Assignment and Assumption of Lease Explained

An assignment and assumption of lease is the two-part instrument that transfers a tenant's entire remaining leasehold to a new tenant and has that new tenant expressly assume the lease obligations going forward. The assignment moves the lease; the assumption makes the new tenant directly responsible to the landlord for it. The one thing it usually does not do is release the original tenant: unless the landlord signs an express release, the departing tenant stays secondarily liable for the rent for the balance of the term if the new tenant defaults.

Last updated July 2026.

When a commercial tenant sells its business, merges, or simply wants out of a lease with time left on it, the deal is usually done through an assignment and assumption of lease. It sounds like a clean handoff. It rarely is, because the document that transfers the lease and the reality of who remains on the hook are two different things, and the gap between them is where the money is.

What is an assignment and assumption of lease?

It is a single agreement that does two jobs. The assignment transfers the assignor's (the original tenant's) entire remaining interest in the lease to the assignee (the new tenant). The assumption is the assignee's express promise to perform the lease obligations, rent, maintenance, insurance, and everything else, from the effective date forward. The assumption half is what gives the landlord privity of contract with the new tenant, meaning the landlord can enforce the lease directly against the assignee rather than only against the tenant that left.

Almost all commercial leases require the landlord's prior written consent to an assignment, so the deal typically involves three documents read together: the assignment and assumption agreement, the landlord's consent, and the underlying lease. Reading any one alone misses terms that decide liability.

What is the difference between an assignment and an assumption?

They are two sides of the same transfer. The assignment is the conveyance: it moves the leasehold from the old tenant to the new one. The assumption is the acceptance of duties: it obligates the new tenant to perform. You can, in theory, have an assignment without an assumption, where the assignee takes the space but never expressly agrees to the lease terms, and that is a problem for the landlord, because enforcement may then run only against the departed assignor. That is why landlords insist on an express assumption as a condition of consent.

Does an assignment release the original tenant?

Usually not. This is the single most misunderstood point in commercial leasing. Under general contract law and most lease terms, an assignment does not release the assignor unless the landlord expressly agrees to a release. Absent that written release, the original tenant remains secondarily liable for the rent and obligations for the rest of the term, so if the assignee stops paying, the landlord can pursue the original tenant, sometimes years after it thought it had walked away. A tenant that assigns a lease and assumes it is free of the obligation, without getting a signed release, has assumed wrong.

What is a novation?

A novation is an assignment plus a genuine release: the landlord agrees to substitute the new tenant for the old one entirely, discharging the original tenant from all future liability. It requires the landlord's consent because the landlord is giving up a party it can collect from. Landlords resist novations for exactly that reason, and they are far less common than a plain assignment. If you are the assignor and being released is the point of the deal, the word to negotiate for, and to confirm in writing, is a release or novation, not merely consent to assign.

Does a lease assignment need landlord consent?

Almost always. Standard commercial leases prohibit assignment without the landlord's prior written consent, frequently qualified by a standard that consent will not be unreasonably withheld, conditioned, or delayed. Some leases give the landlord sole and absolute discretion, and many pair the consent right with a recapture right, letting the landlord terminate the lease and take the space back instead of approving the transfer. An assignment made without required consent can itself be a default that lets the landlord terminate, so the consent letter is not optional paperwork; it is what makes the transfer valid. The related distinction between assigning and subletting is covered in commercial lease assignment versus subletting.

What should a landlord check before consenting?

The assignee's creditworthiness and business use, first of all, since the landlord is swapping a known tenant for an unknown one. Beyond that: whether the lease gives the landlord a recapture right worth exercising, whether the landlord can require a new or continuing guaranty, whether any profit or excess consideration on the transfer must be shared with the landlord, and whether the assignee's insurance meets the lease requirements. On that last point, a landlord consenting to an assignment will want to track the incoming tenant's certificate of insurance from day one, because the old tenant's policy leaves with it. A careful landlord also confirms that the assignor's guaranty either carries over or is replaced, so credit support is not lost in the handoff.

How do you abstract an assignment and assumption of lease?

The goal of abstracting one is to answer, in structured fields, who is now liable and on what terms. That means capturing the assignor and assignee, the effective date, the underlying lease it references, whether landlord consent was obtained and under what standard, whether the assignee expressly assumed the obligations, and, above all, whether the assignor was released or remains secondarily liable. It also means recording any recapture right the landlord exercised or reserved, any profit-sharing on the transfer, and whether a guaranty carried over or a new one was required. Because those answers are split across the assignment, the consent, and the lease, reading them together is the whole job, and it is what lease assignment abstraction does in minutes, with each field citing the page it came from. The options and dates keyed to the new tenant then feed the critical date extraction calendar.

The bottom line

An assignment and assumption of lease transfers the whole lease to a new tenant and binds that tenant to perform, but it does not, by itself, let the original tenant off the hook. The release is a separate promise the landlord has to sign, and without it the departing tenant stays liable for the term. Whether you are the assignor negotiating an exit, the assignee taking on the space, or the landlord deciding whether to consent, the terms that matter, consent standard, assumption, release, recapture, and guaranty, are the ones to read closely and record precisely.