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When a landlord and a tenant enter into a lease agreement, the tenant obtains the right of possession while the landlord has a reversionary right to possession at the end of the term.

What happens if the tenant, prior to the end of the term, assigns their rights under the lease to another? This is called an assignment. An assignment occurs when a tenant transfers all rights under the contract (lease) for the remainder of the term, with no reversionary right of possession to the first tenant.

In this situation, the landlord still maintains privity of contract with the first tenant. In other words, the first tenant can be found liable for any damages caused by the assignee (second tenant) under the terms of the original lease. Additionally, since the first tenant gave up all rights of possession to the assignee, the landlord has privity of estate with the new tenant, now in possession of the premises. The new tenant can be found liable for damages as well as the first tenant.

Word of advice: Although landlords have more rights under an assignment in comparison to a sublease, both can create added obstacles should either tenant fail to meet the obligations under the lease. Without prior knowledge and requested consent of an assignment, landlords lose the opportunity to put the assignee through a thorough application process. Restrictions on assignments and sublets should be in the lease with clear language that includes prohibition on both.

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