X hits on this document





13 / 41

No assignment or subletting of Tenant’s interest under this Lease shall in any way release Tenant from its obligations under this Lease.  Landlord’s consent to one subletting or assignment shall not constitute Landlord’s consent to any subsequent subletting or assignment.

While there is no Washington caselaw directly on this point, this is an easy risk for the landlord to guard against in the lease by including protective language.  

4.Do all of Tenant’s Rights Flow to the Transferee?  The landlord and tenant may negotiate whether certain tenant options under the lease, particularly options to extend the term or expand into other space, benefit transferees of the lease.  The tenant wants to be able to transfer all rights – including rights to extend the term and expand into other space – to a subtenant or assignee.  These rights may make a lease much more attractive to prospective transferees.  Also, the tenant may want to be sure that its permitted transferees (see Section 1.6 above) enjoy these rights.  

By contrast, the landlord may not want its tenant’s transferee to have the right to exercise valuable clauses in the lease such as rights to extend the term or expand into other space.  Rights such as these were specifically negotiated with the tenant and landlord will be reluctant to give another party the right to benefit from them.  

To make specific lease options or rights personal to the tenant and non-transferable, the lease should specifically state this restriction in the restricted clause.  For example:  

Tenant's __________ Option is personal and may not be exercised by any assignee or sublessee [OPTIONAL:  other than an affiliate of Tenant or a successor by merger or consolidation].  

In the absence of such a written restriction, the right probably flows to an assignee of the lease.  Although the author could locate no Washington caselaw on point, it seems that a subtenant’s right with respect to an option in the lease that is passed through to a subtenant is to require the tenant/sublandlord to exercise its right under the lease for the benefit of the subtenant.  

5.Keep the original Tenant responsible if the assigned lease is modified.  In the case of an assignment, even though the assignee steps into contractual privity with the landlord, the original tenant is not released from his contractual obligations under the lease.  Delano v. Tennent, 138 Wash. 39, 244 P. 273 (1926).  The landlord and tenant may negotiate – usually through a specific clause in the lease or a separate agreement at the time of the lease assignment – a full release of the tenant from its obligations under the lease.  Spaulding v. Aetna Cas. & Sur. Co., 164 Wash. 665, 4 P.2d 526 (1931).  For example:  

Upon an assignment of this Lease in compliance with this Section __, Tenant shall be fully and finally released from all further obligations under this Lease.  

The landlord is unlikely to agree to release the transferor Tenant from its obligations without some form of consideration.  However, there is some risk that if the landlord and assignee materially modify the lease, a court may find that a new agreement is formed that releases the original tenant/assignor from its


Document info
Document views52
Page views52
Page last viewedSat Oct 22 21:49:32 UTC 2016