A commercial tenant who leases space in a multi-unit office building decides to assign her lease to her friend, who intends to use the space for a different business than the tenant originally operated. The lease agreement does not contain any provisions restricting assignments, but it requires the landlord's prior written consent for subleases. After the assignment, the new tenant begins using the space, and the landlord sues the original tenant for unpaid rent accrued after the assignment. Who is responsible for the current unpaid rent owed under the lease?
The landlord cannot collect unpaid rent from either tenant due to the absence of any consent requirement for assignments in the lease.
The original tenant is not responsible for the unpaid rent because the lease does not require the landlord's consent for assignments.
The original tenant is not responsible for the unpaid rent because the privity of estate was transferred to the new tenant.
The original tenant is still responsible for the unpaid rent because they remain in privity of contract with the landlord.
The correct answer is based on the principle that in a lease assignment, the original tenant remains liable for rent obligations to the landlord unless there is a release agreement or novation absolving them of liability. This is because the original tenant remains in privity of contract with the landlord, even though privity of estate transfers to the new tenant. The distinction between assignment and sublease highlights the differing effects on liability. In an assignment, the new tenant assumes privity of estate, but if the lease terms don't explicitly absolve the original tenant of liability, that tenant remains responsible under privity of contract. Answers mistaking the relationship created by the transfer or the relevance of lease restrictions on assignments are incorrect because such restrictions wouldn’t void liability unless specifically stated.
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What does it mean to be in privity of contract?
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What is the difference between an assignment and a sublease?
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What is a novation and how does it relate to lease assignments?