Sydney Office Update December Leasing Magazine online | Page 9

SYDNEY OFFICE UPDATE | 7
ASSIGNING YOUR
COMMERCIAL LEASE
BY JHK LEGAL I N PARTN ERS H IP W ITH R AY WHITE CO MME RC IA L
1.  The proposed assignee intends
to change how the shop is used; or
2.  The proposed assignee has financial
resources or retailing skills that
are inferior to those of the current
tenant.
Tenants proposing to assign their lease
obligations are usually still liable to the
landlord for the duration of the lease in
the event that the assignee breaches
covenants of the assignment lease.
It is also important for tenants to note
that usually lease terms will require
them to be in compliance with the
terms of the lease prior to assignment.
Most lease agreements will
contain a provision for both
parties, whether be a tenant or
a landlord to be able to assign
their lease.
Assignment of a lease can occur in
different manners depending on
whether you are a tenant or a landlord
and depending upon the terms
contained in your lease. In the event
that there are clauses contained within
the lease that prohibit assignment then
it may not be possible for the lease to
be assigned.
Often leases will contain terms
allowing the tenant to assign a lease
only where written consent of the
landlord has been granted and usually
the landlord will still require the
assigning tenant to remain liable under
the lease if breached by any future
tenant whom the lease has been
assigned. As a tenant it is important
to ensure a clause is inserted into the
lease which highlights that a landlord
won’t unreasonably withhold consent.
HOW TO OBTAIN CONSENT TO
FROM YOUR LANDLORD TO ASSIGN
YOUR LEASE
Before approaching a Landlord for
consent to assign a lease, there is some
standard information required that
most Landlords will request regarding
the proposed tenant including financial
viability of the proposed tenant,
ownership information if a company
tenant is proposed, reasons for
assignment and details of any other
lease interests of the proposed tenant
and type of business conducted by the
proposed tenant.
For retail shop leases there are
minimum standards and requirements
for the assignment process and usually
if the process is followed tenants are
to be granted consent for assignment.
Tenants should be aware that there are
two main grounds for when a landlord
can refuse consent for assignment of a
retail shop lease:
WHEN A LANDLORD MAY HAVE
TO ASSIGN
Assignment for the Landlord, will
predominantly occur in the course of
the sale of the premises and/or sale
of business located at the premises.
This assignment is usually dealt with in
the sale contract between the existing
Landlord and the new Landlord. Usually
a lease will provide automatic rights to
a landlord for the assignment of a lease
without the consent of the tenant.
Our advice is that when entering into
a lease, whether you are a tenant or
landlord that you thoroughly review
and obtain independent legal advice
as to the provisions of your lease,
including the important assignment
provisions that may become relevant
if you choose to sell the premises and/
or your business.
If you are a tenant or a landlord that requires any advice in
relation to the preparation of your lease and/or advice in
relation to the assignment of your lease, do not hesitate to
contact us at JHK Legal. 02 8239 9600 or visit JHKlegal.com.au