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Can you sublease your commercial space?

On Behalf of | Nov 8, 2021 | Real Estate Law |

When you rented your commercial space, you asked all the right questions. You talked about the square footage, what changes you could make, what your operations would be like and whether it was a net, double-net or triple-net lease — among other things.

Did you remember to ask about assignments and subleases? If times get tough, this could be a critical issue.

What’s the difference between a sublease and an assignment?

Subleases and assignments sound similar, but they have some important distinctions. Here they are in a nutshell:

  • Sublease: When you sublease, you essentially rent all or part of your space out to another tenant, and you become their landlord. (You still must pay your landlord, however, for the space.) If something goes wrong (like your subleased tenant doesn’t pay their rent), you can terminate your sublease and eventually reclaim the space.
  • Assignment: This requires you to transfer your entire lease over to another party for the remainder of your lease. They pay your landlord directly, and you lose the right to evict the new tenant or reclaim the property.

You generally need to have the permission of the landlord or their agent to do this. Ideally, you negotiated this option when you negotiated your lease. Don’t panic if you forgot. Many landlords would rather work with you than have to go through the complicated and expensive process of evicting you for nonpayment.

The more you know about real estate law and commercial leases, the more prepared you’ll be to handle problems when they arise. Experienced legal guidance can help you find answers to all your questions.