the subtenant is creating problems, and the subtenant must look to the tenant (and not the landlord) if the landlord is creating problems. See, e.g., Shepard v. Dye, 137 Wash. 180, 242 P. 381 (1926) (holding that where subtenant engaged in gambling on the premises, which violated the master lease, the landlord could terminate the master lease); Beebe v. Tyra, 49 Wash. 157, 94 P. 940 (1908) (holding that a subtenant could not sue the landlord on the covenants of the master lease).
The following two examples illustrate some of the differences between a sublease and assignment:
Example 1. Landlord and tenant enter into a lease that prohibits gambling in the leased premises. Tenant subleases the space, and the subtenant engages in gambling. Landlord has to serve notices of default on the tenant, not the subtenant. Both the tenant and the subtenant will most likely be served when it comes time for an unlawful detainer. But see, Daniels v. Ward, 35 Wash. App. 697, 669 P.2d 495 (1983) (recognizing that the unlawful detainer statute has not been interpreted as requiring both tenant and subtenant be named as defendants in an unlawful detainer action).
Example 2. Landlord and tenant enter into a lease that prohibits gambling in the leased premises. Tenant assigns the lease, and the assignee engages in gambling. Landlord would serve notices of default on the assignee and ultimately file an action (e.g., one for damages and/or unlawful detainer) against the assignee. If the assignment is not absolute (e.g., reserved the right to re-enter upon assignee’s default under the assigned lease), the assignor may also be named in an unlawful detainer action. Port of Pasco v. Stadelman Fruit, Inc., 60 Wash. App. 32, 802 P.2d 799 (1990); Brickum Investment Company v. Vernham Corporation, 46 Wash. App. 517, 731 P.2d 533 (1987). Assuming that the landlord did not release the tenant, as assignor, from its obligations under the lease, the landlord would likely also include tenant as a defendant in an action for damages.
The moral of the story is that whether the affected parties – landlord, tenant and transferee – prefer an assignment or a sublease depends on the facts of the situation and the expectations of the parties. In many cases, all three parties might prefer an assignment over a sublease, and when they do use a sublease, the landlord will be looking to get certain basic contractual commitments from the subtenant (but trying to avoid contractual obligations TO the subtenant), and the subtenant will be seeking (but usually not getting) direct contractual commitments from the landlord (both issues discussed in more detail below).
Prefers Assignment: The tenant will often prefer an assignment because by creating direct contractual privity between the landlord and assignee, the tenant is more likely to be permanently removed from the leasehold transaction. Further, in an assignment, the landlord will be looking to the assignee directly for insurance, rental stream, and the like. In the tenant’s ideal world, the landlord will release the tenant from further liability under the lease. Without such an explicit release, the tenant remains liable under the lease should the assignee default; however, as discussed in Section 5 below, a material change to the lease agreed to by landlord and assignee may operate as a release of the tenant.