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Commercial Litigation Landlord Tenant Law Litigation

Landlord Considerations When Drafting Assignment and Subletting Provisions

Restricting a tenant’s right to transfer the property it is leasing to a third party is a key component to any lease. Many lenders require landlords to obtain lender consent before the transfer is effective. Failure to obtain such consent could lead to a landlord’s default under the terms and conditions of the loan documents, so it is imperative for a landlord to review its loan documents each time it receives a request from a tenant to transfer its interest under the lease.

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Restricting a tenant’s right to transfer the property it is leasing to a third party is a key component to any lease. Most landlords want to limit the tenant’s ability to encumber the lease so that the landlord has control over who is occupying their property. In addition, a landlord may also need to get its lender involved because many lenders require landlords to obtain lender consent before the transfer is effective. Failure to obtain such consent could lead to a landlord’s default under the terms and conditions of the loan documents, so it is imperative for a landlord to review its loan documents each time it receives a request from a tenant to transfer its interest under the lease.

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