Can a landlord prevent a tenant from subletting or assigning their lease?
This issue is specifically addressed by New York State’s Real Property Law §226-b, which provides that a tenant shall have the right to sublease / assign his premises with the consent of the landlord. Further, the Real Property Law provides that “any provision of a lease or rental agreement purporting to waive a provision of this section is null and void.” In such, the statute provides certain minimal rights to tenants that cannot be overridden by a landlord’s lease.
To fully comprehend the statute’s provisions, a distinction must first be made between subletting and assigning. In a sublet the prime-tenant retains a reversionary interest whereas in an assignment the prime-tenant transfers the prime-tenant’s entire interest in the premises to the under-tenant. To illustrate, suppose a lease commencing on May 15, 2017 and terminating August 15, 2017 where the prime-tenant sublets the premises on June 1, 2017 to an under-tenant. Under a sublet, the prime-tenant must retake possession of the property before the August 15th termination date of the tenancy. Yet, had the prime-tenant assigned the tenancy to the under-tenant rather than subletting the property to such under-tenant, the under-tenant would remain in possession through the August 15th termination date.
With respect to assignments, the statute states:
Unless a greater right to assign is conferred by the lease, a tenant renting a residence may not assign his lease without the written consent of the owner, which consent may be unconditionally withheld without cause provided that the owner shall release the tenant from the lease upon request of the tenant upon thirty days notice if the owner unreasonably withholds consent which release shall be the sole remedy of the tenant. If the owner reasonably withholds consent, there shall be no assignment and the tenant shall not be released from the lease.
In contrast, the law for subletting only provides a prime-tenant with a statutory right if the subject dwelling has four or more residential units. As a result, tenants of residences at one, two or three family properties have no statutory right that overcomes a lease prohibition as to subletting. Where the tenancy is within a dwelling that has four or more residential units, the statute also provides that the tenant “shall have the right to sublease his premises subject to the written consent of the landlord in advance of the subletting. Such consent shall not be unreasonably withheld.” Further, the statute provides an express notice requirement if a tenant wishes to effectuate their right to sublet. Such notice must contain seven detailed terms, including “(i) the term of the sublease, (ii) the name of the proposed sublessee, (iii) the business and permanent home address of the proposed sublessee, (iv) the tenant's reason for subletting, (v) the tenant's address for the term of the sublease, (vi) the written consent of any cotenant or guarantor of the lease, and (vii) a copy of the proposed sublease, to which a copy of the tenant's lease shall be attached if available, acknowledged by the tenant and proposed subtenant as being a true copy of such sublease.” Still further, the statute provides landlords with a mechanism and deadlines to request additional information from the prime-tenant in order to make a determination as to whether rejection of consent will be reasonable.
Lastly, the statute provides that if consent is unreasonably withheld, “the tenant may sublet in accordance with the request and may recover the costs of the proceeding and attorney’s fees if it is found that the owner acted in bad faith by withholding consent.” However, a prime-tenant cannot recover compensatory damages resulting from a landlord's unreasonable withholding of its consent to sublet the prime-tenant’s apartment nor can such prime-tenant recover punitive damages to punish the landlord for violating the statute.
Turning to the reasonableness of refusal, the courts have directed landlords to make their determination by factually and objectively evaluating “the proposed sublessee(s)' financial responsibility, identity or suitability for the particular apartment or building, legality of the proposed use or nature of the occupancy or any other sound real estate business, excepting loss of profit or property control.”
In all, tenants have rights and landlords who wish to remain profitable should quickly get familiar with these rights or get out of the rental industry immediately.