Property Law | Leasehold Rights | Assignment

Deed of Assignment of Lease

Updated format for transferring the assignor's remaining leasehold interest to an assignee, subject to the original lease, landlord consent where required, applicable tenancy law, registration requirements and State stamp law.

Section 108(j) of the Transfer of Property Act, 1882: in the absence of a contract or local usage to the contrary, a lessee may transfer the whole or part of the leasehold interest. However, the original lessee does not cease to be subject to liabilities under the lease merely because the interest has been transferred.

Assignment of lease: current legal position

An assignment ordinarily transfers the assignor's leasehold interest for the unexpired residue of the lease term. It differs from a sub-lease because a sub-lease generally creates a derivative interest under the original tenant, whereas an assignment transfers the tenant's existing interest to the assignee to the extent lawfully transferable.

Check the original leaseA prohibition on assignment or a clause requiring prior written consent can restrict the general transferability recognised by Section 108(j).

Assignor may remain liableSection 108(j) expressly provides that transfer alone does not release the original lessee from lease liabilities. A landlord's consent to assignment is therefore not automatically the same as a contractual release or novation.

Only the remaining interest passesThe assignor cannot transfer more leasehold interest than is lawfully held. The assignee takes subject to the head lease, its remaining term and valid restrictions.

Local tenancy law mattersRent-control legislation, government-grant conditions, development-authority rules, housing-society rules and other special laws may restrict transfer or require additional consent.

Important correction: a deed of assignment should not state without qualification that the assignee automatically "substitutes" the old tenant for every purpose. Transfer of the leasehold interest and release of the original tenant from contractual liability are distinct issues. If complete substitution and discharge are intended, obtain an express landlord release/novation where legally available.

Registration, stamp duty and landlord consent

Section 17(1)(b) of the Registration Act, 1908 requires registration of non-testamentary instruments that create, declare, assign, limit or extinguish rights in immovable property of the statutory value threshold. Section 17(1)(d) separately covers specified leases, including leases from year to year or for a term exceeding one year.

The underlying lease itself is governed by Section 107 of the Transfer of Property Act. An assignment of a registrable leasehold interest should therefore be reviewed for compulsory registration, applicable State amendments and State stamp duty. The deed should also contain a precise property description and the particulars of the original registered lease.

Updated deed of assignment of lease format

Adapt the document to the original lease, the actual landlord consent, the property location, remaining term, consideration, rent, permitted use and applicable State/local law.

DEED OF ASSIGNMENT OF LEASE

This Deed of Assignment is made at ____________ on this ____ day of ____________, 20__.

BETWEEN

Name of Existing Lessee, son/daughter/spouse of ________________, residing/having office at ____________________________________________, hereinafter called the "Assignor";

AND

Name of New Lessee / Assignee, son/daughter/spouse of ________________, residing/having office at ____________________________________________, hereinafter called the "Assignee".

Recitals

A. By a Lease Deed dated ____________, executed between Name of Lessor/Landlord as lessor and the Assignor as lessee, the premises described in the Schedule were leased for a term commencing on ____________ and ending on ____________.

B. The said Lease Deed was registered, where applicable, before the Sub-Registrar at ____________ as Document No. ____________, Book No. ____________, dated ____________.

C. The lease is valid and subsisting and, except as disclosed in Annexure A, the Assignor states that rent and other material obligations due up to the assignment date have been complied with.

D. Clause ____ of the Lease Deed permits assignment / requires prior written consent / contains the following restriction: ____________________________________________.

E. The Lessor has given written consent to this assignment by consent letter / tripartite confirmation dated ____________, annexed as Annexure B, where such consent is required.

F. The Assignee has inspected the lease, consent documents and premises and has agreed to take an assignment of the Assignor's remaining leasehold interest for the consideration and on the terms below.

NOW THIS DEED WITNESSES AS FOLLOWS:

1. Assignment. In consideration of Rs. ____________ paid/payable by the Assignee to the Assignor in the manner stated below, the Assignor assigns to the Assignee all of the Assignor's transferable leasehold right, title and interest in the premises described in the Schedule for the unexpired residue of the lease term, subject to the original Lease Deed and applicable law.

2. Consideration. The consideration shall be paid as follows: Rs. ____________ on ____________ and the balance of Rs. ____________ on execution/registration of this deed. The Assignor acknowledges receipt to the extent actually received.

3. Effective date and possession. The assignment shall take effect from ____________. Vacant/physical possession and keys/access devices shall be delivered to the Assignee on ____________, subject to landlord and registration requirements.

4. Remaining term. The Assignee takes the premises only for the unexpired residue of the term granted under the original lease, presently due to expire on ____________. Nothing in this deed extends or renews the original lease.

5. Rent and outgoings. From the effective date, the Assignee shall pay rent of Rs. ____________ and all other charges for which the lessee is responsible under the original lease, subject to its terms and any valid amendment approved by the Lessor.

6. Assignee's covenant. From the effective date, the Assignee shall observe and perform the lessee covenants in the original lease insofar as they apply to the assigned interest and shall not do anything that would cause a breach, forfeiture or lawful termination of the lease.

7. Assignor's warranties. The Assignor represents that: (a) the lease is subsisting; (b) the Assignor has not previously assigned or encumbered the assigned leasehold interest except as disclosed; (c) material arrears/defaults known to the Assignor are disclosed in Annexure A; and (d) the Assignor has authority to execute this deed, subject to required landlord/statutory consent.

8. No warranty beyond leasehold interest. The Assignor does not convey ownership of the underlying immovable property. The Assignee receives only the leasehold interest that the Assignor can lawfully transfer under the original lease and applicable law.

9. Assignor's pre-assignment liabilities. As between the parties, liabilities attributable to the period before the effective date shall be borne by the Assignor except to the extent expressly assumed by the Assignee under this deed.

10. Assignee's post-assignment indemnity. The Assignee shall indemnify the Assignor against reasonable claims, costs and liabilities arising from the Assignee's failure after the effective date to pay rent or perform covenants assumed under this deed, subject to the rights of the Lessor and applicable law.

11. No automatic discharge of Assignor. The parties acknowledge that, under Section 108(j) of the Transfer of Property Act, assignment alone does not necessarily release the Assignor from liabilities attaching to the lease. Any release or substitution binding on the Lessor shall arise only from an express consent, novation or other legally effective arrangement with the Lessor.

12. Security deposit. The existing lease security deposit of Rs. ____________ shall be dealt with as follows: transfer/adjustment/refund/fresh deposit details. The parties shall obtain the Lessor's written acknowledgement where necessary.

13. Permitted use. The Assignee shall use the premises only for ____________________________ and shall comply with the original lease and applicable municipal, building, zoning, fire, environmental and other legal requirements.

14. Alterations and further transfer. No structural alteration, assignment, mortgage, sub-lease, licence or further parting with possession shall occur except as permitted by the original lease and applicable law and after obtaining any required consent.

15. Documents and records. On completion, the Assignor shall deliver to the Assignee copies/originals, as appropriate, of the Lease Deed, amendments, landlord consents, rent receipts, property handover record and other lease-related documents in the Assignor's possession.

16. Registration and stamp duty. The parties shall cause this deed to be properly stamped and registered where compulsory. Stamp duty, registration charges and incidental expenses shall be borne by Assignor / Assignee / equally, subject to State law.

17. Further assurances. Each party shall execute reasonable documents and take lawful steps required to complete the assignment, update landlord records, utility records and other consequential documentation.

18. Default before completion. If any mandatory landlord consent, statutory approval or registrable completion condition is refused or cannot lawfully be satisfied, the parties shall deal with consideration and possession in accordance with the following agreed arrangement: ____________________________________________.

19. Governing law and jurisdiction. This deed is governed by Indian law and applicable State/local tenancy law. Courts/tribunals having jurisdiction under law over the property and dispute shall have jurisdiction.

20. Original lease prevails. This assignment does not enlarge the rights granted under the original Lease Deed. Any mandatory law and valid restriction in the original lease shall prevail to the extent of inconsistency.

SCHEDULE OF LEASED PROPERTY

Property address: ____________________________________________
Survey/Plot/Municipal/Unit No.: ____________________________
Floor/portion: ____________________________
Area: ____________________________
North: ________________
South: ________________
East: ________________
West: ________________

ANNEXURE A - DISCLOSED DUES / DEFAULTS / ENCUMBRANCES

Nil / specify details

ANNEXURE B - LANDLORD CONSENT / NOVATION

Attach written consent or tripartite agreement where applicable

IN WITNESS WHEREOF, the parties have executed this Deed on the date first above written.

ASSIGNOR
Name: ________________
Signature: ________________

ASSIGNEE
Name: ________________
Signature: ________________

Witnesses

1. Name: ________________ Address: ________________________ Signature: ________

2. Name: ________________ Address: ________________________ Signature: ________

Lease assignment checklist

Read the entire original lease and every amendment before signing.
Check whether assignment is prohibited, unrestricted or subject to landlord's prior written consent.
Obtain an express landlord release/novation if the outgoing tenant is intended to be discharged from future lease liabilities.
Confirm the remaining lease term, rent, arrears, deposit, renewal rights and permitted use.
Search for mortgages, charges, litigation or other restrictions affecting the leasehold interest where relevant.
Ensure the property schedule and original lease registration particulars are accurate.
Check compulsory registration and State/UT stamp duty before execution.
Review rent-control, government-grant, development-authority, society and other special restrictions applicable to the property.

Official legal resources

Assignment of leasehold rights is document- and location-specific. The original lease, State stamp law, rent-control legislation and special property conditions should be checked before execution or registration.