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Supreme Court of California - 163 Cal. App. 3d 11, 209 Cal. Rptr. 135, 40 Cal. 3d 488
Tags: Property, Alienation, Sublease
tl;dr:
A landlord must be reasonable in denying a sublease, even if the contract does not require it, because denial of a sublease is a restriction on alienation.Video Summary
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The legal case concerns a commercial lease provision that requires the lessee to obtain written consent from the lessor before assigning or subletting the premises. The issue is whether the lessor can unreasonably withhold consent without a provision stating otherwise. The California Supreme Court has adopted the rule that lessors must have a good faith reasonable objection to an assignment or sublease before refusing consent. Arbitrary reasons such as personal taste, convenience, or the desire to charge a higher rent than originally contracted for are not considered good faith or reasonable objections. The policy against restraints on alienation pertains to leases in their nature as conveyances. The lessor's discretionary power to approve or disapprove an assignee proposed by the other party to the contract should be exercised in accordance with commercially reasonable standards.
The court affirms the decision of the trial court sustaining the demurrer, as the plain language of the lease in question does not require that consent may not unreasonably be withheld. The prevailing law in California allows a lessor to withhold consent for subletting or assignment arbitrarily or unreasonably, absent a provision to the contrary. The parties to a lease are free to negotiate and include language that reflects their intentions regarding the lessor's right to withhold consent. Although some jurisdictions depart from the common law rule, the majority of jurisdictions, including California, adhere to it absent a provision to the contrary. Justice Lucas dissents from the majority opinion, arguing that commercial lessors can withhold consent to an assignment or sublease arbitrarily or without reasonable cause. However, the court declines to follow the decisions in Schweiso and Cohen, which departed from the long-established rule in California.
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