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What is an assignment?
What is an assignment sale in commercial real estate?
What is the difference between an assignment of lease and a sublease?

What is an assignment?

An assignment in real estate refers to the process of transferring a certain right–held by an assignor– to another party–called the assignee.

What is an assignment sale in commercial real estate?

For example, if Buyer A enters a real estate sale contract with a Seller, but reaches an agreement with Buyer B before the deal is closed, Buyer A becomes the assignor by transferring property rights to Buyer B (the assignee). Buyer B then goes on to close the contract with the Seller and becomes the owner.

What is the difference between an assignment of lease and a sublease?

In the case of an assignment of lease, the assignor is looking to give up the property rights and to be relieved of any obligations to the property (rent payment, liability for damages to the building etc.) by handing them over to a third party (the assignee). The assignee will then take over all rights and obligations specified by the original lease agreement.

– By contrast, when agreeing on a sublease, the assignor is not actually leaving the original lease contract. He remains accountable to the landlord in terms of the rent, and damages incurred by the property. There is little to no contact between the landlord and the assignee. The contract might involve either a part of, or the entire property for a limited portion of the master lease’s duration.
– Subleases are a popular option because they offer increased flexibility for tenants. For instance, if a company outgrows its office but still has several years of its current lease, it can avoid breaching the lease contract by finding a replacement tenant to assign its lease to. However, under the sublease agreement, the assignee pays the rent to the assignor, not directly to the landlord. The assignor forwards the payments to the landlord and remains the contact for both landlord and assignee, regarding issues concerning the property.

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