Assignment & Sublease Clauses: How to Keep an Exit Path
Assignment & Sublease Clauses: How to Keep an Exit Path
Most tenants don’t plan to leave early—until reality hits:
- the business model changes
- sales are slower than expected
- you want to sell the business
- you need to downsize or relocate
Whether you can exit depends on the lease’s assignment and sublease terms.
This guide explains common assignment/sublease structures and tenant negotiation tactics. (Not legal advice.)
Assignment vs. sublease (quick definitions)
- Assignment: you transfer the lease to a new tenant (often as part of selling your business).
- Sublease: you stay on the lease but rent the space (or part of it) to someone else.
Landlords usually want control over who occupies the property. Tenants want a realistic exit path.
Common landlord requirements (and what to push back on)
Consent rights
Landlords often require written consent. The key issue is the standard:
- “Sole discretion” (bad for tenants)
- “Not unreasonably withheld” (better)
Financial strength tests
Landlords may require the new tenant to meet certain financial criteria. That can be reasonable—but should be defined.
Recapture rights
Some leases allow the landlord to “recapture” the space instead of approving an assignment/sublease.
This can be dangerous if:
- you lose the chance to sell your business
- you lose investment in tenant improvements
Profit sharing
Some leases require the tenant to share “profit” from a sublease. Profit should be defined carefully to avoid unfair outcomes.
Tenant-friendly negotiation ideas
- Consent “not unreasonably withheld/delayed”
- Automatic consent for:
- affiliate transfers
- internal reorganizations
- sale of business to a qualified buyer
- Clear recapture limits (or remove it)
- Profit-sharing only after you recover:
- commissions
- legal fees
- tenant improvement costs
Why assignment language affects your sale price
If a buyer can’t take over your lease, your business may be worth less.
Strong assignment language can:
- increase buyer confidence
- reduce deal friction
- improve exit options if you outgrow the space
How BizLeaseCheck helps
BizLeaseCheck flags:
- restrictive consent standards
- recapture clauses
- continuing personal guarantee language that survives assignment
Upload your lease to review the exit terms:
/analyze
Not legal advice
This article is for informational purposes only and is not legal advice. Lease assignment rules and enforceability vary by jurisdiction and deal structure. Use this as a checklist and confirm key terms with qualified professionals.