Julian v. Christopher

Court of Appeals of Maryland · Property

PropertyLandlord and TenantAssignment and SubleaseRestraints on Alienationsilent consent clausesubleaseassignmentlandlord consent

Facts

The tenants bought a tavern and restaurant business and leased the premises, including an upstairs apartment, from the landlord under a lease providing that the premises could not be assigned or sublet without the landlord's prior written consent. The tenants later sought written permission to sublease the upstairs apartment, but the landlord made no inquiry about the proposed sublessee and instead refused consent unless the tenants paid an additional $150 per month in rent. The tenants allowed the sublessee to move in anyway, and the landlord sought repossession on the ground that they had sublet without permission. At trial, the tenants testified that the landlord had said the clause was included only to prevent subletting to someone who would damage the apartment, but the trial judge refused to consider that testimony and construed the lease strictly from its text.

Issue

Whether the common law rule from Jacobs v. Klawans should be changed so that, under a lease clause requiring landlord consent to assignment or sublease but stating no standard, the landlord may not withhold consent unreasonably. The case also presented whether any such change should apply retroactively or only prospectively, and whether these tenants should receive its benefit.

Rule

When a lease contains a silent consent clause requiring the landlord's consent to assignment or sublease but providing no standard, a landlord must act reasonably in withholding consent, unless a freely negotiated lease provision clearly grants the landlord an absolute discretionary right to refuse consent. For leases executed before the mandate in this case, Klawans continues to govern; for leases executed after the mandate, silent consent clauses are interpreted to forbid only unreasonable transfers, not to permit arbitrary refusals.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In 2027, Nora Patel leased retail space in Denver from Summit Row Properties under a lease stating that Nora could not assign the lease without the landlord's prior written consent. The lease said nothing about any standard for granting or withholding consent. Nora later found a financially strong assignee who planned to operate the same type of store, but the landlord refused consent unless Nora agreed to a $2,000 monthly rent increase.

If Nora challenges the refusal, which result is most consistent with the governing rule?

Explanation. For leases executed after the mandate, a silent consent clause does not permit arbitrary refusal. The landlord must act reasonably unless a freely negotiated provision clearly grants absolute discretion. The majority specifically indicated that refusal solely to secure a rent increase is unreasonable unless the proposed transferee would create additional expenditures or increased economic risk for the landlord. (Derived from Julian v. Christopher (n.d.).)