Concurrent Estates & Leaseholds Flashcards

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1
Q

concurrent estates - general rule & three types

A

• Only one present possessory interest may exist at a time, but multiple people may share that interest.

• The law recognizes three types of concurrent ownership:
– A. Tenants in Common
– B. Joint Tenants with Right of Survivorship (JTROS)
– C. Tenants by the Entirety

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2
Q

tenants in common - 5 rules (how created; ownership shares; transfer; creditors)

A

• 1. A tenancy in common is created by any language that does not create a joint tenancy with right of survivorship; if language is ambiguous, the law favors a tenancy in common (unless the conveyance is to a married couple in a tenancy by the entirety state).
– If two or more people inherit property from a decedent who dies intestate, they own as
»> Tenants in Common
– O transfers Blackacre “to my sisters, A and B.” A and B own Blackacre as
»> Tenants in Common

    1. A tenancy in common is the most favored concurrent estate at law. Each co-tenant owns an individual part with the right to possess 100% of the property (i.e., unity of possession - only unity required), regardless of that tenant’s proportional share or contribution to the purchase price.
    1. Equal shares are not necessary for a tenancy in common. For example, one tenant may hold a 75% interest and the other a 25% interest. However, unless the grant clearly specifies unequal shares, the law presumes equal shares.
    1. Each tenant may transfer his or her interest during life and at death because there are no survivorship rights.
    1. Each tenant’s creditors may attach his or her portion and force a partition and sale.
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3
Q

JTRS - creation; common law rule

A

• 1. Creation (and continuance) of a JTROS requires the four unities (“TTIP”):
– Unity of Time (interests were acquired at the same time)
– Unity of Title (interests were acquired by the same title—e.g., deed or will)
– Unity of Interest (each tenant holds the same proportional interest—e.g., 50/50 or 1/3-1/3-1/3)
– Unity of Possession (each tenant has the right to possess 100% of the property)

– **if any of the above is missing, it becomes a TIC

• 2. At common law, if an owner of land wished to convert individually-owned land into a JTROS with another person, the owner was required to use a strawperson so as to establish the four unities; BY STATUTE (so follow CL on bar unless there is a statute) in most states, an owner may convert individually-owned land into a JTROS with a direct conveyance (i.e., no strawperson required).

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4
Q

JTRS - specificity of language

A

• 3. Joint tenancy language must be precise. In some states, it must include “survivorship” language. Joint tenancies are not favored; thus, the granting language must be very clear.

– “to A and B, jointly (or as joint owners)” creates a
• Tenancy in Common

– “to A and B, concurrently and together” creates a
• Tenancy in Common

– “to A and B, as joint tenants with right of survivorship” creates a
• JTROS

– If the MBE refers to co-tenants as “joint tenants” with no survivorship language, the co-tenants own the property as
• JTROS

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5
Q

JTRS - ROS and 7 severance events

A
    1. Joint tenants own by the whole and by the part with right of survivorship. When one tenant dies, that tenant’s share passes automatically to the surviving joint tenants, assuming there has been no severance event. (NOT devisable or descendible)
    1. A JTROS is severed by:

– a. An inter vivos transfer (including secret deeds) by one joint tenant, but only that tenant’s share is severed (no knowledge or consent of other tenants necessary!)

– b. A valid contract of sale by one joint tenant

– c. A voluntary or judicial partition. Tenants in common and joint tenants have a right to a partition (and an accounting). If a judicial partition is sought, the law favors a partition in-kind over a forced sale, but only if an in-kind partition is fair to all parties.

– d. A creditor’s SALE, including a foreclosure sale by a mortgagee or lien creditor.

– e. Intentional and felonious homicide of one joint tenant by another joint tenant (by statute)

– f. Simultaneous deaths of co-tenants (by statute)

– g. one tenant taking out a mortgage in a TITLE THEORY state

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6
Q

JTRS - severance rules (what is it NOT severed by - 4 categories)

A

• 6. A JTROS is NOT severed by:

– A mortgage by one joint tenant, EXCEPT in a title theory state (minority view)
»> think about it – mortgage only severs when it turns into a valid ppty interest – so for lien theory states, it won’t become a ppty interest (and sever the JT) until it is executed upon; for a title theory state (minority), it becomes a ppty interest immediately, severing the JT
»> ***if the JT with the mortgage dies, his interest will pass to the other JTs NOT SUBJECT TO THE MORTGAGE B/C IT WAS NOT FORECLOSED ON IN TIME

– A lease by one co-tenant (a co-tenant has the right to lease her interest in the property, even over the objection of the other co-tenants; however, a lease by one joint tenant is not considered a severance event)

– A creditor’s lien against one joint tenant’s share that has not yet reached foreclosure sale

– The execution of a will by one joint tenant devising her interest in the joint tenancy (though that devise will likely be void because the other JTs have a ROS)

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7
Q

tenancy by the entirety - general rules (unity; 2 examples; conveyances/mortgages; creditors; severance)

A

**minority of states!

• 1. A tenancy by the entirety requires the four unities (TTIP) of a JTROS, PLUS one additional unity: unity of person. To satisfy unity of person, the co-tenants must be a validly married couple. In most tenancy by the entirety states, the estate is presumed unless the conveyance clearly provides otherwise. Tenants by the entirety have rights of survivorship.

– In a tenancy by the entirety state, O transfers property “to A and B.” A and B are validly married. What type of co-tenancy has been created?
• Tenancy by the Entirety

– In a tenancy by the entirety state, O transfers property “to A and B as joint tenants with the right of survivorship.” A and B are validly married. What type of co-tenancy has been created?
• Joint Tenancy with Right of Survivorship

    1. An individual spouse CANNOT convey or mortgage his or her share of a tenancy by the entirety. Such conveyances are VOID
    1. The creditors of ONE SPOUSE CANNOT attach that spouse’s portion of the tenancy or sever the tenancy, except for the Internal Revenue Service

• 4. A tenancy by the entirety may be SEVERED only by:
– a. Divorce or annulment (severs unity of person, becomes TIC) - NOT JUST SEPARATION
– b. Voluntary partition
– c. Execution of a lien by joint creditors of BOTH SPOUSES
– d. Intentional and felonious homicide of one tenant by the other (by statute)
– e. Simultaneous deaths of co-tenants (by statute)

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8
Q

CT rights and duties - possession; rent; adverse possession

A

• 1. Possession: all cotenants have the right to possess 100% of the property, regardless of contribution or proportional ownership

– if a tenant wrongfully excludes another tenant, this is considered an “ouster” and courts will order the ousting party to re-open the land (in this case, the live-in tenant is required to pay rent to the ousted tenant IN THE AMOUNT OF THE OUSTED TENANT’S OWNERSHIP INTEREST)

– Co-tenants may informally agree among themselves for one co-tenant to have exclusive possession or for each co-tenant to exclusively possess an equal or unequal portion; such informal agreements do not sever a JTROS

• 2. Rent: absent an ouster, a co-tenant in exclusive possession does not have to pay rent to the other tenants (even if they are absent) and does not have to share profits from ordinary use of the property (e.g., farming, operating a business)
– However, if the tenant is charging rent to a third party, that rent must be shared among all co-tenants based on their proportional shares
»> The same is true for profits derived from a use of the land that reduces its value (e.g., removal of natural resources)

• 3. Adverse Possession: absent an ouster, a co-tenant may not obtain full ownership of the property by adverse possession because there is no “adverse” or “hostile” possession

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9
Q

CT rights and duties - expenses; repairs; improvements

A

• 4. Expenses: each co-tenant must pay his or her proportional share of taxes and mortgage payments (i.e. his/her percentage of ownership)
»> **a tenant in sole possession may receive reimbursement only for the amount that exceeds the net income from the property or the property’s fair rental value – commonly tested

• 5. Repairs: each co-tenant must pay his or her proportional share of repairs (i.e. his/her percentage of ownership)
»> **a tenant in sole possession may receive reimbursement only for the amount that exceeds the net income from the property or the property’s fair rental value – commonly tested
»> in some jurisdictions, a co-tenant must notify the other co-tenants before making necessary repairs
»> if a co-tenant pays more than her proportional share of expenses or repairs, that co-tenant may sue the other co-tenants for contribution

• 6. Improvements: a co-tenant has no right to contribution for “improvements,” but at partition the improving co-tenant may be entitled to a “credit” (i.e., a larger portion) representing the increased value attributable to the improvements

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10
Q

CT rights and duties - waste; duty of fair dealing

A

• 7. Waste: a co-tenant is liable for the same types of waste as a life tenant; an action for waste may be brought during the tenancy

• 8. Duty of Fair Dealing: Co-tenants are not fiduciaries, but they are required to share opportunities on the land
– thus, if one co-tenant re-acquires the land in a tax or foreclosure sale, the other tenant must be given the opportunity to reacquire his or her proportional share by paying an appropriate portion of the purchase price within a reasonable time

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11
Q

leaseholds - what are they

A

• A leasehold is a present possessory estate. To qualify as a lease, the lessee must have the right to exclusive possession of a defined area. This is what distinguishes a lease from a license, an easement, or a profit.

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12
Q

leaseholds - tenancy for years (duration; notice; writing)

A
  • a. Duration: a tenancy for any fixed period of time; in such leases, the termination date is known by both parties at commencement of the lease
  • b. Notice to Terminate: Is not required by law, because the termination date is known by all parties at commencement (**but contract law might require a term date for leases as contracts)

• c. Is a Writing Required? Yes, but only if the term of the lease is for more than one year from the date of the lease agreement
– the Restatement uses the “date of possession” for purposes of the SOF

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13
Q

leaseholds - periodic tenancy (what is it; different ways it can be created)

A

• a. duration: a lease based on successive, continuous intervals that lasts until it is terminated: e.g., week-to-week, month-to-month, year-to-year

– i. may be created by express language (“To tenant for month-to-month”) or

– ii. by implication or construction:

• if a lease is silent as to its term, but rent is paid on regular intervals (e.g., monthly), this creates an implied (e.g., month-to-month) periodic tenancy

• if an oral lease has a term of more than one year from the date of the agreement (and thus is unenforceable under the SOF), but the tenant makes periodic payments (e.g., monthly rent), an implied (e.g., month-to-month) periodic tenancy will exist
»> prior to acceptance of the first rent payment by the landlord, the parties have a tenancy at will

• if the landlord allows the tenant to HOLDOVER after the end of a lease (rather than evict) and accepts additional rent payments, an implied periodic tenancy arises

> > > ***if the original lease called for annual rent (EVEN IF PAYABLE IN MONTHLY INSTALLMENTS), the new tenancy is probably a year-to-year periodic tenancy (year-to-year maximum b/c of statute of frauds) - ONLY FOR COMMERCIAL LEASES (for residential, we stick with month to month)

> > > if the original lease called for monthly rent, the new tenancy is a month-to-month periodic tenancy

> > > landlord is entitled to raised rent in that situation SO LONG AS HE NOTIFIES THE TENANT of the higher rent BEFORE the expiration of the old lease

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14
Q

leaseholds - periodic tenancy (notice to terminate)

A

• b. Notice: notice to terminate is required (and probably must be in writing); unless otherwise agreed by the parties, the notice period must be equal to at least one rent “period” (e.g., one month for a month-to-month), except for year-to-year tenancies, which require only six months’ notice; the tenancy must end at the conclusion of a rent period

– L and T enter into a month-to-month tenancy on March 1. On May 15, T notifies L that she (T) wishes to terminate the lease as soon as possible. What is the earliest date T can legally terminate the lease?
• June 30

– Failure to provide proper notice constitutes an automatic renewal

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15
Q

leaseholds - tenancy at will (duration; notice; automatic termination)

A

– a. duration: there is no fixed duration; with some minor exceptions, a tenancy at will may be created only by an EXPRESS AGREEMENT of the parties
• If the agreement is silent as to duration and periodic rent payments are made and accepted by the landlord, this will create an
»> Implied periodic tenancy
• “To T as long as L and T desire” creates a
»> Tenancy at will
• “To T until L sells the premises” creates a
»> Tenancy at will

– b. notice: either party may terminate upon “reasonable” notice (under common law, no advance notice was required)
• to qualify as a tenancy at will, both parties must have right to terminate at will
• if the lease gives only the landlord the power to terminate, the tenant will have (as a matter of law) an “implied” power of termination

– c. tenancies at will terminate automatically if either party dies or the tenant attempts to assign her interest in the lease (in most states, a sublease by the tenant will not terminate a tenancy at will)

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16
Q

leaseholds - tenancy at sufferance (3 rules)

A

– a. duration: a tenancy in a party who holds over at the end of a lease; it lasts until the landlord elects to evict or hold the tenant to a new lease

– b. ***most common: If landlord accepts rent payments after the end of the lease, this will create an Implied periodic tenancy

> > > ***if the original lease called for annual rent (EVEN IF PAYABLE IN MONTHLY INSTALLMENTS), the new tenancy is probably a year-to-year periodic tenancy (year-to-year maximum b/c of statute of frauds) - only for COMMERCIAL LEASES; for RESIDENTIAL LEASES, we stick to M-T-M

> > > if the original lease called for monthly rent, the new tenancy is a month-to-month periodic tenancy

> > > landlord is entitled to raised rent in that situation SO LONG AS HE NOTIFIES THE TENANT of the higher rent BEFORE the expiration of the old lease

– c. If a tenant briefly holds over for reasons beyond her control (e.g., hospitalization), a new tenancy for years or periodic tenancy is not created, but the tenant owes rent for the holdover days.

17
Q

three duties of a tenant - what are they

A

– 1. tenant is liable for injury to licensees, invitees, and discovered trespassers as determined by the owner-occupier laws of tort law

– 2. tenant must keep the premises in reasonably good repair and must not commit waste (same duty as life tenants and co-tenants)

• 3. tenant has a duty to pay rent; if tenant fails to pay rent, landlord’s rights depend on whether tenant is still in possession

18
Q

three duties of a tenant - explain “tenant must keep the premises in reasonably good repair and must not commit waste (repairs; waste; fixtures; same duty as life tenants and co-tenants)”

A
  • distinguish routine repairs (on tenant) from ordinary wear and tear (on LL)
  • A lessee is more likely to be held liable for ameliorative waste than a life tenant or co-tenant
  • if premises are destroyed wholly without T’s fault, T may end the lease and is generally not liable for damages

• Removal of a “fixture” may constitute waste
– Tenant’s Rights/Duties in Fixtures
• A “fixture” is tangible, personal property that has been affixed to realty. To determine whether personal property has become a non-removable fixture:
»> look for an agreement among the parties as to removal of fixtures; if the parties have reached an agreement, it will control
»> if no agreement, look to the intent of the annexor of the fixture; if the annexor intended for the fixture to be permanent, it is now real property and the tenant may not remove the fixture without committing waste
»> if the intent of the annexor of the fixture is unclear, look to how much damage to the realty will result if the fixture is removed; if the damage is substantial, then it is probably a fixture and may not be removed; if not, it may be removed by the tenant, but the tenant must repair any damage to the realty

• Frequently Tested Issue: there is a strong presumption that trade fixtures may be removed by the tenant at the end of the lease
»> trade fixtures are those items installed by a lessee for the purpose of carrying on the lessee’s trade or business like McDonalds installing tables/chairs/machines/counters

19
Q

three duties of a tenant - explain “tenant has a duty to pay rent; if tenant fails to pay rent, landlord’s rights depend on whether tenant is still in possession”

  • landlord’s rights when tenant is in possession vs not in possession
  • 2 scenarios where tenant no longer required to pay rent
A

– a. if the tenant is still in possession, landlord may:
• i. Evict tenant using the applicable judicial process (e.g., unlawful detainer)
• ii. Continue the lease and sue for damages

– BUT THE LANDLORD MAY NOT
• Use self-help eviction techniques, such as changing locks, physical removal, calling police, or shutting off utilities

– b. if the tenant is no longer in possession, the landlord may (SIR):
• i. agree to a surrender (i.e., an express or implied agreement to terminate the lease with no further duties or liabilities by either party)
»> if the unexpired term of the lease is more than one year, the surrender must be in writing (SOF)
»> a surrender will be deemed to have occurred if the landlord personally occupies the premises after the tenant vacates

• ii. ignore the departure and hold tenant liable for entire lease
»> majority rule: the landlord is required to take REASONABLE MITIGATION EFFORTS (e.g., attempt to re-lease) before choosing this option

• iii. re-lease the premises and sue for a deficiency

– BUT, a tenant’s duty to pay rent ends where:
• (1) the ENTIRE leased premises are taken by eminent domain
»> for partial takings, the tenant must continue to pay the full rent but is entitled to a portion of the compensation award, unless the lease agreement provides otherwise
• (2) the premises are destroyed through no fault of the tenant

20
Q

landlord’s duties and obligations - duty to deliver

A

• 1. duty to deliver actual, physical possession to tenant at commencement of lease; failure to do so constitutes a breach of the lease
– Minority view: landlord is merely obligated to give tenant the legal right to possession (probably limited to commercial leases)

21
Q

landlord’s duties and obligations - implied covenant of quiet enjoyment (actual vs constructive eviction)

A

• 2. implied covenant of quiet enjoyment (implied in residential AND commercial leases); this covenant is breached by:

– a. actual, WRONGFUL eviction or exclusion by the landlord from the whole premises OR ANY PART THEREOF
»> ***for partial actual evictions by the landlord, the tenant may stay in the property and pay NO RENT

– b. constructive eviction requires three elements (SING):
• i. there must be a SUBSTANTIAL, CHRONIC INTERFERENCE that renders the premises unsuitable for occupancy; constructive eviction may arise only as a result of acts (or failures to act) on the landlord’s part (or someone acting on behalf of the landlord)
»> as a general rule, the landlord is not liable for the acts of third parties, such as other tenants, neighbors, or trespassers, except (1) the landlord has a duty to prevent nuisances on the premises; and (2) the landlord must control common areas. Thus, if the landlord rents to a nuisance (e.g., a tavern in a residential building) or if the interference is taking place in a common area, the landlord is liable.

  • ii. the tenant must give NOTICE to landlord and landlord must fail to remedy within a reasonable time
  • **iii. tenant must then VACATE the premises within a reasonable time (i.e., there can be no constructive eviction claims by tenants in possession)

**remember, this implied warranty runs with the land and applies to subsequent landlords! (same as all covenants running with the land)

22
Q

landlord’s duties and obligations - implied warranty of habitability

A

• 3. implied warranty of habitability (residential leases ONLY and it is NON-WAIVABLE): this warranty requires that the premises (as delivered and maintained) are fit for basic human habitation (often as set forth in the local housing, building, safety, and health codes)

– a. examples of breach of the implied warranty: no water, no heat in the winter, no plumbing, insect infestation.

– b. if the warranty is breached, tenant must notify the landlord of the breach and give the landlord a reasonable time to repair; if landlord does not make such repair, tenant has several options:
• i. Vacate the premises, terminate the lease, and recover damages
• ii. Repair the problem and deduct the cost of repair from rent
• iii. Pay reduced rent (i.e., FMV of premises with defect); the withheld rent should be deposited in an escrow account
• iv. Remain in possession and sue for damages

• **note: unlike constructive eviction, TENANT NEED NOT VACATE to collect damages!

**remember, this implied warranty runs with the land and applies to subsequent landlords! (same as all covenants running with the land)

23
Q

landlord’s duties and obligations - retaliatory eviction/other action; security deposits

A

• 4. retaliatory eviction/other action: in most jurisdictions, a landlord may not evict a tenant or take other punitive action (e.g., raise rent, refuse to renew lease) against a tenant for taking certain legal action, such as complaining to housing or building inspectors or asserting a claim (e.g., implied warranty of habitability) against the landlord
– in many jurisdictions, retaliation will be presumed if the punitive action occurs within a specified time period (e.g., six months) of the tenant’s complaint

• 5. security deposits: landlords often require security deposits to cover damages (e.g., waste, unpaid rent) to the premises beyond ordinary wear and tear. For residential leases, statutes in many states limit the amount (e.g., one month’s rent) that a landlord may require as a security deposit and require the security deposit be held in an interest-bearing escrow account.

24
Q

assignments vs subleases - distinguish

A
  • leases are freely assignable in whole or part by tenants and landlords, unless prohibited by the lease.
  • a transfer of the tenant’s entire remaining interest in a lease is an assignment; anything less than that is a sublease.
25
Q

assignments/subleases - restrictions; consent; waiver

A

• Restrictions on assigning/subleasing are strictly construed against the landlord

– The lease prohibits T “from assigning all or any portion of the leased property.” Nonetheless, T may sublease the premises

– The lease prohibits T “from subletting the leased property.” Nonetheless, T may assign the lease

– The lease prohibits T “from assigning or subletting all or any portion of the leased property without the written consent of the Landlord.” As a result, T may not sublet or assign the premises without the written consent of the Landlord.

• Does the Landlord have to act “reasonably” in withholding consent?
– Majority view: no, the landlord may arbitrarily withhold consent
– Trend: the landlord must act reasonably, particularly in commercial leases

– Waivers of restrictions on assigning/subleasing are usually found:
»> (1) where the landlord knows of an assignment but does not object (e.g., accepts rent payments from the assignee) OR
»> (2) where the landlord has agreed to prior assignments (unless—at the time of the prior assignments—the landlord expressly reserved the right to enforce the restriction as to future assignments)

26
Q

landlord tort liability for tenant and guests - rule and 6 exceptions

A
  • General Rule: Landlord has no liability for injuries to the tenant or the tenant’s guests caused by defects on premises.
  • Exceptions:

– a. dangerous conditions in common areas

– b. concealed or latent defects (i.e., hidden defects of which landlord is aware or should be aware)
»> ***landlord’s liability ends when he notifies tenant of the defect

– c. assumption of duty to repair by landlord (i.e., landlord or landlord’s agent negligently repairs the premises)

– d. public admission: short-term rentals of conventional halls, museums, etc.

– e. short-term (90 days or fewer) rentals of furnished dwellings

– f. landlord contracts to repair premises

27
Q

concurrent estates - partitions

A

– partitions in kind (of the actual land) are favored if possible - this terms the co-tenancy and divides the common property

– the alternative is forced sale and division of proceeds

– parties can usually ask for a voluntary partition

– a court will likely order a partition where co-tenants cannot agree on the use of the land

28
Q

rules for assignment by tenant

A

Assignment:

• assignee stands in shoes of original tenant and thus the assignee and LL are in POE (ie. each is liable to the other for ALL covenants running with the land)
»> so rent payments are a covenant running with the land, and thus the assignee must pay rent directly to the LL
»> **only in POE for the time period that the assignee has the property (i.e. not after he has reASSIGNED), unless said assignee made a separate agreement to pay rent, and thus remains in POC at that point

• after assignment, the original tenant and landlord continue to be in privity of contract (and thus the assignOR is secondarily liable)
»> unless there is a novation (which is never presumed).

29
Q

prior assignee or sublessee assumption of rent payments; excess rent payment; paying on behalf of another

A

• If a prior assignee (or sub-lessee) expressly assumes the obligation to make rent payments to the landlord, the landlord may be able to sue the prior assignee (or sub-lessee) as a third-party beneficiary of the assumption agreement.
»> **otherwise, without an assumption of the rent, the landlord and prior assignee (or sublessee) are not in POC or POE because sublessee is only there temporary – so the landlord could not successfully sue them for rent

  • If an assignee or sub-lessee agrees to pay rent in excess of that owed by the tenant to the landlord, the excess rent belongs to the tenant, not the landlord.
  • **if the tenant pays rent on behalf of an assignee, they can turn around and sue the assignee for that money because tenant was merely acting as a surety
30
Q

rules for sublease by tenant

A

Sublease:

• result of a sublease is that the LL and sublessee are neither in POE or POC - instead, the sublessee is only liable to the tenant in POC
»> **this means that sublessee is not personally liable to LL for rent or for the performance of any covenants in the main lease unless the sublessee EXPRESSLY assumes the covenants
»> sublessee can likely only enforce the implied warranty of habitability against the LL

  • sublessee will usually pay rent to the original tenant who then pays the LL
  • valid termination of the lease by the LL also automatically terms the sublessee
31
Q

rules for assignment by LL

A

• once tenants are given reasonable notice of assignment, they must pay rent to new owner as the LL

• the BENEFITS AND BURDENS of all tenant covenants that touch & concern the land runs with the LL’s estate to the new owner
»> **the original LL also REMAINS LIABLE on all of the covenants they made in the lease