Lease Assignment, Assumption, and Landlord Consent - Arizona

LEASE ASSIGNMENT, ASSUMPTION OF LEASE, AND LANDLORD CONSENT

(Arizona 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: AZ 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: Arizona ZIP: [__________]
Square Footage: [________________________________]
APN: [________________________________]
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 on the Effective Date, ordinary wear and tear excepted.

2.4 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 Arizona laws, including ARS Title 33 commercial tenancy provisions, local building codes, and fire codes; (f) surrender obligations.

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

3.3 Lease not modified except as stated.

ARTICLE 4. ASSIGNOR'S CONTINUING LIABILITY

4.1 Arizona Law. Under Arizona common law, an assignment of a lease does not extinguish the assignor's privity of contract with the landlord. The original tenant remains liable for the lease obligations unless expressly released by the landlord. Arizona follows the general common law rule applicable in most U.S. jurisdictions.

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, then release if no default.

4.3 Notice. 4.4 Cure right ([____] days). 4.5 Subrogation.

ARTICLE 5. LANDLORD'S CONSENT

5.1 Consent granted.

5.2 Arizona Consent Standards — Case Law Framework. The Parties acknowledge:

(a) Arizona case law establishes that even where a tenant's ability to assign is conditioned upon the landlord's consent, the landlord cannot arbitrarily or unreasonably withhold such consent absent a clear provision in the lease giving the landlord the absolute right to do so;

(b) For a refusal of consent to be "reasonable," it must be "objectively sensible and of some significance." Purely financial reasons (i.e., the landlord seeking to capture increased rental value) are not a reasonable basis for refusal;

(c) Reasonable bases for refusal include concerns about: assurance of payment, proper care of property, and use consistent with what is permitted to the original tenant;

(d) The burden is on the tenant to provide sufficient information for the landlord to determine whether consent should be given. The landlord is not obligated to seek out such information;

(e) A landlord must act in good faith and fair dealing in all dealings with the tenant, including in the exercise of consent provisions; and

(f) The Arizona Residential Landlord and Tenant Act (ARS Title 33, Chapter 10) does not apply to commercial tenancies; commercial leases are governed by ARS Sections 33-301 to 33-381 and common law.

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

6.1 The Lease is in full force and effect, unmodified except as stated in the Recitals.

6.2 No default exists, and no event would constitute a default with passage of time or notice.

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

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

6.5 No pending or threatened claims relating to the Lease or Premises.

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

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

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

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

6.10 No known environmental conditions violating applicable law, including the Arizona Environmental Quality Act (ARS Title 49), Water Quality Assurance Revolving Fund (WQARF) provisions, and CERCLA.

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

ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF ASSIGNEE

7.1 Assignee has received and reviewed the complete Lease (Exhibit A).

7.2 Assignee has inspected and accepts the Premises "as-is, where-is."

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

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

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

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.

7.10 If a foreign entity, Assignee has registered with the Arizona Corporation Commission.

ARTICLE 8. SECURITY DEPOSIT

8.1 Existing Deposit. $[________________________________]. Select one:

☐ Transfer to Assignee's Account. Held for Assignee. Assignor's return right assigned to Assignee.

☐ Return to Assignor. Returned upon receipt of replacement deposit from Assignee.

☐ Other: [________________________________].

8.2 Additional Deposit. $[________________________________] delivered on or before the Effective Date:

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

8.3 Total Deposit. $[________________________________], held per the Lease.

8.4 Arizona Security Deposit Rules. Arizona's Residential Landlord and Tenant Act deposit provisions (ARS Section 33-1321) apply only to residential tenancies. Commercial security deposits are governed entirely by the Lease terms and common law. Arizona does not impose statutory requirements on commercial deposit handling, return timelines, or interest.

ARTICLE 9. RENT AND FINANCIAL ADJUSTMENTS

9.1 Rent Proration. All charges prorated as of the Effective Date (30-day month). Assignor responsible for Pre-Assignment Period; Assignee for Post-Assignment Period.

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

9.3 Operating Expense Reconciliation. Reconciliation for the year of the Effective Date allocated by occupancy periods.

9.4 Percentage Rent. If applicable, prorated by respective sales periods with breakpoint adjustment.

9.5 Prepaid Rent. Select one:

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

9.6 Arizona Transaction Privilege Tax (TPT). Arizona imposes a Transaction Privilege Tax on commercial rentals under ARS Section 42-5069. The Parties acknowledge:

(a) TPT applies to the business of renting or leasing real property for commercial purposes;
(b) The state TPT rate for commercial rentals and the applicable city/town rate for the municipality in which the Premises are located must be collected and remitted;
(c) Assignee is responsible for all TPT on rent from the Effective Date forward;
(d) Assignor is responsible for Pre-Assignment Period TPT;
(e) TPT registration with the Arizona Department of Revenue:
☐ Assignee shall obtain a new TPT license
☐ Other arrangement: [________________________________]; and
(f) The applicable combined TPT rate for the Premises location is approximately [____]%.

ARTICLE 10. INSURANCE

Per the Lease: (a) CGL: $[________________________________]/$[________________________________]; (b) Property at replacement cost; (c) Workers' comp per Arizona law (ARS Title 23, Chapter 6); (d) Business income for [____] months; (e) Other per Lease.

Additional insured: Landlord, agent, mortgagee. Certificates [____] days before the Effective Date. Assignor tail for [____] years.

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

12.1-12.3 Standard three-way indemnification.

12.4 Arizona Indemnity Rules. ARS Section 34-226 limits indemnification in construction and design professional contracts. To the extent applicable, indemnification shall be construed in compliance with ARS Section 34-226 and related provisions.

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 Arizona TPT license, local business license, Certificate of Occupancy, and any required Maricopa/Pima County or municipal permits; (i) Other: [________________________________].

Termination if not satisfied.

ARTICLE 14. ARIZONA-SPECIFIC PROVISIONS

14.1 Transfer Taxes. Arizona does not impose a state-level transfer tax, documentary stamp tax, or real estate excise tax on the conveyance or assignment of real property interests. However:

(a) County recording fees apply (currently set by ARS Section 11-475);
(b) An Affidavit of Property Value (ARS Section 11-1134) may be required if the assignment is recorded and involves consideration, though exemptions may apply for leasehold assignments; and
(c) No separate transfer tax return is required.

14.2 Recording. Select one:

☐ Recorded with the [________________________________] County Recorder.
☐ Memorandum of assignment recorded.
☐ Not recorded.

14.3 Arizona Conveyance Requirements. For recording:

(a) Instruments must be acknowledged before a notary public (ARS Section 33-401);
(b) The instrument must contain a legal description sufficient to identify the property; and
(c) A cover sheet with indexing information may be required by the county recorder.

14.4 Arizona Commercial Tenancy Statute (ARS Sections 33-301 to 33-381). Key provisions:

(a) ARS Section 33-321 provides that where a lease is for a term exceeding one year, the tenant's interest may be conveyed or encumbered;

(b) ARS Section 33-361 governs the landlord's remedies for tenant default, including unlawful detainer (forcible entry and detainer under ARS Section 12-1171 et seq.);

(c) ARS Section 33-362 provides that where the tenant abandons the premises, the landlord may retake possession and hold the tenant liable for rent for the balance of the term, or may relet and recover any deficiency; and

(d) These provisions apply to Assignee from and after the Effective Date.

14.5 Arizona Community Facilities District / HOA. If the Premises are within a community facilities district (CFD) or subject to a property owners' association (POA) or homeowners' association (HOA) with commercial use restrictions:

☐ Not applicable.
☐ Applicable — Assignee shall comply with all CFD/HOA/POA requirements. Any required association approval has been obtained: ☐ Yes ☐ Pending.

14.6 Water and Drought Considerations. Given Arizona's water supply challenges:

(a) Assignee acknowledges that water availability may be subject to restrictions, curtailments, or rate increases;
(b) If the Premises rely on groundwater, Assignee shall comply with the Arizona Groundwater Management Act (ARS Section 45-401 et seq.); and
(c) Assignee shall comply with any water conservation requirements imposed by the applicable Active Management Area or municipality.

14.7 Foreign Entity Registration. If Assignee is organized outside Arizona, it must register with the Arizona Corporation Commission (ARS Section 10-1501 for corporations; ARS Section 29-3902 for LLCs) before transacting business in Arizona.

14.8 Waiver of Jury Trial. The Parties waive trial by jury to the fullest extent permitted by Arizona law.

ARTICLE 15. BANKRUPTCY

Standard 11 U.S.C. Section 365 provisions.

ARTICLE 16. NOTICES

Standard provisions. To Assignor / Assignee / Landlord: [________________________________].

ARTICLE 17. GENERAL PROVISIONS

17.1-17.16 Binding Effect; Entire Agreement; Amendments (three Parties); Severability; Governing Law — Arizona; Venue — [________________________________] County, Arizona (Maricopa County Superior Court or applicable county); Waiver — written; Counterparts; Electronic Signatures (ARS Section 44-7001 et seq. — Arizona UETA); Attorneys' Fees — prevailing Party per ARS Section 12-341.01; Time of Essence; Interpretation; Survival; Brokers; Confidentiality; Further Assurances.

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 Arizona
County of [________________________________]

The foregoing instrument was acknowledged before me this [____] day of [________________________________], 20[____], by [________________________________].

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

• ARS Title 33, Chapter 3 (Commercial Tenancies — Sections 33-301 to 33-381)
• ARS Section 11-1134 (Affidavit of Property Value)
• ARS Section 42-5069 (Transaction Privilege Tax — Commercial Rentals)
• ARS Section 44-7001 (UETA)
• ARS Section 12-341.01 (Attorneys' Fees)
• ARS Section 34-226 (Construction Indemnity)
• Arizona case law on reasonable consent to assignment
• 11 U.S.C. Section 365 (Bankruptcy)

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