Subsequent Assignment Didn't Release Prior Assignee from Rent Obligation

A fourth assignee assigned a lease to a fifth assignee in July 2002. The owner consented to the assignment and dealt exclusively with the fifth assignee after the assignment. The fifth assignee defaulted in March 2003 by not paying its rent. The owner sued the fourth and fifth assignees. Its claim against them included a demand for unpaid rent from March 2003 through July 2004. The fourth assignee argued that the assignment to the fifth assignee had released it from liability for future rent.

A Georgia appeals court ruled that the fourth and fifth assignees were liable to the owner for rent, but only through February 2004. The court noted that neither the lease nor the assignment agreement that the owner and fourth and fifth assignees signed contained language releasing the fourth assignee from liability. The general rule is that tenants and assignors stay on the hook for their lease obligations after an assignment unless the parties intend the assignment to create a new lease. Here, the assignment didn't create a new lease, even though the owner had consented to the assignment and the owner dealt exclusively with the fifth assignee after the assignment, noted the court. Also, the evidence showed that the lease was set to expire in February 2004, not in July 2004. So the fourth and fifth assignees weren't obligated for rent after February 2004, said the court [Fagbemi v. JDN Realty Corp.].