Distinction between sublease and assignment of lease
The main difference between a sublease and an assignment of a lease is the responsibility of the lessee. In the case of a sublease, the original lessee remains the lessee with all his rights and obligations, even though the sublessee pays the rent to the lessor. If the sublessee fails to pay, the lessor has recourse against the lessee, who remains liable for the lease. In fact, the original lease remains in effect in the case of a sublease, with the sublease agreement binding only on the lessee and the sublessee. For this reason, the sublessee often does not have the same rights as the original lessee, although some leases provide that the sublessee may pay rent directly to the lessor, and the lessor may claim rent directly from the sublessee.
In an assignment of lease, the assignee (i.e. the person in whose favour the lease is assigned) will pay the rent to the lessor. If the assignee fails to do so, the lessor will no longer have recourse against the original lessee, but only against the new lessee (or assignee), since the original lease will now bind the lessor and the assignee. The assignment of a residential lease relieves the former lessee of his obligations. In the case of a non-residential lease, the parties may agree otherwise.1 For example, some commercial leases provide that the original lessee remains jointly and severally liable for the payment of the rent in the event of an assignment.
Where the sublessee causes serious injury to the lessor or the other lessees, the lessor can apply for the termination of the sublease.2 It should be noted, however, that most commercial leases contain sublease and assignment clauses limiting the lessee’s right to assign or sublease. Sometimes assignment or subleasing will be completely prohibited, as the lessor wants to reserve the right to choose his lessee. In an assignment, the lessor will often have provided in the terms of the lease that the sale of the lessee’s shares is tantamount to an assignment of lease, requiring the lessee to notify the lessor in case of sale of the shares, and potentially terminating the lease if such an event occurs, all at the option of the lessor.
1 Art. 1873 C.C.Q.
2 Art. 1875 C.C.Q.
