Lease pertains to the legal document where the terms and conditions agreed upon by both the lessor and lessee are reflected. The aforementioned explicitly differs from rent because of…continue reading
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What Is an Assignment of Lease?
By definition, this would be the title document that assigns or transfers the rights of a tenant over a certain property to another party. A prime scenario that makes use of this would be when tenants want to get themselves out of leases that have yet to expire. Among the various legal options that have at their disposal at that point would be either have go for an early lease termination or try and assign their lease to somebody else. Depending on what kind of lease is being handled, there can be different requirements to be met before the property’s original tenant is released of his or her lease-related responsibilities.
As a matter of fact, most cases will depend on acquiring the landlord’s consent through another document that is known as a ‘license to assign.’ Among the many reasons why a tenant would want to assign the lease to somebody else would include the reduction of costs on their end, moving to another place for work or commercial reasons, bankruptcy when it concerns commercial leases, and the purchasing of a brand new home for residential rental leases. When it comes to statistics that involve property within the U.S. and why rental rates are what they are, Statista has reported that the value of commercial construction put in place within the U.S. amount to around 89.52 billion USD, while private office construction started at 8.12 billion USD in 2019’s first half alone.
The Elements of an Assignment of Lease
In drawing up a document like an assignment of lease, one needs to be aware of the necessary elements to include. These are staples that, when combined, help make up a complete and legally-enforceable document. Without further ado, the short list below contains the five elements of an assignment of lease along with its details.
How to Create an Assignment of Lease
Now that you know the definition, purpose, and elements of an assignment of lease document, here comes the part where you will discover how you can create it for your own purposes. The actual process of drawing up the document does not need to be overly difficult or complex. Following a set of general instructions, such as the ones detailed below, will ensure a much easier and quicker experience for you.
Step 1: Begin With Some Clarity Over The Assigned Date
The first step that needs to be taken care of when writing an assignment of lease document would be to specifically define the date that the lease assignment is to take place. Be sure to discuss this particular detail with the tenant that you are planning to assign the lease to. Once the two of you have agreed about the exact date, then you can proceed to specifying it in the document.
Step 2: Continue By Coming to Terms With The Master Lease’s Basic Terms
After finishing the previous step, the next thing to do would be to work out the details of the lease assignment in conjunction with the basic terms of the master lease. Among the things to include would be the rental amount due per your rental agreement, the payment schedule, the beginning and end of the lease, any common room rules, the obligations and rights of the landlord, and a lot more. Be sure that the prospective tenant fully understands this before making him or her sign the document.
Step 3: Clarify Any Covenants in Regards to The Master Lease
Take note that you cannot assign something that you are not in possession with. It would also be great if your prospective assignee is made aware that you are, in fact, the primary lease holder. On the document, you need to state the fact that your name is on the master lease and that your relationship with the landlord is good. Whenever possible, include a master lease copy. Should there be any new information in regards to the renewal lease, like any new rent amount to be charged once the lease is turned over, then it is your responsibility to include it in your assignment of lease document.
Step 4: Clarify The Default and Nonpayment Recourse
Now that we have arrived at one of the very last steps, you need to ensure that the default and nonpayment recourse is clarified. The same goes for when dealing with a sublet agreement, but unlike that document, an assignment of lease can reuse the definitions in the master lease so that there is no need for you to redefine any of the terms. Specifically, it is important to clarify the consequences if the assignee defaults as well as who would be the one responsible for dealing with this particular scenario.
Step 5: Proofread The Document
It is understandable for mistakes to happen from time to time, even in the drafting of an assignment of lease. However, there is no excuse for anyone to not proofread anything that they have written, whether by themselves or together with an attorney. Remember that any mistakes you make in your document is going to have profound consequences. Be on the safe side and assume that you’ve made a few typos, grammatical errors, and inaccurate writings here and there. Look for all of them and edit your document accordingly before considering this process almost finished.
Step 6: Gain The Consent of The Stakeholders
Last would be the part where you attempt to gain the stakeholders’ consent. The way this goes is quite simple: having worked out everything else, you need to sign the assignment of lease and have the prospective tenant or assignee sign it as well. From there, the only thing left to do would be to submit the document to your landlord and hope that he or she agrees to everything and sign it as well. If not, there may be a few kinks that you still need to work out between the two of you, which can be an unfortunate but necessary extra step in itself.
The Dos and Don’ts of an Assignment of Lease
Dealing with a document like an assignment of lease will entail maneuvering around certain pitfalls while striving to do things that will help make things even easier and better for you. With the following dos and don’ts listed below, there would be no need for you to undergo a process of trial and error. Look through each one and see how they can aid you in ensuring a high-quality, effective, and enforceable document.
Do be as specific as possible about the basic terms.
If there is one thing that you need to get right, it would be the specification and clarification of the lease’s basic terms. These are the types of info that will determine how any tenants going forward will operate in regards to the property. Should the assignment of lease drafted by you be unclear about the terms, then you may end up creating problems that would have been otherwise avoidable.
Do ensure the new tenant is dependable.
You do not want to give your landlord any major problems going forward. For that reason, it pays to look into your prospective assignee to see if he, she, or they can be as dependable as you have been, if not more. Ensure that the new tenant is just as capable of paying the same amount of rent. If so, you can also see to it that they pay it on time. Anybody who has a tendency to be less than forthcoming or those with a history of dishonesty may not be the right person to turn over the lease to, so be very careful about whom you approach.
Do work with the right professionals.
When you think about all of the details and considerations that goes into an assignment of lease, it pays to have the right professionals around to help you. Enlisting the services of an attorney is practically a must since their particular brand of expertise will save you from too much trouble. It can even be helpful for you to consult with the property manager so that you can gain deeper insights and knowledge about the property, in the event that there are certain details that you are not quite sure about. Remember that you do not have to do everything on your own. Reach out to the right people as much as necessary.
Do ensure that the insurance and other agreements are going to be taken care of.
Any obligations you have before must be taken care of as much as possible so that your landlord and the new tenant do not need to be troubled by any of it. Take responsibility and see to it that you settle any disputes, pay off the insurance, and live up to all other agreements before signing your name on the assignment of lease.
Do encourage continuous communications with your landlord.
There is no reason why you should keep anybody in the dark about your intentions to turn over your lease to somebody else, least of all the person who actually owns the property. To make sure that you even secure his or her consent, open communications with the landlord is going to be a must. Through this, you can have a greater chance at getting what you want and if there are any ongoing disputes, then you can settle them in less problematic ways.
Do not neglect to inform the new tenant of any potentially significant information.
When it comes to the turnover, it is advisable that you inform the assignee about anything and everything related to the property and lease. Neglecting or forgetting to include certain information will create a gap in knowledge that will ultimately lead towards trouble for the new tenant down the line. It pays to have the foresight to avoid all the hassle, so be sure to include even the most remotely useful information for the benefit of your chosen assignee.
Do not neglect to inform your landlord of any updates concerning the agreement.
As much work and communication that needs to take place between you and the new tenant, there is also a third party that nobody can afford to neglect: your landlord. Anything that develops between you and the new tenant must not be kept hidden from the landlord. If possible, strive to make your three-way communication as efficient and successful as possible so that all of you can get the individual results you want.
Do not sign the document without appropriately clarified terms.
The assignment of lease must include terms that are not only advantageous to the new tenant and the landlord, but also to you. For you to determine just how well things are going, the terms of the document need to be made as clear as possible. In the event that you yourself are not sure of something or if you have trouble comprehending certain items, it is best to take it up with someone with the right knowledge and expertise, such as an attorney.
Do not sign the document without resolving any of the ongoing issues.
There may be things involving your lease that will leave everybody in a less than ideal position if they are not taken care of. As the previous tenant that is looking to reassign the lease to somebody else, it would not do to leave issues unresolved. Since you remain responsible for said issues, take the time to do something about them before signing the document. It could involve property repairs, any legal or financial issues, among other things. Perhaps you may even have a dispute with your landlord, which would prevent him or her from giving consent to you in the first place. Whatever it may be, take care of it so that there won’t be any obstructions going forward.
As you can see, there’s quite a bit of work involved when it comes to assignment of lease documents. There is much to consider but with the right knowledge, it does not have to be too complicated or difficult. Even those who are not willing to start from scratch can be comfortable by the fact that online resources are readily available for their convenience. Simply download the assignment of lease or lease transfer template that is most appropriate for your needs. Once you have found the right one for you, be sure to make the necessary edits before printing it out.