Restaurant Lease Assignment Guide (Los Angeles)

What a lease assignment actually is

An assignment transfers the existing lease from the seller (assignor) to the buyer (assignee). The lease terms usually stay the same — rent, term, use clause, options — but the tenant on the paper changes. Assignments are different from a sublease (where the seller stays on the hook) and different from a brand-new lease (where you negotiate everything from scratch).

Why landlords slow assignments down

Consent gives the landlord a rare chance to reprice or reshape the lease mid-term. Expect requests for a rent increase, an extended term, a stronger personal guaranty, additional security deposit, or a share of the sale proceeds ('recapture' or 'profit participation'). Every one of these is negotiable.

The assignment package

Landlords will ask for a package on the assignee. A tight package speeds consent:

• Personal financial statement and last two years of tax returns.
• Two years of business tax returns for the operating entity.
• Résumés showing hospitality experience.
• Business plan or concept summary.
• Proof of funds for purchase price plus 90-day working capital.
• Bank and trade references.

Guaranty structures to negotiate

• Good-guy guaranty — personal liability ends when you return the space in agreed condition.
• Burn-off guaranty — personal exposure decreases over time as you pay rent on time.
• Capped guaranty — total personal exposure is capped at a dollar amount or number of months.
• Full-recourse guaranty — you're personally on the hook for the full term. Avoid when possible.

Rent abatement during build-out

If you're renovating, permitting, or waiting on ABC, negotiate abated or reduced rent tied to real milestones — Health Dept permit issuance, ABC license issuance, or doors-open day. Landlords grant abatement more readily than a permanent rent reduction because the loss is defined.

Consent conditions to watch

• Automatic recapture of options.
• Waiver of the tenant's right to further assign.
• Requirement that the seller-tenant remain secondarily liable.
• Landlord approval of any future menu, hours, or concept change.