Assignment Liability

What This Liability Means

When you assign your lease to a new tenant, you transfer your tenancy position — but not necessarily your liability. Without an explicit written release from the landlord, original guarantors often remain liable for obligations under the assigned lease.

Dollar Example: Original tenant assigns lease at $5,000/month with 3 years remaining. Assignee defaults in month 18.

Worst Case Scenario

You sell your business, assign the lease, and sign a new personal guaranty on your new location. Three years later, the buyer defaults — and the original landlord pursues your surviving guaranty while you're also personally guaranteeing a new lease.

Warning Signs in Your Lease

• Assignment approval letter doesn't include guaranty release language
• Original guaranty contains no automatic termination upon assignment provisions

How to Limit This Liability

• Demand a written guaranty release from the landlord as a condition of any assignment closing
• Negotiate a permitted assignment clause that automatically releases the original guaranty upon transfer

Frequently Asked Questions

Does lease assignment automatically release my personal guaranty?

No. Unless the landlord provides a written guaranty release, your personal guaranty survives the assignment. The landlord can pursue you if the assignee defaults — even years after you transferred the lease.

How do I get a guaranty release at assignment?

Make it a condition of the assignment closing: the landlord must provide a written release of all guaranty obligations arising after the assignment date. The landlord may resist but often agrees if the assignee is creditworthy.

What is a 'continuing guaranty' and why is it dangerous at assignment?

A continuing guaranty provides ongoing personal liability that continues until explicitly terminated. If your guaranty is 'continuing,' assignment doesn't affect it — you remain liable indefinitely until the landlord releases you in writing.

Can I be liable for a lease I assigned 5 years ago?

Yes, if you haven't received a written release. The statute of limitations on guaranty enforcement runs from the date of default — not from the date you signed the guaranty. A default 5 years after assignment is still within your surviving liability window.

What language should a guaranty release include?

'Landlord hereby releases Guarantor from any and all obligations under the Guaranty arising on or after [assignment date], including but not limited to unpaid rent, CAM charges, restoration costs, and attorney fees. This release is irrevocable.'