Recently, the California Supreme Court held that...

Recently, the California Supreme Court held that a landlord in a commercial lease transaction may not unreasonably withhold consent to the assignment or subletting of the premises by the tenant.

However, another recent appellate court ruled against the tenant because he had not requested that the landlord give his consent.

In the latter case, an oil company leased a gas station on condition that the tenant not assign or sublease without the oil company’s consent. The tenant sublet the property without informing the lessor, who brought an unlawful detainer action to evict the subtenant and terminate the lease.

The court held that the landlord may not withhold its consent to an assignment or subletting unless he has a good-faith, reasonable objection to the transfer. However, in this case, the tenant did not request the oil company’s consent to the sublease, which is required to afford the lessor an opportunity to protect his interest.

The court stated that in an appropriate case, and to prevent undue hardship even when the landlord’s consent is not requested, the court should determine whether denying the tenant relief is unjust.

In this case, the court remanded the case to the trial court to consider the nature of the breach, hardship to the tenant and the landlord if relief is granted to the tenant, the reasons why consent was not sought, the subtenant’s knowledge that consent was not requested, good faith or bad faith by either party, and the degree of the landlord’s arbitrariness or unreasonableness.

What this case stands for is that the tenant must ask for the landlord’s consent, provided, of course, that there is a clause in the lease giving the landlord the right to refuse to consent. If the tenant fails to ask for the landlord’s consent, and the tenant seeks appropriate relief, the court must make a determination of whether unjust hardship will result if the lease is “forfeited.”

It seems that in most cases the burden on the tenant to demonstrate unjust hardship would be great, and that requesting consent of the landlord in most cases would be the most reasonable approach to follow.