Landlord Tenant Relationship

Question 1

What are the four tenancies in leashold estates?

Answer 1

Term of years
Period Tenancy
Tenancy at Will
Tenancy at Sufferance

Question 2

Explain a term of years lease

Answer 2

Lasts for some fixed period of time or computable by a formula

+ Common law: no limit on number of years
+ In some US states: fixed period limited
+ Automatically terminates when the term of years expires
+ Can also be terminated due to a condition/event
+ SoF applies b/c of one-year rule

Question 3

True or false: Racially restrictive covenants are invalid

Answer 3

True

Originally used common law on alienation and the 14th Amendment to protect minorities. Now covered by the FHA.

Question 4

What are the exceptions to FHA under §3603?

Answer 4

Roommate

Owner has three or less units/homes for sale/rent

Mrs Murphy boarding house (no more than four families under one roof, where owner lives on the property)

Question 5

What are the protected categories under FHA?

Answer 5

Protected Categories: Race, Color, Religion, Sex, Familial Status (only covers parent-children relationships), and National Origin.

Question 6

What are some of the unprotected categories under FHA?

Answer 6

Age, Sexual Orientation, Gender Identity, Marital Status, Immigration Status, Felony Status, Pets (unless a service animal, which is linked to handicap)

Question 7

What is the difference between a sublease and an assignment?

Answer 7

Sublease: The transfer of part of a leasehold interest from a tenant to a third party, in which the tenant keeps a remainder interest in the leasehold estate, so that the property will go back to the tenant, before eventually reverting to the landlord. ANYTHING LESS THAN THE WHOLE THING.

Assignment: The transfer of an entire leasehold interest from a tenant to a third party. ALL THE TIME left on the lease = the whole thing.

Question 8

What is privity of estate in leasehold estates and why does it matter?

Answer 8

Privity of Estate: A relationship that exists between two people who have a successive interest in the same property.

+ Possession – a tenant in possession is always in privity of estate.

+ Who is in privity of estate with whom? Depends on whether it is a sublease or assignment:

• -> Sublease = privity of estate between the original tenant and landlord.
• -> Assignment = privity of estate with assignee and landlord.

Must have some kind of privity between the party suing and the party to be sued for the suit to stand in court.

Question 9

What is privity of contract in leasehold estates and why does it matter?

Answer 9

Privity of Contract: The relationship between two parties to a contract that allows each party to enforce the terms of the contract against each other.

A lease creates privity of contract:
If a tenant subleases or assigns at minimum part of the lease, and the subsequent tenant agrees in a separate contract to the original terms of the contract, the subsequent tenant has privity of contract with the landlord.

Privity of contract is maintained between the original tenant and the landlord unless there is novation and release (substitution of party and release of the original party).

Must have some kind of privity between the party suing and the party to be sued for the suit to stand in court.

Question 10

True or false: In assignment, privity of estate between lessor and lessee is terminated but privity of contract remains and is unaffected

Answer 10

True. POC would only be terminated if express release.

Question 11

True or false: In sublease, neither privity of estate or contract between lessor and lessee are affected

Answer 11

True.

Question 12

What are the minority and majority rules with regards to assignments/subleases? What are the policy arguments around both?

Answer 12

Majority rule: Landlord can subject subleases and assignments to arbitrary restraints.

+ Colorado falls under majority
+ Policy: Judicial efficiency, economic efficiency (let people do business and keep the courts out of it)

Minority rule/Kendall: Objections need to be commercially reasonable:

+ Efficiency: Landlords need to mitigate their damages
+ Fairness: good faith and fair dealing, reasonable person standard
+ Efficiency: The modern world where we live requires more alienability. Look at scope, duration, and effect of sale of land alienation restraints have an effect.

Question 13

What are some examples of unreasonable commercial objections in a sublease/assignment?

Answer 13

Examples of commercially unreasonable factors:
+ To charge more rent (you should have built rent increases in your initial contract)
+ Personal taste
+ Convenience
+ Sensibility

Question 14

What are some examples of commercially reasonable objections in a sublease/assignment?

Answer 14

Examples of commercially reasonable objections:
+ Bad credit and financial responsibility
+ Character/proposed use of space, ex: Porn shop in a Christian mall

+ Nature of the occupancy: Competing tenants, This type of business doesn’t “fit” in the space, making sure the premises as-is are suitable for the proposed use

Question 15

True or false: Quiet Enjoyment as an argument against landlords is typically used in commercial lease disputes

Answer 15

True. Covenant of quiet enjoyment: A landlord has the duty to repair and provide suitable premises.

Question 16

List and explain the three different applications of the covenant of quiet enjoyment. Is this available to commercial tenants?

Answer 16

Actual eviction: If a tenant is actually evicted, they have no obligation to pay rent. Tenant is actually evicted when the premises if no longer suitable/habitable.

Constructive eviction, Requires a three-part test:

1) Condition of premises amounts to a breach of the covenant of quiet enjoyment.
2) Breach is substantial enough to justify the tenant leaving (objective, reasonable standard)
3) T must actually leave within a reasonable period of time:

Constructive eviction is available to commercial tenants

Question 17

How do you tell if a residential landlord has violated the Implied Warranty of Habitability?

Answer 17

How to tell if it violates the black letter law:
+ Is it a substantial violation of a housing code?
+ Does it affect health and safety of tenant?

(This is an objective test)

Question 18

True or false: Implied Warranty of Habitability is a better option for residential tenants in a dispute

Answer 18

True. A better option for residential tenants to seek damages

IWH is currently not applicable to commercial property:
Tenant will usually only win if they asserted specific needs and the landlord agreed to it, and the landlord did not uphold his part of the bargain.

Question 19

What is the procedure to a IWH claim?

Answer 19

+ T has to give landlord notice of problems (in writing):
+ Landlord gets reasonable time to repair.
+ Landlord bears the costs for a reasonable alternative for the tenant. Ex: paying for a hotel. BUT the landlord gets to choose the alternative (landlord would get to pick the hotel).

+ Common law requires tenant to give notice of the municipal authority for a health violation.

Question 20

What are a tenants remedies under IWH?

Answer 20

+ Tenant may stay and withhold rent: IWH acts as a shield for a non-payment suit.

+ Compensatory damages for discomfort and annoyance.

+ Punitive damages, if the violation is horrendous.

+ Offset any repairs taken by the tenant or contractors hired by tenant:

+ Have the amount the tenant paid for repairs/contractors deducted from rent.

+ Tenant can stay, pay rent, sue for damages, injunction, term of lease.

Question 21

Explain the policy behind IWH and remedies available to tenants

Answer 21

+ Empowers tenants to exercise remedies with greater ease

+ Remedies expanded for T’s options outside the lease

+ Societal wealth maximization

Question 22

Explain some of the policy concerns of IWH and remedies available

Answer 22

+ IWH is supposed to push up quality of low-income housing by forcing the private sector to maintain a certain level of suitability and habitability:

+ Evidence to suggest it has the opposite effect.

+ Unintended consequences of removing the cheapest housing by making sure housing is up to a certain standard:

+ Makes housing unavailable for people with low incomes

Question 23

Larry leases an apartment to Tony for a term of 4 years at a monthly rent of $1,000. The lease provides that “Tony covenants to pay said rent in advance on the first of each month. Tony shall not sublease or assign without the prior express consent of Larry.” One year into the lease, with Larry’s permission, Tony transfers all his interest to Urs for the balance of the lease. Urs agrees in writing to assume all covenants in the original lease. Six months later, Urs orally assigns his entire interest to Vic, without Larry’s permission. Vic stops paying rent to Larry. Whom can Larry sue?

Answer 23

L - T = TOY for 4 years, privity of contract and privity of estate

L – T – U = assignment between Tony and Urs // “for the balance of the lease” // privity of estate and privity of contract

L – T – U – V = assignment between Urs and Vic // “his entire interest” // privity of estate (possession) and privity of contract

Larry can sue Tony, Urs, and Vic for the rent unpaid by Vic. Privity of contract remains between Larry and Tony even after Tony’s assignment to Urs because there was no novation. Privity of contract remains between Larry and Urs even after Urs’s attempted assignment to Vic because there was no novation. Privity of estate exists between Larry and Vic because Vic was in possession of the property. Privity of contract between Larry and Vic is questionable since not in writing, however Larry only need either privity of contract or estate to sue, and he has privity of estate. (99 words)

Question 24

On October 1, L leases Whiteacre “to T for one year, beginning October 1 at an annual rate of $5,000.” T pays the rent. On the following September 30, T moves out without giving L any notice.

Answer 24

L has no rights against T because the “term of years” expired on September 30.

The tenancy created here is a term of years, which is a term of art for any lease with a specific duration (e.g, one year, one year and 2 days, 4 months or 4 weeks would all be examples of a term of years lease. The specified term year of one year expires on September 30 by its terms. T had no obligation to give notice of termination.

Question 25

T, a month-to-month tenant, notified L on November 16, 1997, that she would vacate Whiteacre on November 30, 1997. T’s lease required her to give L 30 days notice to vacate. T vacated on November 30, 1997 and paid no further rent to L. L, after reasonable efforts, finally re-lets Whiteacre to a new tenant on April 1, 1998. L sues T for lost rent from December 1997 through March 1998.

Answer 25

L gets one month additional rent because notice that was not good for November 30 was certainly good for December 31.

A month to month tenancy may be terminated by one month advance notice. Here T gave notice too late to terminate by Nov. 30, but it would certainly meet the 30 day requirement for a termination by December 31, the next month. So, T owes rent for one month. L had a duty to mitigate damages by making reasonable efforts to re-let, which he met. However, he is entitled to recover rent for the month for which the notice to terminate was ineffective.

Question 26

L regularly rents one-bedroom apartments to households of two adults. L regularly rents two-bedroom apartments to households of two adults and two children. However, L will not rent a one-bedroom apartment to a household of one adult and one child nor will she rent a two-bedroom apartment to a household of one adult and three children. 42 U.S.C. 3604(a) prohibits discrimination based on “familial status.” The Fair Housing Act defines “familial status” as: [O]ne or more individuals (who have not attained the age of 18 years) being domiciled with– (1) a parent or another person having legal custody of such individual or individuals; or (2) the designee of such parent or other person having such custody, with the written permission of such parent or other person. Has L violated the Fair Housing Act?

Answer 26

Probably
If the effect is that L is discriminating against single-parent households, then the answer is probably yes. In the situation of the one adult, plus 3 children, there may not be a violation of law if local laws proscribes the number of bedrooms for children over a certain age (many cities do).

Question 27

L refuses to rent to a heterosexual couple because they are unmarried. Has L violated the Fair Housing Act?

Answer 27

No, L has not discriminated on any basis prohibited by the Fair Housing Act.

Familial status relates to the parent-children relationship. Marital status is not covered.

Question 28

L refuses to rent to a gay couple because he objects to the couple’s sexual orientation. Has L violated the Fair Housing Act?

Answer 28

No, L has not discriminated on any basis prohibited by the Fair Housing Act. Sexual orientation is not protected under FHA.

Question 29

L refuses to rent to a gay couple for fear of AIDS. Has L violated the Fair Housing Act?

Answer 29

Probably L has discriminated because of a handicap
Yes!

Note, subsection F on page 476 tells you that AIDS is included in the definition of handicap.

Question 30

L leases to T for a term of three years at a monthly rent of $300. One year later, T “subleases, transfers and assigns” to T1 “for a period of one year.” T1 has never met L and does not know who she is. From that point, neither T nor T1 pay rent to L. What are L’s rights against T and T1, if any?

Answer 30

L can sue T, but not T1.

Because T transfers to T1 less than the full term of the lease (one year out of the two remaining), this is a sublease. In subleases, only the original tenant is liable, so L may sue T.

Question 31

L leases to T for a term of 3 years at a monthly rent of $300. The lease provides that “T hereby covenants to pay said rent in advance on the first of each month.” The lease also provides that T shall not sublease or assign without the express permission of L. Six months later, with L’s permission, T transfers all her interest in the property to T1 for the balance of the term. Thereafter, T1 pays rent directly to L for several months, then defaults. L then sues T for the rent due. Does L recover?

Answer 31

Yes, because L is still in “privity of contract” with T.

In the absence of an express novation and release (substitution of new party and release of the original obligor), the original contractual obligation T assumed to pay rent is still binding. L’s consent to the assignment doesn’t constitute a release. So, T is still liable if T1 doesn’t pay rent. However, T1 is liable for rent too under privity of estate.

Question 32

L leases Whiteacre to T for a term of three years at a monthly rent of $600. In the lease, T covenants to pay rent in advance on the first of each month. Six months later, T assigns her entire interest to T1. T1 agrees in the instrument of assignment to assume all covenants in the original lease between L and T. Three months later, T1 assigns her entire interest to T2. Three months after that, T2 assigns her entire interest to T3, who moves in. T3 then stops paying rent to L. Who can L sue?

Answer 32

T, T1 and T3.
Fantastic! Great work. T2 is the only one who lacks privity (no privity of estate because not in possession and no privity of contract becasue T2 did not expressly assume the obligation to pay rent, like T1 did. T1 is liable on the basis of that contractual assumption. T is liable on the original contract because there has no express release by L. T3 is liable based on privity of estate because T3 is in possession.

Question 33

L owns a high-rise apartment building. L’s maintenance and janitorial staff go on strike for two weeks. The building’s incinerators are inoperative as a consequence of the strike; tenants must take their garbage to the curb in paper bags supplied by L. City sanitation workers refuse to cross the striking employees’ picket lines. Trash piles up to the height of the building’s first floor windows. The garbage is stinky and results in a declaration of a health emergency by the city. Routine maintenance and extermination service is not performed during the strike, and rats and vermin become a problem. Has L breached the implied warranty of habitability?

Answer 33

Park West Management Corp. v. Mitchell: this is a breach of implied warranty of habitability. Damage formula is difference between the fair market value of the premises if they had been as warranted, and the value of the premises during the period of the breach

Question 34

T resides in a fancy apartment building in the Upper East Side of NYC, he has a big rent bill every month. T’s lease provides for a lot of amenities: attendant at the door, elevator, pool, gym inside the building. State law requires leased dwellings be fit for habitation, safe, and healthy, in accord with “the uses reasonably intended by the parties.” Does this description extend the implied warranty of habitability so as to encompass the services and amenities that T reasonably expected to get according to the terms of his lease? Why would that matter?

Answer 34

Solow v Wellner = if there is a claim by a tenant re: breach of warranty of habitability, how do you calculate the damages if the court finds in favor of the tenant? The difference between the fair market value of the premises if they had been as warranted, as measured by the rent reserved under the lease, and the value of the premises during the period of the breach.

Question 35

L offers a small, run-down house for rent at $1000 per month. T inspects the premises, finds a number of defects and tells L that she will take the place as-is but for $50/month “because that’s all it’s worth in its condition.” L agrees and T takes possession, subsequently she fails to pay any rent. In an eviction suit by L, may T assert breach of implied warranty of habitability as a defense?

Answer 35

Haddad v Gonzalez (in favor of the tenant due to the level of uninhabitability) and Foisy v Wyman (remanded to trial for determination of inhabitability)

Question 36

L leases an apartment to X, a registered sex offender. T, who had already leased an adjacent apartment for a one-year term, learns of the lease to X and notifies L in writing that she wants L to terminate her tenancy. When L does not respond, T vacates and sues for the return of her security deposit; L counterclaims for the balance of the rent due on the original lease. Did L, by leasing to X, breach the implied warranty of habitability?

Answer 36

Knudsen v Lax When the tenant sought the landlord’s consent to move, the landlord breached his implied duty to act in good faith by refusing to consent and seeking rent for the lease’s unexpired term. The landlord could not restore the tenant to the peaceful and quiet enjoyment of the leasehold or observe the landlord’s duties under the warranty of habitability and to protect the tenant from a third party’s foreseeable criminal conduct by forcing the offender to move because the landlord was statutorily barred from doing so, so he should have let the tenant move without further rent obligations so he could afford to move his family to safer surroundings.

Question 37

True or false: Implied Warranty of Habitability is a default rule

Answer 37

False. All residential rentals include an implied warranty of habitability, which cannot be waived or disclaimed.

Question 38

T has a term of years lease from L. T vacates the premises prior to the end of the term and stops paying rent. In a subsequent suit by L against T for unpaid rent, T asserts constructive eviction and claims that L breached the covenant of quiet eviction. What would the results be if… L fails to to respond to repeated complaints about a non smoking tenant when cigarette smoke from neighboring units seeps into the tenant’s unit.

Answer 38

(Landlord wins in DeNardo v. Corneloup whereas the tenant won in Merrill v Bosser)

Question 39

T has a term of years lease from L. T vacates the premises prior to the end of the term and stops paying rent. In a subsequent suit by L against T for unpaid rent, T asserts constructive eviction and claims that L breached the covenant of quiet eviction. What would the results be if… The building in which T leases an apartment from L has been the site of criminal activity — burglary and vandalism by unknown third parties. L installs deadbolt locks on all entrance doors and hires private security guards, but the problems continue.

Answer 39

(Landlord wins in a commercial lease case Charlotte Eastland Mall v Sole Survivor and in a residential lease case, Sciascia v Riverpark Apts, courts did not think vandalism or theft qualify for constructive eviction).

Question 40

T has a term of years lease from L. T vacates the premises prior to the end of the term and stops paying rent. In a subsequent suit by L against T for unpaid rent, T asserts constructive eviction and claims that L breached the covenant of quiet eviction. What would the results be if… An office space leased by T, a gynecologist, whose practice includes performing elective abortions, has been the target of demonstratioins. During the protests, singing and chanting demonstrators picket in the parking lot and inner lobby. They approach patients to speak to them, distribute literature, discourage patients from entering and accuse T of killing babies. Despite many complaints by T, L has done nothing.

Answer 40

When a landlord fails to act to help a tenant enjoy and use his property, s/he is liable. Fidelity Mutual Life Ins Co v Kaminsky)

Question 41

What if… L and T enter into a rental agreement that begins on January 1. On that day, T goes to take possession of the property, only to find another tenant already in possession (holding over). Whose problem is this, L or T?

Answer 41

American rule: Landlord is obligated only to deliver legal possession, aka the legal right to possession, when the lease begins. Tenant’s responsibility to oust the other AP’er or holdover. Or to sue the person occupying the premises for damages. Why? Tenants have sufficient legal and equitable remedies available to them, more so than a landlord

English rule: Landlord is obligated to deliver legal and actual possession. Why? Landlord has greater ability to guard against risks of trespassers and holdovers. Most landlords these days are sophisticated when it comes to evictions and can bear the costs. more common*

Question 42

L leases to T for a term of three years (36 months) at a monthly rent of $1000. In the lease, “T covenants to pay the rent in advance on the first of each month” and also “covenants to keep the leased premises in good repair”. Six months later, T assigns her entire interest to T1, who agrees in the instrument of assignment to “assume all the covenants in the lease” between L and T. Three months later, T1 assigns his entire interest to T2 and three months after that T2 assigns his entire interest to T3. T3 defaults on rent and fails to keep the premises in good repair. Who should L sue for damages?

Answer 42

Step 1: Who’s involved and what do they have?
T: TOY for 3 years under privity of contract (36 months)
T1: Assignment for for 30 months, assumes all covenants under privity of contract
T2: Assignment for 27 months, no privity of contract
T3: Assignment for 24 months, no privity of contract, yes privity of estate because no gap in time between T3’s possession and landlord

Step 2: Determine liability between each party and the landlord
You only need one between privity of estate (NO GAP IN TIME) and privity of contract (NO PEOPLE BETWEEN)
T: Yes to liability because of privity of contract
T1: same as T1
T2: No liability because of lack of privity of estate (there’s a gap in time) and lack of privity of contract (b/c T2 didn’t assume covenants)
T3: Liable because of privity of estate (no people between T3 and landlord)

IF T2 subleased to T3 in the situation above, the ownership and liability would be different!
T3: Sublease, no liability to landlord because there’s no privity of contract or estate

Question 43

L leases to T for a term of three years at a monthly rent of $1000. One year later, T “subleases, transfers, and assigns” to T1 for “a period of one year from the date.” Thereafter, neither T or T1 pays rent to L. What rights has L against T? What rights does L have against T1?

Answer 43

L to T: 36 months TOY with POC and POE
T to T1: 24 months Sublease (less than whole) with POE

L can sue both T and T1. T1 still has possession of the property, so privity of estate exists between L and T1. T and L still have privity of contract, since T did not sign a novation waiving all rights to the lease.

Courts only require privity of contract or privity of estate to pursue monetary damages.

Question 44

On October 1, 2019, L leases Whiteacre “To T for one year, beginning October 1.” On September 30, 2020, T moves out without giving L any notice. What are L’s rights?

What if the lease had read, “To T from year/year beginning October 1?”

Answer 44

This was a term of years lease, and no notification is required. The term expires automatically.

Then T would need to provide six months’ notice.

Question 45

Amy, Brett and Cathy own a large house – Blueacre – as joint tenants. In May 2004, Amy comes home and discovers that her living room has been transformed into a bookstore specializing in legal thrillers. She encounters Brett in the kitchen and asks him about the bookstore. He tells her he has leased the living room to Dora for two years at $600 per month, payable on the first of each month. Dora runs the bookstore. Brett shows Amy the lease which includes a provision giving Brett the power to refuse Dora the right to sublease or assign her interest. Amy hates thrillers in general and despises legal thrillers in particular. She is so disgusted with Brett that she quitclaims her interest in Blueacre to Edward. Edward moves into a top floor bedroom and is not heard from again. Cathy, on the other hand, gets along with Dora and spends a lot of time in the bookstore. After a year, Dora asks Brett and Cathy if she can transfer her lease to Franco, who wants to turn the living room into a self-help bookstore. Cathy says absolutely no, that she will not allow a self-help bookstore in her living room. Brett says nothing. Dora moves out. Franco moves in.
Franco writes Brett a check for $600. Brett cashes it. Cathy threatens to sue Franco to cancel the lease. All the stress causes Brett to die of a rare condition. Brett leaves a will devising all his property to Cathy. Cathy comes to your office and asks you whether she should file suit against Franco and what she should ask for by way of relief. What can you tell her?

Answer 45

Cathy, do not fret about Franco, since his lease is terminated with Brett’s unfortunate passing.
Let’s first address what interest you had when you, Amy and Brett first bought Blueacre together: That was a JT with ROS.
Even though it was annoying, Brett’s lease to Dora was within his rights of co-ownership. Dora’s lease does not sever the JT you three already created. The majority of courts follow lien theory, which states that unless the actual title is transferred between parties, the unity of title is not severed. The interest between Brett and Dora was a term of years lease for two years, and as co-owners you all are entitled to a certain % of Dora’s monthly rent payments.

Once Amy quitclaimed her interest in Blueacre to Edward, her JT was severed because it violates the unity of time. Therefore, Edward had a 1/3 interest in Blueacre as a TIC whereas you and Brett still share a JT at 1/3 each.

When Dora transferred her lease to Franco, it isn’t completely clear if this was an assignment or a sublease. The majority of courts give landlords the right to refuse assignments and subleases, however some courts actually require a commercially reasonable excuse to deny tenants a sublease or assignment. Regardless, Franco moved in and paid rent, which Brett accepted. You as a JT and Edward as a TIC should be privy to a % of Franco’s rent payment.

The good news: Now that Brett is deceased, the lease agreement (whatever it was) between Brett and Franco is now void, since that is the rule of law in JT’s involving a third party lease. If you want to eject Franco from Blueacre, you have the right to do so. However, if you want to renegotiate a brand new lease with terms that satisfy you, you have the right to do so as a 75% owner of Blueacre. As JT’s, you and Brett shared ROS and as the survivor, you get Brett’s share of the property.