Continuing Liability & Novation in Lease Assignments
An assignment can leave you fully liable for the whole lease — and a plain assignment usually does not release the seller. A novation is what actually shifts liability.
Last reviewed: May 26, 2026 by the BizLeaseCheck Editorial Team
General information, not legal advice.
Overview
A central question in taking over a lease is who is liable to the landlord afterward — you, the original tenant, or both. The answer turns on whether the deal is a plain assignment or a true novation, and on what the assignment and consent documents say.
Getting this wrong means assuming more (or being protected by less) than you expected.
Topics to check
In an assignment with an assumption, you typically agree to perform all of the tenant’s obligations under the lease for the remaining term — rent, CAM, repairs, restoration, and any accrued amounts. Read the assumption language carefully: it can cover past obligations and defaults, not just future ones, meaning you could inherit unpaid charges or an existing breach.
Confirm exactly which obligations and time periods you are assuming, and exclude pre-closing liabilities where you can.
Assume (Cornell LII Wex)A plain assignment transfers the lease but generally does not, by itself, release the original tenant from liability to the landlord — landlords often keep the original tenant on the hook as additional security. That can be good for you (the seller stays motivated) but is mainly the landlord’s protection, not yours.
What changes liability is a novation: an agreement among the landlord, the original tenant, and you to substitute you for the original tenant, extinguishing the original tenant’s obligations. A novation requires the landlord’s consent.
Novation (Cornell LII Wex)If you are the seller, you want a novation or an express release so you are not liable after you leave. If you are the buyer, you want the assumption narrowed to post-closing obligations, an indemnity from the seller for pre-closing liabilities, and clarity on any existing default. Both want the landlord’s written sign-off.
Decide the liability arrangement deliberately rather than letting a plain assignment default to "everyone stays liable."
Key takeaways
- An assumption can make you liable for the whole remaining lease — and sometimes past defaults.
- A plain assignment generally does not release the original tenant from the landlord.
- A novation (landlord + old tenant + new tenant) is what actually substitutes liability.
- Buyers should narrow the assumption to post-closing obligations and get a seller indemnity for the past.
- Sellers should insist on a novation or express release; both need landlord sign-off.
Official resources
Legal-review notes
Guide confidence marker: Medium confidence.
- Continuing-liability and novation rules depend on the documents and state law; confirm with counsel.
- Whether assumed obligations include pre-closing defaults is a wording question; have an attorney review it.
Frequently asked questions
If I assume a lease, am I liable for the whole thing?
Typically you assume the tenant’s obligations for the remaining term, and the assumption language can even reach past obligations and existing defaults. Read it carefully and try to limit your assumption to post-closing obligations, with a seller indemnity for anything before closing.
Does the original tenant stay liable after assigning to me?
Usually yes, unless there is a novation or an express release. A plain assignment transfers the lease but generally keeps the original tenant liable to the landlord as additional security. Only a novation, with the landlord’s consent, substitutes you and releases them.
What is a novation?
A novation is an agreement among the landlord, the original tenant, and the new tenant to replace the original tenant with the new one, extinguishing the original tenant’s obligations. It requires the landlord’s consent and is the clean way to actually shift liability.