An industrial tenant, 'Alpha Manufacturing Ltd.' in Surrey, has a remaining 3 years on its lease for a 10,000 sq ft warehouse. Alpha is expanding and no longer needs this space. They want to transfer their leasehold interest to 'Beta Logistics Inc.'. They approached their landlord, who is agreeable, but Alpha still wants to be released from future liability. What type of lease transaction should Alpha Manufacturing Ltd. pursue?

Question: An industrial tenant, 'Alpha Manufacturing Ltd.' in Surrey, has a remaining 3 years on its lease for a 10,000 sq ft warehouse. Alpha is expanding and no longer needs this space. They want to transfer their leasehold interest to 'Beta Logistics Inc.'. They approached their landlord, who is agreeable, but Alpha still wants to be released from future liability. What type of lease transaction should Alpha Manufacturing Ltd. pursue?

Answer options:

• A sublease, as it allows Alpha to retain some control. ✅ A full assignment of the lease, with a novation agreement from the landlord.
• A surrender of the lease, then Beta Logistics enters a new lease.
• A partial assignment, keeping some liability for Alpha Manufacturing Ltd.

Correct answer: A full assignment of the lease, with a novation agreement from the landlord.

Explanation: To be released from future liability, Alpha Manufacturing Ltd. needs a full assignment of the lease combined with a novation agreement from the landlord. A novation creates a new contractual relationship between the landlord and the assignee (Beta Logistics), completely releasing the original tenant (Alpha Manufacturing) from its obligations.