By Jones Osborn II

Most leases provide that the tenant cannot assign or sublet without the consent of the landlord.

This isn't quite as simple as it sounds, however. Whether such a clause is enforceable depends on the particular wording of the lease, the landlord's reason for refusing to consent, and even the location of the leased property.

Wording of the Lease. There are some leases, of course, that contain no restrictions on the right to assign or sublet. In this case, the general rule is that the lease is freely assignable and sublettable. The landlord simply has nothing to say about it. The original tenant does, however, remain liable if the assignee or subtenant defaults.

Most leases do, however, provide that the tenant may not assign or sublet without the landlord's consent. In this case, the question is a little more complicated. If the landlord has good cause for refusing to grant consent, he may legally refuse to do so. However, if he does not have good cause, his right to withhold consent depends upon the state in which the property is located because the law on this point varies from state to state. In most states the landlord may withhold consent even without good cause. The lease is simply enforced as written, no matter how unreasonable the landlord might be. In Arizona and a few other states, however, he may withhold consent only if he has good cause -- that is, in these states the landlord may not unreasonably withhold his consent to a sublease or assignment.

What if the lease requires the landlord's consent, and also expressly states that the landlord may unreasonably withhold his consent? Does this overrule the principle that the landlord must act reasonably in those states that require him to do so? The answer is yes. If the lease expressly states that the landlord may unreasonably withhold his consent to a sublease or an assignment, then the general rule is that he may withhold consent for any reason or no reason at all.

How to Judge Reasonableness. The concept of reasonableness is by its nature a vague and imprecise term. There are, however, certain guiding principles in judging a landlord's refusal to grant consent in those states where the landlord must act reasonably. It is clear that he may not withhold consent simply to negotiate an increase in the rent, even if the rent is far below market. The issue of rent increases is, of course, behind a good many refusals to consent, because the landlord often tries to use his power to withhold consent as a means to negotiate an increase in rent. Legitimate reasons for withholding consent may include a lack of financial strength on the part of the new tenant, his lack of experience at running a business of the type to be conducted at the leased premises, or his poor reputation and moral character. In addition, the landlord may withhold consent if he has not been furnished enough information about the assignee or sublessee to make an informed decision. The duty is on the tenant to furnish such information, not on the landlord to dig it out from his own investigation.

The Lessons. If you are a landlord, your lease should, if possible, contain a provision that you may unreasonably withhold your consent to an assignment or sublease, for any reason or no reason at all. If your lease doesn't contain such a provision, you must act reasonably, at least in Arizona. You can't withhold consent in order to force an increase in the rent. The courts have often awarded substantial damages against landlords who have unreasonably withheld their consent without the right to do so.

If you are a tenant, try to negotiate an express provision that requires the landlord to act reasonably -- and if you can't get that, at least try to avoid a provision allowing your landlord to act unreasonably. And when you request consent, be sure you furnish all relevant information, including the financial statements of the proposed new tenant.