## Facts

- Landlords leased land to Rogers for a fixed term, with rent payable monthly or as a percentage of gross receipts, whichever was higher.
- The lease prohibited assignment or subletting without the landlords’ written consent and stated that, after any assignment or sublease, the original tenant would remain liable on the lease.
- The lease required the tenant, at termination, to remove above-ground improvements and clear the property at the tenant’s expense.
- Rogers built and operated a go-kart track and related improvements on the premises.
- Rogers agreed to transfer the business to Conditt and sought the landlords’ written consent to extend/modify the lease and permit Conditt to take possession.
- The landlords executed a written amendment consenting to what was labeled a “subletting,” conditioned on Rogers remaining personally liable under the lease and amendment.
- Rogers and Conditt executed a separate written agreement labeled a “sublease” that transferred Rogers’s entire remaining lease term to Conditt, reserved no right of reentry or future possession to Rogers, and required Conditt to pay rent directly to the landlords and perform the lease obligations.
- Conditt later defaulted on rent and, upon leaving, did not remove the improvements or clear the premises.
- The landlords sued Conditt for unpaid rent and the cost of removing the improvements, asserting that the Rogers-to-Conditt transfer was an assignment making Conditt directly liable to them.
- The trial court entered judgment for the landlords; Conditt appealed, arguing the transfer was a sublease and that only Rogers was primarily liable to the landlords.

## Issues

1. Whether the Rogers-to-Conditt transfer created an assignment or a sublease despite the documents’ use of “sublet” terminology.
2. If the transfer was an assignment, whether the assignee in possession was directly liable to the landlords for rent and for performance of the covenant to remove improvements and clear the premises.

## Decision

- The appellate court affirmed the judgment for the landlords.
- The court held the transfer was an assignment because Rogers conveyed the entire remaining term and retained no reversionary interest or right of reentry.
- The court held Conditt, as assignee in possession, was directly liable to the landlords for unpaid rent and for the costs associated with the removal/clearing obligation.

## Legal Principles

- A transfer of the lessee’s entire remaining term, leaving no reversionary interest in the transferor, is an assignment rather than a sublease.
- Terminology such as “sublet” is not controlling; courts classify the transaction by the legal effect of the transfer and the parties’ intended arrangement as shown by the instruments and surrounding circumstances.
- Lease provisions preserving the original tenant’s liability after an assignment or sublease do not prevent an assignment and do not negate the assignee’s direct liability while in possession.
- An assignee in possession is liable to the landlord on covenants running with the land, including covenants to pay rent and to perform end-of-term obligations such as removing improvements and clearing the premises.

## Conclusion

The court treated the Rogers-to-Conditt transfer as an assignment because it conveyed the entire remaining lease term with no retained reversion, making Conditt, as assignee in possession, directly liable to the landlords for rent arrears and the cost of removing improvements and clearing the property.


Ernst v. Conditt, 390 S.W.2d 703 (Tenn. Ct. App. 1964)