2. Leasehold Estates

Question 1

What are the 4 leasehold estates:

Answer 1

♣ 1. Tenancy for years
• lasts for fixed period in time
• If duration is longer then a year, lease must be in writing (SoF)
• Terminates automatically at end of fixed period

♣ 2. Periodic tenancy

♣ 3. Tenancy at will

♣ 4. Tenancy at sufferance
• Tenant has possession by virtue of wrongfully remaining after termination of a lease.

Question 2

Leasehold Estates:

Answer 2

Estate where tenant has present possessory property interest and landlord has future interest (reversion).

Question 3

Periodic Tenancy

Answer 3

Leasehold that is continuous for successive intervals until either party gives notice of termination.

Question 4

Periodic Tenancy: Creation

Answer 4

♣ EXPRESS AGREEMENT: conveyed to tenant for agreed interval

♣ IMPLICATION: a lease that does not specify duration, but provides for rent to be paid at set intervals

♣ OPERATION OF LAW: two situations
• Holdover tenant: if landlord accepts rent from a holdover tenant, a periodic tenancy arises for the period that payment covers

Invalid lease: if tenant takes possession despite an invalid lease, periodic tenancy arises upon landlord’s acceptance of payment.

Question 5

Periodic Tenancy: Termination

Answer 5

Tenant must give proper notice, which requires:

o 1. Sufficient time: tenant must give notice one full period in advance; year-to-year tenancies require six month notice.

o 2. Effective date: effective date of termination must be at the end of the period if the tenancy.

Question 6

Tenancy at Will

Answer 6

Leasehold with no fixed duration, terminable by either party at any time without notice.

Question 7

Tenancy at Will: Creation

Answer 7

EXPRESS AGREEMENT

♣ Without an express agreement, courts will treat the lease as an implied periodic tenancy.

Question 8

Tenancy at Will: Termination

Answer 8

By will or operation of law

♣ By will: either party can terminate lease at any time without notice, but reasonable demand to vacate premise is usually required.

♣	By operation of law:  
•	1. Death of either party 
•	2. Waste by tenant 
•	3. Assignment by tenant 
•	4. Transfer of title by landlord 
•	5. Lease by landlord to third party

Question 9

Tenancy at Sufferance

Answer 9

Default tenancy that arises when tenant continues to possess property after lease expires (e.g. holdover tenant).

Question 10

Tenancy at Sufferance: Creation

Answer 10

Tenant holds possession beyond lease expiration.

♣ The expired lease’s terms and conditions automatically carry over to the tenancy at sufferance

Question 11

Tenancy at Sufferance

1. Landlord Options
2. Exceptions

Answer 11

o Landlord options:
♣ 1. Sue to evict, or
♣ 2. Impose a new periodic tenancy
• Raised rent: landlord can demand higher rent for both holdover period and new periodic tenancy if he gave notice of increase before lease expired.
• Commercial leases: if expired lease was for one year or longer, new periodic tenancy can be year-to-year

o Exception: imposing new periodic tenancy must be reasonable
♣ New periodic tenancy is unreasonable if:
• Tenant only remains in possession for a few hours
• Tenant is not at fault for delay in vacating (e.g. illness)
• Seasonal leases (e.g., ski cabin, beach house).

Question 12

TENANT’S DUTIES AT COMMON LAW

Duty to Repair

Answer 12

o Duty to Repair: can be largely modified by lease terms:
♣ Tenant must maintain premises and make ordinary repairs
• Residential tenants’ duty to repair is slightly mitigated by the implied warranty of habitability
♣ Tenant must not commit waste – three types of waste:
• 1. Voluntary – overt, harmful acts (e.g., removing fixtures)
• 2. Permissive – neglect
• 3. Ameliorative – alterations increasing property value
♣ Destruction of premises without fault of landlord or tenant
• Common law: tenant held liable for any loss
• Modern law: tenant can terminate lease

Question 13

TENANT’S DUTIES AT COMMON LAW

Duty to pay rent

Answer 13

o Duty to pay rent: tenancy at sufferance arises upon breach

Question 14

TENANT’S DUTIES AT COMMON LAW

Duty to not use property for illegal purposes:

Answer 14

If tenant uses premises for illegal purpose, landlord may terminate lease or obtain damages and injunctive relief

♣ Occasional, minor illegal activities do not constitute a breach

Question 15

TENANT’S DUTIES AT COMMON LAW

Liability to 3rd Parties

Answer 15

♣ Tenant is liable for injuries sustained by third parties invited by tenant (even if landlord promised to make repairs).

Question 16

Fixtures

Answer 16

o Once-movable chattel that is annexed to real property, indicating an intent to permanently improve property.
♣ E.g. heating systems, lighting installations
o Characteristics:
♣ Fixtures pass with ownership of the land
♣ Tenant installation qualifies as a fixture if there is an express agreement between the landlord and tenant
• If no agreement, tenant may remove the chattel that tenant installed as long as removal does not cause substantial harm to the property.
o Fixtures and voluntary waste
♣ If tenant removes fixtures he commits voluntary waste.

Question 17

Landlord Remedies for Tenant Breach

Answer 17

o If tenant breaches his leasehold duties, landlord’s options depend on whether tenant retains possession (e.g. remains on premises).
o Tenant retains possession
♣ Landlord may
• File for notice of eviction or
• Continue the lease and sue for rent due
o Tenant abandons premises
♣ Landlord may
• 1. Surrender: treat the abandonment as tenant’s surrender and accept it, releasing the tenant from the lease
• 2. Ignore: (minority rule) hold tenant liable for unpaid rent or
• 3. Re-let: (majority rule) lease premises to new tenants and hold the breaching tenant liable for any losses.
o No self-help
♣ Landlord may not engage in self-help upon tenant’s breach (e.g. forcibly removing tenant or tenant’s belongings, changing locks)
o Security Deposit
♣ Required at beginning of most leases to secure landlord against damages and/or abandonment
• Landlord must return deposit to tenant once lease terminates
o Landlord may subtract damages she has suffered
o Retaliatory Eviction
♣ Landlord is prohibited from retaliatory eviction if a tenant lawfully reports housing code violations.

Question 18

Landlord’s Duties and Warranties

Answer 18

Landlords have the following implied duties to tenant:

♣ 1. Duty to deliver possession
• Majority: actual possession. Landlord must deliver physical possession to tenant
• Minority: Legal possession (e.g. right to possess). New tenant is responsible for any holdovers on property.
• Tenant’s remedy for breach equals money damages.

♣ 2. Implied covenant of quiet enjoyment

♣ 3. Implied warranty of habitability

♣ 4. Tort liability

Question 19

Implied Covenant of Quiet Enjoyment

Answer 19

o A tenant has an implied right to quiet use and enjoyment of the premises, without interference from the landlord
♣ Breach may occur by actual or constructive eviction

o Actual eviction: landlord wrongfully evicts or excludes tenant from property

o Constructive eviction: landlord’s actions or inactions render the property uninhabitable
♣ Elements:
• 1. Substantial interference: major and/or chronic problems
• 2. Notice: tenant must inform the landlord and give him a reasonable opportunity to repair; landlord must fail to act meaningfully; and
• 3. Value: tenant must vacate within a reasonable period after the landlord fails to repair.

Question 20

Implied Warranty of Habitability

Answer 20

Residential property must be fit for basic human dwelling

Question 21

Implied Warranty of Habitability: Characteristics

Answer 21

♣ Residential only: not applicable to commercial leases
♣ Absolute duty: cannot be modified by lease terms
♣ Local code or case law specifies the standard for a breach
♣ E.g. no heat in winter, no plumbing, no water are types of problems that could give rise to violation of the implied warranty of habitability.

Question 22

Implied Warranty of Habitability:

Tenant’s remedies for landlord breach – tenant can:

Answer 22

♣ 1. Move: vacate premises and terminate the lease

♣ 2. Repair: make reasonable repairs and deduct costs from future rent

♣ 3. Reduce or withhold rent: reduce rent or stop payment until a court determines the fair rental value given the breach
• tenant must place withheld rent in escrow

♣ 4. Remain: remain in possession and seek money damages

Question 23

Landlord Tort Liability to Tenant

Answer 23

A landlord may be liable for injuries occurring on leased property Landlord is liable for injuries involving:

♣ 1. Common areas: duty of reasonable care
• landlord must exercise reasonable care in maintaining and repairing common areas (e.g. hallways, stairs)

♣ 2. Latent defects: duty to disclose
• landlord has a duty to disclose hidden defects he should reasonably know of.

♣ 3. Assumption of repairs: negligence standard
• landlord is liable for harm caused by negligent repairs he chooses to undertake

♣ 4. Public Use: landlord is liable for known defects if he knows the property is for public use and tenant is unlikely to repair.
• E.g. concert hall, convention center

♣ 5. Seasonal or short term lease of a furnished dwelling
• landlord is liable for defects that cause harm to tenant

Question 24

Assignment

Answer 24

♣ Entire leasehold transfers from tenant to assignee
• Assignee is in privity of estate with landlord – the two are bound by all covenants that run with the land
• Assignor remains in privity of contract with landlord
Assignee owes rent directly to landlord, but assignor may be held liable for unpaid rent.

Question 25

Sublease

Answer 25

♣ Parital leasehold transfers from sublessor to sublessee
• Sublessor is in privity of estate and contract with landlord (e.g. relationship between tenant and landlord is unchanged)
o Sublessee pays rent to sublessor as her tenant
• Sublessee is not liable to landlord for rent and is not bound by any covenants unless expressly assumed

Question 26

Assignment/sublease provisions: Construed against landlord

Answer 26

♣ Lease provivisions restricting assignment or sublease are enforceable but generally construed against landlords
♣ Once landlord gives a tenant permission to assign or sublet, such provisions are thereafter waived.