Assignment vs. sublease: what to compare in a commercial lease

An assignment generally transfers the tenant's lease interest to another party. A sublease creates a separate arrangement under which another occupant uses all or part of the space through the existing tenant. Neither label establishes that the original tenant or guarantor has been released.

The American Bar Association's office leasing article explains this distinction. The existing lease, transfer documents, and applicable law determine the actual rights and obligations; counsel should review those together.

Start with the business event

Write down what is actually happening: sale of the business, replacement of the tenant, sharing excess space, transfer to an affiliate, or a change in ownership. Then ask counsel which lease provisions the event may trigger.

A proposed subtenant occupying half a suite has a different operational plan from a buyer taking over the whole business. Identify the space, term, use, access, services, and parties before searching for a generic form.

Compare the documents required for each path

For a proposed assignment, assemble the existing lease, amendments, guaranty, proposed assignment and assumption, and any required consent or release. For a proposed sublease, assemble the same underlying lease documents plus the proposed sublease and applicable consent materials.

Treat this as an intake list to confirm with counsel, not a universal list of legally required documents. Track missing items and which reviewer will obtain them. Keep the proposed economics separate from the provisions already agreed.

Questions for the transfer review

• What events fall within the lease's definition of a transfer?
• Is consent required, and what information must accompany the request?
• What response process, fees, or other conditions are stated?
• Does the proposed use fit the permitted-use provision?
• Are there provisions addressing recapture or transfer proceeds?
• What happens to options, parking, signage, and other rights?
• Which obligations remain with the original tenant and guarantor?
• What written evidence would establish any agreed release?

Put each answer beside its source section. The assignment and subletting glossary entry supplies terminology, while the guaranty checklist helps keep individual obligations visible.

Illustrative sublease cash review

Assume a tenant owes $8,000 monthly under its lease and expects $5,000 monthly from a proposed subtenant. Before other costs, the planned monthly gap is $3,000. If the subtenant does not pay for two months, the missing receipts total $10,000.

The arithmetic does not establish remedies or liability. It helps the business team test whether its plan can withstand an interruption in expected receipts. Add separately any assumed service costs, improvements, commissions, or other expenses, and have the governing obligations verified.

Do not let the new document outrun the underlying lease

Compare the proposed occupancy term, use, services, access, and construction plan with the original lease. Flag inconsistencies for counsel instead of assuming that a new agreement between two parties changes a third party's rights.

Carry questions in an open-items log and verify the final documents before execution. A completed business deal needs an evidence-backed understanding of who remains responsible afterward.