Owner Can Withhold Consent to Assign

Facts: After a tenant negotiated the sale of its lease and business to a third party, it asked the owner for consent to assign the lease. The owner refused, and the tenant sued, alleging that the owner unreasonably withheld consent. The trial court ruled in favor of the tenant, and the owner appealed.

Decision: A California appeals court reversed the trial court's decision and ruled in favor of the owner.

Reasoning: The law required that an owner's decision to withhold consent be based on a reasonable standard. The trial court held that a lease term giving the owner “sole discretion” did not subject the owner's decision to any standard, and therefore, conflicted with the law. The appeals court disagreed and held that the sole discretion standard was permitted as long as the provision was freely negotiated and not illegal, which was the case here.

• Nevada Atlantic Corp. v. WREC Lido Venture, LLC, December 2008