Ontario Court of Appeal Addresses "Ancient" Sublease/Assignment Law

It is a widely understood notion that when a tenant subleases premises for the entire remainder of its lease term, the common law will consider that sublease to be an assignment. An assignment transfers all leasehold rights to the assignee, whereas a sublease creates a new leasehold interest underneath the tenant’s leasehold interest. To get around this, when they intend to sublease for the balance of the head lease term, sublandlords and subtenants routinely exclude the last day of the head lease term from the sublease term.