What assignment of lease means
An assignment of a lease transfers the tenant's entire remaining interest to somebody else.
The assignee steps into the tenant's position for the rest of the term, holding directly from the landlord, bound by the covenants and entitled to the benefits.
That is what distinguishes it from a sublease. A sublease creates a new, shorter tenancy carved out of the existing one, and the original tenant remains the landlord's tenant while becoming the subtenant's landlord. In an assignment the original tenant steps out entirely, or tries to.
The qualification matters. Stepping out of the relationship with the landlord does not automatically end the outgoing tenant's liability under the covenants they gave. Unless the landlord releases them expressly, the original tenant can remain liable on their original promises, including to pay rent, if the assignee defaults.
That is the point outgoing tenants most often miss, and it can surface years later.
How it is used
Almost every commercial lease restricts assignment.
A typical alienation covenant prohibits assigning without the landlord's prior written consent, often adding that consent will not be unreasonably withheld. Some prohibit assignment absolutely.
The practical sequence is to check the covenant, apply for consent in writing with information about the proposed assignee, and complete the assignment by deed only after consent is given.
A landlord considering consent will look at the assignee's financial standing, their intended use, and whether they will be able to perform the covenants. Landlords commonly require the assignee to provide a guarantee, a security deposit or a rent deposit.
Assigning without required consent is a breach of covenant, and where the lease reserves a right of re entry it can trigger forfeiture.
The outgoing tenant should ask for an express release from future liability. Landlords resist it, because the point of retaining the original tenant is having somebody else to look to. Where a full release is not obtainable, a cap or a time limit on the continuing liability is a reasonable negotiating position.
Key features
- Transfers the whole remaining term to the assignee
- The assignee holds directly from the landlord
- Almost always requires the landlord's prior written consent
- The outgoing tenant can remain liable unless expressly released
- Assigning without consent is a breach and can trigger forfeiture
- Distinguished from a sublease, which creates a shorter derivative interest
How this works in Nigeria
The continuing liability point is where Nigerian outgoing tenants are exposed, and it is rarely discussed at the time.
A business assigns its lease when it relocates. It hands over, the assignee occupies, and everybody moves on. Two years later the assignee stops paying, and the landlord looks to the original tenant on the covenants they gave. The original tenant, who has no premises and no relationship with the property, is being asked for rent.
The protections are two, and both have to be arranged at the time of assignment. An express release from the landlord, which is the clean answer and which landlords resist. Or an indemnity from the assignee, which is only as good as their solvency, backed where possible by a guarantee from their directors.
The second Nigerian point is consent. A tenant assigning without consent has breached the alienation covenant, and where the lease reserves a right of re entry the landlord may be able to forfeit, which puts the assignee's occupation at risk as well.
For a prospective assignee, the due diligence is to see the head lease, confirm the consent has been given in writing, check what covenants they are taking on, particularly repairing and reinstatement obligations, and establish whether there are outstanding arrears or dilapidations claims attaching to the term.
The assignment itself is a disposition of an interest in land, so stamping and, depending on the term and the state, registration and consent considerations apply in the ordinary way.
Assignment vs sublease vs surrender
Three ways a tenant gets out of premises, with different consequences.
Assignment transfers the whole remaining term. The assignee becomes the landlord's tenant. The outgoing tenant leaves the picture practically and may remain liable on the covenants unless released.
A sublease creates a shorter tenancy out of the existing one. The original tenant stays the landlord's tenant and becomes the subtenant's landlord, collecting rent and remaining fully responsible upward. They are still in the chain.
Surrender ends the lease by agreement with the landlord. The term is given up and the tenant walks away, usually after negotiating a payment or dealing with dilapidations. It is the cleanest exit and it requires the landlord to agree.
A tenant leaving premises should ask for surrender first, because it ends the liability. Assignment is the next best, with an express release. Subletting keeps you in the chain and is the weakest exit of the three.
Limits and risks
Consent is the practical gate. A landlord unwilling to accept the proposed assignee can refuse, and where the covenant does not require reasonableness, they can refuse without explanation.
Continuing liability is the second. Without an express release, the outgoing tenant remains exposed to a default they have no ability to prevent.
An indemnity from the assignee is only as valuable as their means, and by the time it matters the assignee has usually failed.
And assignment does not resolve accrued liabilities. Arrears and dilapidations relating to the period before assignment remain the outgoing tenant's, and the assignment documentation should say who bears them.
Worth knowing
Ask for an express written release from the landlord when you assign, and where you cannot get one, take an indemnity from the assignee backed by a guarantee from their directors. Nigerian tenants assign and relocate believing they are out, and receive a demand for rent two years later.
Questions people ask
What is an assignment of lease?
A transfer of the tenant's entire remaining term to somebody else, who then holds directly from the landlord and is bound by the covenants for the rest of the term.
Do I need the landlord's consent?
Almost always. Commercial leases contain alienation covenants prohibiting assignment without prior written consent, often qualified by a requirement that consent not be unreasonably withheld.
Am I still liable after assigning?
Potentially yes. Unless the landlord expressly releases you, you can remain liable on the covenants you gave, including to pay rent, if the assignee defaults. Ask for a release at the time.
What is the difference between assignment and subletting?
Assignment transfers the whole remaining term and the assignee becomes the landlord's tenant. A sublease creates a shorter tenancy out of yours, and you remain the landlord's tenant while becoming the subtenant's landlord.
What happens if I assign without consent?
It is a breach of the alienation covenant, and where the lease reserves a right of re entry the landlord may be able to forfeit, which puts the assignee's occupation at risk too.
What should an incoming assignee check?
The head lease itself, that written consent has been given, what covenants they are taking on including repairing and reinstatement obligations, and whether there are outstanding arrears or dilapidations attaching to the term.