Common Pitfalls in Assignation and Sub-Leasing Under Scots Law and How to Avoid Them

14 May 2026

By Eoin McFadyen, Solicitor, Real Estate, Gilson Gray

Commercial tenants increasingly need flexibility in how they occupy property, whether driven by restructuring, a business sale, or a need to downsize. Assignation (transferring your lease) and sub-leasing (granting a lease of the premises to a third party) are often sensible options.

However, both routes involve legal and commercial risks. Missteps can delay transactions, generate unexpected cost, or in some cases constitute a breach of lease.

This article explores the pitfalls we regularly see in practice, and how to avoid them.

Not Obtaining Landlord Consent

Most Scottish commercial leases require the landlord’s prior written consent before assigning or sub-letting. Proceeding without consent is a breach of lease and can lead to:

• Termination of the lease
• Claims for damages
• Disruption to wider commercial transactions (for example, business sales)

Why this matters: Landlords want to ensure any incoming tenant or sub-tenant is financially sound and suitable for the premises.

Practical tip: Review your lease early and speak to the landlord as soon as possible. Financial checks, guarantor discussions and negotiation of conditions can all take time.

Overlooking Conditions Attached to Consent

Even when consent is granted, it may be subject to conditions. These may include:

• Guarantees or security from the outgoing tenant
• Adjustments to rent review mechanics in sub-leases
• Restrictions on the permitted use

Failing to comply can delay completion or invalidate the consent.

 Practical tip: Ensure all conditions are understood and agreed before progressing. Seek advice where conditions appear overly burdensome.

Assuming Your Obligations Automatically End

A common misconception is that subletting the lease brings all obligations to an end. In reality:

• With a sub-lease, the head tenant retains responsibility for ensuring the sub-tenant complies with the terms of the head lease.

Why this matters: If the sub-tenant causes damage, the landlord may still pursue you.

Practical tip: Ensure that strong indemnities are included in any sub-lease.

Misjudging Land and Buildings Transaction Tax (LBTT)

LBTT can apply where:

• A premium is paid for an assignation
• The term is extended
• Rent levels in a sub-lease exceed LBTT thresholds

Failure to deal with LBTT can cause unexpected cost and attract penalties.

Practical tip: Assess LBTT early in the process and build it into financial planning.

Forgetting to Register the Transaction

Certain leases and assignations must be registered in the Land Register of Scotland or the Books of Council and Session. If registration is required but overlooked, this can:

• Affect enforceability
• Complicate lender diligence
• Jeopardise future transactions

Practical tip: Confirm registration requirements at the outset, especially for leases over 20 years or transactions involving security.

Not Checking Title Restrictions

Beyond the lease itself, title deeds may include real burdens or restrictions such as:

• Prohibitions on particular uses (e.g., industrial or retail)
• Restrictions on signage
• Limits on alterations

Non‑compliance can lead to enforcement action.

Practical tip: Carry out full title diligence before progressing with any assignation or sub-lease.

How to Avoid These Issues

Review the lease and title early, engage with the landlord promptly, and agree the conditions of consent up front. Before signing any documents, take advice on LBTT and registration requirements. It is also important to instruct a solicitor with experience in Scots commercial property law to ensure the process runs smoothly and any legal risks are properly managed.

Get in touch with the team at Gilson Gray today to discuss your commercial property requirements.