Sublease Vs. Assignment; the Effects and Obligations on New Owner

Written by Dennis Owusu-Nimoh

Land ownership has become a necessity for the average Ghanaian. For an intended ownership of land, there should be a party(ies) willing to transfer his/her/their interest and another party willing to pay for the bundle of rights (interest) inherent in that property and that transfer could be either be a lease, assignment, sublease, conveyance or even a mortgage.

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Narrowing the transfer of interests to Assignment and Sublease, a basic distinction should be made while sublessees and assignees are made to know the effects of their investments beforehand.
“Assignment” connotes that the assignor (seller) has relinquished his/her interest in a property or what is termed as “outright sale”. The assignee (buyer) is on his own and can carry out any transaction on the land without permission from the assignor, save the allodial title holder who can be a stool, skin or government.
Sublease on the other hand, connotes that though the land has practically been sold, the sublessor (seller) still holds onto the land and that the sublesee (buyer) is absorbed under his lease. The sublessee therefore needs the permission of the sublessor to carry out any transactions on the land.
Recent trend in purpose-built residential apartments or townhouses is that many developers here in Ghana resort more to the sublease type of transfer agreement and a few developers actually outrightly sell out their apartments. The sublease usually spans to the expiration of the lease.
What this means is that the reversionary interest upon the expiration of the sublease still rest in the developers. Though the sublease spans to the expiration of the lease as indicated earlier, the developers will eventually opt for a surrender and renewal or renewal of the lease to accommodate the reversionary interest upon the expiration of the original lease between parties. This is an intriguing business strategy as it seeks to rake in cash to the developers since their clients may be open to a new negotiation for a fresh lease or a resale to other clients.
Where developers assign their interest in these apartments, the assignees (clients) become owners exclusively and are responsible for any further negotiations and transaction on their property.
Sublease and Assignment carry different obligations on the new owner hence, the onus lies on each party to be strict with their demands as to the nature of transfer and other covenants in the contractual agreement to avoid future complications.