This part of the lease covers three things. It says that when the main lease ends, the subleases underneath it generally end too unless the landlord chooses to keep them; it sets the ground rules for asking for and giving approvals; and it makes clear that nothing is binding until both sides sign and deliver the lease.
What these clauses do
These provisions sit near the back of most industrial leases and rarely get attention during negotiation. They should. Together they answer three practical questions: if the lease ends early, who else loses their right to be in the building; when you need the landlord's approval, how fast and at what cost do you get it; and at what moment does a negotiated deal become a binding contract.
None of these is exotic. Each one shows up in real operations: a 3PL that sublets a section of its building to a customer, a tenant waiting on approval for a racking layout or a power upgrade, a company that ordered equipment before the lease was signed.
When the lease ends, the subleases usually end too
A sublease is carved out of the main lease, so it generally cannot outlive it. If the main lease terminates, including because the original tenant defaulted, the subtenant's right to occupy typically falls with it. Most standard forms let the landlord choose to keep one or more subtenancies in place instead, which in practice means the landlord picks the subtenants it wants and lets the others go.
If you are the subtenant, that is a real risk to your operation. Your rent can be current and your space immaculate, and you can still lose the building because of someone else's default. Before you sign a sublease, ask the landlord for a recognition agreement that keeps your occupancy in place if the main lease ends, and review the main lease itself so you know what obligations sit above you.
If you are the one subletting, remember you stay responsible to the landlord for the whole building until every obligation is discharged. Your subtenant's problems become your problems.
How consents work
Many things in an industrial lease need the landlord's approval: alterations, racking and mezzanines, power and HVAC changes, signage, subleases and assignments. The consent clause sets the rules. Well-drafted leases ask both sides to respond promptly and not to hold up approvals in bad faith. The landlord can usually attach reasonable conditions, and granting consent does not waive any existing default. If a request is denied, many forms let the requesting party ask for a written explanation.
The cost is the part tenants overlook. Landlords commonly charge for their time, consultants and attorneys to review a request, and many leases leave that open-ended. As I note in Industrial Intelligence, it helps to agree on a flat fee or a not-to-exceed amount, and to understand the fee applies to each request. Timing matters just as much. A fair lease gives the landlord a set number of days to respond, and if the landlord goes past that, you are no longer stuck waiting.
In a warehouse, slow approvals have a direct cost. A racking permit, a new electrical service or a dock addition often has to line up with a customer launch or a peak season. Build the approval timeline into your project schedule, submit complete drawings the first time, and keep a written record of when each request went in and when the answer came back.
Nothing is binding until it is signed
Proposals, letters of intent and lease drafts are negotiations, not contracts. The lease generally becomes binding only when both parties sign it and deliver it. Until that moment, either side can walk away, and the landlord can keep marketing the building.
That has real consequences in industrial deals, where the lead times are long. Do not order racking, sign with a mover, commit to a power upgrade or give notice at your current building on the strength of a signed LOI. If you need early access to install equipment before the lease is final, put that access in writing with insurance in place. Moving in on a handshake leaves both sides guessing about rent, liability and who can end the arrangement. Settle every business term in the LOI before the lease is drafted, and have a real estate attorney review the final document before you sign.
If you are the tenant
- Set a response deadline for landlord consents, with approval deemed given if the landlord misses it, at least for routine items like racking layouts and interior improvements.
- Cap consent review fees with a flat fee or a not-to-exceed amount per request.
- Ask that consent not be unreasonably withheld, conditioned or delayed, and that any denial be explained in writing.
- Do not commit money to movers, racking, equipment or a notice at your existing building until you hold a lease signed by both parties.
- If you sublease space, ask the landlord for a recognition agreement so your occupancy survives if the main lease ends.
If you are the owner
- Hold your countersignature until the tenant's signed lease and the funds due at signing are in hand and cleared.
- When you decline a request, give documented reasons tied to the property, the tenant's credit or the lease. A vague denial invites a dispute.
- Decide before a problem arises whether you would want to keep a subtenant if the main lease ends, and reserve that choice in the lease.
- Put any early access before lease signing in writing, with insurance and a clear end date.
Go deeper in Justin's books
Both books walk through leases chapter by chapter, from the tenant side and the owner side.
don’t start drafting a lease until you have an LOI that is 100 percent agreed to by both parties.
Common questions
Is a signed letter of intent binding on an industrial lease?
Usually not. Most letters of intent state they are non-binding apart from a few items such as confidentiality. The deal becomes binding when both parties sign and deliver the lease, so avoid spending money you cannot recover before then.
What happens to my sublease if the company I sublease from defaults?
If the main lease is terminated, your sublease generally ends with it unless the landlord chooses to keep it or you have a recognition agreement. That is why subtenants should review the main lease and ask the landlord for recognition before signing.
Can my landlord charge me to review a sublease or alteration request?
Many leases allow it, and the fees often cover the landlord's attorney and consultants. Negotiate a flat fee or a cap per request, and a firm deadline for the landlord's answer.
General information about how industrial leases commonly work, not legal advice. Every lease is different: have a California real estate attorney review yours before you sign.