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Hi. Anna Lynch here, Perth Commercial Property.
Today, I’m going to be talking about the differences of sub-leasing and assignment of property.
Sub-leasing tends to refer to the secondary lease of surplus space by the existing lessee. The lessee still remains responsible to the landlord. The assignment of lease is often where the lessee no longer requires the property so a replacement then is sought by the lessee’s agent to relieve the existing lessee of their leasing obligations.
For example, should I have a 500 square meter warehouse, with a 100 square metre office and I do not need the office, I would look to sub-lease the office component. However, should I not need the entire property, then I would look to assign my lease.
There are advantages and disadvantages to sub-leasing to both parties. From a sub-lessors perspective… so the person looking to lease out the surplus place, it’s a great way to earn additional cash and cover additional overheads by not having excess property sitting around vacant.
However, the disadvantage is that you will still remain liable in all manners to the landlord. Should your sub-lessee not pay their rent or damage the property, it will not be them the landlord goes after. Ultimately, you’ll still be responsible.
From a sub-lessees perspective… so the person looking to lease your additional space, it’s a great way for them to get into the market being able to lease a professional property without having the huge overheads and startup costs to lease an entire property. On the disadvantage to them, however, is that they’re at the mercy of whomever is sub-leasing to them.
They are not in control of the property… so should the sub-lessor not pay their rent, decide to move, or be evicted, they too will have to move and won’t have any choice in the matter.
You’ll assign a lease where you no longer have a requirement for your premises but you still have a lease contract in place. Be sure to read your lease assignment contract papers very carefully as you might often find that you’re still ultimately responsible should the incoming tenant default on the lease.
Lease assignment is quite a common process. For example, here at Perth Commercial Property, we successively assigned the leases for two of our clients in the last month.
Well, that’s it for this commercial property update. Be sure to give me a call or send me an e-mail if you have any questions and remember, I personally respond to all e-mails.