The Rule in Dumpor’s Case

The Rule in Dumpor’s Case provides that if a landlord consents to one transfer that would otherwise violate a covenant against assignment or sublease, he waives his right to assert that future transfers breach the lease. The landlord must expressly reserve the right to object to future transfers at the time of granting consent to the initial transfer.

 

A covenant prohibiting assignment does NOT prohibit subleasing, and vice versa. Covenants against assignment or sublease are strictly construed against the landlord, and absent an express restriction in the lease, a tenant may freely transfer his leasehold interest, in whole or in part. A complete transfer of the tenant’s entire remaining term is an assignment, and a transfer retaining any part thereof is a sublease. A prohibition of either type of transfer does not prohibit the other type.

 

If a tenant transfers her interest in violation of a covenant against assignment or sublease, the transfer is NOT void. However, the landlord usually may terminate the lease under the lease terms or a statute or sue for damages.

 

A covenant against assignment or sublease is NOT void as an unreasonable restraint on alienation. All jurisdictions enforce such covenants.

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