cession and assignment of lease agreement

The Difference Between Cession Delegation and Assignment

HOME / The Difference Between Cession Delegation and Assignment

We’ve all heard the expressions before: someone is going to cede something to someone else. A supervisor or someone of that position is constantly delegating tasks to someone below themselves, or someone is being given an assignment that requires completion. All of these refer to some kind of a right, or obligation being given to another person. What are each of these and what is it that they do or mean?

The principles of Cession were very well set out by the South African Appellate Division in 1983 during the case of Johnson v Incorporated General Insurance Ltd in which it was held that cession in modern law is an act of transfer: it enables the transfer of a right to take place which is accomplished by way of an agreement to transfer the right. It is entered into between a Cedent and a Cessionary, which arises from a lawful cause in which a Cedent intends to transfer its right to a claim to a Cessionary who intends to become the holder of the right. The Cessionary is then further entitled to cede that right to someone should they choose to do so. This means that any right that Cedent once had is given to the Cessionary who becomes the owner of the right and a Cedent would no longer have any claim to that right.

A very simple example would be the following; lets say that X renders services to Y for an amount of R100. Z owes Y R100 because they lost a bet with one another. In order to make things simple, Y could cede his right to receive payment from Z to X, and X could therefore claim the R100 from Z directly. This has the effect of putting a new creditor into the shoes of the old creditor. However, let’s say that Z does not pay X, and court proceedings ensue. X would no longer be able to claim from Y as Y ceded his right to the R100 from Z to X. Y therefore no longer has the capacity to sue or be sued for that amount, his role would be no more than that of a witness who may testify to that effect.

Delegation, put simply, is the act of giving another person the responsibility of carrying out a performance that you contracted into. Therefore, in the commission of delegation there are 3 persons involved; The delegator (this is the person who actually incurred the obligation to perform), the delegate (this is the person to whom the responsibility of performing the obligation has been given), and finally the person to whom the obligation is due to, this person is known as the obligee.

A very practical example would be the following; A contacts B who owns a well known swimming pool company. A explains to B that his pool is terribly dirty and would like for B to arrange for his pool to be cleaned. B, after obtaining consent from A, then sends an employee, C, to go and clean the swimming pool. The contract was entered into between A and B, however the actual task of fulfilling the obligation was done by C. Should anything go wrong however, for example C accidentally broke the pool light while sweeping; B (as the delegator) would be held liable and accountable by A for any damage caused by C in carrying out what he had been delegated to do.

Assignment is a process which denotes a transfer of both rights and obligations. Christie, in the book The Law of Contract in South Africa, 4th Edition, 2001, describes assignment as the following; “Stepping into another’s shoes involves acquiring his rights , which can be done by cession without the debtors consent, and undertaking his obligations, which can be done by delegation with the creditors consent. Since the lesser is included in the greater it follows that the whole process of substitution cannot take place without the consent of the other Party to the contract.” It therefore combines both cession and delegation.

An example of assignment could be this. You sought out a new business venture and as a result of this you bought a company. This company came with numerous clients and employees. With assignment having taken place, you carry all the rights and responsibilities of an employer as the previous employer has now fallen away.

In the most basic way possible, Cession, Delegation and Assignment could be explained like this;

Cession is the transfer of a right from one person to another, delegation is the transfer of an obligation or duty from one person to another and assignment is a combination of the two.

Duncan O’Connor

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Assignment of Lease

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What is an assignment of lease.

The assignment of lease is a title document that transfers all rights possessed by a lessee or tenant to a property to another party. The assignee takes the assignor’s place in the landlord-tenant relationship.

You can view an example of a lease assignment here .

How Lease Assignment Works

In cases where a tenant wants to or needs to get out of their lease before it expires, lease assignment provides a legal option to assign or transfer rights of the lease to someone else. For instance, if in a commercial lease a business leases a place for 12 months but the business moves or shuts down after 10 months, the person can transfer the lease to someone else through an assignment of the lease. In this case, they will not have to pay rent for the last two months as the new assigned tenant will be responsible for that.

However, before the original tenant can be released of any responsibilities associated with the lease, other requirements need to be satisfied. The landlord needs to consent to the lease transfer through a “License to Assign” document. It is crucial to complete this document before moving on to the assignment of lease as the landlord may refuse to approve the assignment.

Difference Between Assignment of Lease and Subletting

A transfer of the remaining interest in a lease, also known as assignment, is possible when implied rights to assign exist. Some leases do not allow assignment or sharing of possessions or property under a lease. An assignment ensures the complete transfer of the rights to the property from one tenant to another.

The assignor is no longer responsible for rent or utilities and other costs that they might have had under the lease. Here, the assignee becomes the tenant and takes over all responsibilities such as rent. However, unless the assignee is released of all liabilities by the landlord, they remain responsible if the new tenant defaults.

A sublease is a new lease agreement between the tenant (or the sublessor) and a third-party (or the sublessee) for a portion of the lease. The original lease agreement between the landlord and the sublessor (or original tenant) still remains in place. The original tenant still remains responsible for all duties set under the lease.

Here are some key differences between subletting and assigning a lease:

• Under a sublease, the original lease agreement still remains in place.
• The original tenant retains all responsibilities under a sublease agreement.
• A sublease can be for less than all of the property, such as for a room, general area, portion of the leased premises, etc.
• Subleasing can be for a portion of the lease term. For instance, a tenant can sublease the property for a month and then retain it after the third-party completes their month-long sublet.
• Since the sublease agreement is between the tenant and the third-party, rent is often negotiable, based on the term of the sublease and other circumstances.
• The third-party in a sublease agreement does not have a direct relationship with the landlord.
• The subtenant will need to seek consent of both the tenant and the landlord to make any repairs or changes to the property during their sublease.

Here is more on an assignment of lease here .

Benjamin W.

Parties Involved in Lease Assignment

There are three parties involved in a lease assignment – the landlord or owner of the property, the assignor and the assignee. The original lease agreement is between the landlord and the tenant, or the assignor. The lease agreement outlines the duties and responsibilities of both parties when it comes to renting the property. Now, when the tenant decides to assign the lease to a third-party, the third-party is known as the assignee. The assignee takes on the responsibilities laid under the original lease agreement between the assignor and the landlord. The landlord must consent to the assignment of the lease prior to the assignment.

For example, Jake is renting a commercial property for his business from Paul for two years beginning January 2013 up until January 2015. In January 2014, Jake suffers a financial crisis and has to close down his business to move to a different city. Jake doesn’t want to continue paying rent on the property as he will not be using it for a year left of the lease. Jake’s friend, John would soon be turning his digital business into a brick-and-mortar store. John has been looking for a space to kick start his venture. Jake can assign his space for the rest of the lease term to John through an assignment of lease. Jake will need to seek the approval of his landlord and then begin the assignment process. Here, Jake will be the assignor who transfers all his lease related duties and responsibilities to John, who will be the assignee.

You can read more on lease agreements here .

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Assignment of Lease From Seller to Buyer

In case of a residential property, a landlord can assign his leases to the new buyer of the building. The landlord will assign the right to collect rent to the buyer. This will allow the buyer to collect any and all rent from existing tenants in that property. This assignment can also include the assignment of security deposits, if the parties agree to it. This type of assignment provides protection to the buyer so they can collect rent on the property.

The assignment of a lease from the seller to a buyer also requires that all tenants are made aware of the sale of the property. The buyer-seller should give proper notice to the tenants along with a notice of assignment of lease signed by both the buyer and the seller. Tenants should also be informed about the contact information of the new landlord and the payment methods to be used to pay rent to the new landlord.

You can read more on buyer-seller lease assignments here .

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Why should you care about cession clauses in lease agreements?

General agreements

Generally, agreements allow for a third party to complete contract specific obligations. The absence of a no cession clause is enough to mean that cession of rights and duties of a contract is possible in such general agreements. In fact, where it concerns long term lease agreements, lessors often do not anticipate that one lessee would carry out the obligations throughout the whole term. However, this position has been altered by a recent Constitutional Court (CC) judgment in University of Johannesburg v Auckland Park Theological Seminary and Another 2021 (8) BCLR 807 (CC) . The court noted that, where parties are considering whether a cession of duties is possible, they ought to consider a position that is a step ahead of the general rule around the absence of no cession clauses . The court held that parties should interpret agreements, such as the contract’s factual matrix, its purpose, and circumstances leading up to its conclusion.

A written no cession clause is often a distinct way to clarify that no party to a contract containing such a clause may cede their rights and/or duties. Such clauses are utilised where agreements are entered into with specific beneficiaries, or person to comply with the obligation, in mind. In instances where the no cession clause is not used, a highly personalised context of a contract is a valid indicator as to the inability to cede the contractual obligations. The common law principle of delectus personae prevents delegation of rights and/or duties of one party to another party in such instances. For example, where a patient consents to surgery being conducted by a specific surgeon, such surgeon is a specified person to complete the obligation. Thus, a right of this nature may not be delegated to another surgeon who may have a different set of skills.

The University of Johannesburg case

In University of Johannesburg , the focus of the matter was whether contractual rights and duties arising out of a lease agreement were lawfully ceded and whether ceding rights in a long-term lease agreement constituted termination of the agreement within context.

This matter concerned the University of Johannesburg (UJ) and Auckland Park Theological Seminary (ATS) concluding a 30-year lease agreement in 1993, which was registered in 1996. The agreement provided, among other rights and duties, that students who registered for theological degrees would be taught other courses by both UJ and ATS. In particular, UJ contractually agreed that ATS would be the lessee when UJ registered the lease agreement with the Minister of Education. In addition, this lease agreement was in terms of the Universities Act 61 of 1955, as well as s 4(2) of the Rand Afrikaans University Act 51 of 1966.

In 2011, ATS ceded its rights arising from the lease agreement to a third party, Wamjay Holdings Investments (Wamjay), for a once off payment of R 6 500 000 without the knowledge of UJ. Wamjay’s intention was to establish a religious-based school for primary and high school education on the premises leased by ATS from UJ. When UJ became aware of the cession by ATS, they took the view that the rights in the lease agreement were personal to ATS. In addition, they considered that ATS’s act to cede their rights to Wamjay was a repudiation of the original lease agreement between UJ and ATC.

The SCA and CC judgments

The Supreme Court of Appeal (SCA) found that the cession by ATS to Wamjay was legal, despite the personal rights alleged by UJ. The SCA highlighted that the restriction that is placed by the delectus personae rule on the cession of rights in long-term lease agreements does not expect that the obligations will be completed by one party. Therefore, the SCA held that there was nothing in the lease itself that indicated that ATS’s rights were delectus personae or not intended to be ceded at a later stage (see M Kader ‘Cession of rights under long-term lease’ ( www.lexisnexis.co.za , accessed 1-2-2023)).

However, the CC took a contextual approach to the interpretation of the lease agreement. In its inquiry, the court discussed that evidence introduced to supplement contracts of a personal nature should be such that it considers the circumstances that were present when the contract was concluded. The decision was further informed by the legal principle of delectus personae on lease agreements to overturn the decision of the SCA.

It was concluded by the High Court that rights contained in long term lease agreements between specific parties may not to be ceded without specific consent. When determining whether rights under a lease agreement are delectus personae , the necessary inquiry is whether the rights are so personal that it makes a reasonable difference who will enforce the rights. If it does, in fact, make a material difference, the rights in an agreement are to be interpreted as incapable of being ceded. As a result of this inquiry, the court found in favour of UJ in that the rights granted through UJ and ATS’s lease agreement were personal and specific to ATS. The rights were severely personal in nature that it did make a difference that ATS were suddenly not the party entitled to enforce the rights. Therefore, the High Court concluded that UJ was reasonable to interpret that ATS had repudiated the lease agreement.

Ways to avoid cession without consent

Briefly stated, this judgment affirms that lessors should continuously ensure that their lease agreements contain a no cession clause, a clause that restricts cession of rights completely. Alternatively, lessors should require that lease agreements contain a written clause that restricts cession of rights to a third party unless the lessor consents. These are ways through which lessors can be protected from cession of rights and/or duties without their consent.

In conclusion, the CC judgment clarifies the responsibility to consider when entering into long-term and short-term lease agreements – to have cession clauses to protect oneself should there be a legal dispute over a cession of rights. It is now certain that courts have been directed to analyse contextual evidence of lease agreements to determine if rights are eligible for cession. Therefore, it is fundamental that lessors enter into lease agreements that do not leave the question of cession in doubt. Instead, clearly define the scope of cession of rights and approach an attorney to assist with this. (See D Thompson ‘Beware of lease cessions! A discussion of University of Johannesburg v Auckland Park Theological Seminary and Another (CCT 70/20) [2021] ZACC 13’ ( www.cliffedekkerhofmeyr.com , accessed 1-2-2023) and SB Nxumalo ‘When are personal rights too personal to be ceded?’ (2022) 43 Obiter 617)).

Siyabonga Skosana LLB (Rhodes) is an Immigration Consultant at Fragomen in Johannesburg.

This article was first published in De Rebus in 2023 (Jan/Feb) DR 7.

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Lease Assignment Agreement

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A Lease Assignment Agreement is a short document that allows for the transfer of interest in a residential or commercial lease from one tenant to another. In other words, a Lease Assignment Agreement is used when the original tenant wants to get out of a lease and has someone lined up to take their place.

Within a Lease Assignment Agreement, there is not that much information included, except the basics: names and identifying information of the parties, assignment start date, name of landlord, etc. The reason these documents are not more robust is because the original lease is incorporated by reference , all the time. What this means is that all of the terms in the original lease are deemed to be included in the Lease Assignment Agreement.

A Lease Assignment Agreement is different than a Sublease Agreement because the entirety of the lease interest is being transferred in an assignment. With a sublease, the original tenant is still liable for everything, and the sublease may be made for less than the entire property interest. A Lease Assignment transfers the whole interest and puts the new tenant in place of the old one.

The one major thing to be aware of with a Lease Assignment Agreement is that in most situations, the lease will require a landlord's explicit consent for an assignment. The parties should, therefore, be sure the landlord agrees to an assignment before filling out this document.

How to use this document

This Lease Assignment Agreement will help set forth all the required facts and obligations for a valid lease assignment . This essentially means one party (called the Assignor ) will be transferring their rights and obligations as a tenant (including paying rent and living in the space) to another party (called the Assignee ).

In this document, basic information is listed , such as old and new tenant names, the landlord's name, the address of the property, the dates of the lease, and the date of the assignment.

Information about whether or not the Assignor will still be liable in case the Assignee doesn't fulfill the required obligations is also included.

Applicable law

Lease Agreements in the United States are generally subject to the laws of the individual state and therefore, so are Lease Assignment Agreements.

The Environmental Protection Agency governs the disclosure of lead-based paint warnings in all rentals in the States. If a lead-based paint disclosure has not been included in the lease, it must be included in the assignment. Distinct from that, however, required disclosures and lease terms will be based on the laws of the state, and sometimes county, where the property is located.

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A guide to help you: Tenants and Subtenants Obligations under a Sublease Agreement

Other names for the document:

Assignment Agreement for Commercial Lease, Assignment of Commercial Lease, Assignment of Lease, Assignment of Residential Lease, Assignment Agreement for Lease

Country: United States

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What is Assignment of Lease and How It Differs from Subletting

The assignment of lease (and rent) is a foggy topic that is often confused with subletting. Let's clear the air once and all right now. Learn the differences between a lease assignment and sublease so you can make the right choice.

What is Assignment of Lease? - The Important Basics

Let's begin by introducing the 3 players in a lease assignment - The landlord, the original tenant (assignor) and the new tenant (assignee). The original tenant has an unexpired lease agreement with the landlord and he wants out. Since the original tenant can't just break the agreement and walk off, what he does is to get a new tenant to swap places... and take over all his rights and obligations for the remainder of the lease period. So if the original tenant signs a 1 year commercial lease and the business goes bust after 8 months, the new tenant will be assigned a 4-month commercial lease (with the same terms and conditions as the original agreement). Now here's the big catch: Even though the original tenant has handed over all his duties and obligations to the new tenant, he is not off the hook... unless the landlord agrees to release him from all liabilities. If the new tenant stirs up trouble, our dear original tenant will find himself in hot soup as well. Of course, whether the original tenant is allowed to pull this assignment trick out of his hat is a whole new matter. Knowing for sure is actually simpler than most people think: First, examine your local landlord tenant laws for any lease assignment rules. Most of the time, landlords are given the right to allow or disallow assignments but once in a while, the local law let tenants have the final say instead. If there's no mention of lease assignments in your law text, then your rental lease agreement shall dictate the terms.

Difference Between Lease Assignment and Subletting

When it comes to subletting vs assignment of lease, there's often a massive mix-up. Sometimes even real estate professional get it wrong by assuming them to be one and same thing. However if you dig deeper, you will find that the differences are not just numerous, but important as well. Let's begin by dragging the landlord into the picture. An assignment of lease launches the new tenant into a direct relationship with the landlord - The landlord collects rent straight from the new tenant and deals with the new tenant directly on all lease issues. So in this case, the original tenant gets to take back seat and doesn't have to manage the new tenant actively. On the other hand, there's no direct relationship between the landlord and new tenant (subtenant) in a sublease. Instead the original tenant plays mother goose and is responsible for collecting rent from the subtenant and making sure that he's following the lease rules. When you compare the two, a sublease is a lot more hands-on for the original tenant. No matter which path you take, you will still want a good new tenant who pays the rent on time and follows the lease rules to the agreement. For the golden rules on screening tenants and running credit checks, Click here for our guide to running tenant credit checks. When you have a lease assignment, the terms and conditions of the lease remains largely unchanged - It's almost like taking the original lease agreement and swapping the tenant's name with another. With a sublease, there's more breathing space - The original tenant can decide how much rent to charge, how long the subtenant is going to stay or even collect security deposit... as long as it stays within the boundaries drawn by the original lease agreement between the landlord and original tenant.

Should You Choose Assignment of Lease or Sublease?

You are the Landlord - A lease assignment is recommended in most cases. You will have more control over your new tenant (instead of leaving matters in the original tenant's hands and hoping that he would do a good job)... plus you still have the original tenant to cover your back in case anything goes wrong. You are the Original Tenant - Now this is a tricky one. If you want to someone to take over the entire lease and property for its remaining duration (e.g. your business goes belly-up and you no longer need the office), then help yourself to a lease assignment. If the landlord's consent is required for assignment (and he doesn't give the nod), you can always try offering him a lease assignment fee as a deal sweetener. However, if you are looking for someone to share the place (and rent)... or perhaps you need someone to cover the rent while you are overseas for a few short months, then a sublease would be ideal. You are the New Tenant - An assignment of lease works better for you most of the time. You won't be at the mercy of the original tenant (for example if he screws up and the landlord terminates the original lease agreement, your sublease might also go up in flames). But if you only want to rent part of the property... or don't want to tie yourself down for the remaining lease duration, then you are better off sticking to a sublease. Now that we have covered the topic of assignment vs sublease, go ahead and take your pick - Click here for an assignment of lease form or Click here for a sublet agreement instead.

Landlord Tenant Law

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Cession of rights under long-term lease

30 november 2021 16:00 by merilyn kader.

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In  University of Johannesburg v Auckland Park Theological Seminary and Another 2021 (3) BCLR 807 (CC) , contextual evidence is not precluded by the parol evidence rule in a delectus personae inquiry as it does not seek to add to, vary, modify or contradict the terms of an agreement but gives context and background when interpreting the rights under the agreement.

By Merilyn Rowena Kader LLB (Unisa), Legal Editor at LexisNexis South Africa.

Lease - Cession of rights under long-term lease: Applicant, the University of Johannesburg (UJ) and first respondent, Auckland Park Theological Seminary (ATS) in  University of Johannesburg v Auckland Park Theological Seminary and Another 2021 (3) BCLR 807 (CC) concluded a co-operation agreement in 1993, which provided,  inter alia , that students who registered for theological degrees, would be taught some courses by UJ and others by ATS. In December 1996, UJ and ATS also concluded a written long-term lease agreement whereby UJ leased some immovable property belonging to it to ATS on which ATS intended to establish a theological college. The lease was registered against the title deed of the property. It was to endure for a period of 30 years, renewable with six months’ written notice by ATS prior to the expiry of the period. ATS paid UJ a once-off rental of R700 000. This all occurred with the approval of the Minister of Education. ATS did not ultimately establish a theological college on the leased premises. Instead, it ceded its rights under the lease agreement to second respondent (Wamjay) by means of a written cession. Wamjay paid ATS R6 500 000 for the rights under the lease agreement. Wamjay’s intention was to establish a religious-based school for primary and high school education on the leased premises. This occurred without UJ, or the Minister being notified beforehand. When UJ learnt of the cession, it took the view that the rights in the lease agreement were personal to ATS and that ATS had, therefore, repudiated the lease agreement by purporting to cede to Wamjay rights that were incapable of cession. UJ thus purported to accept ATS’s repudiation and cancelled the lease agreement. ATS and Wamjay disputed UJ’s right to cancel the lease agreement. UJ applied to the High Court for orders evicting ATS and Wamjay from the leased premises and cancelling the registration of the notarial lease against the title deed.

The High Court found in favour of UJ, holding that the lease was  delectus personae . An appeal to the Full Court by ATS and Wamjay failed. ATS and Wamjay appealed the finding of the Full Court to the SCA, which upheld their appeal and replaced the order of the High Court with an order dismissing UJ’s claim. The SCA, held that all contractual rights can be transmitted unless their nature involves a  delectus personae or the contract shows that the rights were not intended to be ceded. The restriction on cession imposed by the  delectus personae concept was simply a manifestation of the general principle that a cession should not disadvantage the debtor. In a long lease the lessor does not expect that the obligations of the lease will be carried out personally by the lessee throughout the whole term and that there is, therefore, no  delectus personae . A lessee could therefore cede its rights under a lease without the consent of a landlord, unless the terms of the lease forbade it from doing so. It held that in this case there was nothing in the lease itself that indicated that ATS’s rights were not intended to be ceded. UJ had sought to meet that difficulty by adducing oral evidence, but such evidence was plainly inadmissible on the basis of the parole evidence rule. UJ’s introduction of that evidence, the SCA found, was done under the guise that it was adduced in respect of the context in which the lease had been concluded. However, properly construed, such evidence was introduced in order to add to, vary or contradict the general words of the lease. The parole evidence rule applied. The evidence should not have been allowed by the High Court. The SCA held that as the basis of UJ’s claim could not be supported, the High Court’s judgment could not be sustained.

UJ approached the CC seeking leave to appeal against the judgment of the SCA.

The CC in a unanimous judgment per Khampepe J (Mogoeng CJ, Jafta, Madlanga, Mhlantla, Theron Tshiqi JJ and Mathopo AJ concurring) granted leave to appeal and upheld the appeal.

The court considered the principles surrounding the concept of  delectus personae , together with the general principles of contractual interpretation. The court confirmed that a court interpreting a contract has to, from the outset, consider the contract’s factual matrix, its purpose, the circumstances leading up to its conclusion, and the knowledge at the time of those who negotiated and produced the contract. Although this does not mean that extrinsic evidence is always admissible, there will be times where contextual evidence will be necessary for interpretive purposes. To the extent that the SCA purported to revert to a position where contextual evidence may be adduced only when a contract or its terms are ambiguous, it erred. Context must be considered when interpreting any contractual provision and it must be considered from the outset as part of the unitary exercise of interpretation. The position is no different when the interpretive exercise involves a  delectus personae inquiry. Contextual evidence ought to have been admitted in this case to determine whether the rights in question were personal to ATS. Contextual evidence in that sense is not precluded by the parol evidence rule because it does not seek to add to, vary, modify or contradict the terms of the agreement. Rather, that evidence gave context and background to the lease agreement, which could be used by a court in its interpretation of that agreement. It assisted in seeking to ascertain whether the circumstances gave rise to an intention of the parties (at the time of the conclusion of the agreement) that the rights were personal to ATS.

The CC found that in adopting such an interpretive approach the High Court’s finding could not be faulted. The rights were clearly personal to ATS. Given the nature of the rights, ATS’s cession of those rights to Wamjay effectively rendered the contract inoperative. UJ could thus reasonably conclude that ATS had repudiated the lease agreement. UJ was accordingly entitled to cancel the agreement.

Merilyn Rowena Kader Legal Editor at LexisNexis

Free Lease Assignment Agreement Template for Microsoft Word

Download this free Lease Assignment Agreement template as a Word document to easily assign a lease to another party with consent from the landlord.

Lease Assignment Agreement

THIS ASSIGNMENT OF TENANCY AGREEMENT dated this [Insert date]

[Insert name] (the “Assignor”)

– AND-

[Insert name] (the “Assignee”)

A. This is an agreement (the “Assignment”) to assign a residential tenancy agreement in real property according to the terms specified below.

B. The Assignor wishes to assign and transfer to the Assignee that tenancy agreement (the “Tenancy Agreement”) dated June 11, 2020, and executed by the Assignor as tenant and by _________________________ as landlord (the “Landlord”).

IN CONSIDERATION OF the Assignor agreeing to assign and the Assignee agreeing to assume the Tenancy Agreement for the Premises, and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, both parties agree to keep, perform and fulfill the promises, conditions and agreements below:

1. The Tenancy Agreement governs the rental of the following described premises (the “Premises”) to the Assignor: ______________________________________________

Assigned Tenancy Agreement

2. The Assignor assigns and transfers to the Assignee all of the Assignor’s right, title, and interest in and to the Tenancy Agreement and the Premises, subject to all the conditions and terms contained in the Tenancy Agreement.

Effective Date

3. This Assignment takes effect on June 11, 2020 (the “Effective Date”), and continues until the present term of the Tenancy Agreement expires on June 11, 2020.

Assignor’s Interest

4. The Assignor covenants that:

a. the Assignor is the lawful and sole owner of the interest assigned under this Assignment; b. this interest is free from all encumbrances; and c. the Assignor has performed all duties and obligations and made all payments required under the terms and conditions of the Tenancy Agreement.

Breach of Tenancy Agreement by Assignee

5. Consent to this Assignment will not discharge the Assignor of its obligations under the Tenancy Agreement in the event of a breach by the Assignee.

6. In the event of a breach by the Assignee, the Landlord will provide the Assignor with written notice of this breach and the Assignor will have full rights to commence all actions to recover possession of the Premises (in the name of the Landlord, if necessary) and retain all rights for the duration of the Tenancy Agreement provided the Assignor will pay all accrued rents and cure any other default.

Governing Law

7. It is the intention of the parties that this Assignment, and all suits and special proceedings under this Assignment, be construed in accordance with and governed, to the exclusion of the law of any other forum, by the laws of the State of New South Wales, without regard to the jurisdiction in which any action or special proceeding may be instituted.

Miscellaneous Provisions

8. This Assignment incorporates and is subject to the Tenancy Agreement, a copy of which is attached hereto, and which is hereby referred to and incorporated as if it were set out here at length. The Assignee agrees to assume all of the obligations and responsibilities of the Assignor under the Tenancy Agreement.

9. This Assignment will be binding upon and inure to the benefit of the parties, their successors, assigns, personal representatives, beneficiaries, executors, administrators, and heirs, as the case may be.

10. All rents and other charges accrued under the Tenancy Agreement prior to the Effective Date will be fully paid by the Assignor, and by the Assignee after the Effective Date. The Assignee will also be responsible for assuming and performing all other duties and obligations required under the terms and conditions of the Tenancy Agreement after the Effective Date.

11. There will be no further assignment of the Tenancy Agreement without the prior written consent of the Landlord.

IN WITNESS WHEREOF the Assignor and Assignee have duly affixed their signatures under hand and seal on this [Insert date]

SIGNED BY THE ASSIGNOR

_____________________________ Assignor: _________________________

in the presence of (Name of witness) _______________________

(Signature of witness) _____________________________

SIGNED BY THE ASSIGNEE _____________________________ Assignee: _______________________

in the presence of (Name of witness) ___________________

(Signature of witness) _______________________________

CONSENT OF LANDLORD

The Landlord in the above Assignment of Tenancy Agreement executed on [Insert date] consents to that Assignment. The Landlord also agrees to the Assignee assuming after [Insert date] the payment of rent and performance of all duties and obligations as provided in the Tenancy Agreement. Dated: [Insert date]

Landlord: _________________________

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What is the Difference Between Subletting and Assigning a Lease?

By Lianne Tan Lawyer

Updated on February 5, 2020 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

What Is a Lease Assignment?

What is subleasing, is assignment or sublease more appropriate, key takeaways.

As a tenant, you might find yourself in a situation where you need to get out of the lease. Here, you can choose to either:

• assign the lease; or
• sublet the premises.

Both assignment and subletting will require your landlord’s consent before you do so. While there are some similarities between both options, there are key differences between the subletting and assigning a lease. This article explains the crucial distinctions between assignment and subletting and outlines when each would be appropriate.  

Assigning a lease is the process of transferring all your obligations as a tenant under a lease to a new tenant. The new tenant will then be responsible for:

• paying rent;
• paying outgoings; and
• any repair and maintenance obligations.

The party that you assign the lease to will become the tenant under the lease.

However, it is important to understand that an assignment does not release you from your legal responsibilities under the lease. This means that you are still responsible to the landlord if the new tenant breaches the lease. 

For example, if the new tenant does not pay their rent, you will be legally responsible for paying it.

 There are some exceptions to this, including:

• where your lease includes a clause releasing you from all your obligations under the lease on an assignment; or
• if you are a retail tenant and the relevant state or territory-based laws outline that you will no longer be legally responsible on an assignment.

If you wish to be released from your legal responsibilities after you assign your lease, you will need to negotiate this with your landlord.

Assigning a lease will often require that you meet a set process and conditions, including: 

• obtaining your landlord’s consent; and
• proving that the new tenant will be able to meet their obligations under the lease.

When finalised, all parties should sign a deed of assignment which formalises the arrangement. 

Subletting your premises allows a new tenant to take over either: 

• part of your premises; or 
• all of your premises.

Depending on how much of your premises you have sublet, the third party will also take over some of your legal obligations under the lease. 

For example, if you run a teaching centre at your premises, you might sublet a classroom to a tutoring business. The tutoring business will then pay part of your rent and may be responsible for maintaining the classroom that you have sublet out.

If you sublet your premises, you are still legally responsible under the lease. This means that if your subtenant does not meet their obligations under the lease, you will be responsible for  rectifying any breaches. 

For example, if your subtenant fails to pay their rent, you must still pay the full rent to the landlord. If you do not, you will be in breach of the lease. 

It is important to remember that if you sublet your premises, you effectively become the sublandlord under your sublease. Generally, a sublease will include and incorporate the terms of the original lease you signed with the landlord as well. In this case, you should take care to exclude certain obligations of your landlord, like to insure the building.

If you are subletting the premises to share the financial cost of the lease, you should pay attention to the timing of the subtenant’s obligations. This will ensure that the subtenant will pay you their portion of the rent before you are due to pay the landlord.

Like an assignment, subletting will require you to follow a certain procedure and meet certain conditions. You will also need to obtain the landlord’s consent before you proceed. To formalise the arrangement, both you and the subtenant must sign a sublease.

Whether an assignment or a sublease is more appropriate for you will depend on your intention for your business.  

A sublease may be more appropriate if you:

• intend to downsize your business;
• wish to share part of the costs under your lease; or
• have additional space in the premises that you have no use for.

On the other hand, if you intend to sell your business or end your lease early, an assignment will be more appropriate.

While both assigning and subletting your premises allows you to pass on part or all of your premises to another party, they are two distinct types of dealings. An assignment passes on the whole of the property to a third party and may allow you to be released from legal responsibility. In comparison, a sublet allows you to offload part of your lease obligations to another party, while you still remain legally responsible under the lease. If you have any questions about assigning or subletting a lease, contact  LegalVision’s leasing lawyers  on 1300 544 755 or fill out the form on this page. 

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Synonyms of cession

• as in surrender
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Thesaurus Definition of cession

Synonyms & Similar Words

• relinquishment
• capitulation
• acquiescence
• capitulating
• reconciliation
• conciliation
• appeasement
• reconcilement

Antonyms & Near Antonyms

Thesaurus Entries Near cession

Cite this entry.

“Cession.” Merriam-Webster.com Thesaurus , Merriam-Webster, https://www.merriam-webster.com/thesaurus/cession. Accessed 13 May. 2024.

More from Merriam-Webster on cession

Britannica English: Translation of cession for Arabic Speakers

Britannica.com: Encyclopedia article about cession

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ASSIGNMENT OF LEASE BY LESSEE

Read also: PERSONS DISQUALIFIED TO BECOME LESSEES

The lessee cannot assign the lease without the consent of the lessor.

The assignment of a lease by the lessee involves a transfer of rights and obligations pertaining to the contract; hence, the consent of the lessor is necessary.

There arises the new juridical relation between the lessor and the assignee who is converted into a new lessee.

C an a lessee assign the lease of the house to another, without the consent of the lessor?

No, unless there is a stipulation to that effect. 

The law says:

“The lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to the contrary.”

In the case of Josie Go Tamio v.  Encarnacion Ticson ( G.R. NO. 154895, November 18, 2004) , the Court explained that, the objective of the law in prohibiting the assignment of the lease without the lessor’s consent is to protect the owner or lessor of the leased property. In the case of cession or assignment of lease rights on real property, there is a novation by the substitution of the person of one of the parties – – the lessee. The personality of the lessee, who dissociates from the lease, disappears; only two persons remain in the juridical relation – – the lessor and the assignee who is converted into the new lessee.

Thus, there arises the new juridical relation between the lessor and the assignee who is converted into a new lessee.

Hence, the lessee cannot assign the lease without the consent of the lessor (creditor), unless there is a stipulation granting him that right.

Alburo Alburo and Associates Law Offices  specializes in business law and labor law consulting. For inquiries, you may reach us at [email protected], or dial us at (02)7745-4391/0917-5772207.

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Cession – How, when and why does it matter?

by Nicolene Schoeman-Louw | May 4, 2023 | Civil Litigation and Alternative Dispute Resolution , Commercial law , Contract Drafting

Introduction

Often when we do not provide personal surety, the security of a loan can take the form of a cession. Therefore, the theory behind what we agree to when we agree to a cession is critical. 

South Africa has two types of cession: out-and-out and securitatem debiti (security). This has been confirmed in the Supreme Court of Appeal (SCA) case of Grobler v Oosthuizen [2009] 5 SA 500 (SCA). In this case, the SCA gave the provision of cession as security a measure of certainty.

Types of Cession

The two types differ because an out-and-out cession is a bilateral agreement where all rights are entirely ceded to the cessionary. This means the rights no longer belong to the cedent but instead belong to the cessionary. It’s a reversionary interest, which means the cessionary must re-cede the rights to the cedent when the secured debt has been paid off. However, this is not automatic and requires a re-cession agreement unless otherwise stated. Failing to re-cede the debt can have severe consequences for both parties.

On the other hand, a security cession, also known as a pledge and cession in securitatem debiti, is when the cedent pledges or encumbers their rights against their debtor and transfers these rights to the cessionary to secure an obligation owed to them. For example, a security cession is typically used to create a security interest in the cedent’s rights to book debts, bank account funds, insurance policies, or shares. It has been legally recognized that a cession in securitatem debiti is similar to a pledge of corporeal movable property.

Intentions Matter – The Grobler Case

In the case of Grobler, the court established that the type of cession depends on the parties intentions. Therefore, it is crucial that the parties clearly express the kind of cession they intend to enter into. This intention must be clearly outlined in the agreement and reflected in its performance.

At this stage, parties can structure security cessions as they wish, but if their intention is unclear, the pledge construction will be the default.

Formalities are not required for the obligatory agreement or act of cession. However, parties can agree on specific formalities that the cession must comply with. The cession can be expressed, inferred from the parties’ conduct, or tacit. Although it need not be in writing, parties may choose to reduce it to paper; if so, it will only be valid.

If the cedent defaults on the secured debt, the cessionary can realize its security by using its locus standi to collect the principal debt and use the proceeds to settle it. However, whether the cessionary may do so before the cedent defaults is a factual matter that the terms of the obligatory agreement must determine.

In the case of Retmil Financial Services (Pty) Ltd v Sanlam Life Insurance Company Ltd and others [2013] 3 All SA 337 (WCC) , the Western Cape High Court established that a cessionary, like a pledgee, must act as a bonus paterfamilias, meaning they must take reasonable precautions to protect the ceded right and exercise due diligence. They are also responsible for safeguarding the cedent’s interests in the right.

If the cessionary fails to meet these obligations, the cedent may have a damages claim against them, depending on the circumstances. Additionally, whether the cessionary can collect the principal debt from the debtor when the cedent is not in default but instead servicing the secured debt is a factual matter to be determined by the terms of the obligatory agreement, not a legal one.

It is, therefore, crucial to ensure that the intent of both parties is agreed upon. Further, the parties’ conduct is bona fide when exercising the pledge and for the parties to release when exactly the debt is claimable. Contact an attorney at SchoemanLaw Inc for any guidance on your cession.

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Cession and Assignment of Agreements Template South Africa

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Let’s get personal: The transferability of shareholder rights under a company’s constitutional documents

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It’s a long-standing and well acknowledged principle in South African common law that parties to an agreement are generally free to cede and assign their contractual rights as they wish, except where there is a clause specifically prohibiting the transfer of those rights. As a result, where a contract is silent as to whether the rights of a party may be transferred to third parties, that party is generally free to cede and assign its rights freely, without the consent of the other parties.

As is most often the case, however, there are a few exceptions to this principle. One such exception, which recently rose its head again in the SCA judgment of Propell Specialised Finance v Attorneys Insurance Indemnity Fund NPC , is where the rights of a party are of a personal nature and not intended by the parties to be freely assignable to outsiders. Rights of a personal nature (or “ delectus personae ”, as they’re more formally known) may not, without a specific empowering contractual provision, be transferred to third parties.

The Propell case confirmed the established common law position. Propell Specialised Finance had attempted to enforce certain rights allegedly ceded to it by a law firm, BSL, under an insurance policy between BSL and the Attorneys Insurance Indemnity Fund. The SCA held that the nature of the rights that were purportedly ceded to Propell were of a personal nature to BSL (being a law firm which can benefit under the Attorneys Insurance Indemnity Fund). If the rights were ceded to Propell it would create a claim against the Attorneys Insurance Indemnity Fund in favour of a person who was never intended to benefit under the insurance policy. In short, these were rights that were personal in nature to BSL which could not be freely ceded even in the absence of a clause in the insurance policy expressly prohibiting the cession.

What if certain contractual rights bestowed upon a shareholder in a shareholders’ agreement or a memorandum of incorporation are of such a nature that makes them personal to the particular shareholder?

Shareholders are often granted rights or entitlements specifically by name. For example, shareholders are often singled out and granted special rights to transfer their shares, appoint directors, approve or veto certain matters, to be offered corporate opportunities, be present at meetings to constitute a quorum and to exit the shareholding structure, to name a few. Since the Companies Act, No 71 of 2008 came into force in 2011, convention has preferred that, where confidentiality is not a concern, these rights be entrenched in a memorandum of incorporation to ensure that they prevail where there is a conflict with a shareholders’ agreement.

Most shareholders’ agreements feature “boilerplate” clauses regulating cession and assignment and rights and obligations (most often allowing it with counterparty consent). The same is not true of MOIs, which are generally silent as to the cession and assignment of rights. This leaves the door open to the Propell question: in the absence of a particular contractual regime relating to the cession of rights, can a shareholder transfer its rights to a third party purchaser?

The answer: yes it can. But only to the extent that such rights are not intended to be personal or unique to it. It may be argued by the remaining shareholders that certain rights cannot be transferred to a third party purchaser without their consent.

Consider the following scenarios:

• an investment fund with a mandate to realise its investment after a certain period of time has negotiated an “exit event” clause in a company’s MOI. An “exit event” is customarily included in a company’s constitutional documents to allow a particular shareholder to dispose of its investment in a company or group. This is often achieved through an initial public offering of shares or some other corporate transaction whereby the shareholder is permitted to divest;
• a strategic shareholder who contributes specific know-how to a company in a particular industry has an entrenched right to be offered specific corporate opportunities in that field of expertise; or
• a founder of a company who holds shares alongside an institutional investor where the former contributes his/her intellectual property to the company and the latter contributes loan funding to the company, thereby exempting the founder from contributing cash loans.

In each circumstance, the rights in favour of the first shareholder may be considered personal to it. It is not a given that a third party purchaser of its shares will automatically inherit these rights. Shareholders should be careful not to open the door to this question. Instead, if they wish for personal rights to be transferable along with their shares they should expressly cater for this in the MOI or the shareholders’ agreement.

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A Cession and Assignment of Agreements is to transfer contractual rights and benefits to another party.

• Transfer contractual benefits.
• Ensure debt repayment.
• Reduce risk of default.

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CESSION AND ASSIGNMENT OF AGREEMENTS

Summary A Cession of Agreements may be used where the rights and obligations under an agreement need to be ceded and assigned to another person. By signing a Cession & Assignment of Agreements, the Cedent agrees to transfer to the Cessionary the right to claim money and any other benefits owed to the Cedent in terms of the Agreement/s.

Why do I need a Cession of Agreements? The reasons for ceding and assigning an agreement are varied, and could include restructuring of an organisation, the transfer of a business, or the purchase of a debt. This Assignment Agreement provides for the cession of rights and the delegation of obligations from one person to another.

What does the Cession Contract say? The Cession & Assignment contract template can be printed onto three pages.

What do you need to do to use a Cession of Agreements?

• Read the cession and assignment document to ensure that it suits your requirements. Make changes as required.
• Complete the relevant details, and get both parties to sign.

Also known as: Cession Agreement; Terms of Cession; Transfer of Rights & Obligations; Cession & Delegation Agreement.

The Use and Benefits of a Cession And Assignment of Agreements Template:

A cession and assignment agreement/pledge involves the transfer of rights and obligations from one party, known as the cedent, to another party, known as the cessionary and place those right in the individuals own name. This type of agreement is commonly used in South African common law and can apply to personal right, movable property belonging to the cedent’s estate transferred to the cessionary’s estate, and security cession (also known as securitatem debiti ) by way of this transfer agreement.

In this contract, the party ceding their rights, known as the cedent, agrees to transfer those rights to the party receiving them, referred to as the cessionary. It specifies the terms and conditions of its existence , including payment, that both parties must respect. It outlines the rights and obligations of the parties to the cession, ensuring compliance with the law in respect of this cede.

The cedent cedes their interest in a particular asset, such as property or securities, to the cessionary as security for money owed or other obligations.

The contract establishes the payment terms for any money and conditions, providing a legal framework for the cession and ensuring that the cedent’s interests and the cessionary’s security are protected.

Here are some key points to keep in mind in relation to this agreement:

• A cession agreement/pledge involves the transfer of ceded rights from the cedent to the cessionary.
• Cession agreements/pledge can apply to personal rights, movable property, and security.
• The cessionary acquires the determined rights and obligations of the cedent.
• The agreement/ pledge must be in writing to be valid.
• The cedent retains any reversionary rights they may have had.
• The agreement/ pledge can be used for the transfer of debts, payments, and other obligations.
• A cession and assignment agreement can be used for insurance policies and bank accounts.
• The agreement/ pledge can be used to secure a debt through securitatem debiti or the pledge theory whereby the cedent pledges or encumbers its personal rights against its debtor and transfers such rights to the cessionary (ceded right(s)) to secure the fulfilment, by the cedent or a related party, of an obligation owed to the cessionary.
• The cedent divests themselves of the ceded right and the cessionary becomes the new owner under the pledge.
• The cessionary must have locus standi or legal standing to enforce the rights (they must be the owner of such rights).
• The agreement/ pledge must comply with the law and be determined to be valid.
• The cessionary may have authority granted to them to act on behalf of the cedent in a particular manner.
• The cessionary is entitled to any future proceeds resulting from the transferred rights.
• The cedent may retain reversionary rights or reversionary interest.

A cession agreement is a legal document that transfers the rights and obligations of one party, the cedent, to another party, the cessionary. In South African law, a cession agreement is a common way of assigning debts and other claims and have been in use for more than a century. A security cession refers to the transfer of rights to secure a debt or obligation.

Personal rights, such as claims arising from a contract, can be ceded, meaning that the cessionary can enforce those rights in the same manner as the cedent. However, the cedent’s personal rights, such as their right to privacy or dignity, cannot be transferred, whereas debt can be transferred.

Movable property, such as bank accounts or insurance policies, can also be ceded, with the cedent transferring ownership to the cessionary. In some cases, a cession agreement may contemplate the transfer of the cedent’s interests in future property.

The cession agreement must include certain clauses to be valid, such as a description of the rights being ceded and any conditions or restrictions on the cession. The cessionary must also have locus standi, or legal standing, to enforce the ceded rights.

In the cession contemplated under this agreement, the cedent relinquished themselves of the ceded rights, which become the property of the cessionary and is thus no longer the property of the original owner. However, the cedent may retain reversionary rights or reversionary interest, meaning that they will regain the ceded rights if certain conditions are met by way of due performance.

As mentioned, a cessionary’s obligations are determined by the law applicable to the type of security instrument that creates the security. Authority for this is to be found in Bisnath v Absa Bank Limited; Absa Bank Limited v Bisnath and Another [2008] 3 All SA 219 (SCA)

Under South African law, a cession agreement is a useful tool for transferring obligations undertaken by one party to another . It allows for the transfer of debt and other claims by one creditor or more, and provides a means for securing those obligations. Should you wish to transfer book debts, you will need to conclude a specific agreement for that. In the event of a dispute, a court may be called upon to determine the validity of the cession and the rights of the parties to the pledge.

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