always erase a non-debtor guarantor’s liability, which is why personal guarantors must separately file or negotiate a release.

State Law Variation

State law adds a second layer, and the variation is significant. California codified the rules in Civil Code §§1995.010–1995.340, which permit absolute prohibitions on assignment only if the lease expressly says so. New York applies Real Property Law §226-b primarily to residential leases but applies common law reasonableness standards to commercial leases. Texas, under Property Code §91.005, requires landlord consent before assignment but does not impose a reasonableness standard unless the lease says so.

Florida, Illinois, Massachusetts, and most other states follow the common law default: if the lease requires consent, the landlord may withhold it for almost any reason unless the lease itself includes a reasonableness qualifier. The consequence for multi-state tenants is that a portfolio assignment, such as a chain’s sale of 40 locations across 12 states, must be analyzed state by state and lease by lease. A real-world example is Harper Lin, CFO of a regional gym chain, who had to prepare 40 separate consent packages because each state’s default rule, and each landlord’s clause, demanded different disclosures.

A common misconception is that reasonable means the same thing everywhere. It does not. California’s Kendall v. Ernest Pestana standard asks whether a reasonable commercial landlord would object on commercially reasonable grounds, while Texas courts tend to let landlords decide in their sole discretion unless the lease says otherwise.

How Landlord Consent Works

Landlord consent is the single most important step in any commercial lease assignment. The governing rule is usually a clause titled “Assignment and Subletting” that sets the procedure, the standard for consent, and the landlord’s remedies. The Restatement (Second) of Property §15.2 states that a landlord may not unreasonably withhold consent unless the lease clearly reserves sole discretion, and many states have adopted this rule by statute or case law.

The plain-English explanation is that the landlord almost always has a gatekeeping role, and the tenant must satisfy that gatekeeper before the assignment can close. The consequence of ignoring the clause and assigning anyway is that the landlord can declare a default, accelerate rent, terminate the lease, sue the assignor, and, in most leases, recover attorney’s fees. Courts enforce these remedies routinely because commercial leases are negotiated by sophisticated parties and judges are reluctant to rewrite them.

The Kendall Reasonableness Standard

The landmark case is Kendall v. Ernest Pestana, Inc., 40 Cal.3d 488 (1985), in which the California Supreme Court held that when a commercial lease requires landlord consent to assignment but is silent on the standard, the landlord must act reasonably. The court identified commercially reasonable grounds, including the financial strength of the assignee, the suitability of the proposed use, and the legality of the operation. Grounds that are not reasonable include personal taste, a desire to extract a higher rent, and general unwillingness to deal with a new party.

The consequence of Kendall in adopting states is that landlords must document specific, commercial reasons for any denial. A landlord who says I just don’t like the new tenant loses. A landlord who says the assignee’s debt-service coverage ratio is 0.8, below our 1.25 minimum wins. A mini-scenario: Rafael Mendes, a landlord in San Jose, denied a proposed assignment because he wanted to recapture the space at market rent, which had climbed 40% since lease signing. The court ruled the denial unreasonable and awarded the tenant lost profits on the failed sale.

A common misconception is that Kendall applies nationwide. It does not. States like Texas, Florida, and parts of New York still apply the older common law rule that lets landlords withhold consent for almost any reason when the lease is silent on the standard.

The Consent Package

The consent package is the set of documents the tenant delivers to the landlord to request approval. A typical package includes the assignee’s two years of audited financial statements, the proposed Assignment and Assumption Agreement, a business plan for the location, a list of the assignee’s existing leases and landlord references, and the proposed use of the premises. Sophisticated landlords also ask for personal guarantor financials, tax returns, and a background check authorization.

The consequence of submitting an incomplete package is delay and, often, denial. Most assignment clauses give the landlord 15 to 30 days to respond after receipt of a complete package, and the clock does not start until the landlord says the package is complete. A real-world example is Jasmine Ortega, a café owner in Brooklyn who submitted her assignee’s unaudited QuickBooks reports because the assignee did not have audited statements. The landlord rejected the package as incomplete, and Jasmine had to pay $12,000 for a CPA-reviewed statement before the 30-day clock even began.

A common misconception is that the landlord must state reasons for denial within the review period. In most states, the landlord must only respond within the window, and detailed reasons can follow, which often leaves tenants guessing about what to fix.

Step-by-Step Process of a Commercial Lease Assignment

The assignment process follows a predictable arc from initial analysis to post-closing administration. Each step has its own deliverables, its own risks, and its own common mistakes. The American Bar Association Commercial Leasing Committee resources recommend running the process in writing from day one so that a later dispute can be resolved by reference to a clean paper trail.

The total timeline typically runs 45 to 120 days from the first letter of intent to closing, with the landlord consent step consuming the largest chunk. Tenants who try to compress the timeline almost always end up paying rent on an empty space for an extra month.

Step 1: Read the Lease

The first step is a full read of the existing lease, focused on the assignment clause, the use clause, the recapture clause, the guaranty, and any transfer-premium or profit-sharing provisions. The tenant must also check for change of control language, which treats a stock sale or membership-interest sale as a deemed assignment even if the name on the lease never changes.

The consequence of skipping this step is that tenants sign letters of intent with buyers before discovering that the lease forbids assignment outright, requires a 50% profit split with the landlord, or contains a recapture clause that lets the landlord terminate the lease instead of consenting. A mini-scenario: Theo Kaplan, owner of a print shop in Chicago, signed an LOI to sell his business for $340,000. Two weeks later, his attorney found a profit-sharing clause that entitled the landlord to 50% of the sale proceeds above book value, which cut Theo’s net proceeds nearly in half.

Step 2: Qualify the Assignee

The second step is pre-qualifying the assignee financially and operationally. The tenant should request the same documents the landlord will eventually request, plus proof of funds, a business plan, and references. Running this diligence before signing a purchase agreement avoids the nightmare of a buyer who cannot clear landlord consent.

The consequence of skipping assignee diligence is a failed assignment, which often kills the underlying business sale because most asset purchase agreements are conditioned on landlord consent. A real-world example involves Nadia Brooks, who sold her dental practice to a buyer with a 620 credit score. The landlord reviewed the buyer’s financials, denied consent on commercially reasonable grounds, and the sale collapsed, forcing Nadia to keep practicing for another full year.

Step 3: Submit the Consent Request

The third step is the formal written consent request, delivered in the exact manner required by the lease’s notice provision, which is usually certified mail or a specific email address. The request must include the complete consent package and a cover letter that starts the response clock. Smart tenants hand-deliver the package and obtain a signed receipt to avoid disputes about when the clock started.

The consequence of improper notice is that the landlord can ignore the request indefinitely without triggering a default. A mini-scenario: Owen Patel, a tenant in Phoenix, emailed his consent request to his property manager instead of the notice address in the lease. The landlord sat on the request for 75 days and then argued, successfully, that the clock never started.

Step 4: Negotiate the Consent Document

The fourth step is negotiating the Landlord Consent to Assignment, which is a separate document from the Assignment and Assumption Agreement. Landlords typically use the consent document to impose conditions, including a consent fee (often $1,500 to $5,000 in attorney’s fees), a reaffirmation of the guaranty, a new security deposit, and sometimes an increase in rent or a shortening of the term.

The consequence of accepting a landlord’s first draft without negotiation is that tenants often sign away valuable protections, including extension options, exclusive-use rights, and the right to further assign. A real-world example is Camila Reyes, who let her landlord strip two five-year renewal options out of the consent document. Her buyer discovered the loss at closing and reduced the purchase price by $180,000.

Step 5: Sign the Assignment and Assumption Agreement

The fifth step is executing the Assignment and Assumption Agreement among the assignor, assignee, and landlord. The agreement transfers the leasehold, documents the assignee’s assumption of all future obligations, and allocates pre-closing and post-closing liabilities. Sophisticated agreements also include indemnifications running both directions, security deposit transfer mechanics, and proration of rent and operating expenses.

The consequence of sloppy drafting is post-closing litigation over who owes what. A mini-scenario: Xavier Thornton assigned his warehouse lease without addressing the $38,000 security deposit, which the landlord refused to refund at the end of the term years later because the assignment document was silent. Xavier spent two years in small claims actions trying to recover the deposit from both the landlord and the assignee.

Scenario Tables: Three Common Assignment Situations

Scenarios illustrate how the rules play out in practice. Each of the following tables shows a typical tenant move and the legal or financial consequence that follows. These are drawn from patterns reported in the CBRE U.S. Office Occupier Sentiment Survey and the JLL Retail Outlook.

Scenario 1: Business Sale Assignment

Scenario 2: Downsizing or Space Exit

Scenario 3: Franchise Transfer

Mistakes to Avoid in a Commercial Lease Assignment

Mistakes in lease assignments are expensive because most commercial leases include fee-shifting clauses that force the losing party to pay the winning party’s attorney’s fees. The American Land Title Association commercial resources flag assignment errors as one of the top five post-closing disputes in commercial real estate.

1. Failing to read the assignment clause before signing an LOI. The negative outcome is a deal that falls apart once profit-sharing, recapture, or absolute-prohibition language comes to light.
2. Treating the assignment as a sublease or vice versa. The negative outcome is unexpected continuing liability for the original tenant or loss of the right to recover the space at the end.
3. Forgetting to secure a landlord release. The negative outcome is that the assignor stays on the hook for rent and damages for years after the assignee takes possession.
4. Ignoring the guaranty. The negative outcome is that the personal guarantor remains liable even after the corporate tenant has been released, often because the guaranty is a standalone contract.
5. Using an improper notice method. The negative outcome is that the landlord’s response clock never starts, which lets the landlord delay indefinitely and leverage the tenant.
6. Submitting an incomplete consent package. The negative outcome is weeks of delay as the landlord demands additional documents, pushing past the buyer’s financing contingency.
7. Accepting the landlord’s consent form without negotiation. The negative outcome is the loss of renewal options, exclusive-use rights, or assignment rights that diminish the location’s value.
8. Missing the change-of-control trigger. The negative outcome is a deemed assignment that violates the lease even though the name on the door never changes.
9. Overlooking state-specific reasonableness rules. The negative outcome is relying on Kendall in a state that does not follow it, and vice versa.
10. Skipping security deposit mechanics in the assignment document. The negative outcome is disputes years later about who is entitled to the deposit refund.

Do’s and Don’ts

Do’s

• Do read the full lease before negotiating any transfer, because every rule starts with the written clause and the Statute of Frauds.
• Do request an express landlord release in writing, because consent alone does not erase the assignor’s liability under common law.
• Do run a financial diligence file on the assignee first, because the landlord will run the same file and a weak assignee kills the deal.
• Do use certified mail or the exact notice method in the lease, because improper notice gives the landlord unlimited delay.
• Do negotiate the consent fee and conditions, because landlords routinely start with aggressive terms that they will soften when challenged.
• Do coordinate closing with the underlying business sale, because most APAs are conditioned on simultaneous landlord consent.

Don’ts

• Don’t sign an LOI before reading the assignment clause, because clauses like recapture or profit-sharing can destroy the deal economics.
• Don’t assume reasonableness applies in every state, because Texas, Florida, and others still honor sole-discretion clauses.
• Don’t confuse assignment with sublease, because the liability implications are entirely different under the Restatement.
• Don’t skip the guaranty analysis, because guarantors often remain liable even after corporate releases.
• Don’t let the landlord run the clock, because you can force a response by documenting a complete package delivery.
• Don’t close without a signed Assignment and Assumption Agreement, because oral transfers violate the Statute of Frauds.

Pros and Cons of Commercial Lease Assignment

Pros

• Preserves location goodwill for a business sale, which is often the single most valuable asset in the transaction.
• Eliminates ongoing rent obligations when paired with a release, which is a cleaner exit than most buyouts.
• Usually faster than negotiating a lease buyout, because landlords prefer a paying replacement tenant to an empty box.
• Transfers build-out value to the new tenant, which increases the sale price of the underlying business.
• Often avoids a large lump-sum payment, which preserves the seller’s working capital.
• Allows landlords to upgrade tenant credit, which can improve the value of the landlord’s asset.

Cons

• Residual liability is the default, which means most assignors remain liable unless they negotiate a release.
• Landlord consent adds 30–90 days, which can misalign with buyer financing windows.
• Transfer premiums and consent fees erode proceeds, which often surprise first-time sellers.
• Recapture clauses give the landlord a veto, which can kill the deal even if the assignee is strong.
• Change-of-control triggers can be hidden, which cause inadvertent defaults during stock sales.
• State-by-state variation adds cost, which is especially painful for multi-location portfolios.

Key Entities in a Commercial Lease Assignment

The assignor is the original tenant who is transferring the lease. The assignee is the incoming tenant who is taking the lease over. The landlord is the owner of the real property and the original counterparty to the lease, with an interest in tenant mix, creditworthiness, and property value. The guarantor is a separate party, often an owner of the tenant entity, whose personal guaranty can survive the corporate entity’s release.

The lender on either side matters because mortgage lenders often have veto rights over major tenant changes through a Subordination, Non-Disturbance, and Attornment Agreement, and the assignee’s SBA lender will review the lease under SBA SOP 50 10 7. The franchisor, when applicable, is a fifth party whose tri-party consent is required for any unit transfer inside a branded system. The broker typically earns a commission on both the business sale and the lease transfer and serves as the practical quarterback of the timeline.

Each role carries its own consequence. The landlord can kill the deal through denial or recapture. The guarantor can be stuck with the bill if not released. The lender can refuse to fund if the assignment terms change the collateral profile. A mini-scenario: Julian Cho, a dental practice buyer, lost SBA financing three days before closing because his underwriter discovered the lease had only 4 years left, below the SBA’s required term including options. Julian had to negotiate a lease extension and delay closing by 60 days.

Tax and Accounting Consequences

Assignment of a commercial lease has tax consequences on both sides. For the assignor, any lump-sum payment received from the assignee, often called key money or a transfer premium, is typically ordinary income under IRC §61, though leasehold sale treatment may apply if the tenant has capital investment in the space. For the assignee, the same payment is typically amortized over the remaining lease term under IRC §178 as a cost of acquiring the leasehold.

Security deposits are not income when transferred, but their treatment under ASC 842 lease accounting changes for both parties. The assignor removes the right-of-use asset and lease liability from its books, while the assignee records a new right-of-use asset at the remaining obligation. A common misconception is that the security deposit is always refunded to the assignor at assignment. In practice, it is almost always transferred to the assignee, and the assignee reimburses the assignor separately outside the landlord’s books.

The consequence of mishandling tax treatment is a year-end surprise during the audit or tax return preparation. A real-world example is Sofia Whitman, who treated a $120,000 key money receipt as a capital gain and paid 20% federal tax, only to have the IRS recharacterize the payment as ordinary income and assess an additional $18,000 plus penalties.

Bankruptcy and Distressed Assignments

Assignment inside bankruptcy follows a different set of rules that override most lease clauses. Under 11 U.S.C. §365, a Chapter 11 debtor-tenant may assume and assign a non-residential lease even if the lease prohibits assignment, as long as the debtor cures defaults and provides adequate assurance of future performance. The debtor has 120 days from the petition date to assume or reject, extendable once for 90 days, under §365(d)(4).

The consequence for landlords is that they lose the broad veto power they would have outside bankruptcy and must instead rely on the narrow objections available under §365(b)(3) for shopping centers. The consequence for tenants is that bankruptcy can be a tool to monetize a below-market lease, because the debtor can sell the assignment rights to the highest bidder in a court-supervised auction. A mini-scenario: Ibrahim Salazar, trustee of a defunct chain, auctioned 14 below-market leases in a Delaware bankruptcy court and recovered $4.8 million for creditors despite anti-assignment clauses in every single lease.

A common misconception is that all leases can be assigned in bankruptcy. Leases of personal services, franchises, and leases where applicable non-bankruptcy law excuses the non-debtor from accepting performance from a third party are not assignable under §365(c). The Collier on Bankruptcy treatise walks through the limits in detail.

Recap of Key Court Rulings

Several appellate decisions shape the modern law of commercial lease assignments. In Kendall v. Ernest Pestana, Inc., 40 Cal.3d 488 (1985), the California Supreme Court imposed a reasonableness standard on landlord consent. In Julian v. Christopher, 320 Md. 1 (1990), Maryland’s high court adopted the same rule. In F & L Center Co. v. Cunningham Drug Stores, 19 Ohio App.3d 72 (1984), Ohio went further and analyzed consent denials under a good-faith lens.

On the opposite side, Texas and Florida courts have repeatedly upheld sole-discretion clauses, notably in Reynolds v. McCullough, 739 S.W.2d 424 (Tex. App. 1987), which refused to imply a reasonableness requirement into a commercial lease. In bankruptcy, In re Trak Auto Corp., 367 F.3d 237 (4th Cir. 2004) reinforced the shopping-center protections of §365(b)(3) by blocking an assignment that violated a use clause.

The consequence for practitioners is that every assignment analysis must begin with a check of which state’s law governs, followed by a check of whether that state follows Kendall or Reynolds on reasonableness. A practitioner who misreads the controlling law can miss the entire theory of recovery in a later dispute.

FAQs

Can a landlord refuse a commercial lease assignment for any reason?

No. In states that follow Kendall, a landlord must act reasonably when the lease is silent on the standard. In sole-discretion states like Texas, the landlord can refuse for almost any non-discriminatory reason.

Does landlord consent automatically release the original tenant?

No. Consent and release are separate legal acts. The assignor remains liable for the full lease term unless the landlord signs an express written release, usually called a novation.

Is a commercial lease assignment the same as a sublease?

No. An assignment transfers 100% of the remaining leasehold interest, while a sublease transfers only part of the time or space. The liability implications differ significantly.

Can I assign a commercial lease without the landlord’s written consent?

No. Almost every modern commercial lease requires written consent, and assignment without consent is a default. The landlord can terminate the lease and sue for damages and attorney’s fees.

Does the personal guarantor remain liable after an assignment?

Yes. A guaranty is a separate contract and survives the corporate tenant’s release unless the guarantor negotiates a specific written release at the time of assignment.

Can a bankrupt tenant assign a lease despite an anti-assignment clause?

Yes. Under 11 U.S.C. §365(f), a Chapter 11 debtor may assign a non-residential lease over a clause prohibition, subject to adequate assurance of future performance.

Is landlord approval of a stock sale required?

Yes, usually. Most modern leases include change-of-control language that treats a stock or membership-interest transfer as a deemed assignment requiring consent.

Can a landlord charge a fee to consent to an assignment?

Yes. Landlords routinely charge $1,500 to $5,000 in attorney’s fees, and many leases also require sharing of transfer premium profits, typically 50% over the assignor’s base cost.

Does the security deposit transfer to the assignee automatically?

No. Transfer of the security deposit must be addressed in the assignment document or handled outside the landlord’s books by reimbursement from the assignee to the assignor.

Can a landlord recapture the space instead of consenting?

Yes, if the lease contains a recapture clause. Many commercial leases let the landlord terminate the lease and take back the space if the tenant proposes an assignment.

Are lease assignments subject to the Statute of Frauds?

Yes. Any lease assignment with more than one year remaining must be in writing and signed by the party to be charged, or the transfer is unenforceable.

Does SBA financing affect a commercial lease assignment?

Yes. SBA SOP 50 10 7 requires the remaining lease term, including options, to at least equal the loan term, which often forces lease extensions at assignment.