Assignment of Lease

A lease assignment occurs when the original tenant (assignor) transfers their entire interest in a commercial lease to a third party (assignee), who then assumes all rights and obligations for the remainder of the lease term. Unlike a sublease — where the original tenant retains liability — a full assignment typically releases the original tenant from future obligations, though some landlords require the original tenant to remain as a guarantor. In the healthcare sector, lease assignments most commonly arise in two scenarios: the sale of a medical practice and the retirement or departure of a founding physician. When a dental practice, medical group, or therapy clinic is sold, the buyer typically needs to assume the existing lease — making the terms of the original lease and the landlord's assignment provisions critically important to the transaction. Illinois commercial leases almost universally require landlord consent for assignments, and some include recapture provisions.

For healthcare operators planning to sell their practice, the assignability of the lease is a critical asset — or liability. A lease that cannot be assigned without landlord consent (or includes punitive recapture rights) can significantly complicate or devalue a practice sale.

A solo internist selling his practice to a larger medical group negotiates an assignment of the remaining 4 years on his lease. The landlord approves the assignment after reviewing the acquiring group's financials, and the original physician is released from further lease liability.