Also known as: lessor interest · lessors' interest · landlord's interest
Written by attorneys · grounded in primary & secondary sources — see below
The economic value represented by the right to receive future rental income during the lease term together with the present value of the property upon reversion at the end of the lease.
Lamar Lewis leased commercial space to Legacy Motors for ten years. When Lewis sought to sell the building to Lighthouse Shipping, Legacy Motors withheld consent on the ground that the buyer lacked experience managing industrial tenants. The court evaluated whether the withholding was unreasonable and thereby affected the market value of Lewis's lessor's interest in the remaining lease payments and reversion.
Lance Lee owned an office building leased to Lotus Pharmaceuticals. Lee assigned his entire interest to Liberty Trust without first obtaining the tenant's consent. Lotus Pharmaceuticals claimed the assignment was invalid under the lease clause. The dispute turned on whether the assignment diminished the value of Lee's original lessor's interest by exposing the tenant to an unapproved successor.
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Levi Lowe leased rooftop space on his building to a tenant. A cable company installed equipment across the roof without Lowe's permission. The installation reduced the usable area and thereby lowered the present value of Lowe's lessor's interest in future rents and the building's reversionary worth.
Lucy Liu leased an apartment to Logan Lane. After Lane reported housing code violations, Liu attempted to sell her interest to a third party who planned to evict Lane. The threatened sale raised questions about whether the lessor's interest could be transferred in a manner that circumvented tenant protections.
The lessor's interest consists of the discounted value of expected rental payments over the lease term plus the discounted value of the property when possession reverts to the owner at lease end.
Supporting sources
A valid restraint requires tenant consent to any transfer of the landlord's interest, but that consent may not be withheld unreasonably unless the lease grants an absolute right to withhold.
Yes. When a third party installs equipment that occupies space on the leased property, the invasion can diminish the present value of future rents and the reversion by limiting the owner's usable area.
Supporting sources
Assignment is generally permitted unless the lease imposes a reasonable-consent requirement. Courts examine whether withholding consent is commercially reasonable before enforcing any restraint.
Supporting sources
…as Amici Curiae 21. [^maj-15]: In this case, the Court of Appeals noted testimony preceding the enactment of § 828 that the landlord's interest in excluding cable installation "consists entirely of insisting that some negligible unoccupied space remain unoccupied." 53 N. Y. 2d, at 141, 423 N. E. 2d, at 328 (emphasis omitted). The…