Indiana statutes provide little guidance regarding the relationship a resident creates when s/he assigns his/her lease or subleases to another person. However, Indiana law does state that residents are liable for rent payments. State law also asserts that persons to whom the owner, operator, or resident conveys either property or an interest in property have the same legal rights as the owner/operator or resident had before conveying the property. (Ind. Code § 32-31-1-12.)

Most leases include a provision regarding a resident’s assigning or subletting the property. Many leases provide that a resident can assign or sublet only with the owner or operator’s consent. Most of these leases also provide that the owner or operator may not unreasonably withhold consent. Even if a lease does not provide that the owner or operator may not unreasonably withhold consent, the law generally implies that provision in the lease. In general, the law does not favor restricting the resident’s right to assign or sublease his/her interest in the property. Indiana courts consider provisions restricting these rights to be in derogation of common law, and they strictly construe them against the owner or operator. Thus, if a lease is silent about a resident’s right to assign or sublease, the resident is free to assign the lease or sublet the premises to another person.

When one resident sublets to another person, both the original resident and the sublessee are liable to the owner or operator for rent and other lease obligations. In the event of a default, the owner or operator may pursue the original resident, the sublessee, or both. An exception to this general rule exists in a case in which the owner or operator and the sublessee enter into a new lease, which extinguishes the obligations of the old lease.

A resident’s assignment of his/her interest in the property is a conveyance to a new resident of the original resident’s rights under the lease. The new resident, or assignee, may enforce those rights against the owner or operator. The owner or operator may look directly to the new resident to fulfill all lease obligations. However, the owner or operator may not hold the new resident liable for breaches of the lease occurring before the assignment in the absence of the new resident’s agreeing to that condition. As between the original resident and the new resident, the new resident bears primary responsibility for rent accruing after the assignment. However, an owner or operator may pursue either the original resident or the new resident to recover unpaid rent, so long as (1) the lease requires payment of specified rent, and (2) the owner or operator has not consented to an arrangement allowing the new resident to assume the original resident’s obligations.

A resident may neither sublet nor assign any interest in the property greater than s/he possesses under the lease terms. That is, a resident may not extend the term of the lease or assign or sublet premises different from those the lease describes. If, however, an owner or operator agrees to an arrangement extending the lease term, the owner or operator has created a new term and has created a new lease. The owner or operator then may not hold the original resident liable for the additional obligations.

While an owner or operator may not unduly restrict a resident’s rights or ability to assign his/her lease or sublet the leased premises, owners and operators can and should insist on a notice provision. Such a provision requires the resident to give written notice of his/her intent to assign the lease or sublet the premises, and the owner or operator also must give consent. This provides the owner or operator with the opportunity to be familiar with the particulars of the arrangement and, if the arrangement contains an unsuitable or unacceptable resident or building use, the owner or operator has the opportunity to prevent the arrangement.