Lease Assignment, Assumption, and Landlord Consent - Arkansas

LEASE ASSIGNMENT, ASSUMPTION OF LEASE, AND LANDLORD CONSENT

(Arkansas 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: AR 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: [________________________________]
Suite/Unit: [________________________________]
City: [________________________________] County: [________________________________] State: Arkansas 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, Assignee desires to assume, and Landlord consents;

NOW, THEREFORE, the Parties agree:

ARTICLE 1. DEFINITIONS

1.1-1.10 Standard definitions: Assignment, Assignment Consideration ($[________________________________]), Business Day, Effective Date, Existing Security Deposit ($[________________________________]), Guarantor, Lease, Permitted Use, Pre-/Post-Assignment Periods, Premises.

ARTICLE 2. ASSIGNMENT OF LEASE

2.1 Assignor assigns all right, title, and interest, 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 of possession on the Effective Date, ordinary wear and tear excepted.

2.4 All keys, access cards, and codes delivered.

ARTICLE 3. ASSUMPTION OF LEASE OBLIGATIONS

3.1 Assignee assumes all tenant obligations from the Effective Date: (a) all rent and charges; (b) use restrictions; (c) maintenance/repair; (d) insurance; (e) compliance with Arkansas laws, building codes, and fire codes; (f) surrender obligations.

3.2 Assignee acknowledges Lease terms and accepts Premises "as-is."

3.3 Lease not modified except as stated.

ARTICLE 4. ASSIGNOR'S CONTINUING LIABILITY

4.1 Arkansas Law. Arkansas follows the common law rule that an assignment does not release the original tenant from privity of contract. The assignor remains liable unless expressly released by the landlord or through a novation. Arkansas courts enforce lease provisions as written under freedom-of-contract principles.

4.2 Liability Election. Select one:

☐ Option A — Remains Liable. Assignor remains secondarily liable. Not liable for post-assignment expansions or rent increases beyond scheduled amounts.

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

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

4.3 Notice of defaults. 4.4 Cure right ([____] days). 4.5 Subrogation upon cure.

ARTICLE 5. LANDLORD'S CONSENT

5.1 Consent granted.

5.2 Arkansas Consent Standards.

(a) Arkansas does not have a specific statute governing landlord consent to commercial lease assignments;

(b) Under Arkansas common law, leases are freely assignable unless the lease expressly restricts assignment;

(c) Anti-assignment clauses are strictly construed — a prohibition on "assignment" alone may not restrict "subletting" and vice versa;

(d) Where the Lease requires consent without specifying a standard, Arkansas courts may apply the implied covenant of good faith and fair dealing;

(e) The Arkansas Residential Landlord-Tenant Act of 2007 (Ark. Code Section 18-17-101 et seq.) does not apply to commercial leases; Ark. Code Section 18-17-912 addresses only commercial lease eviction procedures; and

(f) Acceptance of rent from an assignee after an unauthorized assignment may constitute waiver of the restriction.

5.3 Standard limitations on consent scope.

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

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

5.6 Fee: $[________________________________]. 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 except as stated 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.

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

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

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

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

6.7 Assignor has full power and authority to execute and perform this Agreement.

6.8 The Assignment Consideration represents the total consideration received or to be received by Assignor.

6.9 No broker is entitled to a commission except: [________________________________].

6.10 Assignor is not aware of any environmental conditions at the Premises that would violate applicable law, including the Arkansas Hazardous Waste Management Act (Ark. Code Section 8-7-201 et seq.), Arkansas Water and Air Pollution Control Act (Ark. Code Section 8-4-101 et seq.), or CERCLA.

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

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 the complete Lease (including all amendments). A copy is attached as Exhibit A.

7.2 Assignee has inspected the Premises and accepts them "as-is, where-is" without representation or warranty by Assignor or Landlord.

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

7.4 Assignee intends to use the Premises for the Permitted Use only.

7.5 Assignee is duly organized, validly existing, and in good standing, and is qualified to do business in Arkansas.

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

7.7 Execution does not violate any agreement, order, or decree binding on Assignee.

7.8 Financial statements delivered to Landlord are true and accurate in all material respects.

7.9 No bankruptcy or insolvency proceeding within [____] years, except as disclosed to Landlord.

7.10 If organized outside Arkansas, Assignee has registered with the Arkansas Secretary of State.

ARTICLE 8. SECURITY DEPOSIT

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

☐ Transfer to Assignee's Account. The Existing Security Deposit shall be held for Assignee's account. Assignor's right to return is assigned to Assignee.

☐ Return to Assignor. Returned upon Landlord's receipt of a replacement deposit from Assignee per Section 8.2.

☐ Other: [________________________________].

8.2 Additional Security Deposit. Assignee shall deliver $[________________________________] to Landlord on or before the Effective Date:

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

8.3 Total Security Deposit. Following the Effective Date: $[________________________________], held per the Lease.

8.4 Arkansas Security Deposit Rules. Arkansas's residential security deposit statute (Ark. Code Section 18-16-304) does not apply to commercial tenancies. Commercial security deposit handling is governed entirely by the Lease terms and common law. The Parties should ensure the Lease specifies conditions for application, return timeline, and interest requirements (if any).

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 responsible for Pre-Assignment Period; Assignee for Post-Assignment Period.

9.2 Rent Commencement. Assignee's direct rent obligation to Landlord begins [__/__/____].

9.3 Operating Expense Reconciliation. Any operating expense, tax, or insurance reconciliation for the year of the Effective Date shall be allocated between Assignor and Assignee based on respective occupancy periods.

9.4 Percentage Rent. If applicable:
(a) Assignor responsible for Pre-Assignment Period sales;
(b) Assignee responsible for Post-Assignment Period sales;
(c) Breakpoint prorated for partial periods;
(d) Each Party provides sales records for calculation.

9.5 Arkansas Tax Considerations. Arkansas does not impose a state sales tax on commercial lease payments. However, Assignee shall comply with all applicable Arkansas state and local tax obligations related to business operations, including Arkansas gross receipts tax (Ark. Code Section 26-52-301 et seq.) on goods and services sold from the Premises.

9.6 Prepaid Rent. Select one:

☐ Applied to Assignee's account.
☐ Refunded to Assignor; Assignee prepays $[________________________________].

ARTICLE 10. INSURANCE

10.1 Assignee's Insurance. Assignee shall maintain all insurance required under the Lease, including:

(a) Commercial general liability: $[________________________________] per occurrence / $[________________________________] aggregate;

(b) Property insurance at full replacement cost;

(c) Workers' compensation as required by Arkansas law (Ark. Code Section 11-9-101 et seq.) — Arkansas requires coverage for employers with three or more employees;

(d) Business income coverage for [____] months;

(e) Tornado and severe weather coverage — Arkansas is in a high tornado-risk region, and adequate windstorm coverage is essential;

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

(g) Other insurance required under the Lease.

10.2 Additional Insured. All liability policies shall name Landlord, managing agent, and mortgagee as additional insureds.

10.3 Certificates. Delivered to Landlord no later than [____] days before the Effective Date.

10.4 Assignor's Tail Coverage. Assignor shall maintain tail coverage under claims-made policies for [____] years for Pre-Assignment Period occurrences.

ARTICLE 11. GUARANTY

11.1 ☐ None ☐ Continues (Exhibit C) ☐ Released ☐ Conditionally released.
11.2 ☐ None required ☐ Required from [________________________________] (Exhibit D): ☐ All obligations ☐ Payment ($[________________________________]) ☐ [____] months.

ARTICLE 12. INDEMNIFICATION

12.1 Assignor's Indemnification of Landlord. Assignor shall indemnify, defend, and hold harmless Landlord from claims arising from: (a) breach of Assignor's representations; (b) Pre-Assignment Period obligations; (c) Assignor's pre-Effective Date acts or omissions; and (d) Assignor's failure to perform under this Agreement.

12.2 Assignee's Indemnification of Landlord. Assignee shall indemnify, defend, and hold harmless Landlord from claims arising from: (a) breach of Assignee's representations; (b) Post-Assignment Period obligations; (c) Assignee's post-Effective Date acts or omissions; and (d) Assignee's failure to perform under this Agreement or the Lease.

12.3 Assignee's Indemnification of Assignor. Assignee shall indemnify, defend, and hold harmless Assignor from claims arising from: (a) Post-Assignment Period obligations; (b) Assignee's post-Effective Date acts or omissions; and (c) Landlord claims against Assignor based on Assignee's default.

12.4 Arkansas Indemnity Rules. Arkansas follows general common law indemnification principles. Arkansas Code Section 4-56-104 limits indemnification in construction and design contracts; the Parties shall comply to the extent applicable. Indemnification provisions shall not require indemnification for a Party's own sole negligence where prohibited by law.

12.5 Survival: [____] years.

ARTICLE 13. CONDITIONS PRECEDENT

By [__/__/____]: (a) Landlord approval; (b) financial statements; (c) insurance; (d) deposit; (e) guaranty; (f) fees/costs; (g) no default; (h) permits, including local business licenses, Arkansas sales/use tax permits (if applicable), and Certificate of Occupancy; (i) Other: [________________________________].

Termination if conditions not met.

ARTICLE 14. ARKANSAS-SPECIFIC PROVISIONS

14.1 Real Estate Transfer Tax. Arkansas imposes a real estate transfer tax under Ark. Code Section 26-60-101 et seq. at the rate of $3.30 per $1,000 of actual consideration (or fraction thereof) for the transfer of real property. The applicability of this tax to a leasehold assignment depends on whether the assignment constitutes a "transfer" of real property under the statute:

(a) Applicability:
☐ Transfer tax applies. Estimated: $[________________________________]. Paid by: ☐ Assignor ☐ Assignee ☐ Shared.
☐ Does not apply (consult counsel).
☐ To be determined.

(b) The transfer tax is paid at the time of recording to the County Clerk;

(c) A Real Property Transfer Tax Affidavit must be filed with the county.

14.2 Recording. Select one:

☐ Recorded with the Circuit Clerk / County Recorder of [________________________________] County, Arkansas.
☐ Memorandum of assignment recorded.
☐ Not recorded.

14.3 Arkansas Conveyance Requirements. For recording in Arkansas:

(a) Instruments must be acknowledged before a notary public or other authorized officer (Ark. Code Section 18-12-201);
(b) If executed outside Arkansas, acknowledgment must comply with the law of the place of execution; and
(c) The grantor's (Assignor's) Social Security Number or tax identification number is not required on the instrument but may be required on the transfer tax affidavit.

14.4 Commercial Lease Eviction Procedures. Under Ark. Code Section 18-17-912, commercial lease eviction proceedings have specific requirements distinct from residential evictions. If Assignee defaults under the Lease, Landlord may pursue unlawful detainer under Ark. Code Section 18-60-301 et seq. Assignee acknowledges these procedures.

14.5 Foreign Entity Registration. If Assignee is organized outside Arkansas, it must register with the Arkansas Secretary of State prior to transacting business in Arkansas (Ark. Code Section 4-27-1501 et seq. for corporations; Ark. Code Section 4-37-1002 for LLCs).

14.6 Arkansas Minimum Wage and Employment. If Assignee's use of the Premises involves employees, Assignee shall comply with all applicable Arkansas labor laws, including the Arkansas Minimum Wage Act (Ark. Code Section 11-4-201 et seq.).

14.7 Severe Weather. Arkansas is located in a region with significant tornado and severe weather risk. Assignee acknowledges responsibility for maintaining a severe weather preparedness plan and for storm damage to tenant improvements as allocated under the Lease.

14.8 Arkansas Freedom of Information Act (FOIA). If Landlord is a governmental entity, certain terms of this Agreement may be subject to public disclosure under the Arkansas FOIA (Ark. Code Section 25-19-101 et seq.).

ARTICLE 15. BANKRUPTCY

15.1 Each Party represents it is not subject to pending or contemplated bankruptcy proceedings, is not insolvent, and enters this Agreement in good faith.

15.2 Under 11 U.S.C. Section 365, a trustee may assume, reject, or assign the Lease subject to cure of defaults and adequate assurance of future performance. For shopping center leases, Section 365(b)(3) imposes additional requirements.

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

ARTICLE 16. NOTICES

All notices in writing, deemed given upon: (a) personal delivery; (b) one (1) Business Day after overnight courier; (c) three (3) Business Days after certified mail; (d) confirmed email with hard copy follow-up.

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

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

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

ARTICLE 17. GENERAL PROVISIONS

17.1 Binding Effect. Binds the Parties, successors, assigns, heirs, and legal representatives.

17.2 Entire Agreement. This Agreement, the Lease, and exhibits constitute the entire agreement.

17.3 Amendments. Written instrument signed by all three Parties only.

17.4 Severability. Invalid provisions severed; remainder continues.

17.5 Governing Law. Governed by Arkansas law.

17.6 Venue. Circuit Court of [________________________________] County, Arkansas, or the United States District Court for the [________________________________] District of Arkansas.

17.7 Waiver. Written and signed only.

17.8 Counterparts. Each an original.

17.9 Electronic Signatures. Valid under the Arkansas Uniform Electronic Transactions Act (Ark. Code Section 25-31-101 et seq.).

17.10 Attorneys' Fees. Arkansas generally follows the American Rule — each Party bears its own fees unless the Lease or this Agreement provides otherwise.

17.11 Time of the Essence.

17.12 Interpretation. Jointly negotiated; not construed against drafter.

17.13 Survival. Representations, warranties, and indemnification survive.

17.14 Brokers. No broker except: [________________________________]. Mutual indemnification.

17.15 Confidentiality. Terms confidential except as required by law.

17.16 Further Assurances. Each Party shall execute additional documents reasonably necessary.

ARTICLE 18. EXECUTION

ASSIGNOR:

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

ASSIGNEE:

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

LANDLORD CONSENT:

[________________________________]
Consent limited to this Assignment.
By: [________________________________] Name: [________________________________] Title: [________________________________] Date: [__/__/____]

NOTARIZATION

State of Arkansas
County of [________________________________]

On this [____] day of [________________________________], 20[____], before me, [________________________________], a Notary Public, personally appeared [________________________________], known to me to be the person(s) who executed the foregoing instrument, and acknowledged that (he/she/they) executed the same as (his/her/their) free act and deed.

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

(Repeat for each Party)

EXHIBITS

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

SOURCES AND REFERENCES

• Ark. Code Title 18, Chapters 12, 16, 17 (Property, Landlord-Tenant)
• Ark. Code Section 18-17-912 (Commercial Leases)
• Ark. Code Section 26-60-101 (Transfer Tax)
• Ark. Code Section 25-31-101 (UETA)
• Ark. Code Section 4-56-104 (Construction Indemnity)
• 11 U.S.C. Section 365 (Bankruptcy)

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