Both assignments and subleases occur when a tenant/lessee lease the land out further to a third-party. An assignment is when the lessee conveys the whole term, leaving no reversionary interest in the landlord/grantor/assignor. If the instrument purports to transfer the lessee’s estate for the entire remainder of his term it is an assignment, regardless of its form or the parties’ intention. A sublease, on the other hand, is a transaction where a tenant/lessee grants an interest in the leased premises less than his/her own, or reserves to himself/herself a reversionary interest in the term. If the instrument purports to transfer the lessee’s estate for less than the entire term – even for a day less – it is a sublease, regardless of its form or the parties’ intention.
How does one determine whether an assignment or sublease has occurred? As with all contract and breach of contract analysis, the primary rule is to ascertain the intention of the parties through the language. Accordingly, careful attention needs to be given to the structure of the contract.
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