A tenant sometimes faces a practical need: they have moved to another city before the lease expires, they have sold their business and wish to transfer the premises to the buyer, or they wish to share part of the premises with someone. A central question then arises: may they do so without the landlord's permission? The answer differs according to the transaction and the type of lease, and an error may end in an eviction judgment costing the tenant both premises and business. This article explains the position under the property leasing legislation and the general rules of Kuwait Civil Code No. 67 of 1980.
Assignment Distinguished from Subletting
The distinction is not verbal but fundamental in its effects:
- Assignment of the lease: a transfer of the entire lease, so the original tenant leaves the relationship and the assignee takes their place in the rights and obligations directly towards the landlord.
- Subletting: a new lease concluded by the tenant as landlord with a subtenant, the original lease remaining in force and the original tenant remaining bound towards the landlord.
- Effect on liability: in subletting the original tenant remains responsible for rent and for the condition of the premises, so the subtenant's breach falls back on them. In a valid assignment the responsibility passes.
- No direct relationship: subletting creates no direct contractual relationship between landlord and subtenant, though the landlord may in some cases claim rent directly from them to the extent of what they owe.
- Sharing and hosting: allowing a person to reside with the tenant is not subletting so long as no consideration is paid and they do not occupy part of the premises independently.
The Landlord's Consent
- The contract governs: the matter is governed first by the lease. Most leases contain an express clause prohibiting assignment and subletting without the landlord's prior written consent.
- Force of the clause: such a clause is valid and binding, and breach is a fundamental breach justifying eviction.
- Written consent: oral consent carries no weight in a dispute. It must be obtained in writing, dated, and signed by the landlord or a person authorised to sign.
- Implied consent: a landlord's prolonged silence with knowledge of the position and acceptance of rent from the new occupier may indicate implied consent, but relying on this is a considerable risk given the difficulty of proof.
- No unreasonable refusal: where the lease provides that consent may not be refused without reasonable cause, the refusal is subject to assessment. Tenants are advised to negotiate such a clause when contracting.
Commercial Leases
The position for commercial premises differs importantly from residential:
- Premises tied to location: the value of commercial premises is closely tied to their location and customer connection, so the leasehold right is an essential element of the business concern.
- Selling the business: on selling a business concern the leasehold right passes among its elements, but this does not dispense with the landlord's consent where the lease requires it.
- The risk of overlooking this: many business sales fail because the buyer discovers after payment that the landlord refuses the assignment, emptying the transaction of substance.
- The correct sequence: obtain the landlord's consent before completing the sale or make it a condition precedent to the contract taking effect.
- Change of use: the premises' designated purpose ordinarily may not be changed, so assignment to a person carrying on a different activity may properly be refused.
Effect of Breach
- Eviction proceedings: assignment or subletting in breach of the lease entitles the landlord to seek eviction and rescission.
- Transaction ineffective: a transaction in breach cannot be relied on against the landlord, and the original tenant remains responsible to them.
- The subtenant's position: precarious, since their right falls with the original tenant's and they may be required to vacate despite having paid rent in full.
- Recourse in damages: a subtenant may claim damages from the person who let to them where the prohibition was concealed from them.
- Damages to the landlord: the landlord may claim damages for the non-conforming use or for the difference in rental value.
Practical Guidance
- Read the assignment and subletting clause before any arrangement. It is among the most important and most overlooked provisions in a lease.
- Do not rely on oral consent however firm it appears. Obtain it in writing and signed.
- When buying commercial premises, make the landlord's consent to transfer of the lease a condition precedent to payment.
- Subtenants should ask to see the head lease and the landlord's consent before paying.
- Record a separate handover minute when a new occupier takes possession, establishing the condition of the premises.
- Landlords wishing to prohibit assignment should say so expressly, and should not remain silent for long about a situation they know of, as silence may be construed as acceptance.
Assignment and subletting are useful tools but turn on one decisive condition, the landlord's consent, and overlooking it converts a practical arrangement into eviction proceedings. Yamnak Law Firm advises on reviewing leases and arranging their transfer and represents parties in eviction and leasing disputes before the competent bodies.
