What about Lease Assignments?
By: Matthew Petra
If you have ever reviewed a commercial lease agreement relating to a property in Florida, you have probably noticed a clause that requires the landlord’s consent for a tenant assignment or sublease of that lease agreement. By default, pursuant to Florida law, if a landlord fails to include “consent” language in a commercial lease agreement, then it has allowed the lease agreement to be freely assignable by its tenant; such an outcome could be disastrous for the landlord.
Therefore, the first step for a landlord is to ensure that its commercial lease form contains “consent” language for subleases and assignments. However, that is just the starting point. As discussed in the case below, a landlord should not act in a manner that fails the tests of good faith and commercial reasonableness. Without repeating the elements outlined in points (a) – (e) below, a landlord should engage in a sober, business-minded examination of its relevant fact pattern before withholding its consent of an assignment or sublease. The identity and background of a proposed tenant or subtenant are of great relevance, as is the future use of the leased premises by that same party.
As a tenant-focused takeaway, barring some unusual fact pattern, if the proposed commercial lease you are reviewing neglects to address assignments or subleases, then that lease agreement is very favorable for you. In most instances, you would be better off not raising the issue with the prospective landlord. As with many other lease topics, when dealing with assignments and subleases, a careful review of your lease, with your attorney, is worth your while.
“… The law generally favors free alienation of property and under common law a tenant has the right to assign his leasehold interest without the consent of the lessor. … In order to protect the landlord from this common law right of assignment, many leases expressly provide that the property cannot be assigned without the written consent of the landlord. … A withholding of consent to assign a lease, which fails the tests for good faith and commercial reasonableness, constitutes a breach of the lease agreement. Whether a landlord breached the lease by acting unreasonably in withholding consent of a commercial tenant is to be determined by a jury according to the facts of that case. The following factors are among those which a jury may properly consider in applying the standards of good faith and commercial reasonableness: (a) financial responsibility of the proposed subtenant (b) the “identity” or “business character” of the subtenant, i.e., suitability for the particular building, (c) the need for alteration of the premises, (d) the legality of the proposed use, and (e) the nature of the occupancy, i.e., office, factory, clinic, etc. …” Fernandez v. Vazquez, 397 So. 2d 1171, 1172 & 1174 (Fla. Dist. Ct. App. 1981)