27.10 A. Whether Required

• Jurisdiction: New York

A. Whether Required

In most states, including New York, the rule remains that if a lease prohibits assignment or subletting without the landlord’s consent, the landlord may refuse consent arbitrarily and for any or no reason at all—and may even extract payment as a condition for consent⁶⁸³—unless the lease specifically requires any refusal of consent to be reasonable.⁶⁸⁴ Under the traditional majority rule, a landlord bears no obligation to act “reasonably” or “in good faith” in considering a request for such consent.⁶⁸⁵

A small but growing minority of jurisdictions hold, however, that a landlord must act reasonably in withholding consent even if the lease does not require reasonableness. One commentator suggested the following basis for this trend:

The reasoning behind the rule allowing nearly total landlord control over tenant transfers, in the absence of a lease provision to the contrary, no longer holds sway with many judges, lawmakers, and commentators. Relationships between landlord and tenant have become more impersonal . . . . These changes and concerns have had a profound impact on courts and legislatures . . . . [M]odern courts have almost universally adopted the view that restrictions on the tenant’s right to transfer are to be strictly construed.⁶⁸⁶

Florida and Illinois, among other states,⁶⁸⁷ have adopted this position. California codified a presumption of reasonableness for purposes of ascertaining whether a landlord’s consent was reasonable, and placed the burden of proof on the tenant to determine otherwise.⁶⁸⁸ The California statute allows the parties to contract around this presumption by setting express standards in the lease.⁶⁸⁹

A 2005 California federal court case⁶⁹⁰ restated this rule by holding that when the contract unambiguously grants one party an unqualified right, “in its sole discretion, to terminate the negotiations with any prospective [s]ubtenant or assignee at any time and to refuse to enter into any sublease or with any prospective subtenant,”⁶⁹¹ that party can not only refuse to enter into any sublease proposals but also can refuse even to consider any and all proposed sublease agreements.⁶⁹²

As in so many other areas, New York diverges from California and follows the majority rule, tending to prefer private negotiations over judicial improvement (and often rewriting) of privately negotiated agreements. If a New York lease contains a Transfer Restriction, the landlord need not be reasonable in refusing consent unless the lease language specifically so requires.⁶⁹³ Absent an agreement otherwise, a New York landlord may impose conditions, including payment, as a prerequisite to consent.⁶⁹⁴ (One court, however, held such conditions may amount to economic duress,⁶⁹⁵ demonstrating yet again how these outcomes can depend on the particular judge rather than the consistent application of predictable legal principles, even in New York.) Like other restrictions on alienation of property, though, Transfer Restrictions are disfavored. Therefore, courts will construe such clauses strictly against any restrictions on alienation.⁶⁹⁶

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Notes:

^[683] . See Alwen v. Tramontin, 228 P. 851, 852 (Wash. 1924) (enforcing a lease provision requiring tenant to pay a fee for landlord’s consent to assignment in a jurisdiction that does not...