Lease Assignment, Assumption, and Landlord Consent - Alabama

LEASE ASSIGNMENT, ASSUMPTION OF LEASE, AND LANDLORD CONSENT

(Alabama Commercial Lease)

THIS AGREEMENT ("Agreement") is entered into as of [__/__/____] (the "Effective Date"),

by and among:

ASSIGNOR (Current Tenant):
Name: [________________________________]
Entity Type: ☐ Individual ☐ Corporation ☐ LLC ☐ Partnership ☐ Other: [________________]
State of Organization: [________________________________]
Principal Address: [________________________________]
City: [________________________________] State: AL ZIP: [__________]
County: [________________________________]
Telephone: [________________________________]
Email: [________________________________]

ASSIGNEE (New Tenant):
Name: [________________________________]
Entity Type: ☐ Individual ☐ Corporation ☐ LLC ☐ Partnership ☐ Other: [________________]
State of Organization: [________________________________]
Principal Address: [________________________________]
City: [________________________________] State: [____] ZIP: [__________]
Telephone: [________________________________]
Email: [________________________________]

LANDLORD (Property Owner):
Name: [________________________________]
Entity Type: ☐ Individual ☐ Corporation ☐ LLC ☐ Partnership ☐ Other: [________________]
Principal Address: [________________________________]
City: [________________________________] State: [____] ZIP: [__________]
Telephone: [________________________________]
Email: [________________________________]

RECITALS

WHEREAS, Landlord and Assignor entered into that certain lease dated [__/__/____], as amended by [________________________________] (the "Lease"), for the premises at:

Premises Address: [________________________________]
Suite/Unit: [________________________________]
City: [________________________________] County: [________________________________] State: Alabama ZIP: [__________]
Square Footage: [________________________________]
Legal Description: Exhibit A

(the "Premises");

WHEREAS, the Lease commenced [__/__/____] and expires [__/__/____], with [____] renewal options;

WHEREAS, current monthly base rent is $[________________________________];

WHEREAS, Assignor desires to assign all rights to Assignee, and Assignee desires to assume;

WHEREAS, Section [____] of the Lease requires Landlord's consent;

WHEREAS, Landlord consents upon the terms herein;

NOW, THEREFORE, the Parties agree:

ARTICLE 1. DEFINITIONS

1.1 "Assignment" — transfer of all Assignor's Lease interest.
1.2 "Assignment Consideration" — $[________________________________].
1.3 "Business Day" — excluding Saturday, Sunday, Alabama holidays.
1.4 "Effective Date" — per preamble or Section 13.1.
1.5 "Existing Security Deposit" — $[________________________________].
1.6 "Guarantor" — [________________________________] (or "None").
1.7-1.10 Lease, Permitted Use, Pre-/Post-Assignment Periods, Premises — as in Recitals.

ARTICLE 2. ASSIGNMENT OF LEASE

2.1 Assignment. Assignor assigns all right, title, and interest in the Lease, including: (a) occupancy rights; (b) renewal/expansion options; (c) unexercised TI allowances; (d) alterations and fixtures; (e) ancillary agreements (Exhibit B).

2.2 Excluded Assets. [________________________________].

2.3 Delivery. Possession delivered on the Effective Date, ordinary wear and tear excepted.

2.4 Keys/Access. All keys, access cards, and codes delivered on the Effective Date.

ARTICLE 3. ASSUMPTION OF LEASE OBLIGATIONS

3.1 Assumption. Assignee assumes all tenant obligations from the Effective Date, including: (a) all rent and charges; (b) use restrictions and rules; (c) maintenance/repair; (d) insurance; (e) compliance with Alabama Building Code and applicable local ordinances; (f) surrender obligations.

3.2 Acknowledgment. Assignee has reviewed the Lease and accepts the Premises "as-is."

3.3 No Modification. Lease not modified except as stated.

ARTICLE 4. ASSIGNOR'S CONTINUING LIABILITY

4.1 Alabama Law. Alabama follows the common law rule that leases are freely assignable unless restricted by the lease terms. An assignment does not release the original tenant from privity of contract absent a novation or express release. Alabama courts recognize that the covenant of good faith and fair dealing does not override express contractual terms giving the landlord discretion over consent, though the landlord's rejection of an assignee must be based on reasonable criteria when a reasonableness standard applies (identity, financial backing, proposed use, and compatibility with other tenants are recognized reasonable factors).

4.2 Liability Election. Select one:

☐ Option A — Assignor Remains Liable. Assignor remains secondarily liable for all tenant obligations. Liability does not extend to post-assignment expansions or rent increases beyond scheduled amounts.

☐ Option B — Assignor Released (Novation). Conditions: [________________________________].

☐ Option C — Transition Period. [____] months. Release upon expiration without default.

4.3 Notice. Landlord provides prompt notice of Assignee defaults.
4.4 Cure Right. [____] days.
4.5 Subrogation. Upon cure.

ARTICLE 5. LANDLORD'S CONSENT

5.1 Consent Granted. Landlord consents.

5.2 Alabama Consent Standards.

(a) Alabama does not have a specific commercial lease assignment consent statute;

(b) Consent standards are governed by the Lease terms; Alabama law strongly favors freedom of contract in commercial transactions;

(c) Where the Lease includes a "reasonableness" standard, Alabama courts recognize as reasonable the consideration of: assignee identity, financial capacity, required alterations, legality of use, and compatibility with other tenants. Personal taste, convenience, or sensibility of the landlord is not a reasonable basis for rejection;

(d) Where the Lease grants sole discretion without a reasonableness qualifier, Alabama courts generally enforce the provision as written; and

(e) Alabama prohibits no specific provisions within a commercial lease, providing broad contractual freedom.

5.3 Limitations. Standard limitations on scope of consent.

5.4 Assignment Consideration. ☐ Not applicable ☐ [____]% to Landlord ☐ Other: [________________].

5.5 Recapture. ☐ Waived ☐ Not exercised ☐ Not applicable.

5.6 Fee and Costs. (a) Fee: $[________________________________]; (b) Costs not to exceed $[________________________________].

ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR

Assignor represents and warrants to Assignee and Landlord as of the Effective Date:

6.1 The Lease is in full force and effect and has not been modified, amended, or supplemented except as set forth in the Recitals.

6.2 Assignor is not in default under the Lease, and no event has occurred that with passage of time or notice would constitute a default by Assignor.

6.3 To Assignor's knowledge, Landlord is not in default under the Lease.

6.4 All rent and additional charges under the Lease have been paid through [__/__/____].

6.5 There are no pending or threatened claims, actions, suits, or proceedings relating to the Lease or Premises.

6.6 Assignor has not previously assigned, sublet, encumbered, or otherwise transferred any interest in the Lease.

6.7 Assignor has full power and authority to execute, deliver, and perform this Agreement, and execution has been duly authorized by all necessary corporate, partnership, or membership action.

6.8 The Assignment Consideration represents the total consideration received or to be received by Assignor in connection with this Assignment.

6.9 No broker, finder, or intermediary is entitled to a commission or fee except: [________________________________].

6.10 Assignor is not aware of any environmental conditions at the Premises that would violate applicable environmental laws, including the Alabama Environmental Management Act (Ala. Code Section 22-22A-1 et seq.), the Alabama Underground Storage Tank and Wellhead Protection Act (Ala. Code Section 22-36-1 et seq.), or CERCLA.

6.11 Assignor has disclosed all known material facts about the physical condition of the Premises to Assignee.

ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF ASSIGNEE

Assignee represents and warrants to Assignor and Landlord as of the Effective Date:

7.1 Assignee has received and reviewed a complete copy of the Lease (including all amendments, exhibits, and addenda). A true and complete copy is attached as Exhibit A.

7.2 Assignee has inspected the Premises and accepts them in their current "as-is, where-is" condition, without representation or warranty by Assignor or Landlord as to condition, suitability, or fitness for Assignee's intended use.

7.3 Assignee has the financial capacity and operational capability to perform all obligations of the tenant under the Lease.

7.4 Assignee intends to use the Premises for the Permitted Use and no other purpose.

7.5 Assignee is duly organized, validly existing, and in good standing under the laws of its state of organization and is qualified to do business in Alabama.

7.6 Assignee has full power and authority to execute, deliver, and perform this Agreement.

7.7 Execution and performance of this Agreement does not violate any agreement, instrument, order, or decree to which Assignee is a party or by which Assignee is bound.

7.8 Assignee's financial statements delivered to Landlord are true, complete, and accurate in all material respects and fairly present Assignee's financial condition.

7.9 Assignee has not been the subject of any bankruptcy, insolvency, reorganization, or similar proceeding within the past [____] years, except as disclosed in writing to Landlord.

7.10 If Assignee is a foreign entity, Assignee has registered or will register with the Alabama Secretary of State prior to the Effective Date.

ARTICLE 8. SECURITY DEPOSIT

8.1 Existing Security Deposit. The Existing Security Deposit held by Landlord is $[________________________________]. Select one:

☐ Transfer to Assignee's Account. The Existing Security Deposit shall be transferred to and held by Landlord for the account of Assignee. Assignor's right to the return of the Existing Security Deposit is hereby assigned to Assignee.

☐ Return to Assignor and Replacement. The Existing Security Deposit shall be returned to Assignor upon Landlord's receipt of a replacement security deposit from Assignee in the amount specified in Section 8.2.

☐ Other Arrangement: [________________________________].

8.2 Additional Security Deposit. Assignee shall deliver to Landlord an additional security deposit in the amount of $[________________________________] on or before the Effective Date. Form:

☐ Cash or certified funds
☐ Irrevocable standby letter of credit issued by [________________________________]
☐ Other: [________________________________]

8.3 Total Security Deposit. Following the Effective Date, the total security deposit held by Landlord shall be $[________________________________], held and applied in accordance with the Lease terms.

8.4 Alabama Security Deposit Rules (Commercial). Alabama's Uniform Residential Landlord and Tenant Act security deposit provisions (Ala. Code Section 35-9A-201) apply only to residential tenancies. For commercial leases, security deposit handling is governed entirely by the Lease terms and common law. The Lease should specify the conditions for application of the deposit, the timeline for return, and whether interest accrues. Alabama law does not impose statutory requirements on commercial security deposit handling.

ARTICLE 9. RENT AND FINANCIAL ADJUSTMENTS

9.1 Rent Proration. All base rent, additional rent, and recurring charges shall be prorated as of the Effective Date based on a 30-day month. Assignor is responsible for all charges attributable to the Pre-Assignment Period, and Assignee is responsible for all charges attributable to the Post-Assignment Period.

9.2 Rent Commencement. Assignee's obligation to pay rent directly to Landlord shall commence on [__/__/____].

9.3 Operating Expense Reconciliation. Any operating expense, tax, or insurance reconciliation for the calendar or fiscal year in which the Effective Date occurs shall be allocated between Assignor and Assignee based on their respective periods of occupancy. The Parties shall cooperate with each other and with Landlord in connection with any such reconciliation.

9.4 Percentage Rent. If the Lease requires percentage rent or other amounts based on sales or revenue:

(a) Assignor is responsible for percentage rent based on Pre-Assignment Period sales;
(b) Assignee is responsible for percentage rent based on Post-Assignment Period sales;
(c) The breakpoint shall be prorated for the partial period; and
(d) Each Party shall provide sales records reasonably necessary for calculation.

9.5 Alabama Sales Tax Considerations. Alabama does not impose a state sales tax on commercial lease payments. However, Assignee shall comply with all applicable state and local tax obligations related to its business operations at the Premises, including Alabama sales and use tax (Ala. Code Section 40-23-1 et seq.) on transactions conducted from the Premises.

9.6 Prepaid Rent. Any prepaid rent or credits held by Landlord as of the Effective Date shall be:

☐ Applied to Assignee's account and credited against future rent obligations.
☐ Refunded to Assignor, and Assignee shall make a fresh prepayment of $[________________________________].

ARTICLE 10. INSURANCE

10.1 Assignee's Insurance Obligations. Assignee shall maintain all insurance required under the Lease throughout the Post-Assignment Period, including without limitation:

(a) Commercial general liability insurance with minimum limits of $[________________________________] per occurrence and $[________________________________] in the aggregate;

(b) Property insurance covering Assignee's personal property, trade fixtures, and leasehold improvements at full replacement cost;

(c) Workers' compensation insurance as required by Alabama law (Ala. Code Section 25-5-1 et seq.) — Alabama requires workers' compensation for employers with five or more employees;

(d) Business income/extra expense insurance covering a minimum of [____] months of rent and operating expenses;

(e) Tornado and severe weather coverage as specified in the Lease — Alabama is in a high tornado-risk zone, and adequate windstorm coverage is essential;

(f) Flood insurance if the Premises are in a FEMA Special Flood Hazard Area; and

(g) Such other insurance as required under the Lease.

10.2 Additional Insured. All liability policies shall name Landlord, Landlord's managing agent, and Landlord's mortgagee (if any) as additional insureds.

10.3 Certificates of Insurance. Assignee shall deliver certificates of insurance to Landlord no later than [____] days before the Effective Date.

10.4 Assignor's Tail Coverage. Assignor shall maintain or purchase tail coverage under any claims-made policies for a period of [____] years following the Effective Date to cover claims arising from Pre-Assignment Period occurrences.

ARTICLE 11. GUARANTY

11.1 ☐ No Existing Guaranty ☐ Continues (Exhibit C) ☐ Released ☐ Released conditionally.
11.2 ☐ No New Guaranty ☐ Required from [________________________________] (Exhibit D): ☐ All obligations ☐ Payment only ($[________________________________]) ☐ First [____] months.

ARTICLE 12. INDEMNIFICATION

12.1 Assignor's Indemnification of Landlord. Assignor shall indemnify, defend, and hold harmless Landlord from and against any and all claims, damages, losses, costs, and expenses (including reasonable attorneys' fees) arising from or related to: (a) any breach of Assignor's representations or warranties; (b) any obligation or liability under the Lease attributable to the Pre-Assignment Period; (c) any act or omission of Assignor at or with respect to the Premises prior to the Effective Date; and (d) any failure by Assignor to perform its obligations under this Agreement.

12.2 Assignee's Indemnification of Landlord. Assignee shall indemnify, defend, and hold harmless Landlord from and against any and all claims, damages, losses, costs, and expenses (including reasonable attorneys' fees) arising from or related to: (a) any breach of Assignee's representations or warranties; (b) any obligation or liability under the Lease attributable to the Post-Assignment Period; (c) any act or omission of Assignee at or with respect to the Premises from and after the Effective Date; and (d) any failure by Assignee to perform its obligations under this Agreement or the Lease.

12.3 Assignee's Indemnification of Assignor. Assignee shall indemnify, defend, and hold harmless Assignor from and against any and all claims, damages, losses, costs, and expenses (including reasonable attorneys' fees) arising from or related to: (a) any obligation or liability under the Lease attributable to the Post-Assignment Period; (b) any act or omission of Assignee from and after the Effective Date; and (c) any claim by Landlord against Assignor based on Assignee's failure to perform under the Lease.

12.4 Alabama Indemnity Rules. Alabama follows the general common law regarding indemnification in commercial transactions. Unlike some states, Alabama does not have a specific anti-indemnity statute applicable to general commercial leases, though Ala. Code Section 8-1-21 addresses certain construction contract indemnity limitations. The indemnification provisions herein shall be construed in compliance with applicable Alabama law.

12.5 Survival. [____] years.

ARTICLE 13. CONDITIONS PRECEDENT

13.1 By [__/__/____]: (a) Landlord approval; (b) financial statements; (c) insurance; (d) deposit; (e) guaranty; (f) fees/costs; (g) no default; (h) all permits including Alabama business privilege license, local business licenses, and zoning compliance; (i) Other: [________________________________].

13.2 Termination if not satisfied.

ARTICLE 14. ALABAMA-SPECIFIC PROVISIONS

14.1 Recording Tax. Alabama imposes a recording tax under Ala. Code Section 40-22-1 on instruments conveying real property. The applicability of this tax to commercial lease assignments depends on whether the assignment is considered a "conveyance" subject to the tax:

(a) The standard recording tax rate is $0.50 per $500 (or fraction thereof) of consideration;

(b) Certain counties (notably Jefferson, Mobile, and others) may impose additional local recording fees;

(c) Applicability to This Assignment:
☐ Recording tax applies. Estimated amount: $[________________________________]. Paid by: ☐ Assignor ☐ Assignee ☐ Shared.
☐ Recording tax does not apply (consult counsel).
☐ To be determined by counsel.

(d) If applicable, the recording tax is paid at the time of recording to the Probate Judge of the county.

14.2 Recording. Select one:

☐ This Agreement shall be recorded in the office of the Judge of Probate of [________________________________] County, Alabama.
☐ A memorandum of assignment shall be recorded.
☐ Not recorded.

14.3 Alabama Conveyance Requirements. For instruments conveying or affecting interests in real property to be recorded in Alabama:

(a) The instrument must be acknowledged before a notary public or other authorized officer (Ala. Code Section 35-4-29);

(b) If executed outside Alabama, the instrument must be acknowledged according to the law of the state where executed, or before an Alabama officer; and

(c) Alabama requires the notary to affix an official seal.

14.4 Business Privilege Tax. Alabama imposes a business privilege tax (Ala. Code Section 40-14A-1 et seq.) on entities doing business in Alabama. Assignee represents that it is or will be in compliance with all business privilege tax obligations.

14.5 Alabama Landlord's Lien. Under Alabama common law, a landlord has a lien on the tenant's personal property located on the premises for unpaid rent. This lien:

(a) Attaches to Assignee's property from the Effective Date;
(b) Covers unpaid rent and other charges; and
(c) The landlord's lien rights are subject to the Lease terms and applicable law.

14.6 Severe Weather / Tornado Considerations. Alabama is located in a region with significant tornado and severe weather risk. Assignee acknowledges:

(a) Responsibility for maintaining a severe weather safety plan for the Premises;
(b) Responsibility for all storm damage to tenant improvements (to the extent not covered by landlord's insurance under the Lease); and
(c) Compliance with any FEMA floodplain requirements if the Premises are in a Special Flood Hazard Area.

14.7 Foreign Entity Registration. If Assignee is organized outside Alabama, Assignee shall register with the Alabama Secretary of State as a foreign entity authorized to transact business in Alabama (Ala. Code Section 10A-1-7.01 et seq.) prior to the Effective Date.

ARTICLE 15. BANKRUPTCY CONSIDERATIONS

15.1 Bankruptcy Representations. Each of Assignor and Assignee represents that: (a) it is not the subject of any pending or contemplated bankruptcy, insolvency, receivership, or similar proceeding; (b) it is not insolvent and execution of this Agreement will not render it insolvent; and (c) this Agreement is entered into in good faith and for reasonably equivalent value.

15.2 Bankruptcy Assignment Rights. Under 11 U.S.C. Section 365, a bankruptcy trustee or debtor-in-possession may assume, reject, or assign the Lease, subject to cure of defaults, adequate assurance of future performance, and (for shopping center leases) the requirements of 11 U.S.C. Section 365(b)(3).

15.3 Anti-Assignment Override. Anti-assignment provisions may be unenforceable in bankruptcy proceedings under 11 U.S.C. Section 365(f).

ARTICLE 16. NOTICES

All notices shall be in writing and deemed given upon: (a) personal delivery; (b) one (1) Business Day after deposit with a nationally recognized overnight courier; (c) three (3) Business Days after deposit in the U.S. mail, certified or registered, return receipt requested; or (d) confirmed email transmission with hard copy follow-up within two (2) Business Days.

To Assignor:
[________________________________]
[________________________________]
Attn: [________________________________]
Email: [________________________________]

To Assignee:
[________________________________]
[________________________________]
Attn: [________________________________]
Email: [________________________________]

To Landlord:
[________________________________]
[________________________________]
Attn: [________________________________]
Email: [________________________________]

To Landlord's Counsel:
[________________________________]
[________________________________]
Attn: [________________________________]
Email: [________________________________]

ARTICLE 17. GENERAL PROVISIONS

17.1 Binding Effect. This Agreement binds and benefits the Parties, their successors, assigns, heirs, and legal representatives.

17.2 Entire Agreement. This Agreement, together with the Lease and exhibits, constitutes the entire agreement among the Parties regarding its subject matter.

17.3 Amendments. This Agreement may be amended only by written instrument signed by all three Parties.

17.4 Severability. If any provision is invalid, the remaining provisions continue in full force and effect.

17.5 Governing Law. Governed by the laws of the State of Alabama.

17.6 Venue. Actions shall be brought in the Circuit Court of [________________________________] County, Alabama, or the United States District Court for the [________________________________] District of Alabama.

17.7 Waiver. No waiver is effective unless in writing signed by the Party against whom enforcement is sought.

17.8 Counterparts. This Agreement may be executed in counterparts, each deemed an original.

17.9 Electronic Signatures. Electronic signatures are valid under the Alabama Uniform Electronic Transactions Act (Ala. Code Section 8-1A-1 et seq.).

17.10 Attorneys' Fees. Alabama follows the American Rule — each Party bears its own attorneys' fees unless the Lease or this Agreement provides otherwise. If the Lease includes an attorneys' fees provision, such provision shall govern disputes arising under this Agreement.

17.11 Time of the Essence. Time is of the essence for all dates and deadlines.

17.12 Interpretation. This Agreement has been jointly negotiated and shall not be construed against any Party as drafter.

17.13 Survival. Representations, warranties, and indemnification obligations survive execution and consummation.

17.14 Brokers. No broker except: [________________________________]. Each Party indemnifies the others against broker claims.

17.15 Confidentiality. Terms of this Agreement shall be treated as confidential except as disclosed to attorneys, accountants, lenders, advisors, or as required by law.

17.16 Further Assurances. Each Party shall execute additional documents reasonably necessary to carry out this Agreement.

ARTICLE 18. EXECUTION

IN WITNESS WHEREOF, the Parties execute this Agreement as of the date first written above.

ASSIGNOR:

[________________________________]

By: [________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

ASSIGNEE:

[________________________________]

By: [________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

LANDLORD CONSENT:

[________________________________]

Landlord hereby consents to the foregoing Assignment and Assumption upon the terms and conditions set forth in this Agreement. This consent is limited to this specific Assignment and does not waive any Lease provision requiring consent to future transfers.

By: [________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

NOTARIZATION

State of Alabama
County of [________________________________]

I, [________________________________], a Notary Public in and for said County in said State, hereby certify that [________________________________], whose name is signed to the foregoing instrument, and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, (he/she) executed the same voluntarily on the day the same bears date.

Given under my hand and seal this [____] day of [________________________________], 20[____].

Notary Public: [________________________________]
My Commission Expires: [__/__/____]
[Notarial Seal]

(Repeat for each Party)

EXHIBITS

Exhibit A — Copy of Lease | Exhibit B — Ancillary Agreements | Exhibit C — Guarantor's Consent | Exhibit D — New Guaranty | Exhibit E — Financial Statements

SOURCES AND REFERENCES

• Ala. Code Title 35 (Property)
• Ala. Code Section 35-9A (URLTA — residential only)
• Ala. Code Section 40-22-1 (Recording Tax)
• Ala. Code Section 10A-1-7.01 (Foreign Entity Registration)
• Ala. Code Section 8-1A-1 (UETA)
• Negotiating Essential Terms in Commercial Leases — Christian & Small LLP
• 11 U.S.C. Section 365 (Bankruptcy)

This template is for informational purposes only. Consult an Alabama-licensed attorney before execution.