If you’re buying a business, relocating, downsizing, or handing your premises over to someone else, a transfer of lease (often called an “assignment of lease”) can feel like a simple admin step.
But in practice, it’s one of the most important documents you’ll sign in the whole process - because it determines who is responsible for the lease (and on what terms) after the transfer. A small clause you miss can turn into a big cost later.
This guide is updated for 2026 and written for NZ business owners who want the legal side explained clearly. We’ll walk you through what a transfer of lease is, what can go wrong if you don’t review it properly, and what a lawyer actually checks when they review it.
What Is A Transfer Of Lease (And Who Is It For)?
A transfer of lease usually means you’re assigning your existing commercial lease to someone else (the “assignee”). You (the “assignor”) step out, and the new party steps in.
This often comes up when:
- you’re selling your business and the buyer will operate from the same premises;
- you’re restructuring (for example, moving the lease into a new company);
- you’re exiting a site and have found someone to take over;
- you’re buying a business and need the lease transferred to you before you can trade.
It’s also common for the landlord to require a formal deed documenting the transfer, plus extra documents such as:
- a landlord consent to assignment;
- a deed of assignment of lease;
- a deed of covenant (where the new tenant promises to comply with the lease);
- guarantees or security documents.
Because the paperwork can come from multiple parties (landlord, landlord’s lawyers, agent, buyer/seller), it’s easy to assume “it’s standard.” The problem is that “standard” often means “standard for the person who drafted it” - not necessarily fair or safe for you.
In many cases, a transfer of lease sits alongside other transaction documents. For example, if you’re selling, the lease transfer usually needs to align with your Business Sale Agreement so the handover date, conditions, and responsibilities match up.
Why A Transfer Of Lease Review Matters More Than Most People Expect
A lease is usually one of the biggest ongoing commitments in a small business - right up there with payroll and supplier costs. When you transfer a lease, you’re not just handing over keys; you’re reallocating legal risk.
Here’s what’s really at stake when you sign a transfer of lease without a proper review.
You Might Still Be On The Hook After You “Transfer”
One of the most common surprises is that the outgoing tenant can still be liable after the assignment.
Depending on:
- the wording of the original lease;
- the landlord’s consent terms; and
- what’s included in the assignment documents,
you could remain responsible if the new tenant defaults - for example, if they stop paying rent or abandon the premises.
This can happen through clauses that operate like:
- ongoing guarantees;
- indemnities;
- “privity” type obligations (where you stay connected to the lease even after assignment); or
- specific conditions the landlord imposes as part of their consent.
A review helps you understand whether you truly “walk away” - or whether you’re still carrying hidden risk.
The Transfer Documents Can Quietly Change Your Deal
People often focus on the original lease and forget that the transfer paperwork can add new obligations, such as:
- additional security requirements;
- extra fees payable to the landlord;
- new restrictions (for example, tighter permitted use);
- new default provisions or enforcement rights.
Even if the assignment is “approved,” you want to ensure the approval doesn’t come with conditions that undermine your business sale, your exit strategy, or your costs.
You Can Inherit Problems You Didn’t Cause (If You’re The Incoming Tenant)
If you’re taking over a lease, you want to be clear on what you’re inheriting.
For example, if there’s damage to the premises, unpaid outgoings, or unresolved maintenance issues, you don’t want to accidentally accept responsibility for it just because the documents are vague.
A review will usually focus on who is responsible for:
- make-good obligations;
- existing breaches of lease;
- repair and maintenance history;
- any “as-is” acceptance clauses;
- outgoings reconciliations.
This is especially important where you’re stepping into a lease as part of a broader transaction - like buying the business and taking over staff, equipment, and suppliers. If the lease transfer goes wrong, it can derail settlement entirely. (That’s why it’s worth using a structured Legal Due Diligence approach when you’re acquiring a business.)
What A Lawyer Looks For When Reviewing A Transfer Of Lease
A transfer of lease review isn’t just a quick glance at the signature page. The point is to map the legal obligations and risks before you commit.
Here are some of the key things a lawyer will typically check.
1) Does The Lease Actually Allow An Assignment?
Most commercial leases don’t allow you to assign freely. They usually say you can only assign with the landlord’s written consent (and often the landlord can impose conditions).
A review checks:
- what the lease requires for consent (timeframes, info, forms, references);
- whether the landlord can refuse consent and on what grounds;
- who pays the landlord’s legal costs for the transfer;
- whether you need to meet any prerequisites before the landlord will even consider it.
This is one of those areas where timing matters. If you’re trying to settle a business sale on a particular date, landlord consent delays can create serious problems if you haven’t planned for them early.
2) Are There Any “Continuing Liability” Clauses?
This is the big one for outgoing tenants.
A lawyer will look for terms that effectively say:
- you remain liable if the assignee breaches;
- you must guarantee the assignee’s performance;
- you must indemnify the landlord for losses after the assignment;
- your security (bond/bank guarantee) stays in place for some period.
Sometimes these clauses are negotiable. Sometimes they’re not. Either way, you want to understand the risk and, if needed, adjust your broader commercial deal (for example, by requiring stronger guarantees from the buyer).
3) Are The Landlord’s Conditions Reasonable And Clear?
Landlords often approve an assignment on conditions such as:
- the assignee entering into a deed of covenant;
- providing personal guarantees;
- providing a bank guarantee or bond;
- updating insurance certificates;
- paying the landlord’s legal fees and admin costs.
A review checks whether those conditions are consistent with the lease, proportionate, and clearly drafted. “Clear” matters because vague conditions often lead to disputes later (particularly around when the transfer is actually effective).
Where the landlord wants a formal document to manage ongoing obligations, you may see documents like a Deed of Assignment of Lease or other supporting deeds. The key is making sure the documents all match and don’t contradict each other.
4) Do The Dates And Handover Obligations Line Up?
Transfers of lease often sit in a messy real-world context: stock handover, staff transitions, fit-out changes, signage, and “who pays what” on settlement day.
A lawyer will typically check alignment on:
- the effective transfer date;
- rent and outgoings adjustments (including GST where relevant);
- utilities and service contracts;
- keys, access cards, alarms, and security codes;
- any required make-good or reinstatement work before handover;
- any landlord inspection requirements.
If you’re the outgoing tenant, you don’t want to keep paying rent because the documents didn’t clearly define when responsibility shifts. If you’re the incoming tenant, you don’t want to be liable before you have access (or before the seller has actually vacated).
5) Are There Any Hidden Fit-Out Or “Make Good” Traps?
Make-good obligations can be expensive - and they’re often misunderstood.
A review will look at:
- whether the outgoing tenant must restore the premises to a base build condition;
- whether the landlord can require removal of fit-out (even if it’s valuable);
- whether the incoming tenant accepts the fit-out “as-is”;
- who is responsible for compliance issues (for example, unconsented alterations).
Even if you’re assigning the lease (rather than ending it), a landlord may still require you to remedy existing issues before consenting.
Depending on your situation, your lawyer may recommend additional documents to keep the transfer clean and enforceable. For example:
- If you’re the outgoing tenant and the landlord insists you remain liable, you may want protections from the incoming tenant (for example, an indemnity or guarantee arrangement).
- If there are multiple parties involved (buyer, seller, guarantors, related companies), you may need clear execution and witnessing formalities.
- If you’re selling a business, you may need settlement documents that coordinate with the lease transfer obligations and timing.
In some cases, it’s also worth reviewing your broader lease position - especially if the assignment is happening because the lease has become unaffordable or unsuitable. If the real issue is the underlying rent or the terms, a Commercial Lease Review can help you understand your options before you commit to any “fix” that creates new risk.
Common Risks If You Don’t Get The Transfer Of Lease Reviewed
When people skip legal review, it’s usually because they’re trying to save time or money. The trouble is that lease issues can cost far more than a review ever would.
Here are some common “pain points” we see when a transfer of lease wasn’t properly checked.
Unplanned Costs
- landlord legal fees you didn’t budget for;
- unexpected bond or bank guarantee requirements;
- make-good work that becomes urgent (and expensive);
- outgoings reconciliations that don’t reflect what you expected.
Delays That Affect Your Business Sale Or Opening Date
- landlord consent takes longer than expected;
- documents aren’t signed correctly (and need to be re-done);
- the landlord requests additional information late in the process;
- the parties disagree about when the assignment becomes effective.
Disputes About Repairs, Condition, And Fit-Out
- the incoming tenant claims the outgoing tenant must fix issues;
- the landlord refuses consent until repairs are done;
- the outgoing tenant assumes the incoming tenant is “taking it as-is,” but the documents don’t actually say that.
Ongoing Liability After You’ve Left
This is often the most stressful outcome: you leave, you think you’re done, and then a year later you get a call because the new tenant stopped paying rent.
Even where liability is legally arguable, the practical reality is that you might still need to spend time and money responding to claims, negotiating with the landlord, or defending your position.
How To Make The Transfer Process Smoother (For Both Tenants And Landlords)
A good transfer of lease process is mostly about two things: clarity and coordination.
Here are practical ways to reduce friction and protect yourself.
Get The Landlord Involved Early
If your lease requires consent, start those conversations early - ideally before you lock in settlement dates in other documents.
Ask upfront:
- what information the landlord needs about the incoming tenant;
- whether guarantees/security will be required;
- what legal fees are payable and when;
- what documentation they will use (and whether you can review it early).
Make Sure Your “Commercial Deal” Matches The Legal Documents
If you’ve agreed on a handover date, who pays rent until when, what happens to the fit-out, and whether stock or equipment is included - make sure the legal paperwork reflects that agreement.
This is especially important when the lease transfer is part of a larger transaction. For example, in a business sale, if the buyer taking over the premises is a condition of settlement, the lease transfer documents need to line up with the conditions and timing in the sale contract.
Don’t Treat The Lease Like A Template
Commercial leases are often drafted from standard forms, but the details matter.
For example, a single clause about:
- permitted use,
- hours of operation,
- signage,
- maintenance,
- assignment conditions,
can have a real impact on how you run your business day-to-day.
If you’re taking over a lease for a new venture, it’s often worth checking whether the lease actually supports your plans. If you later need to sublease part of the space, restructure the business, or sell, you’ll want flexibility built in (or at least a clear understanding of what’s possible).
Plan For The “What If” Scenarios
This is where legal review is less about paperwork and more about risk management.
For example:
- If the landlord requires the outgoing tenant to remain liable, what protections do you have if the incoming tenant defaults?
- If the incoming tenant fails to obtain a licence or consent needed for the business, what happens to the transfer?
- If there’s a dispute about make-good, who is responsible and what’s the process?
These are the kinds of “what if” questions a lawyer will raise early so you can negotiate practical protections before anyone is locked in.
Key Takeaways
- A transfer of lease (assignment of lease) is a major legal step because it shifts responsibility for rent, outgoings, and compliance with the lease.
- Even after a lease is transferred, the outgoing tenant can sometimes remain liable if the documents create ongoing obligations or guarantees.
- If you’re the incoming tenant, you need to be careful not to inherit existing breaches, repair issues, or unclear make-good obligations.
- A proper review checks the original lease assignment rules, the landlord’s consent conditions, handover dates, costs, security requirements, and any added clauses in the transfer documents.
- Transfers often connect to broader transactions (like a business sale), so the lease documents should align with the commercial terms and settlement timetable.
- Getting legal help early can prevent delays, unexpected costs, and disputes - and helps you feel confident you’re protected from day one.
If you’d like help reviewing your transfer of lease or related documents, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.
