LandLordTenant_Unit3 Flashcards
Implied Warranty of Habitability
Implied majority rule in residential leases (tenancies).
Landlord has to maintain bare living conditions
Landlord has to deliver and maintain safe and healthy living conditions and provides duty to make certain repairs to maintain these conditions.
Note: In the event of total destruction, no fault of tenant or landlord, then the landlord has not duty to rebuild. Unless the landlord agrees to do it EXPRESSLY in the lease.
Contract theory: Excuses tenant from paying rent
In states where you have IWH, then you don’t need to have constructive eviction.
Nonwaivable! you cannot waive IWH in contracts.
Texas has recognized IWH in common law and by law.
Remedies of Breach for Implied Warranty of Habitability
1) Continue to pay rent, under property law, and then bring an affirmative action to establish the breach and receive a reimbursement for excess rents paid.
2) Stop paying rent until landlord makes the repair.
Calculating Damages:
- How to determine excess rent, “percentage diminution” : What percentage of the property overall is not usable and then that is considered the excess rent.
- Other damages: If these damages are foreseeable of the landlord’s breach then the tenant can recover for personal injury, property damage, relocation expenses, or other similar injuries.
- Punitive Damages: If it’s an egregious breach then some courts allow punitive damages - IF IT’S REALLY TERRIBLE.
Unlike constructive eviction, the tenant doesn’t have to move out to recover damages from rent.
pg. 59 of textbook
Economic Effect of Habitability
Landlords will abandon property instead of renting it out because it’s too expensive to maintain habitability. The statutory laws show a prima facie case of breach of warranty of habitability but it can be proved in other ways.
Implied Warranty of Suitability
pg 64-65
Contract Theory, modern view that contracts and property law are linked together because the value of the property is more valuable now then when property law applied during agrarian days. Rule of reason based on factors of suitability
Note: In the event of total destruction, no fault of tenant or landlord, then the landlord has not duty to rebuild. Unless expressed in lease. The expression must be VERY express.
Applies to commercial leases. This warranty means that at the inception of the lease there are not latent defects in the facilities that are vital to the use of the premises for their intended commercial purpose and that these essential facilities will remain in a suitable condition. If, however, the parties to a lease expressly agree that the tenant will repair certain defects, then the provisions of the lease will control.
Waivable by express agreement in lease.
How to determine if there is a breach of warranty of suitability:
a. Nature of the defect: What has gone out of repair, what hasn’t gone out of repair
b. Effects on the use of premises
c. Age of the structure
d. Length of time the defect persisted
e. The amount of rent
f. The area in which the premises are located
g. Whether tenant waived the defects
I. Whether the defect resulted from any unusual or abnormal use by the tenant
Express Covenant to Repair by Landlord
Residential: The landlord cannot delegate responsibilities to repair fore essential elements within warranty of habitability, unless the tenant caused the problems.
Commercial: Leases often contain express agreements (errr, express/implied agreements) to maintain repair and rebuild the premises when they are damaged. 1. Common law rule: In the event of complete destruction, the landlord is not required to rebuild unless he is obligated EXPRESSLY to do so by the terms of the lease.
Covenant by Tenant to Repair
The common law says that regardless of the cause of the destruction that the tenant has a duty to rebuild for the warranty of redelivery and repair.
Difference between Rebuilt and Repair
Repair: To mend an old thing but to restore it to a sound state something which has become partially diliapidated
Rebuild: Create something that doesn’t exist
Right of First Refusal
The tenant has the first right to decide to buy the apartment or not when the landlord is planning to sell the apartment.
Privity of Contract/Estate
The relationship between the parties in a contract, tells us who has the obligations to perform and who has the rights to enforce the performance of the obligations.
In Sublease Agreements: Privity of contract and privity of estate begins with the landlord and original tenant. When the original tenant assigns to a new tenant as a sublease the Privity of Contract remains with the original tenant but privity of estate moves to the new tenant.
NOTE: The subletter can also agree to assume all the lease obligations so that they also have privity of contract with the landlord. The original tenant will always remain as a Surety to pay rent, unless the landlord does something (expressly or implicitly) to release original tenant from the original privity of contract.
Assignment v. Sublease
Majority Rule: In an assignment one transfers his whole estate "without reserving a reversionary interest to himself and privity of estate is immediately created between his transferee and the original lessor"
Minority Rule ("intent" rule of reason): What are the factors: What did parties intended? Did the tenant maintain any reversionary interest, even for a day?Reversion
The premises will go back to the landlord at the end of the rent term.
Renewal Option
At the end of a lease, the tenant has a right of first renewal before the landlord offers it to other people.
Percentage Rent
In a retail lease, there is a base rent and then a percentage of revenue pays the landlord. It allows the landlord to protect himself against inflation and to participate in the good fortune of the tenant.
Tenant’s Right to Assign or Sublease
If the lease is silent then the tenant has the absolute right to assign or sublease the premises, because it’s in the best interest of society to fully utilize the property.
It has long between the law that covenants seeking to limit the right to assign a lease are “restraints which courts do not favor.
EXCEPTION: If, however, the expectations of the landlord are substantially dependent upon some special skill or trait of the lessee, the lack of which might endanger the lessor’s legitimate contractual expectations, then it may be appropriate to find the existence of an implied covenant limiting the right to assign, for in such circumstances no reasonable person would enter into the contract without assurance that the tenant could not be replaced by an assignee lacking the requisite skills or character traits. Even if such a case, however, the implied restrictions must of course be limited to the extent possible without destroying the landlord’s legitimate interests.
Consent-to-Transfer
Common law/Old Rule/Majority Rule: When there is a silent consent rule, the landlord can withhold consent for any reason and no reason.
Modern Trend: To impose a standard of reasonableness on the landlord in withholding consent to a sublease unless the lease expressly states otherwise.
- What constitutes a reasonable objection to an assignment or sublease under a consent-to-transfer clause? It must be based on commercially viable reasons
