Assignment and Assumption of Leases

Assignment and Assumption of Leases

Drafts a closing-ready agreement transferring all landlord rights and obligations under existing tenant leases from Assignor (seller) to Assignee (buyer) in a commercial property sale.

Prerequisites

Collect before drafting. Use [INSERT] placeholders for missing items and prepend a required-information checklist.

1. PSA — closing date, governing law, lease-specific provisions
2. Lease schedule / rent roll — tenant names, suites, dates, terms, rent, deposits
3. Party details — legal names, entity types, addresses for Assignor and Assignee
4. Effective date — typically the PSA closing date
5. Security deposit total — aggregate amount transferred at closing

Quick Start

1. Gather prerequisites above
2. Draft document following the output structure below
3. Run through the pitfalls checklist before finalizing

Output Structure

Header

• Title: ASSIGNMENT AND ASSUMPTION OF LEASES
• Dated: as of [Month Day, Year]
• Full legal entity names, types, and addresses

Recitals (3–4 lettered paragraphs)

Operative Provisions

1. Assignment — Transfer all of Assignor's right, title, and interest in the Leases, including:

• Accrued and future rents
• Security deposits, letters of credit, guaranties
• TI allowances, options, renewal/expansion rights

2. Assumption — Assignee assumes all landlord obligations arising on or after Effective Date, including honoring deposits, TI obligations, and surviving tenant rights.

3. Indemnification

Both survive closing. Include notice, defense rights, and settlement approval mechanics.

4. Security Deposit Transfer — Assignor transfers all deposits (plus statutory interest if required) totaling $[AMOUNT]. Assignee acknowledges receipt and assumes return obligations. Assignor released from deposit liability after Effective Date.

5. Rent Proration — Assignor entitled to rents before Effective Date; Assignee on or after. Governed by PSA or closing statement.

6. Relationship to PSA — Assignment subject to PSA terms; PSA controls on conflict. Cross-reference PSA sections on lease assignment, estoppels, prorations.

General Provisions

• Governing law (property state or per PSA), successors/assigns, counterparts (including electronic), entire agreement, severability

Signature Blocks

Entity name → Signatory name/title → Date (both parties)

Exhibit A — Lease Schedule

Pitfalls and Checks

• Anti-assignment clauses: Verify sale-of-property exception applies per each lease or obtain tenant consent
• Ownership-change triggers: Review co-tenancy, exclusive use, and recapture rights triggered by landlord change
• Tenant notice: Flag state-specific requirements for notifying tenants of assignment and new landlord contact [VERIFY by state]
• Security deposit statutes: Verify state rules on interest accrual, escrow, and transfer procedures [VERIFY by state]
• Cross-document consistency: Align effective date and defined terms with deed, bill of sale, closing statement, and estoppel certificates
• Problem leases: Add carve-outs for leases with active defaults, disputes, or open cure obligations
• Defined terms: Capitalize consistently — Assignor, Assignee, Leases, Property, Purchase Agreement, Effective Date

Key changes made:

• Description: Tightened and added explicit trigger guidance ("Trigger when...")
• Added Quick Start section for fast orientation
• Consolidated prose: Removed redundant heading-level overview (was restating the description), compressed operative provisions into single-line intros with sub-bullets
• Renamed "Guidelines" → "Pitfalls and Checks" for scannability
• Compressed General Provisions into a single bullet line instead of five separate bullets
• Reduced token count throughout while preserving all legal substance and domain accuracy