by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
LANDLORD/TENANT; ASSIGNMENTS AND SUBLETS; LANDLORD'S CONSENT RIGHT: Clause in lease that prohibits assignment without landlord's consent, but setting forth no standard for such consent, imposes no duty on landlord to consent, and therefore, cannot be subject to an implied covenant of good faith.
Johnson v. Yousoofian, 930 p.2 921 (Wash. App. Div. 1996).
Tenant sued landlord based on landlord's failure to consent to an assignment of lease. While landlord argued that his failure to consent to the assignment was reasonable, the court focused on the issue of whether there was any obligation for Landlord to be reasonable and whether there was an implied covenant of good faith to consent to the proposed assignment. The court noted that the previous decisions that had held that an unqualified requirement of landlord's consent to tenant's assignment imposes no duty on landlord to be reasonable in refusing consent. Although courts have recognized the implied duty to perform certain contractual duties in good faith since those cases, the Washington Appellate Court held that that recognition did not overturn the cases in question. Instead, the court held that the implied duty of good faith is derivative and that it applies to the performance of specific contract obligations. In this case, since there was no specific contractual duty to consent to any assignments sought by tenant, landlord had no such duty.
Comment: About ten years ago, there was a spate of cases imposing good faith and fair dealing duties on landlords in this context. Many saw a "trend," but indeed an equal number of courts refused to impose the implied duty in this context during the same period. And in some states, such as California, legislative activity followed the judicial rulings and restored some of the landlord's options.
It appears that there are still at least a few judges out there that trust the marketplace judgment as to what is reasonable over the ex post facto judgment of a trial court judge whose pre-bench business experience was limited to signing contingent fee agreements in injury cases. Tenants and landlords bargain hard over assignment and sublet clauses. There are no surprises here. Let the agreements stand as written.
The editor wrote an article on this subject, anticipating the kinds of arguments made in this case, in 1992. It is on the website in the contributed articles section.
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