Prefers Sublease: Situations in which a tenant might prefer a sublease include those where only part of the space is being allotted to the transferee, where the space is undermarket (and the lease allows the tenant to share or enjoy all of higher rent from the transferee) and where the tenant wants the space back at a later time. A tenant might also prefer a sublease where there are other lease interests that the tenant does not want to transfer, such as an option to purchase or a cause of action against the landlord. See, e.g., Nourbakhsh v. Melvin, 123 Wash. App. 1003, 2004 WL 1874664 (Wash. App. Div. 1) (2004) (unpublished) (holding that by assigning “all right, title and interest” in a lease, assignor transferred to assignee the assignor’s right to sue on certain causes of action under the lease).
Prefers Assignment: The transferee will often prefer an assignment because it will be easier to enforce the terms of the lease should the landlord not perform. Even though a tenant acts as “landlord” for its subtenant, on a practical level the original landlord likely is still the party providing utilities, taking care of the common areas, etc. If the landlord fails to provide such services, the subtenant may be faced with bringing an action against the tenant to force the tenant to sue the Landlord and enforce its lease obligations. In an assignment, the assignee does not have to bother with the tenant in such a situation. An assignment also removes the risk to the transferee of a tenant default or a termination of the master lease, which could terminate a sublease. Indeed, in a sublease situation, the sublessee should get a commitment from the landlord to enter into a new lease with the subtenant should the master lease terminate.
Prefers Sublease: A transferee might prefer a sublease if the transferee can negotiate transfer terms (e.g., rent) that are more favorable than those contained in the lease. A transferee might also desire different (as opposed to more favorable) business terms, such as a shorter term, in which case an assignment may not be an option.
Prefers Assignment: The landlord is a bit more torn than the tenant or transferee. An assignment gives the landlord direct contractual rights against the transferee, although it can also get those by a properly drafted consent to sublease (see Exhibit K). An assignment means that the landlord does not have to track down the original tenant to terminate the lease (and don’t underestimate how difficult that can be). An assignment also means that the landlord probably has two parties contractually obligated under the lease (although see subsequent discussions of ways by which the assigning tenant may be released from liability).
Prefers Sublease: A landlord may not want to deal directly with a new party, even though it may be willing to allow the new party to occupy the leased space under a sublease with the tenant. In addition, if the transferee is financially weaker than the tenant, a landlord may not want to have a direct contractual relationship with the assignee. Even though the original tenant would normally remain liable following the assignment, a financially weak assignee would increase the risk of a lease default. And, even though a landlord may intend for the assigning tenant to remain