At Andersonbain, our commercial property team specialise in advising landlords, tenants, assignees and guarantors on the assignation of commercial leases. We appreciate that many commercial clients find the process for lease assignment to be complex, frustrating and costly. We aim to avoid such issues by helping to ensure that assignation is completed quickly with as little stress and disruption as possible.
Get in touch with us on 01224 456 789 or complete our online enquiry form.
What is an assignation of a commercial lease?
Assignation is the transfer by a tenant of their interest under a lease to another party. The party who takes over the lease is known as the 'assignee'. Assigning a lease transfers all rights to the assignee to occupy the premises for the rest of the term. The process is completed by way of a deed called an assignation. This will typically contain provisions for all of the tenant's obligations, transferring them to the assignee.
Does the tenant still have obligations after the assignation?
No, on completion of a valid assignation the tenant ceases to have any liability for the obligations under the lease. The exceptions are:
- If any obligations have been specifically cut out of the assignation and left with the tenant; or
- If the lease provides for the tenant and assignee to be joint and severally liable for the tenant's obligations under the lease. However, this would be unusual in a Scottish property lease.
What are the benefits of assignation?
Assignation is the best option for a tenant who wants to vacate the whole property and give up their interest in a lease. The assignation will usually result in little disruption for the landlord and the assignee will have secure tenure until the end of the current lease.
Do I need the landlord’s permission to assign a lease?
This depends on the terms of your lease, but almost all commercial leases will include a clause preventing a tenant from assigning without the landlord's consent. In most cases, the landlord's consent is usually qualified and cannot be unreasonably withheld. In practice, this means that the landlord will need to provide good reason for withholding their consent. An example might be if the tenant has rent arrears, or that the landlord has concerns that the assignee doesn't have the finances to perform their obligations under the lease.
Are there any other options for a tenant who wants out of their lease before a break date?
A common alternative to assignation is subletting. In a sublease, the tenant grants a lease to a third party without giving up their interest as a tenant. The sublease entitles the subtenant to occupy the property but doesn't get the tenant out of their obligations to the landlord.
Another option is sharing possession. This might be an option if the tenant still wants to trade from the premises but is willing to give up some space to a third party. But that would normally need landlord`s consent too.
Contact our Commercial Lease Lawyers in Aberdeen & Edinburgh, Scotland
For more information on the assignation of commercial leases, call the commercial property solicitors at andersonbain today on 01224 456 789 or complete our online enquiry form.