National Real Estate Exam (PSI)ContractsMedium
A tenant with three years remaining on a five-year commercial lease transfers the entire remaining lease term to a new party but remains secondarily liable to the landlord if the new party defaults. This transaction is best described as:
- AAn assignment
- BA sublease
- CA novation
- DA lease renewal
Show answer & explanationAnswer & explanation
Correct answer: A. An assignment
An assignment occurs when a tenant transfers the entire remaining leasehold interest to another party. The original tenant typically remains secondarily liable unless the landlord releases them through a novation.
Why the other options are wrong
- B. A sublease involves transferring only part of the remaining term or premises, not the entire interest.
- C. A novation would fully release the original tenant, substituting the new tenant entirely.
- D. A renewal extends the lease term with the landlord, not a transfer to a third party.
Assignment of Lease
A complete transfer of a tenant's entire remaining leasehold interest to a third party, while the original tenant typically remains secondarily liable to the landlord.
- Assignment transfers the whole remaining term
- Sublease transfers only part of the term or premises
- Original tenant remains liable unless released via novation
Memory trick: Assign it ALL, sublease just a stall (partial).