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TITLE 5.  HIRING
CHAPTER 6.  ASSIGNMENT AND SUBLEASE
Article 1.  General Provisions

This chapter applies to transfer of a tenant's interest in a lease of real property for other than residential purposes. Title 5, Chap. 6, 1995.010

As used in this chapter:

(a) "Landlord" includes a tenant who is a sublandlord under a sublease.

(b) "Lease" means a lease or sublease of real property for other than residential purposes, and includes modifications and other agreements affecting a lease.

(c) "Restriction on transfer" means a provision in a lease that restricts the right of transfer of the tenant's interest in the lease.

(d) "Tenant" includes a subtenant or assignee.

(e) "Transfer" of a tenant's interest in a lease means an assignment,
sublease, or other voluntary or involuntary transfer or encumbrance of all or part of a tenant's interest in the lease. Title 5, Chap. 6, 1995.020 Except as provided in Section 1995.270, this chapter applies to a lease executed before, on, or after January 1, 1990.  Title 5, Chap. 6, 1995.030

Article 2.  Restrictions on Transfer

(a) Subject to the limitations in this chapter, a lease may include a restriction on transfer of the tenant's interest in the lease.

(b) Unless a lease includes a restriction on transfer, a tenant's rights under the lease include unrestricted transfer of the tenant's interest in the lease. Title 5, Chap. 6, 1995.210
An ambiguity in a restriction on transfer of a tenant's interest in a lease shall be construed in favor of transferability. Title 5, Chap. 6, 1995.220

A restriction on transfer of a tenant's interest in a lease may absolutely prohibit transfer.  Title 5, Chap. 6, 1995.230

A restriction on transfer of a tenant's interest in a lease may provide that the transfer is subject to any express standard or condition, including, but not limited to, a provision that the landlord is entitled to some or all of any consideration the tenant receives from a transferee in excess of the rent under the lease. Title 5, Chap. 6, 1995.240

A restriction on transfer of a tenant's interest in a lease may require the landlord's consent for transfer subject to any express standard or condition for giving or withholding consent, including, but not limited to, either of the following:

(a) The landlord's consent may not be unreasonably withheld.

(b) The landlord's consent may be withheld subject to express standards or conditions. Titel 5, Chap. 6, 1995.250 If a restriction on transfer of the tenant's interest in a lease requires the landlord's consent for transfer but provides no standard for giving or withholding consent, the restriction on transfer shall be construed to include an implied standard that the landlord's consent may not be unreasonably withheld.  Whether the landlord's consent has been unreasonably withheld in a particular case is a question of fact on which the tenant has the burden of proof.  The tenant may satisfy the burden of proof by showing that, in response to the tenant's written request for a statement of reasons for withholding consent, the landlord has failed, within a reasonable time, to state in writing a reasonable objection to the transfer. Title 5, Chap. 6, 1995.260

(a) The Legislature finds and declares:

(1) It is the public policy of the state and fundamental to the commerce and economic development of the state to enable and facilitate freedom of contract by the parties to commercial real property leases.

(2) The parties to commercial real property leases must be able to negotiate and conduct their affairs in reasonable reliance on the rights and protections given them under the laws of the state.

(3) Until the case of Kendall v. Ernest Pestana, Inc., 40 Cal. 3d 488 (1985), and its predecessor, Cohen v. Ratinoff, 147 Cal. App. 3d 321 (1983), the parties to commercial real property leases could reasonably rely on the law of the state to provide that if a lease restriction requires the landlord's consent for transfer of the tenant's interest in the lease but provides no standard for giving or withholding consent, the landlord's consent may be unreasonably withheld.

(4) The Kendall and Cohen decisions reversed the law on which parties to commercial real property leases executed before September 23, 1983, the date of the Cohen decision, could reasonably rely, thereby frustrating the expectations of the parties, with the result of impairing commerce and economic development.

(b) Section 1995.260 applies to a restriction on transfer executed on or after September 23, 1983.  If a restriction on transfer executed before September 23, 1983, requires the landlord's consent for the tenant's transfer but provides no standard for giving or withholding consent, the landlord's consent may be unreasonably withheld.  For purposes of this subdivision, if the terms of a restriction on transfer are fixed by an option or other agreement, the restriction on transfer is deemed to be executed on the date of execution of the option or other agreement. Title 5, Chap. 6, 1995.270

Article 3.  Breach and Remedies

A remedy provided by law for violation of the rights of the tenant or of the landlord concerning transfer of a tenant's interest in a lease, including a remedy provided in this article, is

(a) subject to an express provision in the lease that affects the
remedy and

(b) subject to any applicable defense, whether legal or equitable, including, but not limited to, waiver and estoppel. Title 5, Chap. 6, 1995.300 If a restriction on transfer of a tenant's interest in a lease requires the landlord's consent for transfer subject to an express or implied standard that the landlord's consent may not be unreasonably withheld, and the landlord unreasonably withholds consent to a transfer in violation of the tenant's rights under the lease, in addition to any other remedies provided by law for breach of a lease, the tenant has all the remedies provided for breach of contract, including, but not limited to, either or both of the following:

(a) The right to contract damages caused by the landlord's breach.

(b) The right to terminate the lease. Title 5, Chap. 6, 1995.300
If a tenant transfers the tenant's interest in a lease in violation of a restriction on transfer of the tenant's interest in the lease, in addition to any other remedies provided by law for breach of a lease, the landlord has all the remedies provided for breach of contract, including, but not limited to, either or both of the following:

(a) The right to contract damages caused by the tenant's breach.

(b) The right to terminate the lease.  Title 5, Chap. 6, 1995.320

(a) An assignee who receives or makes a transfer in violation of a restriction on transfer of a tenant's interest in a lease is jointly and severally liable with the tenant for contract damages under Section 1995.320.  For this purpose, the provisions of Section 1951.2 applicable to a lessee apply to an assignee.

(b) The landlord's right to terminate a lease under Section 1995.320 includes the right to terminate a transfer without terminating the lease.  If the landlord terminates a transfer without terminating the lease, the assignee or subtenant in possession is guilty of unlawful detainer and the landlord may obtain possession from the assignee or subtenant without terminating the right to possession of the tenant.  For this purpose, the landlord may use the procedure provided in Chapter 4 (commencing with Section 1159) of Title 3 of Part 3 of the Code of Civil Procedure, with the changes necessary to make the procedure applicable to this subdivision. Title 5, Chap. 6, 1995.330

(a) Subject to subdivision (b), a restriction on transfer of a tenant's interest in a lease applies to a subsequent transfer by a tenant, an assignee, or a subtenant notwithstanding the landlord' s consent to a prior transfer or the landlord's waiver of a standard or condition for a prior transfer.

(b) Subdivision (a) does not apply if either of the following conditions is satisfied:

(1) The lease provides expressly that the restriction on transfer is limited to the original tenant.

(2) The landlord states expressly in writing that the consent or waiver applies to a subsequent transfer.  Title 5, Chap. 6, 1995.340          

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