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Charles Feitel

Why You Should Have A Complimentary Lease Review (Part VI)

Why You Should Have A Complimentary Lease Review (Part VI)

9/19/2019 7:41:17 AM   |   Comments: 0   |   Views: 5

The Right to Have Another Tenant Take Over

Next, your tenant rep will want to look to make sure you have solid options for subleasing or assigning your space.

He’ll look at the approval process for getting permission to have another tenant take over and whether you’ll be charged a fee for exercising this right.

The right to sublease or assign can be crucial.

There might come a time when you need to vacate your space before your lease is up. Unless you've negotiated a termination provision, you'll have to pay rent until your lease expires.

If you have options to have someone else take over your space, you won’t have to do this. It’s crucial to have these options in your contract, because you never know what the future holds!

Maybe you want to sell your practice. Or you’re downsizing and don’t need your entire space anymore. You might even need a bigger space, because your practice is growing exponentially with no end in sight.

That’s a nice problem to have!

Plan ahead by negotiating as much flexibility as possible in the assignment and subleasing clauses of your contract. You’ll want the freedom to assign or sublet your space without your landlord interfering with your right to do so.

If a lease doesn’t explicitly say you can’t assign or sublet, this means you probably can.

Your Landlord’s Permission

You might need your landlord’s permission to exercise either of these two options. Just remember that many areas of the country don’t allow a landlord to unreasonably withhold consent.

Assignment

An assignment is a transfer of the complete right to be the tenant under the terms of the lease. The new tenant pays rent directly to the landlord and is treated as the tenant under the lease.

However, you're still responsible if the new tenant defaults unless your landlord releases you from all legal liability. So, you could be sued by the landlord for back rent and other obligations imposed by the lease.

Even if he doesn’t release you from liability, he’ll still probably want to run background checks on the new tenant to make sure that the tenant taking over your space has financials that are at least as strong as yours were.

Try to negotiate for an automatic release provision when assigning a space. Many landlords are unwilling to make this concession because they see it as being too risky, but it can’t hurt to try!

You could also try to negotiate for a release if the proposed tenant has a financial strength and creditworthiness similar to your own.

Subleasing

With a sublease, the original lease remains in effect because you draw up a separate lease for the person who’s renting from you.

You'll still pay rent to your landlord while collecting rent from your sublessee. If your sublessee fails to pay his rent, the landlord goes after you—not the person who’s renting from you.

You can sublet out a portion of your space. However, an assignment must be for the entire premises.

A sublease is the more involved transaction because it requires the creation of an entirely new document.

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