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assignment-and-assumption-of-leases

Drafts an Assignment and Assumption of Leases transferring tenant leases from seller (Assignor) to buyer (Assignee) as a closing document to a commercial property PSA. Trigger when closing a commercial property sale with existing tenant leases or when a user needs lease assignment/assumption language for a real estate transaction.

personAuthor: jakexiaohubgithub
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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)

| Recital | Content | |---------|---------| | A | PSA reference — date, property address/legal description | | B | Assignor is landlord under leases on Exhibit A | | C | Intent to assign/assume all landlord rights per PSA | | D (if needed) | Material facts: estoppels, modifications, known disputes |

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

| Party | Scope | |-------|-------| | Assignor → Assignee | Claims from landlord obligations/defaults before Effective Date | | Assignee → Assignor | Claims arising on or after Effective Date |

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

| Tenant | Suite | Lease Date | Commencement | Expiration | Base Rent/Mo. | Security Deposit | Notes | |--------|-------|------------|--------------|------------|---------------|-----------------|-------| | [Name] | [#] | [Date] | [Date] | [Date] | $[Amount] | $[Amount] | Amendments, options, disputes |

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