Assignment vs Sublet: One Word Apart, a Whole Lease of Liability
Your business is being sold, shrunk, or relocated — but the commercial lease still has years to run. Assignment and sublet sound alike, but one lets you walk away clean and the other keeps you on the hook. Choose wrong and you carry the next tenant’s default to the bitter end.
What’s the difference between assignment and subletting a commercial lease?
An assignment transfers your entire lease obligation to a new tenant — the new tenant steps directly into your place. A sublet keeps you as the head tenant while you rent part (or all) of the space to another business; you remain the landlord’s primary tenant. The core difference is liability: assignment generally lets you exit more cleanly, while under a sublet you remain liable to the landlord under the original lease. Under section 23 of Ontario’s Commercial Tenancies Act, the landlord’s consent “is not to be unreasonably withheld” — but “unreasonable” has limits.
Source: Ontario Commercial Tenancies Act s.23 / commercial leasing practice (2026)
I’m Arthur Zhao. Every commercial tenant eventually hits this fork: the business is being sold, shrunk, or relocated, but the lease still has years to run. You have two roads — assign the lease to whoever takes over, or sublet the space to someone else. Many assume they’re the same and pick one at random. But on the question of whether you still have to backstop the space, they’re worlds apart. Choose wrong, and if the successor walks and the rent stops, the landlord may come right back to you. Here’s the difference, whether the landlord can block you, and what to plant in the lease at signing.
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Assignment: hand over the whole lease
Sublet: you’re still in the chain
⚠️The biggest misconception about subletting is thinking “once it’s rented out, it’s not my problem.” The opposite is true — under a sublet you remain the landlord’s head tenant, so if the subtenant stops paying or breaches, the liability lands back on you, and you must pay the landlord first, then chase the subtenant. To truly exit, you want an assignment, not a sublet.
The liability difference is the whole decision
Landlord consent: the limits of "not unreasonably withheld"
💡 One line captures it: assignment lets you (most likely) leave clean; a sublet keeps you in the liability chain. Giving the same space to someone else, one asks “can I fully exit?” and the other asks “am I willing to keep backstopping the subtenant?” Decide what you want first — a permanent exit or a temporary shuffle.
What to plant at signing
ℹ️The legal line between assignment and sublet can be subtle (Ontario courts have ruled specifically on the distinction), and the wording and structure affect your actual liability. For any exit from an unexpired commercial lease, have a lawyer experienced in commercial leasing review the terms and set the structure — don’t act on a plain-language reading yourself.
Frequently Asked Questions
I sublet my shop, the subtenant walked without paying — why is the landlord coming after me?
Because under a sublet you remain the landlord’s head tenant, fully liable under the original lease. The subtenant is your tenant, not the landlord’s, so on their default the landlord contractually looks to you; you pay, then chase the subtenant. To stop being responsible for the space entirely, you need an assignment, not a sublet — that’s the crucial difference between the two.
Can the landlord refuse my assignment/sublet for any reason?
Not for just any reason. Under section 23 of Ontario’s Commercial Tenancies Act, consent “is not to be unreasonably withheld” — the landlord needs a good reason (poor assignee credit, unlawful use, etc.) to refuse. But “reasonable” has interpretive room, so it’s best to spell out in the lease the specific consent standard, that reasons must be in writing, and an approval time limit, to limit the landlord stalling or refusing on vague grounds.
I’m selling my business — assignment or sublet?
Usually an assignment. Selling the business means a full exit, handing the whole lease and location to the buyer, and assignment lets you (subject to the terms) leave more cleanly. Subletting suits temporary or partial shuffles where you want the space back later. But whether you’re fully released after assignment depends on the lease terms — have your lawyer confirm and push for release or a liability cap.
I didn’t negotiate assignment/sublet rights at signing — can I still transfer?
It depends on the lease. If it flatly prohibits or heavily restricts assignment/sublet, you’re in a weak position now and may have to seek the landlord’s consent separately with little leverage. This is exactly why assignment/sublet rights should be secured at signing, while you still have leverage. If you only now find yourself restricted, get a lawyer to assess your room under the existing terms quickly.
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