BAR FLASHCARDS - P6 Transfers & LL liability

Question 1

TRANSFER OF LEASEHOLD–THE ASSIGNMENT
VERSUS THE SUBLEASE

Answer 1

ASSIGNMENT: Transfer of entire remaining term of lease (transfer in whole).
SUBLEASE: Transfer of part of remaining term of lease.

In the absence of some prohibition in the lease, a tenant may freely transfer their interest
in whole (thereby accomplishing an assign- ment, meaning a transfer of the entire remaining term of a lease)
or in part (thereby accomplishing a sublease, meaning the tenant has retained some part of the remaining term, other than a right to reenter upon breach).
In the lease, a landlord can prohibit a tenant from assigning or subletting without the landlord’s prior written approval.
However, once a landlord consents to one transfer by a tenant, the landlord waives the right to object to future transfers by that tenant, unless the landlord expressly reserves the right.

Question 2

a transfer will be considered a sublease, rather than an assignment, only when….

Answer 2

a transfer will be considered a sublease, rather than an assignment, only when the original tenant reserves time for herself (for example, the last month of the lease).

Question 3

The Assignment: Results

Answer 3

ASSIGNMENT: Transfer of entire remaining term of lease (transfer in whole).

Assignee Tenant in privity of estate with LL.
- Liable on covenants that run with land.
An assignee stands in the shoes of the original tenant in a direct relationship with the landlord; that is, the assignee and the landlord are in “privity of estate,” and each is liable to the other on all covenants in the lease that “run with the land.”

Original T in privity of Contract (but not estate) with LL.
- Liable for original lease obligations.
After assignment, the original tenant is no longer in privity of estate with the landlord, but their lease contract remains in effect and enforceable. In other words, the original tenant remains liable on the original contractual obliga- tions, such as to pay rent (privity of contract).

Question 4

Assignee Tenant in privity of ___ with LL.

Answer 4

Assignee Tenant in privity of estate with LL.
- Liable on covenants that run with land.
An assignee stands in the shoes of the original tenant in a direct relationship with the landlord; that is, the assignee and the landlord are in “privity of estate,” and each is liable to the other on all covenants in the lease that “run with the land.”

Question 5

If LL and T2 are in privity of estate, they are liable to each other for….

Answer 5

privity of estate, they are liable to each other for all of the covenants (promises) in the original lease that run with the land.

To paint the premises, to repair, to pay taxes.

Question 6

Privity of estate means

Answer 6

Property-based nexus based on being in possession.

If T2 assigns to T3, privity of estate ends as to T2.

Question 7

Original T in privity of ___ (but not ___) with LL.

Answer 7

Original T in privity of Contract (but not in privity of estate) with LL.
- Liable for original lease obligations.
After assignment, the original tenant is no longer in privity of estate with the landlord, but their lease contract remains in effect and enforceable. In other words, the original tenant remains liable on the original contractual obliga- tions, such as to pay rent (privity of contract).

They remain in privity of contract BECAUSE they shared the original words of contract that created the lease.

Means if T2 cannot pay rent, or betrays any of the promises in the lease, etc… T1 is still LIABLE!

Question 8

Covenants that Run with the Land

Answer 8

A covenant runs with the land if the original parties to the lease so intend and if the covenant “touches and concerns” the land (that is, benefits the landlord and burdens the tenant (or vice versa) with respect to their interests in the property).

Question 9

Rent Covenants

Answer 9

Because a covenant to pay rent runs with the land, the assignee owes rent directly to the landlord.
If a tenant’s assignee fails to pay rent (or breaches another covenant), the landlord can sue the assignee because of privity of estate and, if the assignee cannot pay, can also sue the original tenant because of privity of contract.
If the assignee reassigns the leasehold interest, their privity of estate with the landlord ends, and they have no liability for the subsequent assignee’s failure to pay rent.

Question 10

Sublease

Answer 10

T2 has no privity (estate or contract with LL.
- T1 & T2 responsible to eachother.
Relationship between LL and T1 remains intact.

A sublessee is the tenant of the original lessee and usually pays rent to the original lessee, who then pays the landlord.
A sublease arises when T1, the original tenant, transfers less than her entire interest to T2.
The result of a sublease is that the landlord and sublessee are in neither privity of estate nor privity of contract.
Instead, T2 is responsible to T1 and vice versa.
Thus, a sublessee is not personally liable to the landlord for rent or for the performance of any of the covenants in the main lease unless the sublessee expressly assumes the covenants.

Question 11

If there’s a sublease, the relationship between L and T1 ____.
Thus, for example, if T2 fails to pay rent, L proceeds against ___ and ___ in turn proceeds against __.
If the residential premises betray the implied warranty of habitability, __ proceeds against __ and __ in turn proceeds against __.

Answer 11

If there’s a sublease, the relationship between L and T1 remains fully intact. Thus, for example, if T2 fails to pay rent, L proceeds against T1 and T1 in turn proceeds against T2. If the residential premises betray the implied warranty of habitability, T2 proceeds against T1 and T1 in turn proceeds against LL.

Question 12

Landlord’s Remedies

Answer 12

The landlord may terminate the main lease for nonpayment of rent or breach of other covenants if the lease so states or the power is given by statute. The sublease automatically terminates with the main lease.

Question 13

Assignment by Landlord

Answer 13

Consent: Tenant’s consent not required.
Privity of Estate: Assignee and tenant are in privity of estate.
Privity of Contract: Assignee and tenant are not in privity of contract. Original landlord and tenant remain in privity of contract.
Liability for Covenants in Lease: Assignee liable to tenant on all covenants that run with the land. Original landlord remains liable on all covenants in the lease.

Question 14

Assignment by Tenant

Answer 14

Consent: Landlord’s consent may be required by lease
Privity of Estate: Assignee and landlord are in privity of estate.
Privity of Contract: Assignee and landlord are not in privity of contract. Original tenant and landlord remain in privity of contract.
Liability for Covenants in Lease: Assignee liable to landlord on all covenants that run with the land. Original tenant remains liable for rent and all other covenants in the lease.

Question 15

Sublease by Tenant

Answer 15

Consent: Landlord’s consent may be required by lease.
Privity of Estate: Sublessee and landlord are not in privity of estate. Original tenant remains in privity of estate with landlord.
Privity of Contract: Sublessee and landlord are not in privity of contract. Original tenant and landlord remain in privity of contract.
Liability for Covenants in Lease: Sublessee is not personally liable on any covenants in the original lease and cannot enforce the landlord’s covenants. Original tenant remains liable for rent and all other covenants in the lease and can enforce the landlord’s covenants.

Question 16

Rights of Sublessee

Answer 16

A sublessee cannot enforce any covenants made by the landlord in the main lease, except a residential sublessee may be able to enforce the implied warranty of habitability against the landlord.

Question 17

Covenants Against Assignment or Sublease

Answer 17

In the lease, a landlord can prohibit a tenant from assigning or subletting without the landlord’s prior written approval.
A valid covenant against assignment is considered waived if the landlord was aware of the assignment and did not object (for example, by knowingly accepting rent from the assignee).
Once a landlord consents to one transfer by a tenant, the landlord waives the right to object to future transfers by that tenant, unless the landlord expressly reserves the right (known as the Rule in Dumpor’s Case).
Lease covenants restricting assignment and sublease are strictly construed against the landlord.
(Thus, a covenant prohibiting assignment does not prohibit subleasing and vice versa.)
Note: If a tenant assigns or sublets in violation of a lease provision, the landlord usually may terminate the lease or sue for damages, but the transfer is not void.

Question 18

Assignments by Landlords

Answer 18

A landlord may assign the rents and reversion interest they own. This is usually done by deed when the landlord conveys a building to a new owner. The tenants’ consent is not required.
a. Rights of Assignee Against Tenants—Attornment: Once tenants are given reasonable notice of the assignment, they must recognize and pay rent to the new owner as their landlord. The benefit of all tenant covenants that touch and concern the land runs with the landlord’s estate to the new owner.
b. Liabilities of Assignee to Tenants: The burden of the landlord’s covenants that touch and concern the land runs with the landlord’s estate to the assignee; thus, the assignee is liable for the performance of those covenants.
The original landlord also remains liable on all of the covenants they made in the lease.

Question 19

Common Law of Caveat Lessee (Tenant Beware)

Answer 19

In tort, a landlord was under no duty to make the premises safe. LL has NO duty to make premises safe.

The five EXCEPTIONS to caveat lessee: CLAPS:
• Common areas
• Latent defects
• Assumption of repairs
• Public use rule
• Short-term lease of furnished dwelling

Question 20

EXCEPTIONS to caveat lessee: CLAPS:

Answer 20

Common Areas
Latents Defects
Assumption of repairs
Public use rule
Short term Lease of furnished dwelling

Question 21

EXCEPTIONS to caveat lessee: Common Areas

Answer 21

Common Areas: A landlord has a duty of reasonable care in maintaining all common areas (for example, hallways, stairwells, elevators).

Question 22

EXCEPTIONS to caveat lessee: Latent Defects

Answer 22

General rule: LLs are not liable for latent defects unless they knew or had reason to know of latent defects.

BUT, EXCEPTION: LLs are liable for defects if the lease is SHORT-TERM and the premises are FURNISHED.

Latent Defects Rule: (L must warn) A landlord must warn a tenant of hidden defects (meaning, a dangerous condition that the tenant couldn’t discover by reasonable inspection) of which the landlord has knowledge or reason to know.
Otherwise, the landlord will be liable for any injuries resulting from the condition.
If the tenant accepts the premises after disclosure, the tenant assumes the risk; the landlord is no longer liable in tort.
Note that the landlord’s obligation in tort is a duty to warn, and not a duty to repair.

Question 23

EXCEPTIONS to caveat lessee: Assumption of repairs

Answer 23

Assumption of Repairs: (L liable if negligent) While in tort a landlord is under no duty to make repairs, once repairs are undertaken, the landlord must complete them with reasonable care. What does that mean?
If the LL makes those repairs NEGLIGENTLY, the LL is liable.

Question 24

EXCEPTIONS to caveat lessee: Public Use Rule

Answer 24

Public Use Rule: (short lease, significant defect) A landlord who leases public space (for example, a convention hall or a museum), and who should know, because of the significant nature of the defect and the short length of the lease, that a tenant will not repair, is liable for any defects on the premises that cause injury to members of the public. Why?

Question 25

EXCEPTIONS to caveat lessee: Short term lease of furnished dwelling

Answer 25

Short-Term Lease of Furnished Dwelling: A landlord who rents a fully furnished premises for a short period (for example, a summer cottage) is under a stricter duty. Such landlords are responsible for any defective condition which proximately injures a tenant (whether or not they knew of the defect). Why?

Question 26

CLAPS

Answer 26

EXCEPTIONS to Caveat Lessee: Common areas, Latent defects, Assumption of defect, Public Use rule, Short term lease of furnished dwelling.

Question 27

Modern Trend—General Duty of Reasonable Care

Answer 27

Many courts now hold that a landlord owes a general duty of reasonable care toward residential tenants, and will be held liable for injuries in tort resulting from ordinary negligence if the landlord had notice of a defect and an opportunity to repair it.

a. Defects Arising After Tenant Takes Possession: A landlord generally is held to have notice of defects existing before the tenant took possession but is not liable in tort for defects arising after the tenant takes possession unless the landlord knew or should have known of them.
b. Legal Duty to Repair: If the landlord has a statutory duty to repair (for example, housing codes), the landlord is liable in tort for injuries resulting from the landlord’s failure to repair or negligence in making repairs.
c. Security: Some courts hold landlords liable in tort for tenant injuries inflicted by the criminal conduct of third parties in cases where the landlord failed to comply with housing code provisions dealing with security, maintain ordinary security measures, or provide advertised security measures (for example, surveillance cameras).

Question 28

Tenant’s Liability

Answer 28

The duty of care owed by a tenant, as an occupier of land, to third persons is discussed in the Torts outline.

Question 29

FIXTURES

Answer 29

A fixture is a chattel that has been so affixed to land that it has ceased being personal property and has become part of the realty. A fixture passes with the ownership of the land and must stay put.

Question 30

FIXTURES: CHATTELS INCORPORATED INTO STRUCTURE

Answer 30

How to tell that a given chattel is a fixture and must stay put: there are two ways to tell. First, when items are incorporated into the realty so that they lose their identity. Second, a chattel affixed to realty
is a fixture when its removal would cause considerable damage to the premises. Common examples here: plumbing, heating ducts, a furnace.

Question 31

FIXTURES: COMMON OWNERSHIP CASES

Answer 31

A common ownership case is one in which the person who brings the chattel to the land owns both the chattel and the land, as when X installs a furnace in his home. That item is a fixture if the party who made the annexation objectively intended to make the item part of the realty. This intention is determined by: the nature of the article, the manner of attachment, the amount of damage that would be caused by its removal, and the adaptation of the item to the use of the realty.

Question 32

FIXTURES: DIVIDED OWNERSHIP CASES

Answer 32

In divided ownership cases, the chattel is owned and brought to the realty by someone other than the landowner (for example, by a tenant, licensee, or trespasser). Accession describes the annexor’s intent to make the chattel a permanent part of the real estate.
a. Landlord-Tenant: Suppose that a tenant installs a chandelier onto the leased premises’ ceiling. How can you tell whether that tenant installation qualifies as a fixture, in which case it must stay put because fixtures pass with ownership of the land? An agreement between the landlord and tenant is controlling on whether an annexed chattel is a fixture. Absent an agreement, a tenant is deemed to lack the intent to permanently improve the property, and thus may remove his annexed chattels if removal does not substantially damage the premises or destroy the chattel. Annexed chattels must be removed by the end of the lease term (or within a reasonable time after the termination of an indefinite tenancy), and the tenant is responsible for repairing any damage caused by the removal.
b. Life Tenant and Remainderman: The same rules apply in the life tenant-remainderman context as in landlord-tenant situations, except that the life tenant’s representa- tive may remove annexations within a reasonable time after the life tenant’s death.
c. Licensee or Trespasser and Landowner: Licensees are treated much like tenants, whereas trespassers normally lose their annexations. Thus, absent a statute, an adverse possessor or good faith trespasser cannot remove fixtures (for example, house erroneously constructed on a parcel that possessor believed she owned). Some courts, however, allow a good faith trespasser recovery measured by the value added to the land (not construction costs).