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continue to be personal obligations of the original parties to the lease

even after assignment.


By contrast, a sublease by the tenant does not create privity of estate
between the landlord and the subtenant. The subtenant is liable only to
the tenant for the sublease obligations, and the subtenant has no claim
against the landlord for failure to perform his lease obligations. There is
generally no privity of contract between the subtenant and the landlord,
either, because only the tenant and subtenant have a contractual
relationship. Consequently, the critical issue usually is to decide whether
any given transfer of a leasehold is an assignment or a sublease.
B. Assignment: An assignment is the transfer of the party’s entire interest
under the lease. If a tenant retains any interest, it is a sublease instead.
See section IV.C, below. The methods of deciding whether any given
transfer is an assignment or sublease are discussed in section IV.D,
below. Given our presumption of free alienability of property interests
and that leaseholds are property interests, unless the lease prohibits or
conditions assignment, either the landlord or the tenant may freely assign
the reversion or leasehold, respectively, that they hold. Most leases
either expressly prohibit assignment by the tenant or require the tenant
to obtain the landlord’s consent.
1. Privity of estate: An assignment places the assignee in privity of
estate with the other original party. Privity of estate is rooted in the
idea that leaseholds are an estate in land.
Example: Lord leases Blackacre to Tenant, who assigns the leasehold
to Newcomer. Lord and Newcomer are now in privity of estate with
respect to Blackacre; Lord and Newcomer have the relationship of
landlord and tenant.
The consequence of being in privity of estate is that the assignee is
obligated to perform all the lease covenants that “run with the estate.”
See section IV.B.1.a, below. Perhaps the most important lease
promise that runs with the estate at common law is the promise to pay
rent.
Example: The lease between Lord and Tenant provided that Tenant
would pay $1,000 per month rent. This promise runs with the estate.
Because Newcomer is in privity of estate with respect to Blackacre,
Newcomer must perform the promise and pay the rent.
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