8. Lease Transfers Flashcards
What is the difference between assignments and sub-leases?
Assignment
- Tenant ‘completely’ transfers remaining term
- Landlord + Tenant (privity of contract)
- Assignee pays rent to Landlord (privity of estate)
- Covenants run with the land
Sub-lease
- Tenant ‘partially’ transfers remaining term (retains part of remaining term)
- Landlord + Tenant (privity of contract + estate)
- Assignee pays rent to Tenant (Sublease)
- Covenants do NOT run with land
What is required for assignment by Tenant?
1) Tenant’s ‘complete’ transfer of remaining term
2) Assignment has same terms + conditions as original lease
Does the Tenant have rights against the Assignee?
Right to terminate lease (re-entry)
- Assignee breaches terms of original lease
How may Landlord/Landlord-Assignee and Tenant-Assignee be liable to one another?
Privity of estate (Breach of covenants that run with the land)
1) Landlord + Tenant’s intent that covenants run with the land
2) Covenants touch and concern the land
- Benefits/Burdens Landlord/Tenant
What are examples of covenants that run with the land?
Covenants to do/NOT do physical act
- Repairs
- NOT run business on land
- Supply heat
Covenants to pay money
- Rent
- Taxes
Covenants regarding lease duration
How may Tenant-Assignee be liable to Landlord for failure to pay rent?
Assignment
1) Assignee fails to pay rent to Landlord
- Breach of covenant to pay rent runs with land
2) Liable for rent;
- Between assignment + end of lease
- Between assignment + re-assigment
Re-Assignment (to Sub-Assignee)
1) Assignee assigns interest to Sub-Assignee
2) Sub-Assignee fails to pay rent to Landlord
- Breach of covenant to pay runs with land
3) Either;
- Sub-Assignee is liable for rent between re-assignment + end of lease
- Assignee is liable for rent between re-assignment + end of lease (if Assignee specifically promised to Landlord he will pay Sub-Assignee’s rent => Creates privity of contract between Assignee + Landlord)
- Assignee is liable for rent between re-assignment + end of lease (if Assignee specifically promised to Tenant he will pay Sub-Assignee’s rent => Landlord (TP Beneficiary) can sue Assignee under contract law)
How may Tenant be liable to Landlord for Tenant-Assignee’s failure to pay rent?
Assignment
1) Tenant promised to pay rent to Landlord (Privity of contract)
2) Assignee fails to pay rent + disappears
3) Tenant is liable to Landlord for Assignee’s failure to pay rent (Privity of contract)
How may Sublessee be liable to Landlord?
Sublessee’s breach of covenants + rent covenant (original lease)
- Sublessee is NOT personally liable to Landlord (NO privity of estate)
- Covenants do NOT run with land in subleases
- But Landlord can terminate original lease for breach (if expressly stated) => Automatically terminates sublease
Sublessee’s assumption of covenants + rent covenant (original lease)
- Express assumption
- Sublessee becomes personally liable to Landlord (TP Beneficiary)
How may Tenant be liable to Sublessee?
Enforcement of covenants in sublease
- NOT original lease
How may Landlord be liable to Sublessee?
Implied warranty of habitability
- Residential lease
NOT covenants in original lease
- NO privity of estate (Landlord + Sublessee)
Can restrictions against assignment or sub-lease restrict the other?
No
How may restrictions against assignment be waived?
1) Landlord knows of assignment
2) Landlord does NOT object
- Landlord knowingly accepts rent from Assignee
What are Landlord’s rights if restriction against assignment/sub-lease is breached?
Terminate lease
- Lease is voidable
Sue for damages (if any)
Can Landlord withhold consent to assignment?
Yes (most states)
- NOT unreasonably (few states)
- NOT mandatory
What is required for assignment by Landlord?
(LAD)
1) By Landlord
- NO Tenant’s consent
2) Attornment
- Notice to Tenant re assignment => Tenant liable to pay rent to Assignee
3) Deed
