Assignment And Subletting Meaning

Subletting

The leasing of part or all of the property held by a tenant, as opposed to a landlord, during a portion of his or her unexpired balance of the term of occupancy.

A landlord may prohibit a tenant from subletting the leased premises without the land-lord's permission by including such a term in the lease. When subletting is permitted, the original tenant becomes, in effect, the landlord of the sublessee. The sublessee pays the rent to the tenant, not the landlord. The original tenant is not, however, relieved of his or her responsibilities under the original lease with the landlord.

A sublease is different from an assignment where a tenant assigns all of his or her rights under a lease to another. The assignee takes the place of the tenant and must deal with the landlord provided the landlord permits it. The original tenant is no longer responsible to the landlord who consents to the termination of their landlord-tenant relationship.

Cross-references

Landlord and Tenant.

Question: What is the difference between assignment and subletting?

Answer:

Assignment and subletting occur in instances when an existing lessee (tenant) wishes to abandon his lease before the date specified in the lease agreement.

An assignment of a lease is the transfer of the entire property and giving over of proprietary rights under the lease to a new tenant. A sublease only transfers a part of the interest in the property. So when you assign a lease you give up your rights in relation to the property and the lease, when subletting you retain these rights and share them with the sublessee.

A sublease can apply to a physical part of the property, or for a period of time within the existing lease. This might happen when an existing tenant, the ‘head tenant’, wishes to rent out a part of the property such as a room or a basement to another person, the ‘sub-tenant’, without giving up the entire property, OR if they wish to rent out the entire property for a period of time within their fixed-term lease. The sub-tenant treats the head tenant as their landlord, as the head tenant retains his tenancy agreement with the actual landlord and assumes liability on behalf of the sub-tenant for any loss or damage they may cause.

You will need the consent of the landlord in order to assign lease or sublet – before you do so, speak directly with your landlord or consult a leasing lawyer.

Answered by Emma Jervis

Emma is an experienced franchise lawyer and litigator who has successfully helped many clients achieve commercial and workable solutions to their legal problems. With over 10 years legal experience, Emma has run many cases in all tiers of the NSW Court system and Family Court of Australia, as well as having many years experience in advising clients of their legal rights in both the commercial and family law spheres. Emma is also experienced in drafting a range of documents, including franchise documents and complex commercial contracts.

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