Landlords of residential dwellings of four or more units, other than public housing or cooperative apartment buildings, cannot unreasonably withhold their consent to assignment or subleasing of the apartment by the tenant.

However, the tenant must obtain the written consent of the landlord before subleasing or assigning.

An “assignment” of the lease transfers the entire unexpired balance of the lease term to another person. The “subleasing” of the apartment involves renting out for part of the lease term. A tenant would sublet his apartment lease rather than assign it if he planned on returning to it before the expiration of the lease term.

The tenant must complete certain procedures before subletting or assigning. He must inform the landlord of his intent to sublease or assign by mailing a request to the landlord by certified mail, return receipt requested. The request must contain:

1. The term of the sublease,
2. The name of the proposed sublessee,
3. The business and permanent home address of the proposed sublessee,
4. The tenant’s reason for subletting,
5. The tenant’s address for the term of the sublease,
6. The written consent of any co-tenant or guarantor of the lease, and
7. 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.

Within ten days after the mailing of the request, the landlord may ask the tenant for further information in order to determine whether or not rejection of the tenant’s request will be unreasonable.

Within thirty days after the tenant mails the request, or within thirty days after the landlord requests additional information (whichever is later), the landlord must notify the tenant of his consent or his reasons for not consenting. If the landlord neglects to send such a notice, he is considered to have consented to the proposed subletting or assignment.

If the landlord consents, the apartment will be sublet or assigned in accordance with the request, but the original tenant still remains liable for his obligations under the lease,
such as for payment of the rent.

If the landlord unreasonably withholds his consent, the tenant may either:

1. Request that the landlord release him from the lease or
2. Sublet in accordance with the request and recover the cost of the proceedings and attorney’s fees if it is determined that the landlord acted in bad faith by withholding his consent.

If the landlord reasonably withholds his consent, there shall be no subletting and the tenant shall not be released from the lease. Any provision of a lease or rental agreement whereby the tenant waives his right to assign or sublet is null and void.

Attorneys in New York may cancel real estate purchase agreements on behalf of their clients for any reason, or for no reason at all, under the “attorney approval contingency” clause typically used in Buffalo and Western New York.

The Erks signed a contract to purchase the Morans home in Clarence, New York for $505,000. The contract of sale contained an “attorney approval contingency.” That clause provided that the contract was contingent upon approval by the parties’ attorneys giving  both the seller and buyer three days from their attorney’s receipt of the contract to disapprove of the contract and render it void.

The contract and rider were boilerplate forms copyrighted and approved by the Greater Buffalo Association of Realtors and the Bar Association of Erie County. It is intended to ensure that real estate brokers avoid the unauthorized practice of law.

After signing the contract, the Erks began to have second thoughts about the purchase. As a result, they instructed their attorney to disapprove of the contract, which she did within the three-day period provided in the contract. The Morans sold their house about 3 years later for $385,000.

Shortly thereafter, they sued the Erks for breach of contract and sought the difference in sale prices plus carrying costs for the nearly 3-year period the house was on the market.

The New York trial court entered judgment against the Erks, holding that they acted in bad faith by instructing their attorney to cancel the contract. The New York Appellate Division affirmed.

The New York Court of Appeals reversed, holding the language of the “attorney approval contingency” clause means what it says: no vested rights are created by the contract prior to the expiration of the contingency period.

The Court held that as long as attorneys cancel sales contracts within the prescribed time period, and the contract otherwise does not explicitly prevent them from doing so, attorneys and their clients would not be acting in bad faith by withdrawing from the sales agreement under the attorney approval contingency.

Ruling otherwise would inject doubt in an area of contracts — the sale of real estate — where “clarity and predictability are particularly important.” Reading a bad-faith exception into the contingency clauses could prompt litigation “by a disappointed would-be seller or buyer any time an attorney disapproved a real estate contract pursuant to an attorney approval contingency.”

The threat to attorney-client confidentiality under a bad faith regime could harm the attorney-client relationship itself in the context of real estate transactions.  A diligent attorney, cognizant of the risk of being subpoenaed to testify as to the basis for disapproval, would face a perverse incentive to avoid candid communications with his or her client regarding a transaction in which the attorney is supposed to represent the client’s legal interest.