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How Maryland Law Constrains a Landlord’s Unstated Discretion Under a Commercial Lease

Weiss LLP  •  Client Advisory

Commercial leases routinely hand the landlord a lever the tenant cannot pull back: approval of an assignment, sign-off on alterations, consent to a sublease, or the right to relocate a tenant within a building. Drafters do not always specify how that discretion must be exercised. When a dispute arises, the question is whether Maryland law leaves the landlord free to decide as it pleases, or whether the law fills the gap with a duty to act reasonably. The answer, under a well-established line of Maryland Court of Appeals authority, is the latter — as a default rule that applies unless the lease itself says otherwise.

The Default Rule: Julian v. Christopher

The foundational case is Julian v. Christopher, 320 Md. 1, 575 A.2d 735 (1990). The lease at issue required the landlord’s consent before the tenant could sublease the premises, but said nothing about the standard governing that consent. The Court of Appeals held that, absent express language to the contrary, “consent may not be unreasonably withheld unless the lease explicitly gives the landlord the right to withhold consent arbitrarily.” In doing so, the Court discarded Maryland’s older common-law rule permitting a landlord to refuse consent for any reason, or none at all. The Court grounded its holding in two independent doctrines. First, restraints on alienation are disfavored in Maryland and are strictly construed against the party invoking them, so ambiguity in a consent clause is resolved in favor of the reading that least restrains the tenant’s ability to transfer its interest. Second, and more broadly, the Court reaffirmed that every lease — like every contract — carries an implied covenant that the parties will act in good faith and deal fairly with one another. Where a lease grants a party discretion without defining its scope, that discretion “must be exercised in accord with principles of good faith and fair dealing.”

Extending the Principle: Questar Builders v. CB Flooring

Julian’s reasoning is not confined to assignment and sublease clauses. In Questar Builders, Inc. v. CB Flooring, LLC, 410 Md. 241, 978 A.2d 651 (2009), the Court of Appeals addressed a general contractual discretion — a termination-for-convenience clause — and articulated the standard in terms applicable to any unspecified grant of discretion under a Maryland contract, commercial leases included. The Court held that where an agreement confers discretion on one party without stating the standard for exercising it, the implied covenant of good faith and fair dealing requires that the discretion be exercised consistently with the parties’ “reasonable expectations” at the time of contracting — an objective, commercially reasonable standard rather than a subjective one. Questar makes explicit what Julian implied: a party holding unspecified contractual discretion may be called upon to justify how it exercised that discretion, and its reasons must hold up as commercially reasonable under the circumstances. The discretion-holder cannot use silence in the contract as license to frustrate the other side’s expected benefit of the bargain, to claw back what it gave up at signing, or to sidestep an obligation it otherwise owes. That said, Questar also marks the boundary: where the contract expressly grants sole, absolute, or unfettered discretion — or ties the decision to genuinely subjective criteria the parties knowingly bargained for, such as personal taste — the reasonableness gloss gives way to the parties’ own bargain.

The Boundary: A Gap-Filler, Not a New Cause of Action

It is worth being precise about what the implied covenant does and does not do under Maryland law. Maryland does not recognize an independent, freestanding claim for “breach of the implied covenant of good faith and fair dealing.” See Mount Vernon Properties, LLC v. Branch Banking & Trust Co., 170 Md. App. 457, 907 A.2d 373 (2006). The covenant operates as an interpretive gloss on rights and discretion the lease already confers — it constrains how an existing contractual power is exercised, but it does not conjure new lease obligations that the parties never agreed to. A tenant cannot use the covenant to demand something the lease never promised; it can use the covenant to insist that a power the lease did grant the landlord be exercised reasonably and in good faith.

Practical Takeaways

For landlords who want genuinely unreviewable discretion over a particular decision — approval of alterations, consent to signage, use of common areas, relocation rights, or the like — the lease needs to say so in unmistakable terms: “in Landlord’s sole and absolute discretion,” “for any reason or no reason,” or comparable language. Silence will not be read as license to act arbitrarily. Under Julian and Questar, silence is read instead as an implicit promise that the power will be used reasonably, consistently with what the tenant could fairly expect at signing. Tenants negotiating a lease, conversely, should recognize that an unqualified consent or approval clause is not an unqualified grant of landlord power — Maryland law has already written a reasonableness floor into it, and that floor is worth confirming, not necessarily worth re-negotiating from scratch.

Citations

• Julian v. Christopher, 320 Md. 1, 575 A.2d 735 (1990).
• Questar Builders, Inc. v. CB Flooring, LLC, 410 Md. 241, 978 A.2d 651 (2009).
• Mount Vernon Properties, LLC v. Branch Banking & Trust Co., 170 Md. App. 457, 907 A.2d 373 (2006).

This article summarizes general principles of Maryland law as of September 2026 and does not constitute legal advice regarding any specific lease or dispute. The application of these principles depends on the precise language of the lease at issue and the facts surrounding its negotiation and performance. Contact Weiss LLP for more information.