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July 2017 — Property Management Quarterly — Page 27
Mavi Unlimited
Michael Hoover
MC Commercial Real Estate –
Colorado Springs
Gosia Bikker
MC Commercial Real Estate –
Denver
Jim McLure • Dottie Regas • Michelle Tanner
Mountain West Industrial
Properties LLC
Michael Hicks
Newmark Grubb Knight Frank -
Property Managers
Dan Simpson • Theresa Dampier
Panorama Property Management
Don Palik, RPA
Prime West Development, Inc.
James J. Neenan
Vector Property Services, LLC
Matt Smith • Wendy Williams • Mark Weston
W.W. Reynolds Companies, Inc.
Chad Henry
Weststar Management
Michael Hayutin • Kevin Hayutin
Wheelhouse Apartments
Zvi Rudawsky, CPM®
Providence Hospitality Partners
David B. Storm
Sessions Group LLC
Steve Sessions
Simpson Property Group
Todd S. Pope • Sharon O’ Connell, CPM
Christina Steeg
St. Charles Town Company LLC
Charles H. Woolley, II
The Jones Realty Group
Pamela J. Coburn, RPA
The Ross Management Group
Deborah Ross, CPM
Transwestern
Lyla Gambow • Rene Wineland
Karla Flowers
Property Management Directory
PROPERTY MANAGEMENT DIRECTORY
If your firm would like to participate in this directory, please contact Lori Golightly at or 303-623-1148 ext. 102
Sessions
• Sessions: Can an owner withhold
consent to an assignment or sublet-
ting?
• Halstead: Yes. The standard for
reviewing a proposed assignment or
sublease will be determined by the
lease. By way of example, a landlord
may have the right to withhold its
consent in its “sole discretion.” More
often, however, a landlord must be
“reasonable” in evaluating a proposed
assignment or sublease. Some leases
specifically define bases that may
be considered “reasonable,” while
others are silent. In most cases, it is
appropriate to consider the financial
strength of a prospective subtenant or
assignee, their business experience,
the tenant mix within a property and
the proposed use by the subtenant or
assignee.
• Sessions: Is it customary for the
assignee of a lease to assume the obli-
gations of the assignor/tenant under
a lease?
• Halstead: Yes. An assignee usually
assumes the obligations under the
lease accruing on or after the date of
an assignment. Ideally, the assignee
and assignor will be jointly and sev-
erally liable for obligations accruing
after the date of the assignment. For
clarity, it should be clear which party
will be responsible for any common
area maintenance, tax or insurance
reconciliations that may take place at
a later date and who is entitled to the
return of any security deposit at the
expiration of the lease.
• Sessions: Are assignment provi-
sions heavily negotiated? What are
the main points at issue?
• Halstead: Sometimes. It’s not
uncommon for a proposed assignee to
try and negotiate a longer lease term
or renewal options, particularly if they
are buying a business from the origi-
nal tenant. A landlord may request
additional security for the perfor-
mance of the lease if the assignee’s
financials are not as strong. Perhaps
the biggest point of contention is
whether the original tenant and any
original guarantors will remain liable
for the lease obligations and, if so, for
how long.
• Sessions: Is a sublease a safer
alternative to an assignment?
• Halstead: From a landlord’s per-
spective, subleases make sense when
the subtenant is leasing less than
the entire premises and/or for less
than the entire term of the lease.
Otherwise, creating privity of contract
with the party that will be occupying
the leased premises by virtue of an
assignment while preserving claims
against the original tenant is pre-
ferred.
From a tenant’s perspective, a sub-
lease may be preferred over an assign-
ment given that it provides the tenant
with some element of control in the
event of a default by the subtenant.
By way of example, an original tenant
might reenter the premises and reini-
tiate its business operations following
a default by an subtenant.
• Sessions: What other provisions of
a lease may be modified as a result of
an assignment or sublease?
• Halstead: Permitted uses, expira-
tion dates, identities of guarantors,
nature and extent of renewal options,
any number of terms.
• Sessions: When should an owner
withhold consent for an assignment
or sublease?
• Halstead: A landlord should be
cautious in evaluating a prospective
assignment or sublease and would
not want to withhold its consent in
violation of the standard set forth in
the lease. By way of example, a land-
lord could be exposed to claims for
tortious interference with a sale of a
business.
One way to limit this type of expo-
sure is to include express language in
a lease limiting the tenant’s remedies
to specific performance in the event
a landlord wrongfully withholds its
consent. Withholding consent may
be appropriate where the proposed
assignee or subtenant’s use differs
from that of the original tenant,
where the proposed assignee or sub-
tenant has limited business experi-
ence, weak financials or a criminal
history.s