Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
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. 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.
Types of Transfers
The four ways tenants generally transfer their interest under the lease are via: 1) an assignment of the lease; 2) a subletting of the premises; 3) mortgaging its interest under the lease; and 4) giving a third party a license to occupy space within the leased premises. Landlords typically prohibit the right of tenants to encumber the leased property through a mortgage (except in the case of a ground lease). Although licenses are a method of dealing with the use of a property on a short-term basis, only in rare instances does a "standard" landlord lease form permit a tenant to enter into a license agreement with a third party unless the deal specifically calls for such a transfer. The most common ways a tenant transfers its interest in a lease are by way of an assignment or a sublease.
Landlord Consent and Recapture Right
Most landlords do not want just anyone occupying their property and require the tenant to obtain the landlord's consent before the leased premises is assigned or sublet. Landlords, in most cases, agree that such consent shall not be unreasonably withheld, delayed or conditioned. Many of the more sophisticated landlords provide, however, that the landlord has the right to recapture (with the option, in some cases to also sublease back) the space that the tenant is leasing.
In any event, many landlords specifically require a tenant to provide the following documents after a tenant submits written notice to a landlord requesting an assignment or sublet: 1) a copy of the proposed assignment or sublease, requiring that the effective date be not less than a certain number of days (typically 30-60 days) and no more than a certain number of days (typically 120-180 days) after the giving of such notice; 2) a statement setting forth in reasonable detail the identity of the proposed assignee or subtenant, the nature of its business and its proposed use of the premises; and 3) current financial information with respect to the proposed assignee or subtenant, including its most recent financial report certified by a certified public accountant.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
Beach Boys Songs Written Decades Ago Triggered Current Quarrel With Lawyers
There's current litigation in the ongoing Beach Boys litigation saga. A lawsuit filed in 2019 against Nevada residents Mike Love and his wife Jacquelyne in the U.S. District Court for the District of Nevada that alleges inaccurate payment by the Loves under the retainer agreement and seeks $84.5 million in damages.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Transfer Tax Implications on Real Property Leases
The real property transfer tax does not apply to all leases, and understanding the tax rules of the applicable jurisdiction can allow parties to plan ahead to avoid unnecessary tax liability.