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Indepth Workshop on Permitted Assignment and Transfer Provisions

Apr 21, 2016 | Article 

Written by Dennis Daoust
(ICSC Canadian Law Conference), 2016

Commercial leases contain restrictions on assignment, subleasing and parting with or the sharing of possession and control.  Those types of transactions are referred to in this paper as “Direct Transfers”. The restrictions reflect two basic concerns: (i) concern about the quality of operation of the tenant’s business in the premises, its ability to generate revenue, and the character of the tenant having regard to the financial strength as well the operating and bushiness practices of the tenant, and (ii) the concern with ensuring that market rental value increases accrue to the landlord’s benefit (and not the tenant’s).

The tenant in a commercial lease may be an individual, a corporation, a general partnership, a limited partnership, a trust, a joint venture, a club, an association or a combination of those entities.  The protection afforded by restricting a tenant’s right to effect a Direct Transfer can be deteriorated by a variety of transactions that result in changes of control of the tenant (and thus the premises) by indirect means.  For that reason, changes of control of the tenant are usually restricted.  

Read the full article Permitted Assignment and Transfer Provisions

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