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Demystifying Assignment of Lease: Your Go-To Guide

LegalGPS : July 25, 2024 at 12:20 PM

When you’re talking about property leasing, it’s important to understand that there are a lot of terms and concepts that you may have never heard before. One of them is the assignment of lease, which refers to a situation where a tenant transfers their rights and responsibilities under the lease agreement to another party.

Assignment of Lease Template

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What is an Assignment of Lease, and why is it so crucial?

An Assignment of Lease is a term you may have heard thrown around, especially if you're involved in rental properties. It’s a pretty important document. But what exactly is it? Well, in simple terms, an Assignment of Lease is an agreement where the original tenant of a property transfers their leases and all of its rights and obligations to a new tenant. Now, you might be wondering, "When would this scenario ever occur?"

Let's imagine you're a tenant who signed a three-year lease for an office space. However, two years in, you need to relocate due to unprecedented growth of your business. Instead of breaking the lease, you might choose to assign your lease to another business looking for office space. This means that you, as the original tenant, no longer have any obligations under the lease. The new tenant is now responsible for paying rent and complying with all of the terms of the previously signed agreement.

Now that you understand, let's get into the step-to-step guide on how to create an Assignment of Lease!

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Steps to Write an Assignment of Lease

Creating a thorough Assignment of Lease agreement doesn't need to be an overwhelming task. Simply follow these steps to ensure your agreement is both comprehensive and legally binding:

Step 1: Identify the Parties

The information of each party should be included. For the existing tenant (the assignor), make sure to include:

Full legal name or business name

Postal mailing address

Phone number and email address

Do the same for the new tenant (the assignee). Make sure all the information is up-to-date and accurate to avoid any unnecessary confusion or disputes. For example, if the assignor is a business, make sure they have updated their mailing address with the post office to reflect their new building location. If a party has multiple addresses, be sure to list them all.

Step 2: Specify the Lease

This section requires exact information from the original lease agreement, including:

Property address and description

Lease start and end date

A reference to the original lease agreement (for instance, a sentence like "the lease agreement dated...")

Remember to include a copy of the original lease as an attachment to ensure the assignee understands the terms they're adhering to. If not already included in the original lease agreement, be sure to add the following information: Description of rental property, Lease term (how long the lease is good for), Rent amount, and Security deposit amount.

Step 3: Detail the Assignment

State that the assignor is transferring all their interests and obligations in the lease to the assignee. Here, write something like:

"The Assignor hereby assigns, transfers, and conveys to the Assignee all of the Assignor's rights, title, and interest in and to the Lease, together with all the Assignor's obligations, liabilities, and duties under the Lease."

This means that the assignor is transferring all of their interests and obligations in the lease to the assignee. This includes any future rent payments, repairs and maintenance responsibilities, notices of default by either party, and so on.

Step 4: Landlord's Consent

Many leases require the landlord's consent to assign the lease. The assignor should request written consent from the landlord and include a clause like:

"The assignment of the lease is not valid unless and until the landlord provides written consent."

This is followed by a place for the landlord to affirm consent by signing or initialing. This is important because the landlord can elect to withhold consent and the assignment will not be valid. If this is the case, you may need to provide additional consideration for your landlord's assent (for example, an increase in rent).

Step 5: Assignee Acceptance

Include a statement in which the new tenant agrees to the assignment and the terms of the lease. It may look like:

"The Assignee hereby accepts this assignment, assumes all duties and responsibilities under the Lease, and agrees to perform all of the Assignor's obligations under the Lease."

You need to do this because the new tenant needs to have an affirmative acceptance of the assignment in order for it to be valid. This is typically done through a letter from the assignee stating that they agree to perform all of your obligations under the lease.

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Step 6: Signature and Date

Every binding legal document needs a date and a signature. Make sure that there is a proper place for the assignor and the assignee to sign and print their names, with a line for the date.

By following these clear, actionable steps, you'll be able to construct an effective Assignment of Lease agreement. Remember, every situation is unique, so adjust the template as necessary, being sure to include all relevant details.

Clear so far? Great! Now, let's focus on the tips to draft a perfect Assignment of Lease.

Tips to Draft a Perfect Assignment of Lease

Accurate Dates: Be sure to include the date when this agreement will take effect. Precision avoids any confusion about durations, when the assignee takes over, or when the assignor's obligations end.

Clear Terms: This document should restate the terms of the original lease. The assignee needs a clear understanding of what they're stepping into. Bit ambiguous? Think of it like this: the assignee should be able to step into the assignor's shoes comfortably.

Specify Rent Terms: Stating the rent amount, due dates, and method of payment in the assignment helps create a record of the agreed-upon rent terms, ensuring no misunderstanding arises in the future.

Specify the Term: The assignment should state how long the new lease lasts. For example, if the original lease is for one year, then the assignee will assume only a one-year term.

Specify Other Conditions: If there are other conditions in place—such as tenant improvements or utility allowances—then specify these too.

An assignment of lease doesn't have to be a formidable task to overcome. With a cautious and considered approach, these documents can be a smooth and seamless part of managing a successful lease transition.

Our contract templates can offer you even more support, empowering you towards crafting an excellent and individualized Assignment of Lease ready for your task. So why not take your next step towards leasing success and check them out today? Click here to get started!

Get Legal GPS's Assignment of Lease Template Now

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Lease Assignment Agreement

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ContractsCounsel has assisted 217 clients with lease assignment agreements and maintains a network of 168 real estate lawyers available daily. These lawyers collectively have 21 reviews to help you choose the best lawyer for your needs. Customers rate lawyers for lease assignment agreement matters 4.98/5 stars.

A lease assignment agreement is a legally binding contract outlining the terms and conditions of transferring a lease from one party to another in one place. This means the assignee becomes the new tenant and assumes all the rights, obligations, and liabilities under the original lease. Lease assignments are commonly used in real estate transactions when a tenant wants to transfer their lease to another party before the lease term expires. We will discuss the lease assignment agreements' purpose, key elements, and other relevant aspects.

Key Elements of a Lease Assignment Agreement

A lease assignment agreement includes several key elements outlining the terms and conditions of the lease transfer. These elements may vary depending on local laws and specific circumstances but generally include the following:

• Parties: The lease assignment agreement should clearly identify the parties involved, including the original tenant (assignor), the new tenant (assignee), and the landlord.
• Property: The agreement should specify the property subject to the lease assignment, including the address, unit number, and relevant details.
• Terms: The agreement should state the lease assignment's effective date, the original lease's remaining term, and any renewal or termination provisions.
• Rights and Obligations: The agreement should outline the rights and obligations of the assignor, assignee, and landlord, including rent payments, maintenance responsibilities, and any other lease terms that will carry over to the assignee.
• Consent: In most cases, the lease assignment agreement requires the landlord's written consent. The agreement should specify the conditions and process for obtaining landlord consent.
• Indemnification: The agreement may include provisions for indemnifying the landlord against any losses or damages resulting from the lease assignment.
• Governing Law : The agreement should specify the governing law and jurisdiction applicable to any disputes or legal matters related to the lease assignment.

Legal Implications of Lease Assignment Agreements

Lease assignments have legal implications for all parties involved. It is important to understand the potential legal risks and obligations associated with lease assignments. For tenants, it may be necessary to review the original lease agreement and seek legal advice to ensure compliance with the terms and conditions of the lease assignment. Landlords should carefully review and approve lease assignments to protect their rights and interests. In some jurisdictions, landlords may have the right to reject a proposed lease assignment for valid reasons.

Benjamin W.

Practical Tips for Managing Lease Assignment Agreements

Lease assignments can be complex, and it is important for tenants and landlords to approach them with caution. Here are some tips for navigating lease assignments:

For Tenants

• Review the Original Lease Agreement: Understand the terms and conditions of the original lease before entering into a lease assignment agreement.
• Seek Legal Advice: Consider consulting with a real estate attorney to ensure compliance with local laws and protect your rights and interests.
• Obtain Written Consent from the Landlord: Follow the process outlined in the lease assignment agreement to obtain written consent from the landlord before proceeding with the assignment.
• Communicate with all Parties Involved: Keep open communication with the assignee, assignor, and landlord throughout the process to avoid misunderstandings or disputes.
• Fulfill Obligations under the Original Lease: Even after the lease assignment, the assignor may still be responsible for fulfilling their obligations under the original lease until the effective date of the assignment.

For Landlords

• Review the Lease Assignment Carefully: Carefully review the proposed lease assignment agreement, including the terms and conditions, rights and obligations of the assignor and assignee, and any indemnification provisions.
• Require Written Consent: Insist on obtaining written consent from the assignor and assignee before allowing the lease assignment to proceed, as this protects your rights and interests as a landlord.
• Verify Financials and Credentials of Assignee: Conduct thorough due diligence on the proposed assignee's financials and credentials to ensure they can fulfill the lease obligations.
• Update Lease Documentation: Once the lease assignment is approved, update the lease documentation to reflect the new tenant (assignee) and provide copies to all parties involved.
• Communicate with all Parties Involved: Maintain open communication with the assignor, assignee, and any property management or legal professionals involved in the lease assignment process to ensure a smooth transition.

Potential Risks and Considerations

There are potential risks and considerations that tenants and landlords should be aware of when it comes to lease assignments. These may include:

• Non-Compliance with the Original Lease: If the assignee fails to comply with the terms and conditions of the original lease, the assignor may still be held liable for any breaches.
• Landlord's Right to Reject: In some jurisdictions, landlords may have the right to reject a proposed lease assignment for valid reasons, such as the assignee's inability to meet financial obligations or lack of appropriate credentials.
• Indemnification Provisions: The lease assignment agreement may include indemnification provisions that hold the assignor and assignee responsible for any losses or damages resulting from the lease assignment.
• Legal Disputes: Disputes may arise during the lease assignment process, such as disagreements over the terms and conditions, consent requirements, or other related matters.
• Local Laws and Regulations: Lease assignments are subject to local laws and regulations, which may vary by jurisdiction. It is important to ensure compliance with applicable laws and seek legal advice.

Key Terms for Legal Assignment Agreements

• Consideration: Refers to the value or benefit each party receives in exchange for entering into the assignment agreement.
• Assignment: The transfer of rights or obligations from one party (assignor) to another (assignee) as agreed upon in the assignment agreement.
• Consent: The requirement for obtaining permission or agreement from relevant parties, such as the original contracting parties, for the assignment to occur.
• Indemnity : The legal protection provided by the assignor to the assignee against any potential losses, liabilities, or claims arising from the assignment.
• Governing Law: The jurisdiction or legal system that governs the interpretation, validity, and enforcement of the assignment agreement, which is typically specified in the agreement itself.

Final Thoughts on Legal Assignment Agreements

A lease assignment agreement is a legally binding contract allowing tenants to transfer their lease rights and responsibilities to another party. It is important for both tenants and landlords to carefully review and understand the terms and conditions of a lease assignment, seek legal advice if needed, and maintain open communication throughout the process. By following the appropriate steps and considering potential risks and considerations, lease assignments can be a useful tool for tenants and landlords to manage their lease agreements effectively.

However, you need the help of a professional lawyer to ensure you do not end up messing up a lease assignment agreement. So, ensure you approach an experienced attorney who is well-versed in the field.

If you want free pricing proposals from vetted lawyers that are 60% less than typical law firms, click here to get started. By comparing multiple proposals for free, you can save the time and stress of finding a quality lawyer for your business needs.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

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Lease Assignment Agreement

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A Lease Assignment Agreement is a short document that allows for the transfer of interest in a residential or commercial lease from one tenant to another. In other words, a Lease Assignment Agreement is used when the original tenant wants to get out of a lease and has someone lined up to take their place.

Within a Lease Assignment Agreement, there is not that much information included, except the basics: names and identifying information of the parties, assignment start date, name of landlord, etc. The reason these documents are not more robust is because the original lease is incorporated by reference , all the time. What this means is that all of the terms in the original lease are deemed to be included in the Lease Assignment Agreement.

A Lease Assignment Agreement is different than a Sublease Agreement because the entirety of the lease interest is being transferred in an assignment. With a sublease, the original tenant is still liable for everything, and the sublease may be made for less than the entire property interest. A Lease Assignment transfers the whole interest and puts the new tenant in place of the old one.

The one major thing to be aware of with a Lease Assignment Agreement is that in most situations, the lease will require a landlord's explicit consent for an assignment. The parties should, therefore, be sure the landlord agrees to an assignment before filling out this document.

How to use this document

This Lease Assignment Agreement will help set forth all the required facts and obligations for a valid lease assignment . This essentially means one party (called the Assignor ) will be transferring their rights and obligations as a tenant (including paying rent and living in the space) to another party (called the Assignee ).

In this document, basic information is listed , such as old and new tenant names, the landlord's name, the address of the property, the dates of the lease, and the date of the assignment.

Information about whether or not the Assignor will still be liable in case the Assignee doesn't fulfill the required obligations is also included.

Applicable law

Lease Agreements in the United States are generally subject to the laws of the individual state and therefore, so are Lease Assignment Agreements.

The Environmental Protection Agency governs the disclosure of lead-based paint warnings in all rentals in the States. If a lead-based paint disclosure has not been included in the lease, it must be included in the assignment. Distinct from that, however, required disclosures and lease terms will be based on the laws of the state, and sometimes county, where the property is located.

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A guide to help you: Tenants and Subtenants Obligations under a Sublease Agreement

Lease Assignment Agreement - FREE - Sample, template

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What is Assignment of Lease and How It Differs from Subletting

The assignment of lease (and rent) is a foggy topic that is often confused with subletting. Let's clear the air once and all right now. Learn the differences between a lease assignment and sublease so you can make the right choice.

What is Assignment of Lease? - The Important Basics

Let's begin by introducing the 3 players in a lease assignment - The landlord, the original tenant (assignor) and the new tenant (assignee). The original tenant has an unexpired lease agreement with the landlord and he wants out. Since the original tenant can't just break the agreement and walk off, what he does is to get a new tenant to swap places... and take over all his rights and obligations for the remainder of the lease period. So if the original tenant signs a 1 year commercial lease and the business goes bust after 8 months, the new tenant will be assigned a 4-month commercial lease (with the same terms and conditions as the original agreement). Now here's the big catch: Even though the original tenant has handed over all his duties and obligations to the new tenant, he is not off the hook... unless the landlord agrees to release him from all liabilities. If the new tenant stirs up trouble, our dear original tenant will find himself in hot soup as well. Of course, whether the original tenant is allowed to pull this assignment trick out of his hat is a whole new matter. Knowing for sure is actually simpler than most people think: First, examine your local landlord tenant laws for any lease assignment rules. Most of the time, landlords are given the right to allow or disallow assignments but once in a while, the local law let tenants have the final say instead. If there's no mention of lease assignments in your law text, then your rental lease agreement shall dictate the terms.

Difference Between Lease Assignment and Subletting

When it comes to subletting vs assignment of lease, there's often a massive mix-up. Sometimes even real estate professional get it wrong by assuming them to be one and same thing. However if you dig deeper, you will find that the differences are not just numerous, but important as well. Let's begin by dragging the landlord into the picture. An assignment of lease launches the new tenant into a direct relationship with the landlord - The landlord collects rent straight from the new tenant and deals with the new tenant directly on all lease issues. So in this case, the original tenant gets to take back seat and doesn't have to manage the new tenant actively. On the other hand, there's no direct relationship between the landlord and new tenant (subtenant) in a sublease. Instead the original tenant plays mother goose and is responsible for collecting rent from the subtenant and making sure that he's following the lease rules. When you compare the two, a sublease is a lot more hands-on for the original tenant. No matter which path you take, you will still want a good new tenant who pays the rent on time and follows the lease rules to the agreement. For the golden rules on screening tenants and running credit checks, Click here for our guide to running tenant credit checks. When you have a lease assignment, the terms and conditions of the lease remains largely unchanged - It's almost like taking the original lease agreement and swapping the tenant's name with another. With a sublease, there's more breathing space - The original tenant can decide how much rent to charge, how long the subtenant is going to stay or even collect security deposit... as long as it stays within the boundaries drawn by the original lease agreement between the landlord and original tenant.

Should You Choose Assignment of Lease or Sublease?

You are the Landlord - A lease assignment is recommended in most cases. You will have more control over your new tenant (instead of leaving matters in the original tenant's hands and hoping that he would do a good job)... plus you still have the original tenant to cover your back in case anything goes wrong. You are the Original Tenant - Now this is a tricky one. If you want to someone to take over the entire lease and property for its remaining duration (e.g. your business goes belly-up and you no longer need the office), then help yourself to a lease assignment. If the landlord's consent is required for assignment (and he doesn't give the nod), you can always try offering him a lease assignment fee as a deal sweetener. However, if you are looking for someone to share the place (and rent)... or perhaps you need someone to cover the rent while you are overseas for a few short months, then a sublease would be ideal. You are the New Tenant - An assignment of lease works better for you most of the time. You won't be at the mercy of the original tenant (for example if he screws up and the landlord terminates the original lease agreement, your sublease might also go up in flames). But if you only want to rent part of the property... or don't want to tie yourself down for the remaining lease duration, then you are better off sticking to a sublease. Now that we have covered the topic of assignment vs sublease, go ahead and take your pick - Click here for an assignment of lease form or Click here for a sublet agreement instead.

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Assigning a Lease

Assignments explained, more information on assignments.

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Lease Assignment Agreement

You'll need a lease assignment agreement when you're transferring your interest in a lease to another tenant..

In order to transfer your lease to another tenant , you must sign an agreement with the new tenant (or "assignee") and your landlord or property manager. You can draft your own assignment agreement, sign it with your proposed assignee, and send it to your landlord for their review.

Unlike a sublet agreement , a lease assignment agreement must be signed by your landlord. They may or may not release you from the lease as part of the agreement. If you assign your lease and don't sign an agreement that clearly frees you from all obligations to pay the rent, you are still liable if the person who took over your lease skips out for any reason.

In This Article

Basic terms Master lease covenants Default definitions Default recourse Consents

Basic terms

Start with getting clarity between you and your assignee about the date that the assignment will occur and the basic terms of the master lease:

• When does the master lease end?
• What is the rent amount?
• Who pays for utilities? As a default, you can stipulate that the assignee transfers the utilities into his or her own name.

Covenants regarding the master lease

You can't assign something you don't have and your assignee will want to be assured that you are in fact the primary leaseholder. State that your name is on the master lease and that you are in good standing with the owner. Include a copy of the master lease.

If there is any information about the renewal lease, such as the new rent amount that will be charged when the lease turns over, it may also be included. A copy of the master lease itself should also be included.

Default and nonpayment definitions

As with a sublet agreement, you should clearly define what it means to default on the lease agreement. Unlike with a sublet agreement you can use the same definition that is in the master lease so you do not need to redefine these terms.

Default and nonpayment recourse

A lease assignment agreement should clarify what happens if the assignee defaults and who's responsible for dealing with it. Some assignment agreements will leave obligations on the shoulders of the outgoing tenant—which is bad news for you. You've gone to the trouble of assigning your lease, but are still responsible for rent payments as if you're subletting out your unit. Watch out for a term like this in an assignment agreement:

In the event of default by the Assignee the Landlord will provide the Tenant with written notice of this default and the Tenant will have full rights to commence all actions to recover possession of the Premises (in the name of the Landlord, if necessary), including commencement of eviction proceedings. This agreement will immediately become null and void. CONSENT TO THIS ASSIGNMENT WILL NOT DISCHARGE THE ASSIGNOR OF ITS OBLIGATIONS UNDER THE LEASE IN THE EVENT OF A BREACH BY THE ASSIGNEE, UNLESS THE ASSIGNOR LATER RETAKES POSSESSION OF THE PREMISES FROM THE ASSIGNEE.

If possible, you should make sure that your assignment agreement has a release clause instead of the above. Here is the release clause in our standard assignment agreement:

In the event of default by the Assignee the Landlord will have full rights to commence all actions to recover possession of the Premises including commencement of eviction proceedings. This agreement will immediately become null and void. CONSENT TO THIS ASSIGNMENT WILL DISCHARGE THE ASSIGNOR OF ITS OBLIGATIONS UNDER THE LEASE IN THE EVENT OF A BREACH BY THE ASSIGNEE, UNLESS THE ASSIGNOR LATER RETAKES POSSESSION OF THE PREMISES

If you do not sign an agreement with a term like the above then you are still responsible for the monthly rent even if you assigned your lease.

Consent from all stakeholders

As with a sublet agreement, you should sign the assignment agreement, get your assignee to sign it and then send it to your landlord for consent.

Related articles

The information provided on this website does not, and is not intended to, constitute legal advice.

• assignments basic law

Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

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Assignment and Assumption of Lease and Landlord Consent

You can use a Lease Assignment to outline the terms for assigning the responsibilities of a lease to someone else. You need to make sure that the landlord has given his or her consent for the Lease Assignment to go into effect. The terms of assignment, consent of the lessor, and acceptance by the assignee are covered in this Lease Assignment, including the length of the assignment, consent of the person taking over the lease, and acceptance by you, the current lease holder. A Lease Assignment transfers the rights and obligations of an existing lease from one tenant to another.

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ASSIGNMENT AND ASSUMPTION OF LEASE AND LANDLORD CONSENT

THIS ASSIGNMENT AND ASSUMPTION OF LEASE AND LANDLORD CONSENT (" Agreement ") is effective as of _________________ (the “ Effective Date ”), between  _____________  a ________________ corporation (" Assignor "), and ________________   a ________________ corporation (" Assignee ") who agree as follows:

A.              Lease .  ________________ a Delaware corporation (“ Landlord ”), and Assignor, as tenant, are parties to that certain Master Lease dated as of ________________  (the “ Master   Lease ”), pursuant to which Assignor leased from Landlord, and Landlord leased to Assignor, certain premises consisting of approximately ________________ rentable square feet located ________________ (the “ Leased Premises ”) in the building with a street address of ________________________________  (the “ Building ”).  A true, correct and complete copy of the Lease is attached hereto as  Exhibit “A”  and is by this reference incorporated herein and made a part hereof.  The Lease is scheduled to expire on ________________. 

B.         Assignor desires to transfer and assign all of its right, title and interest, as subtenant, in, to, and under the Lease to Assignee, and Assignee wishes to assume all of Assignor's duties, liabilities, and obligations thereunder.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties mutually covenant and agree as follows:

1.               Assignment .  Assignor, for and in consideration of the payment of rent and the performance of all of the Lease covenants by Assignee as successor subtenant under the Lease, does hereby grant, assign, and convey to Assignee all of Assignor’s right, title, and interest in and to the Lease, for the residue of the term of the Lease, at the rent and other charges set forth in the Lease and subject to the conditions contained in the Lease and henceforth to be performed and observed by Assignee.    

2.               Performance of Lease Covenants and Conditions; Assumption . For the benefit of Assignor and Landlord and Landlord, Assignee hereby assumes all rights, duties, and obligations of the subtenant under the Lease and Assignee hereby covenants and agrees to perform all of the duties and obligations of the subtenant pursuant to the Lease from and after the Effective Date as if Assignee were the original subtenant thereunder. Assignee shall make all payments of rent, additional rent, and other sums due under the Lease from the subtenant thereunder, for the period from and after the Effective Date, when due and payable strictly in accordance with the terms, covenants, and conditions of the Lease.

3.               Letter of Credit .  Within three (3) business days following the full execution of this Agreement by the parties hereto, Landlord’s execution of its consent and Landlord’s execution of the Landlord’s Consent, each as set forth below, Assignee shall deliver to Landlord a letter of credit which satisfies the requirements of Section 21 of the Lease.  Within three (3) business days following Landlord’s receipt of such Letter of Credit from Assignee, Landlord shall return the original Letter of Credit to Assignor and thereafter such original Letter of Credit shall be void and of no further force or effect. 

4.               Possession . Assignor hereby tenders, and Assignee hereby accepts, possession of the Premises in its “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS” condition. Assignor makes no representations or warranties with respect to the physical condition of the Premises or the suitability thereof for Assignee’s use.

5.               Assignment and Subleasing . Subject to the provisions of the Lease, Assignee may assign the Lease, or sub-lease all or any portion of the Premises, but Assignee must also obtain Assignor’s prior written consent, which consent shall not be unreasonably withheld or delayed. As a condition of granting such consent to an assignment, Assignor may require that the new assignee assume the obligations of the subtenant under the Lease and take subject to all of the terms and conditions contained both in the Lease and this Agreement and as a condition of consenting to any lease, Assignor may require that each sublessee agree, by an express provision in its lease, to be bound by all of the terms and provisions of the Lease and this Agreement.  If Assignee assigns the Lease or leases the Premises, in whole or in part, Assignee shall nevertheless remain liable to Assignor for the full performance of Assignee’s obligations under the Lease and this Agreement.

6.               Entry . Assignee agrees that Assignor may at any time during the regular business hours enter upon the Premises for purpose of inspecting the same.

7.               Insurance . Assignee agrees to maintain in effect all of the insurance coverages required to be maintained by the subtenant under the Lease and to provide evidence of such insurance to Assignor from time to time. Assignee agrees to name Assignor as an additional insured under the general liability insurance carried by Assignee with respect to the Premises.

8.               Lease Amendments or Modifications . Assignee shall not enter into any lease amendments or modifications of the Lease with Landlord without the prior written consent of Assignor, which consent shall not be unreasonably withheld or delayed.

9.               Broker Commissions; Fees .  Assignee acknowledges and agrees that Assignee shall be solely responsible for the payment of all broker commissions in connection with this Agreement.  Each of Assignee and Assignor represents and warrants to the other that it has taken no act nor permitted any act to be taken pursuant to which it or the other party hereto might incur any claim for brokerage commissions or finder’s fees in connection with the execution of this Agreement other than Jones Lang LaSalle representing Assignee and CBRE representing Assignor.  Each party agrees to indemnify, defend and hold the other harmless against all liabilities and costs arising from a breach of such representation and warranty, including, without limitation, for attorneys’ fees and costs in connection therewith.  In addition, Assignee shall pay any fees charged by Landlord and Landlord in connection with obtaining the consent of each of them.

10.            Indemnification.    Assignee hereby indemnifies and holds Assignor and its officers, directors, shareholders, members, affiliates, representatives, agents, employees, successors and assigns harmless from and against all claims, damages, demands, losses, expenses and costs incurred, arising out of, or in connection with Assignee’s failure, from and after the Effective Date, to observe, perform and discharge any and all of the subtenant’s covenants, obligations and liabilities in connection with the Lease.  Assignor hereby indemnifies and holds Assignee and its officers, directors, shareholders, members, affiliates, representatives, agents, employees, successors and assigns harmless from and against all claims, damages, demands, losses, expenses and costs incurred, arising out of, or in connection with Assignor’s failure to the extent accruing prior to the Effective Date, to observe, perform and discharge any and all of the subtenant’s covenants, obligations and liabilities in connection with the Lease.

11.            Defaults under Lease . Within two (2) days after receiving any notice from Landlord relating to the performance of the obligations of the subtenant under the Lease, Assignee shall send a copy of such notice to Assignor. Within two (2) days after receiving any notice from Landlord relating to the performance of any obligations of the subtenant under the Lease, Assignor shall send a copy of such notice to Assignee. If Assignee is in default under the provisions of the Lease or this Agreement, and if Assignee fails to cure such default within fifteen (15) days after receipt of notice from Landlord or Assignor specifying the nature of such default with respect to non-monetary defaults and two (2) business days with respect to monetary defaults, then Assignor may reenter the Premises, with or without process of law, and cure such default, in which event Assignee shall promptly reimburse Assignor for all costs and expenses with regard thereto, or, at Assignor’s option, Assignor may repossess and enjoy the Premises as of Assignor’s first and former estate and either declare this Agreement to be terminated at no further force or effect or, without terminating the same, Assignor may reassign the Lease to itself or others or sublet the Premises to itself or others, in whole or in part, for the account of Assignee, in which event Assignee shall promptly reimburse Assignor for any rent deficiencies and other charges, costs, reasonable attorneys’ fees, or expenses so incurred by Assignor with respect thereto.

12.            Attorneys’ Fees .  In any action between the parties to enforce any of the terms or provisions of this Agreement, the prevailing party in the action shall be entitled to recover from the non-prevailing party, in addition to damages, injunctive relief or other relief, its reasonable costs and expenses, including, without limitation, costs and reasonable attorneys’ fees, as the court shall determine.  Any such attorneys’ fees and other expenses incurred by either party in enforcing a judgment in its favor under this Agreement shall be recoverable separately from and in addition to any other amount included in such judgment, and such attorneys’ fees obligation is intended to be severable from the other provisions of this Agreement and to survive and not be merged into any such judgment.

13.            Successors and Assigns .  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.

14.            Severability .  If any provision of this Agreement shall be held invalid or unenforceable for any reason and to any extent, the remainder of this Agreement shall not be affected, but shall be enforced to the greatest extent permitted by law.

15.            Governing Law .  This Agreement shall be governed by and construed in accordance with the laws of the State of California.

16.            Counterparts .  This Agreement may be executed in one or more counterparts.  All such counterparts, when taken together, shall comprise the fully executed Agreement.  Signatures of the parties transmitted by facsimile or electronic mail in PDF format shall be deemed to constitute originals and may be relied upon, for all purposes, as binding the transmitting party hereto.  The parties intend to be bound by the signatures transmitted by facsimile or electronic mail in PDF format, are aware that the other party will rely on such signature, and hereby waive any defenses to the enforcement of the terms of this Agreement based on the form of the signature.

17.            Notices .  For purposes of this Agreement, the notice addresses for Assignee and Assignor shall be as follows:

_____________________

Attn: ________________

18.            Warranty and Authority .  Each party represents that this Agreement has been executed by its duly authorized representative.

19.            Condition Precedent .  This Agreement is not and shall not be effective unless and until each of Landlord and Landlord provides its consent to this Agreement.  If either Landlord or Landlord fails to consent to this Agreement with thirty (30) days after delivery of this Agreement to Landlord and Landlord then either Assignor or Assignee may terminate this Agreement by written notice thereof to the other party at any time prior to receipt of Landlord’s and Landlord’s consent and in such event neither Assignor nor Assignee shall have any obligations to the other party under this Agreement.  Assignee shall reasonably cooperate with Assignor to obtain Landlord’s and Landlord’s consent, including providing Landlord and Landlord with financial information and other information requested by Landlord and Landlord

IN WITNESS WHEREOF, this Agreement has been executed as of the Effective Date set forth above.

LANDLORD’S CONSENT

By its execution below, Landlord consents to this assignment of the Lease to Assignee and acknowledges the continuance of the Lease by and between Assignee and Landlord.  Landlord is not a party to the assignment and executes this document for the limited purpose of granting its consent.  The consent to this assignment shall not act as or be deemed as a waiver of Landlord’s right to consent to any subsequent assignment or lease in accordance with the terms of the Lease.  Notwithstanding the foregoing, so long as Assignee delivers to Landlord a letter of credit which satisfies the requirements of Section 21 of the Lease then within three (3) business days following Landlord’s receipt of such Letter of Credit from Assignee, Landlord shall return the original Letter of Credit to Assignor and thereafter such original Letter of Credit shall be void and of no further force or effect.

Landlord, Inc.

By:                                                      

Its:                                                       

LANDLORD CONSENT TO ASSIGNMENT OF LEASE

By its execution below,  Landlord consents to this assignment of the Lease to Assignee and acknowledges the continuance of the Lease by and between Assignee and Landlord.  Landlord is not a party to the assignment and executes this document for the limited purpose of granting its consent.  Landlord’s consent shall not relieve or discharge Landlord from any of its obligations under the Master Lease, whether or not such Default should occur by fault of the Assignee.  The consent to this assignment shall not act as or be deemed as a waiver of Landlord’s right to consent to any subsequent assignment or lease in accordance with the terms of the Master Lease.

Landlord’s consent is conditioned upon payment by Landlord of all Rent and any other charges due under the Master Lease at the time of the assignment (notwithstanding that such charges may be billed following the date of the assignment).

a ________________ corporation

By:                                               

Its:                                               

(see attached)

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Peter Pan Mini Golf scores another lease extension; still hopes for a long-term deal

At a time when many Austin originals are being forced to close or relocate, Peter Pan Putt Putt is a symbol for the sustaining essence of an Austin aura — though its future is still unclear. 

Amid fears the 76-year-old putt course would close in September, as previously reported , it looks like the business has been given a lifeline. This came in the form of another six-month lease extension that was approved by the Texas Juvenile Justice Department.

The lease will now expire on March 31, 2025, but the owners of Peter Pan are hoping this is a stepping stone to something more. In an Instagram post by the company, they expressed excitement for the extension and added “Our goal is to continue to work with the landowner to negotiate a longer term, multi-year lease.”

Why is Peter Pan Putt Putt struggling to stay in its current location?

Rumors that the popular course would be closing started because the land it was built on is controlled by the John C. Wende Trust. The trust was set up in 1948 to benefit the orphans of the state of Texas.

The board of the Juvenile Justice Department has long served as the trustee for the land on which Peter Pan Putt Putt was built on. However in 2022, the Texas Legislature mandated that the property be put under the control of a third-party trustee rather than the Juvenile Justice Department.

Peter Pan's lease renewal then fell into the hands a new trustee, a Juvenile Justice Department spokeswoman told the Statesman  last August .

Enthusiasm for the putt-putt course spilled over online. Around the time of the first rumored closure, Austinites came together to create a petition asking for the course to remain open. 

"We appreciate the well wishes and show of support expressed by our wonderful fans. We are humbled by the affection for Peter Pan Mini Golf. Our sincere and heartfelt thank you!" Dismukes Massad wrote on Facebook at the time.

Margaret Dismukes Massad's father, Glenn Dismukes, founded Peter Pan with his brothers, Jack and Clifford Dismukes. The course, which has two 18-hole courses and is adorned with zany sculptures, has been in the family continually for 75 years.

Statesman staff writer Shonda Novak contributed to this report.

Beck Andrew Salgado covers trending topics in the Austin business ecosystem for the American-Statesman . To share additional tips or insights with Salgado , email [email protected].

Dan Merica, Associated Press Dan Merica, Associated Press

Nicholas Riccardi, Associated Press Nicholas Riccardi, Associated Press

Chris Megerian, Associated Press Chris Megerian, Associated Press

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• Copy URL https://www.pbs.org/newshour/politics/kamala-harris-chose-a-long-term-approach-when-tasked-to-tackle-rise-in-border-crossings

Kamala Harris chose a long-term approach when tasked to tackle rise in border crossings

WASHINGTON (AP) — President Joe Biden, watching tens of thousands of migrants from Central America reach the U.S.-Mexico border just a few months into his administration, tapped his second-in-command to help address the influx — a decision that has exposed Vice President Kamala Harris to one of her biggest political liabilities.

In grappling with migration, Harris proceeded cautiously. She focused her time and prestige on boosting private investment in El Salvador, Honduras and Guatemala, the so-called Northern Triangle; her goal was to help create jobs to bolster economies and dissuade migrants from making the perilous journey to the United States.

It was a decidedly long-term — and limited — approach to a humanitarian crisis, and it has allowed Republicans to tie her to the broader fight over the border. While migration from the Northern Triangle ebbed, it surged from other nations, sparking an emergency at the U.S.-Mexico border, one that Republicans have aggressively sought to exploit at Harris’ expense.

A review of Harris’ work on immigration reveals a record that is more nuanced than the one presented by her critics or allies. It also provides insights into how Harris — who took over as the Democratic standard-bearer when Biden dropped out of the presidential race last month — might tackle one of the nation’s most vexing concerns.

WATCH: A look at Kamala Harris’ legal career and political record

Harris was never the “border czar,” or put in charge of border security or halting illegal border crossings, as former President Donald Trump, Republicans and even the occasional media outlet have claimed. Instead, she was tasked in March 2021 with tackling the “root causes” of migration from the Northern Triangle and pushing its leaders — along with Mexico’s — to enforce immigration laws, administration officials said.

Harris’ backers say she demonstrated leadership by leveraging her stature to win investments that might curb migration years down the road.

“She felt — and I think she was right — that what she could do the most was help basically lead the effort to draw in investment, using the confidence that a relationship with the White House would give to investors,” said Ricardo Zúniga, a former State Department official who specialized in the Northern Triangle and who traveled with Harris to the region.

Critics contend that she could have done far more but chose a less risky path, ensuring the problem only worsened.

“She was like, ‘nope, I’m just root causes,’’” said Mark Krikorian, executive director of the Center for Immigration Studies, which advocates for less immigration. “Even if it worked, it’s the sort of thing that takes generations, not one term.”

He also said there was no evidence that Harris pushed Mexico and the Northern Triangle nations to enforce immigration laws.

Harris has defended her work, and her campaign began running a television ad Friday that said Harris as president would “hire thousands more border agents and crack down on fentanyl and human trafficking.” Democrats have also blasted Trump for helping tank a bipartisan immigration bill earlier this year that would have increased funding for border security, including the hiring of new Customs and Border Protection personnel.

Trump “has been talking a big game on securing the border, but he does not walk the walk,” the vice president said last month in Atlanta. Later, she added, “Donald Trump does not care about border security. He only cares about himself.”

Immigration becomes a big political issue

Immigration has long been an issue that motivates Trump and his base of supporters, and polls show it is among the most important issues on the minds of voters. As a presidential candidate in 2016, Trump said he would build a wall along the border between the United States and Mexico and get Mexico to pay for it. Trump was not able to complete the project, and Mexico did not fund the part of the barrier that was constructed. The former president also used explosive language to describe immigrants, launching his campaign by suggesting Mexico was sending its “rapists” and criminals to the United States.

While in office, Trump sought to tightly restrict asylum, which was challenged in the courts. This time around, Trump has promised to oversee a “mass deportation” of migrants who have committed crimes in the United States.

Migration numbers have spiked and dropped during both presidencies. Border Patrol arrests on the southern border fell in Trump’s first year in office, then shot back up his next two, rising to more than 850,000 in 2019. The numbers plunged in 2020 during the coronavirus pandemic before rising even higher during Biden’s presidency, reaching a peak of more than 250,000 encounters in December 2023, before falling below 84,000 in June of 2024, federal statistics show.

When Biden took office, he reversed dozens of Trump’s moves on immigration even as apprehension numbers began to rise.

Harris was put in a ‘difficult spot’

Harris received the migration assignment when border crossings were rising, garnering considerable attention and leading to bipartisan calls for action.

Chris Newman, an immigration rights advocate in Los Angeles, said Harris was put in a difficult spot.

“She was tasked with developing a long-term policy framework rather than creating a short-term political performance project,” said Newman, the legal director of the National Day Laborer Organizing Network.

Biden and Harris had taken office only two months before, and Harris was under pressure to build her policy portfolio. When he was vice president, Biden had taken on a similar role on immigration. In 2021, though, Harris was dealing with an especially challenging situation given the lack of governing partners in the region. El Salvador’s new president, Nayib Bukele, had a fraught relationship with the administration due to human rights questions raised by his crackdown on crime in his nation. The man who was then president of Honduras has since been convicted of drug trafficking.

The headaches for Harris began almost immediately, validating the concerns of some on her team that it was a no-win assignment.

Harris traveled to Mexico and Guatemala in June 2021, where she defended the fact she had not been to the U.S.-Mexico border during an interview with NBC’s Lester Holt by saying she hadn’t “been to Europe. And I mean, I don’t … understand the point that you’re making.”

She also drew criticism on that trip for warning migrants bluntly: “Don’t come” to the U.S.

Harris decided to focus on bringing private investment to the region, tapping into a network of business and nonprofit executives and using the prestige of the White House to signal the Biden administration was backing this effort.

The work linked multinational companies — like Visa, Nestle and Meta — with smaller nonprofits and Latin American businesses, all of which pledged to increase their investments or bolster their work with at-risk communities.

Focused on private investment

The Associated Press contacted all thenearly two dozen companiesthe White House touted as participants in the outreach effort. Some, like AgroAmerica, a sustainable food corporation, that pledged to invest more than $100 million in six new projects, reported their work had begun and they were on track to meet their investment goals. Others, including Columbia Sportswear Company, said they would likely surpass their pledges.

Most companies, however, either declined to comment or did not respond when asked about their efforts.

The vice president’s office has said Harris’ efforts have generated more than $5.2 billion in investment promises. In an illustration of how long it takes the promises to translate into concrete spending, the State Department reported that companies have plowed nearly $1.3 billion in the region as of June 2024, the bulk of it in Guatemala and Honduras.

READ MORE: Past match-ups offer clues on how Harris might debate Trump

“We are on track to exceed our commitments,” Peter Bragdon, a top executive at Columbia Sportswear Company, said of their promise to purchase up to $200 million in products from the region. That pledge would create nearly 7,000 jobs over five years, the company said. The executive called Harris’ efforts a “work in progress” but “a smart approach.”

Katie Tobin, who worked as the top migration adviser at the National Security Council for three years, credited Harris’ focus with spurring investment in reducing these numbers, arguing that Harris “was able to leverage her credibility” and the power of the White House to persuade companies to invest in “a risky investment environment.”

“That was very much Kamala Harris,” she added. “I have never seen something like that done before in this space and it made a real impact.”

Republican Sen. Rick Scott of Florida, a sharp critic of Harris, said the vice president and White House were taking credit for investments that would have been made anyway.

The companies are “not doing it because someone asked them to,” said Scott, who co-founded a major medical company. “They’re doing it because it makes economic sense.”

Addressed corruption

Harris also sought to address endemic corruption that has fueled migration from Central America. Before her 2021 trip to Guatemala, Harris met with a group of exiled Guatemalan prosecutors and judges in Washington.

Among them was Thelma Aldana, a former chief prosecutor who fled her country after what she said were politically motivated corruption charges.

“I came out of it convinced that she has a genuine interest in seeing things change in Central America,” Aldana said.

The vice president also deserves credit for helping stop Guatemala’s former president, Alejandro Giammattei, from overturning the 2023 election of his successor, Bernardo Arévalo, according to Luis Von Ahn, a U.S.-based technology entrepreneur from Guatemala.

“Giammattei didn’t want to leave power, the administration of Kamala Harris came and told him ’stop (messing) around,’” said Von Ahn, the founder of the language app Duolingo. “That’s a big help to Guatemala. If an extremely corrupt president doesn’t want to leave it’s terrible and (his exit) lets us be a better country.”

Verdict is out on Harris’ approach

While the Harris campaign and White House have pointed to statistics that show migration from Northern Triangle countries has dropped substantially since early 2021, there is debate over what is responsible for that drop.

Sen. Chris Murphy, D-Conn., said Harris and the administration deserve credit for the reduction because their efforts “worked.”

Independent analysts, however, said they were skeptical that Harris’ approach was responsible for the dip. They said the decrease was likely driven by regional factors, including the ascension of El Salvador’s new president and his aggressive drive to combat violent crime. His government reported a 70% drop in homicides in 2023.

Julia Gelatt, associate director of the Migration Policy Institute in Washington, said investment can take years to alter migration patterns — if it ever does.

“Even a whole lot of economic development doesn’t curb immigration in the way countries hope it will,” Gelatt said.

Riccardi reported from Denver. Associated Press writer Sonia Pérez D. in Guatemala City contributed to this story.

Associated Press

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Presented with rise in border crossings, Kamala Harris chose a long-term approach to the problem

FILE - Vice President Kamala Harris stands in front of mountains during a news conference, June 25, 2021, at the airport after her tour of the U.S. Customs and Border Protection Central Processing Center in El Paso, Texas. (AP Photo/Jacquelyn Martin, File)

FILE - Vice President Kamala Harris, right, smiles as women speak to her about their businesses during a meeting with Guatemalan women entrepreneurs and innovators at the Universidad del Valle de Guatemala, June 7, 2021, in Guatemala City. (AP Photo/Jacquelyn Martin, File)

FILE - Vice President Kamala Harris walks to board Air Force Two to return to Washington, Jan. 27, 2022, in Palmerola, Honduras. (Erin Schaff/The New York Times via AP, Pool, File)

FILE - Vice President Kamala Harris speaks to the media, June 8, 2021, at the Sofitel Mexico City Reforma in Mexico City. (AP Photo/Jacquelyn Martin, File)

FILE - Vice President Kamala Harris and Mexican President Andrés Manuel López Obrador wave from the balcony of the Eisenhower Executive Office Building on the White House complex in Washington, Nov. 18, 2021. (AP Photo/Susan Walsh, File)

• Copy Link copied

WASHINGTON (AP) — President Joe Biden , watching tens of thousands of migrants from Central America reach the U.S.-Mexico border just a few months into his administration, tapped his second-in-command to help address the influx — a decision that has exposed Vice President Kamala Harris to one of her biggest political liabilities.

In grappling with migration , Harris proceeded cautiously. She focused her time and prestige on boosting private investment in El Salvador, Honduras and Guatemala, the so-called Northern Triangle; her goal was to help create jobs to bolster economies and dissuade migrants from making the perilous journey to the United States.

It was a decidedly long-term — and limited — approach to a humanitarian crisis, and it has allowed Republicans to tie her to the broader fight over the border. While migration from the Northern Triangle ebbed, it surged from other nations, sparking an emergency at the U.S.-Mexico border, one that Republicans have aggressively sought to exploit at Harris’ expense.

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A review of Harris’ work on immigration reveals a record that is more nuanced than the one presented by her critics or allies. It also provides insights into how Harris — who took over as the Democratic standard-bearer when Biden dropped out of the presidential race last month — might tackle one of the nation’s most vexing concerns.

Harris was never the “border czar,” or put in charge of border security or halting illegal border crossings, as former President Donald Trump, Republicans and even the occasional media outlet have claimed. Instead, she was tasked in March 2021 with tackling the “root causes” of migration from the Northern Triangle and pushing its leaders — along with Mexico’s — to enforce immigration laws, administration officials said.

Harris’ backers say she demonstrated leadership by leveraging her stature to win investments that might curb migration years down the road.

Vice President Kamala Harris, right, smiles as women speak to her about their businesses during a meeting with Guatemalan women entrepreneurs and innovators at the Universidad del Valle de Guatemala, June 7, 2021, in Guatemala City. (AP Photo/Jacquelyn Martin, File)

“She felt — and I think she was right — that what she could do the most was help basically lead the effort to draw in investment, using the confidence that a relationship with the White House would give to investors,” said Ricardo Zúniga, a former State Department official who specialized in the Northern Triangle and who traveled with Harris to the region.

Critics contend that she could have done far more but chose a less risky path, ensuring the problem only worsened.

“She was like, ‘nope, I’m just root causes,’’” said Mark Krikorian, executive director of the Center for Immigration Studies, which advocates for less immigration. “Even if it worked, it’s the sort of thing that takes generations, not one term.”

He also said there was no evidence that Harris pushed Mexico and the Northern Triangle nations to enforce immigration laws.

Harris has defended her work, and her campaign began running a television ad Friday that said Harris as president would “hire thousands more border agents and crack down on fentanyl and human trafficking.” Democrats have also blasted Trump for helping tank a bipartisan immigration bill earlier this year that would have increased funding for border security, including the hiring of new Customs and Border Protection personnel.

Trump “has been talking a big game on securing the border, but he does not walk the walk,” the vice president said last month in Atlanta . Later, she added, “Donald Trump does not care about border security. He only cares about himself.”

Immigration becomes a big political issue

Immigration has long been an issue that motivates Trump and his base of supporters, and polls show it is among the most important issues on the minds of voters. As a presidential candidate in 2016, Trump said he would build a wall along the border between the United States and Mexico and get Mexico to pay for it. Trump was not able to complete the project, and Mexico did not fund the part of the barrier that was constructed. The former president also used explosive language to describe immigrants, launching his campaign by suggesting Mexico was sending its “rapists” and criminals to the United States.

While in office, Trump sought to tightly restrict asylum, which was challenged in the courts. This time around, Trump has promised to oversee a “mass deportation” of migrants who have committed crimes in the United States.

Vice President Kamala Harris walks to board Air Force Two to return to Washington, Jan. 27, 2022, in Palmerola, Honduras. (Erin Schaff/The New York Times via AP, Pool, File)

Migration numbers have spiked and dropped during both presidencies. Border Patrol arrests on the southern border fell in Trump’s first year in office, then shot back up his next two, rising to more than 850,000 in 2019. The numbers plunged in 2020 during the coronavirus pandemic before rising even higher during Biden’s presidency, reaching a peak of more than 250,000 encounters in December 2023, before falling below 84,000 in June of 2024, federal statistics show.

When Biden took office, he reversed dozens of Trump’s moves on immigration even as apprehension numbers began to rise.

Harris was put in a ‘difficult spot’

Harris received the migration assignment when border crossings were rising, garnering considerable attention and leading to bipartisan calls for action.

Chris Newman, an immigration rights advocate in Los Angeles, said Harris was put in a difficult spot.

“She was tasked with developing a long-term policy framework rather than creating a short-term political performance project,” said Newman, the legal director of the National Day Laborer Organizing Network.

Biden and Harris had taken office only two months before, and Harris was under pressure to build her policy portfolio. When he was vice president, Biden had taken on a similar role on immigration. In 2021, though, Harris was dealing with an especially challenging situation given the lack of governing partners in the region. El Salvador’s new president, Nayib Bukele, had a fraught relationship with the administration due to human rights questions raised by his crackdown on crime in his nation. The man who was then president of Honduras has since been convicted of drug trafficking.

The headaches for Harris began almost immediately, validating the concerns of some on her team that it was a no-win assignment.

Harris traveled to Mexico and Guatemala in June 2021, where she defended the fact she had not been to the U.S.-Mexico border during an interview with NBC’s Lester Holt by saying she hadn’t “been to Europe. And I mean, I don’t … understand the point that you’re making.”

She also drew criticism on that trip for warning migrants bluntly: “Don’t come” to the U.S.

Harris decided to focus on bringing private investment to the region, tapping into a network of business and nonprofit executives and using the prestige of the White House to signal the Biden administration was backing this effort.

The work linked multinational companies — like Visa, Nestle and Meta — with smaller nonprofits and Latin American businesses, all of which pledged to increase their investments or bolster their work with at-risk communities.

Vice President Kamala Harris and Mexican President Andrés Manuel López Obrador wave from the balcony of the Eisenhower Executive Office Building on the White House complex in Washington, Nov. 18, 2021. (AP Photo/Susan Walsh, File)

Focused on private investment

The Associated Press contacted all the nearly two dozen companies the White House touted as participants in the outreach effort. Some, like AgroAmerica, a sustainable food corporation, that pledged to invest more than $100 million in six new projects, reported their work had begun and they were on track to meet their investment goals. Others, including Columbia Sportswear Company, said they would likely surpass their pledges.

Most companies, however, either declined to comment or did not respond when asked about their efforts.

The vice president’s office has said Harris’ efforts have generated more than $5.2 billion in investment promises. In an illustration of how long it takes the promises to translate into concrete spending, the State Department reported that companies have plowed nearly $1.3 billion in the region as of June 2024, the bulk of it in Guatemala and Honduras.

“We are on track to exceed our commitments,” Peter Bragdon, a top executive at Columbia Sportswear Company, said of their promise to purchase up to $200 million in products from the region. That pledge would create nearly 7,000 jobs over five years, the company said. The executive called Harris’ efforts a “work in progress” but “a smart approach.”

Katie Tobin, who worked as the top migration adviser at the National Security Council for three years, credited Harris’ focus with spurring investment in reducing these numbers, arguing that Harris “was able to leverage her credibility” and the power of the White House to persuade companies to invest in “a risky investment environment.”

“That was very much Kamala Harris,” she added. “I have never seen something like that done before in this space and it made a real impact.”

Republican Sen. Rick Scott of Florida, a sharp critic of Harris, said the vice president and White House were taking credit for investments that would have been made anyway.

The companies are “not doing it because someone asked them to,” said Scott, who co-founded a major medical company. “They’re doing it because it makes economic sense.”

Addressed corruption

Harris also sought to address endemic corruption that has fueled migration from Central America. Before her 2021 trip to Guatemala, Harris met with a group of exiled Guatemalan prosecutors and judges in Washington.

Among them was Thelma Aldana, a former chief prosecutor who fled her country after what she said were politically motivated corruption charges.

“I came out of it convinced that she has a genuine interest in seeing things change in Central America,” Aldana said.

The vice president also deserves credit for helping stop Guatemala’s former president, Alejandro Giammattei, from overturning the 2023 election of his successor, Bernardo Arévalo, according to Luis Von Ahn, a U.S.-based technology entrepreneur from Guatemala.

“Giammattei didn’t want to leave power, the administration of Kamala Harris came and told him ’stop (messing) around,’” said Von Ahn, the founder of the language app Duolingo. “That’s a big help to Guatemala. If an extremely corrupt president doesn’t want to leave it’s terrible and (his exit) lets us be a better country.”

Verdict is out on Harris’ approach

While the Harris campaign and White House have pointed to statistics that show migration from Northern Triangle countries has dropped substantially since early 2021, there is debate over what is responsible for that drop.

Sen. Chris Murphy, D-Conn., said Harris and the administration deserve credit for the reduction because their efforts “worked.”

Independent analysts, however, said they were skeptical that Harris’ approach was responsible for the dip. They said the decrease was likely driven by regional factors, including the ascension of El Salvador’s new president and his aggressive drive to combat violent crime. His government reported a 70% drop in homicides in 2023.

Julia Gelatt, associate director of the Migration Policy Institute in Washington, said investment can take years to alter migration patterns — if it ever does.

“Even a whole lot of economic development doesn’t curb immigration in the way countries hope it will,” Gelatt said.

Riccardi reported from Denver. Associated Press writer Sonia Pérez D. in Guatemala City contributed to this story.

Lessor vs. Lessee: How Are They Different?

A lessor leases property to a lessee who rents the property. Learn the rights and responsibilities of each, why they matter, and common lease types.

Learn more about commercial leases

by   Fabrienne Bottero

Fabrienne is a writer and journalist who specializes in branding and content strategy. In the last five years, s...

Read more...

Updated on: August 14, 2024 · 8 min read

Lessor vs. lessee at a glance

Lessor vs. lessee: roles and responsibilities, key differences between a lessor and a lessee, types of lease agreements, why does a strong lease agreement matter.

When we think of leases, we often think of a landlord and a tenant. While commercial and residential real estate are common, you can lease almost any asset. Equipment, vehicles, and even trademark leases are important aspects of our economy and sometimes our daily lives. 

No matter the asset, the cornerstone of every contract is a strong relationship between the lessor and lessee. Building this relationship starts with a deep understanding of your role.

Both parties enter into a contract called a lease or rental agreement, typically for residential or commercial real estate . The lessee makes payment(s) to the lessor for use of the property or asset.

Lessor meaning: The owner of an asset who grants the right to use it to another party through a lease agreement. The property owner can be an individual or a company.

Lessee meaning: The other party who obtains the right to use an asset. The lessee can also be an individual or company.

Lease vs. rental agreement: Rental agreements are typically short-term or month-to-month, while lease agreements are often six months or more.

While the details of this dynamic will depend on the context of the lease, there are common obligations that each party should consider before entering into a new contract.

Successfully navigating these duties depends on clear communication, comprehension of legal rights and responsibilities, and cooperation between both parties regardless of the leasing situation.

Lessor roles and responsibilities:

• Payment: The lessor dictates the amount, frequency, and duration of lease payments.
• Maintenance: The lessor is responsible for major, and sometimes minor, repairs to the asset while it is in their care or if it's a real estate property.
• Negotiations: The lessor communicates with the lessee to negotiate the terms of the lease. For example, a lessor may want to raise the lease price based on market trends.
• Security deposit: The lessor may retain or deduct from the security deposit to fund any damages to the asset that the lessee caused.

Lessee roles and responsibilities:

• Payment: The lessee is responsible for making periodic payments in accordance with the terms of the lease. For example, by the due date specified in the contract.
• Maintenance: The lessee is responsible for maintaining the asset's original condition, with the exception of normal wear.
• Negotiations: The lessee can negotiate the terms of the lease with the lessor for more favorable terms. Doing so can avoid confusion or unfavorable circumstances down the line.
• Security deposit: The lessee can document the condition of the asset to avoid paying for pre-existing damages.

These differences will vary depending on the type of lease you have, so we always recommend seeking  legal advice to best understand each party's rights and responsibilities in your specific case.

That said, here is a brief overview of the key differences between a lessor and lessee across most lease agreements:

The lessor retains ownership rights, while the lessee has usage rights for the duration of the lease agreement. Although the lessee can negotiate certain privileges—such as early termination of the lease, renewal with unchanged terms, or permission to sublease—whether or not to accept these terms is ultimately up to the lessor.

Control and responsibilities

Most jurisdictions have an implied warranty of habitability that requires landlords to keep the property livable and consistent with local housing codes. That said, responsibilities for property maintenance and expenses can vary depending on the type of lease agreement and the lessor sets the terms.

For real estate, vehicles, and equipment, the lessee is responsible for maintaining the original condition of the asset. For example, they'll have to pay to fix any damages they've directly or passively caused to the asset.

Financial aspects

The lessor receives periodic lease payments from the lessee based on the terms of their contract, which can be monthly, quarterly, or yearly, depending on the lease. The lessee is responsible for regularly making payments based on the terms of the contract​.

In this way, the lessor generates income from leasing the asset, and the lessee uses the asset without having to pay the full purchase price. In some cases, the lessee and lessor can agree on a lease-to-buy option, in which lease payments eventually convert into a down payment to purchase the leased asset.

Rights and obligations

The lessor has the authority to enforce lease terms and take action if the lessee fails to comply​. The lessee must comply with all lease terms, and any changes to the property usually require lessor approval.

That said, if the lessor fails to maintain the asset to meet legal and safety standards, the lessee can withhold lease payments until those standards are met, as long as they're in a jurisdiction that follows the habitability warranty mentioned above.

Both parties can request proof of reliability. For example, a lessor can request evidence of reliable income or credit, and the lessee can request proof of ownership and evidence of the asset's good condition.

Use and access

In some cases, the lessor may have restricted access to the property or asset unless specified otherwise in the lease agreement. The lessee typically enjoys exclusive use of the asset during the lease term. This right is called quiet enjoyment , which protects a lessee's right to use the property or asset undisturbed.

These are some of the common types of lease agreements.

• Operating lease : Typically for short-term usage. The lessor maintains ownership and responsibility for asset maintenance, but the lessee won't have an option to eventually purchase.
• Gross lease : The lessor covers all property-related expenses, such as maintenance, taxes, and insurance, while the lessee pays a single, fixed lease amount. A  gross lease makes budgeting easier but can result in higher rents​.
• Triple net lease : The lessee is responsible for property taxes, insurance, and maintenance costs in addition to the rent. In a triple net lease , the base rent is typically lower because the lessee manages all the operating costs.
• Capital lease : A long-term lease in which the lessee assumes ownership responsibilities with the option to buy; it’s often recorded as an asset and liability on balance sheets (financial statements). A capital lease agreement is also known as a finance lease.
• Sale and leaseback : An asset owner—typically a company—can sell their property and then lease it from the new owner. A company may choose to do this in order to receive substantial funds from the sale while maintaining usage rights.

A strong lease agreement is essential for lessors and lessees as it establishes clear terms that consider both parties, which is necessary for a legally binding partnership. An attorney can be an invaluable asset to ensure a strong lease. We can help you find an attorney who will create, revise, and customize a commercial lease for you.

Clarity and enforceability

A well-drafted lease agreement provides clear terms and conditions, reducing the potential for misunderstandings. It serves as a legally binding document that can dictate how courts proceed if disputes arise​. It clearly outlines the rights and responsibilities of both parties, protecting their interests and ensuring that both parties understand their obligations​.

Financial security

The agreement defines the rental amount, payment frequency, and any penalties for late payments. This ensures that the lessor receives timely compensation and the lessee understands their financial obligations​. It also includes details about security deposits, additional fees, and conditions under which these are returned.

Conflict resolution

Dispute resolution mechanisms—such as mediation or arbitration —included in the agreement offer a faster and less costly alternative to litigation​. It also specifies the conditions under which either party can terminate the lease, as well as other conditions that lessors and lessees can refer to when settling possible disputes.

Asset protection

An agreement that specifies maintenance responsibilities ensures that the property or asset is adequately cared for during the lease term and prevents potential misuse or damage. Although the law requires landlords (real estate lessors) to meet local building and housing codes, it's possible to assign some maintenance to the tenant in the lease agreement.

Flexibility and customization

Lease agreements can be customized to fit the specific needs of the lessor and lessee, including lease duration, renewal options, and special conditions​. They can include specific clauses—such as early termination options, buyout clauses, or rights of first refusal, which allow the lessee the first choice to renew the lease or not before the lessor can seek a new lessee.

Compliance and risk management

A comprehensive agreement ensures compliance with local, state, and federal laws. The lease can limit the liability of both parties by specifying conditions under which each party is responsible for damages or losses, reducing the risk of costly legal battles. It can require insurance coverage for certain risks , ensuring both parties are protected financially in case of accidents or damage.

Can a lease agreement be terminated early?

Yes, either party can terminate an agreement early if one party violates the terms of the contract or early termination is granted in the terms of the agreement.

What happens if a lessee defaults on lease payments?

Usually, three months of missed payments will warrant a default. In that case, the lessor will likely repossess the asset. Failure to resolve the default can lead to evictions, lawsuits, collections, and judgments. This could impact your credit and ability to lease or buy in the future.

Can a lessee make changes to the leased property or asset?

Sometimes, a lessee can request that the lessor modify the property or asset. If the request is accepted, the lessee is free to make the agreed-upon changes. The lessor may also deny the request, meaning the lessee cannot make the requested modifications.

Is a landlord a lessor?

Yes, a landlord is a lessor of real estate property, either residential or commercial. 

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