Commercial Lease Assignment & Transfer

A commercial lease assignment is the transfer of a lease from one tenant (the assignor) to another (the assignee), usually as part of a sale of business. We act for outgoing tenants, incoming tenants, and landlords on lease assignments across Australia.

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A clean assignment matters. Done badly, the outgoing tenant can stay liable for the rent for years; the incoming tenant can inherit obligations they didn’t know about; and the landlord can lose security and pricing leverage. Our commercial lease lawyers handle assignments across all states.

When you’d assign a commercial lease

Sale of business - the lease is part of the deal and must be transferred to the buyer
Restructure - moving the lease between related entities (still typically requires landlord consent)
Exit strategy - assigning the lease to a third party to avoid an early lease termination claim
Franchise transfer - passing the lease to a new franchisee in the same system

See: Sale of Business Lease Transfer

How a lease assignment works

Read the lease. The lease will set out when landlord consent is required and on what conditions. Most retail leases also import the relevant Act’s rules.
Apply for landlord consent. A formal request, usually with information about the assignee (financials, experience, references).
Landlord decision. The landlord must generally act reasonably, but can impose conditions (security top-up, director guarantee, lease updates).
Negotiate the deed of assignment. The deed records the transfer, the release point for the assignor, and any landlord conditions. Mortgagee consent may also be needed.
Settle the assignment. Aligned with the business sale settlement, where applicable. Bank guarantees, security deposits, and incentive deeds are dealt with on the day.

See: Deed of Assignment

Most leases require landlord consent and require the landlord to act reasonably. The relevant retail leases Act often spells out what the landlord can and can’t ask for. The Victorian Small Business Commission provides a useful summary of the rules for retail lease transfers in Victoria. Generally reasonable:

Information about the proposed assignee’s financial standing
A request for references and business experience
A director guarantee where the assignee is a company
Security in the same form as the existing tenant
The assignee accepting the lease as it stands

Generally unreasonable:

Demanding upgraded lease terms (longer term, higher rent) as a condition of consent
Requiring the outgoing tenant to remain liable indefinitely after assignment
Withholding consent for irrelevant reasons (personal preference, unrelated commercial leverage)

Liability after assignment: who’s on the hook

This is the part outgoing tenants most often get wrong. The default position varies by state and lease, but commonly:

The outgoing tenant remains liable under the lease for the remainder of the term, even after assignment, unless the lease (or the relevant Act) provides a release
Personal guarantors of the outgoing tenant remain on the hook unless explicitly released
Some retail leases Acts (Victoria’s Section 91 of the Retail Leases Act 2003 for example) provide a statutory release in defined circumstances on assignment as part of a sale of business

We negotiate the release point in the deed of assignment so the outgoing tenant has a clean exit.

What the incoming tenant should check

The lease itself (term, options, rent, outgoings, make good)
The current rent and any review just before settlement
The state of any incentive deed (rent free, fit-out contribution, cash incentive) and any clawback
The disclosure statement (where retail), which the landlord may need to issue afresh
The make good obligation, including any earlier deal with the original tenant
Outstanding outgoings, repair issues, and essential safety measures compliance
Any security on foot (bank guarantee, personal guarantees)

This is part of standard business sale due diligence.

Common assignment problems

Outgoing tenant assumes assignment ends their liability (it usually doesn’t, without an explicit release)
Landlord delays consent to extract concessions
Incoming tenant inherits a make good obligation they didn’t price
Bank guarantee not transferred or replaced cleanly on settlement
Disclosure statement not issued where the relevant Act requires
Lease has only months left and the option has already lapsed

Where assignment isn’t possible, a sublease or licence may be an alternative route to offset the rent burden.

Frequently asked questions

Almost always yes. The lease will say so, and the relevant Act usually reinforces it. Acting without consent is a breach of the lease.

Once a complete information pack is in front of the landlord, two to four weeks is normal. Larger landlords and shopping centres can take longer.

Will I still be liable after I assign the lease?

Usually yes, unless the lease or the relevant Act gives you a release, or you negotiate one in the deed of assignment. We focus on this in every assignment we do for an outgoing tenant.

Only on reasonable grounds, in most cases. Refusal for an irrelevant reason is generally unenforceable, but you may need to take the issue to the relevant tribunal to force the consent through.

What is a deed of assignment?

The legal document that transfers the lease. It records the parties, the date of transfer, the release of the assignor (where agreed), the landlord’s consent and any conditions, and the treatment of security and incentives.

Does my personal guarantee transfer to the new tenant?

Not automatically. The new tenant will usually need to provide its own guarantee, and your personal guarantee will need to be released. Don’t sign the deed without confirming the release.

Can I assign a retail lease?

Yes. The relevant Act will usually impose extra rules around the assignment (information requirements, statutory release on sale of business, disclosure statement). These rules generally help the outgoing tenant.

How much does a lease assignment cost?

Fixed fee for most assignments. Send us the lease and the proposed buyer’s details and we’ll come back with a quote within one business day.

Talk to a commercial lease assignment lawyer

Whether you’re selling a business with a lease attached or buying one, the cleanest assignments are run by a lawyer from the start.