National Real Estate Exam (PSI)ContractsMedium
A tenant leasing retail space transfers only the back storage room of the leased premises to another business for the remaining lease term, while the tenant continues occupying and paying rent on the rest of the space. What has the tenant created?
- AA sublease
- BAn assignment of lease
- CA novation
- DA lease renewal
Show answer & explanationAnswer & explanation
Correct answer: A. A sublease
When a tenant transfers only part of the leased premises or less than the full remaining term, and remains liable and involved with the landlord, this is a sublease, not a full assignment.
Why the other options are wrong
- B. An assignment transfers the entire remaining interest in the leased premises to a new tenant.
- C. Novation would replace the original tenant with a new party, releasing the original tenant, which isn't described here.
- D. A lease renewal extends the lease term, not a transfer of premises to another party.
Sublease
A transfer of less than the entire leasehold interest—either partial space or partial remaining term—while the original tenant remains responsible under the lease.
- Original tenant remains liable to landlord
- Differs from assignment, which transfers the entire interest
- Can involve partial space, partial term, or both
Memory trick: Sublease splits it; assignment sends it all away.