Keep Tenant Primarily Liable After Assignment

June 30, 2005

If you're like most owners, you'll require the tenant to remain on the hook for its lease obligations after it assigns the lease. This lets you dig into two pockets—the tenant's and the assignee's—if the assignee defaults under the lease. You'll want the right to sue either the tenant or assignee—or both simultaneously.

If you're like most owners, you'll require the tenant to remain on the hook for its lease obligations after it assigns the lease. This lets you dig into two pockets—the tenant's and the assignee's—if the assignee defaults under the lease. You'll want the right to sue either the tenant or assignee—or both simultaneously.

But if your consent form to an assignment is like many we've seen, it may have a loophole that restricts your ability to choose which party you'll sue and in what order. Here's the loophole: If the assignment consent form doesn't give you the right to sue the tenant before (or at the same time) you sue the assignee, you may need to sue the assignee first, before you can sue the tenant. Then you can sue the tenant only if you don't collect all of your damages from the assignee. This unnecessarily drags out the process of collecting your damages.

Get Flexibility on Whom to Sue

To plug this loophole, specify in your assignment consent form that the original named tenant and the assignee will be “jointly and severally” liable and that their liability will be “primary” to you, says New York City attorney Robert P. Reichman. And have the tenant sign the consent form so that it agrees to this requirement, he advises.

“Jointly and severally” means that you can sue the parties separately or together, says Reichman. And by adding that their liability is primary, you're saying that you don't have to sue the assignee first before trying to hold the original tenant liable, he adds. So you'll get the flexibility to sue the tenant first, the assignee first, or both of them at once—as you decide, he explains.

Model Language

Anything herein to the contrary notwithstanding, Landlord's consent to the assignment shall not release Tenant from the payment and performance of its obligations in the Lease and the liability of Tenant and its assignee to Landlord shall be joint, several, and primary and not conditioned or contingent upon the pursuit by Landlord of any remedies it may have against either party with respect to the Lease.

CLLI Source

Robert P. Reichman, Esq.: Partner, Siller Wilk LLP, 675 3rd Ave., New York, NY 10017; (212) 421-2233; rreichman@sillerwilk.com.

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