7: Assignments & Subleases Flashcards
What is an assignment?
A transfer of all of the tenant’s rights under the lease to the transferee
What is a sublease?
The original tenant transfers less than all of their rights to the transferee. The original tenant maintains a revisionary interest in the property meaning they can back after the allotted time of the sublease
What is the majority (common law) approach to distinguish assignment?
If the transfer is for the remaining balance of the lease, or the transferor transfers all of their interest in the property to the other, then there is an assignment
What is the majority (common law) approach to distinguish sublease?
If the transfer is for anything less than the remaining balance of the lease, then ti is a sublease
Under the minority approach to distinguish assignment/sublease, what do you focus on?
Must look to the intent of the parties
Under the minority approach to distinguish assignment/sublease, what are the factors to look at?
- Characterization/language that is used to describe the relationship
- Who the rent is paid to
- Whether there is a reversionary interest
Which approach focuses heavily on the language within the agreement?
Minority approach
Under the minority approach, if rent is paid to the sublessor or original tenant, who then pays it to the original landlord, is it a sublease or an assignment?
Under the minority approach, it is a sublease
Under the minority approach, if there is a revisionary interest, is it a sublease or an assignment?
Under the minority approach, it is a sublease
Under the minority approach, if the amount of rent is the same, is it a sublease or an assignment?
Under the minority approach, it is an assignment
What is a privity of estate?
A possessory interest in land, the covenant of privit of estate runs with the land, meaning it cannot be separated from the land
What is a privity of contract?
Binds the party to be obligated to the agreement, P of K follows the original tenant and the current assignee
What happens with privity of contract if the transfer is a sublease?
A new privity of estate and contract are created between the sublessor and sublessee
What is the No Prohibition on Assigning and Subleasing Rule?
If there is no prohibition on assigning or subleasing I the contract, then the tenant is free to do so. There can be a prohibition on assigning or subleasing individually, which would only restrict that specific action
Under the majority approach, when does the lease require the tenant to obtain consent from the landlord?
Where a lease requires a tenant to obtain the prior written consent of the landlord to sublet or assign, a landlord may refuse consent arbitrarily, except when the lease contains a clause specifically stating that the landlord may unreasonably withhold such consent
