Article Detail

News & Knowledge

Do Change of Control Transactions Constitute an Assignment by Operation of Law? [Lowndes Leasing Lawyers]

May 20, 2021

Attorneys Laura Walda and Samantha Duran discuss what a lease needs to include if a landlord wants to restrict change of control.


Commercial landlords often rely on anti-assignment provisions to restrict the ability of tenants to assign their interest in a lease to a third party. Such provisions will often explicitly restrict assignments by “operation of law,” which are generally considered involuntary assignments mandated via a court order. Commercial landlords may assume that a change of control transaction violates a basic anti-assignment clause, but clear drafting is necessary for Landlords to protect their interests. Landlords wishing to restrict change of control of a tenant entity should have clear anti-assignment provisions in their leases that expressly restrict such transactions and characterize such “changes of control” as assignments.  

A change of control is a significant change in the equity, ownership, or management of a business entity. This can occur through a merger, consolidation or acquisition.  

The general rule is that change of control of a corporate entity is not an assignment by operation of law, and therefore does not violate a basic anti-assignment provision. Courts have reasoned that a landlord entering into a lease with a corporate tenant should be aware that a corporation, or limited liability company, is an entity which exists separate and apart from its ownership, and that a change in ownership of the corporate entity does not change the tenant entity under the lease. [Read more]

This blog was originally posted on Lowndes Leasing Lawyers

This article is informational only. You should consult an attorney before acting or failing to act. The law may change rapidly and no warranty is given. LOWNDES DISCLAIMS ALL IMPLIED WARRANTIES AND WITHOUT LIMITATION, ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. ALL ARTICLES ARE PROVIDED AS IS AND WITH ALL FAULTS. Consult a Lowndes attorney if you wish to establish an attorney/client relationship.
Laura

Laura Walda is a shareholder in the firm’s commercial real estate practice area focusing on contract and lease negotiation and drafting, real estate acquisitions and dispositions, negotiation and structuring of credit facilities and review of title insurance matters. She also has experience in commercial litigation focusing on title insurance matters, landlord/tenant disputes and banking litigation.

Samantha

Samantha Duran is an attorney in the firm’s Real Estate Group. She focuses her practice in the areas of real estate development, finance and transactions, condominiums, property owners’ associations, commercial leasing, commercial lending and title insurance.

Samantha earned her juris doctorate from the University of Florida Levin College of Law, where she graduated cum laude and was selected for Order of the Coif. She received her bachelor’s degree in legal studies and political science from the University of Central Florida and was a member of the Phi Delta Phi legal honor society.

Prior to joining Lowndes as an attorney, Samantha was a summer clerk with the firm. While at law school, she served as a legal extern for both the U.S. District Court for the Middle District of Florida and the University of Florida Self Insurance Program. She was also articles editor for The Florida Law Review, a research assistant for Professor William Page, and a teaching assistant for Legal Writing and Appellate Advocacy classes, as well as a volunteer for the Restoration of Civil Rights Project.

In her free time, Samantha enjoys training at Orange Theory Fitness and hiking.

Meritas Law Firms Worldwide logo
Do Your Part Logo