Subletting or Assigning Commercial Leases: New York

A sublease agreement is a legal document that allows a tenant to re-rent their property to someone else (subtenant). This is known as “subletting” and requires the landlord’s permission unless allowed in the original lease. Generally, the terms of a sublease cannot extend beyond the end date of the original lease.

Is Subleasing or Assigning the Property Allowed for a Commercial Lease in New York?

In New York, the tenant’s contractual lease terms will determine whether they are permitted to sublet or assign the property. Many leases contain an express provision that allows a commercial tenant to sublease or assign their interest to another party with the landlord’s consent. In other situations, the landlord’s consent is not required. Look at the lease closely to see whether the landlord’s approval must first be obtained before subleasing or assigning the property.

If the commercial lease states the landlord’s consent is required, the landlord has the absolute right to prohibit subleasing or assignments by the tenants. The landlord can refuse to allow the sublease or assignment regardless of whether their actions are reasonable or unreasonable. In response to this, many commercial leases specifically state that the landlord’s consent to sublease or assign the commercial property cannot be unreasonably withheld.
In this situation, the landlord may withhold their consent only if there is a reasonable commercial objection to the sublease or assignment.

Assume there is no express provision regarding a landlord’s consent in a commercial lease, and the landlord chooses not to bargain with tenants to allow for sublease or assignment rights. In that case, a tenant is prohibited from subletting or assigning during the lease term. A New York real estate lawyer can provide you with more information if there is a legal basis for your issue.

Subleasing may be a great option for small businesses who want to obtain office space in prime NYC locations at lower-than-market rates. However, subleasing also involves some risks and responsibilities for both the sublessor and the sublessee. Therefore, it is advisable to consult a lawyer before entering into any sublease agreement.

May a New York Landlord Unreasonably Withhold Their Consent to Sublease or Assign Commercial Property?

The answer to whether a landlord can refuse to allow the sublease or assignment depends on whether the commercial lease contains an express provision that requires the landlord’s consent to sublease or assign the property.

If the lease does not require the landlord’s consent, then the tenant is prohibited from subletting or assigning during the lease term.

If the lease requires the landlord’s consent, then the landlord has the absolute right to prohibit subleasing or assignments by the tenants, regardless of whether their actions are reasonable or unreasonable.

However, many commercial leases also state that the landlord’s consent cannot be unreasonably withheld. In this case, the landlord may only withhold their consent if there is a reasonable commercial objection to the sublease or assignment.

If the landlord unreasonably withholds their consent, the tenant may proceed to sublet or assign at their own risk and may be able to recover legal fees if the landlord sues them for breach of contract. Alternatively, the tenant may request to be released from the lease if the landlord unreasonably refuses to consent to an assignment.

What if the Lease Contains No Provision About Subleases or Assignments?

If the lease does not contain any provision about subleases or assignments, then the tenant is prohibited from subletting or assigning during the lease term. This means that the tenant cannot transfer their rights and obligations under the lease to another person without the landlord’s consent.

If the tenant sublets or assigns without the landlord’s consent, they may be in breach of contract and face legal consequences such as eviction, damages, or termination of the lease.

The only exception to this rule is for residential tenants who live in a dwelling with four or more units. They have a statutory right to sublet their premises subject to the landlord’s consent, which cannot be unreasonably withheld. However, this right does not apply to commercial tenants, who must follow the terms of their lease or negotiate with their landlord for sublease or assignment rights.

Imagine a scenario where you run a small business in a commercial building with several units. The business was going well, and you signed a five-year lease. However, two years into the lease, an unexpected shift in market conditions forces you to relocate your operations elsewhere, but you still have three years left on the lease.

Since you’re a commercial tenant, your right to sublet or assign the lease is entirely dependent on the terms outlined in your lease agreement. Let’s say your lease does not allow for subletting or assignment without the landlord’s express consent.

Now, you approach a fellow business owner interested in your premises. They’re willing to move in and essentially take over your lease, which sounds like a great solution. However, according to your lease agreement, you must first obtain the landlord’s approval.

You approach your landlord with a formal request to assign your lease to the new business owner. However, your landlord refuses. Unlike a residential tenant in a dwelling with four or more units – who would have statutory protection against a landlord unreasonably withholding consent – as a commercial tenant, you don’t have the same right.

In this situation, you might have to negotiate with your landlord to allow the assignment or subletting, which could involve legal assistance or potentially costly concessions. This illustrates why it’s so crucial for commercial tenants to fully understand their lease terms and consult with a legal professional when considering subleasing or assignment rights.

Do I Need a Lawyer for My Commercial Sublease or Assignment Issue?

Navigating commercial real estate transactions, especially when it comes to subleases or assignments, can be complex and fraught with potential legal pitfalls. This is where the experience of a lawyer becomes valuable.

Hiring a New York real estate lawyer should be your first step if you’re dealing with a commercial sublease or assignment issue. A knowledgeable attorney can help explain the intricacies of real estate law, guide you through the process, and ensure your rights are protected.

Legal matters in the commercial real estate world can have serious implications for your business. A lawyer can help you avoid any costly mistakes, negotiate better terms, and give you peace of mind, knowing your interests are being taken care of.

Finding the right lawyer for your specific needs can be challenging. This is where LegalMatch steps in. LegalMatch is a unique attorney-client matching service that matches you with pre-screened, highly skilled lawyers in your area.

Just present your case, including your commercial sublease or assignment issue, and LegalMatch will provide you with a list of New York real estate lawyers who are well-equipped to handle your case. You can then check their profiles, rates, and reviews and choose the one that best fits your needs. This simple process is easy to do and costs you absolutely nothing.

Don’t let legal complications disrupt your business operations. Use LegalMatch today to find the right lawyer to help you with your commercial sublease or assignment issue.