Deed of Assignment - Commercial Lease

A Deed of Assignment for a Commercial Lease allows the Tenant of a commercial property with an existing commercial lease, to transfer the legal interest of the Tenant in that commercial property to another individual, company or partnership. This means that after the assignment, the original tenant under the commercial lease will no longer be the tenant of the commercial property and the person to who the lease is transferred will become the new tenant of the commercial property. As a consequence, the Tenant (also known as the "Assignor") will have to vacate the commercial property, which will then be occupied by another person (known as the "Assignee"). The Assignee upon taking over the occupation of the commercial property will have to adhere to the terms contained in the lease including the amount of rent, the duration of the lease, payment schedules and other undertakings.

A Deed of Assignment can be beneficial to the Assignor in that it grants them the opportunity to leave the leased property before the expiration of the agreed termination date of the lease. This can be particularly useful where the Assignor judges that it will not be able to keep up with rent payments for the remainder of the lease due to economic constraints and wishes to completely let go of the property, or where the Assignor comes to the decision that it does not need the lease anymore for its business and wishes to transfer it completely to another party without retaining any rights to the property.

This template can be used to create such a Deed of Assignment for a commercial lease. This Deed of Assignment makes provision for the Assignee to pay a fee to the Assignor, which in effect is like a price which the Assignee is using to buy the rights of the commercial lease from the Assignor. This fee is known as the Premium. The Deed of Assignment also makes provision for the event where the Assignee will cover any additional costs the Assignor may incur as a result of the assignment, such as legal costs or any incidental costs that are separate from the Premium. An example of how this applies is where the Assignor hires a solicitor to provide legal advice and oversee the assignment of the lease, the Assignor may wish for the Assignee to be the one to pay for the costs incurred in hiring a solicitor. This cost will not form part of the Premium but rather an additional cost that the Assignor will bear and may therefore prefer for the Assignee to cover such cost.

This template also makes note of the persons who were parties to the commercial lease. Where there was a guarantor for the original Tenant, that person will not be a party to this assignment. The guarantor's identity is only noted in this template to accurately list all the parties to the commercial lease for record and documentary purposes.

A Deed of Assignment is a legally binding contract between all the interested parties, including the Assignor, the Assignee and the Landlord (i.e. the Owner of the commercial property). Before a commercial property can be assigned, the landlord's consent will usually be required. Similarly, the Commercial Lease will usually preclude the Assignor (i.e. the Tenant under the Commercial Lease) from assigning the lease unless the landlord expressly consents to such assignment. Under UK law, a landlord is under an implied duty to consent to the assignment of the lease unless it would be unreasonable to do so. Such consent should be given in within a reasonable time and it should be given in writing, although there is no strict format that this written notice must follow. In the rare case where the commercial lease does not state whether the assignment of the lease is subject to the landlord's consent, it will mean that the Assignor can assign the lease without the need for such landlord's consent. It is therefore important to refer to the commercial lease concerned and confirm what the lease's provisions are regarding its assignment and the landlord's consent. Where the landlord's consent is required for the assignment of the lease, the original Tenant should contact the landlord to address matters and request that consent is given. The manner with which the Original tenant should inform the landlord about the assignment of the lease and request consent will be contained in the commercial lease.

This Deed of Assignment can only be used where the commercial property is located in the jurisdiction of England and Wales.

This template can be used where the assignment of the lease applies to either of the two scenarios:

• Where the term of the commercial lease has not expired and there is still time remaining. For example where the commercial lease was for 6 years and the original Tenant has only used 3 years, with 3 years of the term left unused.
• Where the term of the commercial lease has expired but the original Tenant is still in possession of the property. This scenario is called a continuation of the lease. A continuation of the lease can occur either through an application made by the original Tenant to the court or it can occur automatically under statutory provisions.

Note: This document should only be used where the commercial lease is an unregistered lease. An unregistered commercial lease is a lease which was granted for a period of 7 (seven) years or less. Under UK law, if a commercial lease is for a period of more than 7 years, it has to be registered at the Land Registry. Where the lease is a registered lease and the original Tenant wishes to assign the lease, the TR1 form should instead be used.

Differences between a deed of assignment and a commercial sublease agreement

Under an assignment of a commercial lease, the Tenant (i.e. the Assignor) ceases to be liable for any breaches of the original lease and the responsibility for liability is legally transferred to the Assignee from the date of assignment. Whereas, under a commercial sublease, the Tenant (i.e. the Sublandlord) remains liable under the original lease for any breaches that may be committed by the party who is subleasing (i.e. the Subtenant).
Under an assignment of a commercial lease, the Tenant (i.e. the Assignor) will not share the property with the Assignee, rather the Assignee will enjoy full possession of the commercial property from the date of assignment until the end of the term of the commercial lease. Whereas, under a commercial sublease, it is commonplace for the Tenant (i.e. Sublandlord) to only sublease a portion of the commercial property to the Subtenant and thus continue in shared possession of the commercial property with the Subtenant.

How to use this document

This Deed of Assignment allows the user to input all of the required rights and responsibilities that are necessary to assign the commercial property to an Assignee. The document allows a user to:

• input the address of the commercial property;
• the amount of Premium to be paid by the Assignee;
• the method of payment of the Premium;
• the date of the landlord's consent (if applicable);
• the details of any additional costs;
• whether the Assignee will indemnify the Assignor for losses;
• whether there is another agreement that also addresses the assignment of the lease;
• what type of title guarantee is being assigned; and
• other important details.

After the document has been filled out, it should be printed and signed by the parties. Consequently, each party should hold a copy of the signed deed for reference purposes.

As this Deed of Assignment relates to an interest in land, it is required to be executed as a deed. This means that it must be in writing and must be signed in the presence of a witness. If the party is a company, instead of a witness, the deed can be signed by two directors or by a director and the company secretary.

Applicable Law

Landlord and Tenant (Covenants) Act 1995

Law of Property (Miscellaneous Provisions) Act 1994

Landlord and Tenant Act 1954

Law of Property Act 1925

Land Registration Act 2002

Help from a lawyer

You can choose to consult a lawyer if you need help.

The lawyer can answer your questions or help you through the process. You will be offered this option when you complete the document.

How to modify the template

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.