Legal Definitions - headlease

A headlease refers to the primary, original lease agreement for a property, established directly between the property owner (landlord) and a tenant. This foundational lease grants the tenant the right to occupy and use the property. Crucially, a headlease is the agreement under which a tenant may then grant a sublease to another party, allowing that subtenant to occupy all or part of the property.

Essentially, the headlease sets the overarching terms and conditions for the entire property, and any subsequent subleases must comply with its provisions.

• Example 1: Commercial Office Building

  Imagine a large commercial real estate firm, "CityCorp Properties," leases an entire 15-story office building from the building's owner, "Apex Holdings," for a period of 20 years. This agreement between Apex Holdings and CityCorp Properties is the headlease. CityCorp Properties then divides the building into individual office suites and leases these suites to various businesses, such as a law firm, a tech startup, and a marketing agency. These individual leases between CityCorp Properties and the businesses are subleases. The terms of each sublease, such as the duration, rent, and permitted use, must align with and not violate the conditions set forth in the original headlease between Apex Holdings and CityCorp Properties.

• Example 2: University Housing

  A university owns a large residential complex designed for student housing. The university enters into a long-term agreement with a private student accommodation provider, "Campus Living Solutions," leasing the entire complex to them for 10 years. This agreement is the headlease. Campus Living Solutions then manages the property and leases individual apartments or bedrooms within the complex directly to students. These agreements with the students are subleases, and their terms (e.g., rules about guests, quiet hours, maintenance responsibilities) are ultimately governed by the overarching headlease between the university and Campus Living Solutions.

• Example 3: Retail Shopping Center

  A property developer, "Grand Malls Inc.," leases a large parcel of land from a municipal government for 99 years, with the intention of building and operating a shopping center. This long-term agreement for the land is the headlease. Grand Malls Inc. then constructs the shopping center and leases individual retail units within it to various businesses, such as clothing stores, restaurants, and a cinema. Each of these leases for the individual retail units is a sublease. The ability of Grand Malls Inc. to grant these subleases, and the conditions within them (like operating hours or permitted types of businesses), are all established and limited by the original headlease with the municipal government.