Growing brands require new locations and additional space. The commercial facility that a company leased a few years ago may no longer adequately meet the organization’s needs. However, the commercial lease signed for the current premises may still remain in effect for multiple years despite the changing needs of the organization.
In such cases, seeking a new tenant to assume lease obligations through lease assignment can be a mutually beneficial arrangement.
Lease restrictions are common
A lease assignment involves an outside party agreeing to take over the remainder of the lease. In many cases, commercial landlords have clauses in their leases that either outright prohibit lease assignment or that restrict the scenarios in which assigning a lease to another party is possible.
Landlords may require that the new tenant have a similar or better credit score or may impose minimum standards on company revenue and operational history. Landlords may need to ultimately approve any attempt to assign the lease to an outside party.
Given the time spent marketing the opportunity to other businesses and prepping the facilities for tours or showings, ensuring compliance with lease requirements and the willingness of the landlord to enter into a lease assignment arrangement can limit the likelihood of lost time and capital while attempting to address the remainder of a commercial lease. Business leaders may need a legal professional to assist with negotiations with the new tenant and with the landlord.
Working with a commercial real estate attorney can make the process of acquiring new premises for a growing, successful company less costly and risky. Legal support when reviewing a lease and negotiating with interested parties can help streamline the lease assignment process.