Check Your Understanding: Assignment and Subletting (Parts 6-9)

If a landlord is going to consider consenting to a partial sublet of a tenant’s entire space where such space is going to be separately demised, the lease should provide that any portion of the premises proposed to be sublet shall not comprise less than twenty-five percent (25%) contiguous square feet of area and shall be of a shape or configuration such that both the area proposed to be sublet and the remainder of the premises shall, in landlord’s judgment, constitute commercially marketable space as separate rental units.

In the event that the landlord within the lease conditions a sublet or assignment on a rent increase of 10%, a tenant should (i) delete the provision, (ii) seek to reduce the potential rent increase by a lower amount (e.g., 5%), and/or (iii) make the provision non-applicable in the event of an assignment or sublet to a related entity or in respect to a bona fide sale or acquisition of a tenant’s assets or business.

A landlord should not only narrowly define the tenant’s permitted use of the space, but also include in its initial lease draft a myriad of prohibited uses and if possible, a list of any “exclusivity provisions” that the landlord has agreed to with other tenants.