Leasehold Estates Flashcards
Leasehold Estates
An estate in which the tenant has a present possessory property interest and the landlord has a future interest (reversion).
Four leasehold estates:
1) Tenancy for years
» Lasts for a fixed period of time.
» Requires a definitive beginning and end date.
» If duration is longer than one year, lease must be in writing (required under SoF)
» Terminates automatically at the end of the fixed period.
* No notice is required.
» Also referred to as “estate for years,” “term for years,” or “fixed term tenancy.”
2) Periodic tenancy
» Tenancy estate that repeats until terminated/ Continues for successive intervals until properly terminated.
3) Tenancy at will
» No fixed duration.
» Either party can terminate at any time without notice.
4) Tenancy at sufferance
» Tenant has possession by virtue of wrongfully remaining after termination of a lease (holdover tenant)/ Tenant wrongfully holds over past lease expiration.
» Landlord proceeds to recover rent.
» Terminates when Landlord moves to evict or holds T to new tenancy.
Periodic Tenancy
A leasehold that is continuous for successive intervals (e.g., weeks or months) until either party gives notice of termination
Creation—can be express, implied, or by operation of law
• Express agreement—conveyed to tenant for agreed interval
• Implication—a lease that does not specify duration, but provides for rent to be paid at set intervals
• Operation of law—two situations:
1) Invalid lease—if tenant takes possession despite an invalid lease (e.g., lease violates SoF), periodic tenancy arises upon landlord’s acceptance of payment.
• Period of the tenancy is determined by the period the payment covers
2) Holdover tenant—if landlord accepts rent from a holdover tenant, a periodic tenancy arises for the period the payment covers
Termination—tenant must give proper notice, which requires:
1. Sufficient time—tenant must give notice one full period in advance/ at least equal to length of period at common law; year-to-year tenancies require six-month notice under common law, one month under the modern view.
2. Effective date—effective date of termination must be at the end of the period of the tenancy.
Note—parties can agree to modify these requirements
Tenancy at Will
A tenancy with no fixed duration, terminable by either party at any time
Creation—express agreement
• Without an express agreement, courts will treat the lease as an implied periodic tenancy
Termination—by will or operation of law
• By will—either party can terminate the lease at any time. But today, in most states, notice and a reasonable demand to vacate the premises is usually required.
• By operation of law—occurs upon any of the following:
1. Death of either party
2. Waste by the tenant
3. Assignment by the tenant
4. Transfer of title by the landlord
5. Lease by the landlord to a third party
Tenancy at Sufferance
A default tenancy that arises when a tenant continues to possess property after the lease expires (i.e., a holdover tenant).
Creation—tenant holds possession beyond lease expiration.
• The expired lease’s terms and conditions automatically carry over to the tenancy at sufferance.
Landlord options:
1) Sue to evict, or
2) Impose a new periodic tenancy
» Raised rent—landlord can demand higher rent for both the holdover period and any new periodic tenancy if he gave notice of the increase before the lease expired
» Commercial leases—if expired lease was for one year or longer, the new periodic tenancy can be year-to-year
Exception—imposing new periodic tenancy must be reasonable
• New periodic tenancy is unreasonable if:
» Tenant only remains in possession for a few hours
» Tenant is not at fault for delay in vacating (e.g., illness)
» Seasonal leases (e.g., ski cabin, beach house)
Tenant’s Duty to Repair if Lease Silent
• Maintain premises.
• Make routine repairs.
• Not ordinary wear and tear repairs.
• Don’t commit waste.
Tenant’s Duty to Pay Rent
If Tenant breaches and remains on premises:
• Evict
• Continue relationship and sue for rent
• No self-help
If Tenant breaches and is out of possession:
• S — surrender: end lease;
• I — ignore: do nothing (hold Tenant liable for rent);
• R — relet: new lease (hold Tenant liable for deficiency).
Tenant’s Duties at Common Law
Duty to repair—can be largely modified by lease terms:
•Tenant must maintain premises and make ordinary repairs
» Residential tenants’ duty to repair is modified by the implied warranty of habitability.
•Tenant must not commit waste—three types of waste:
1. Voluntary—overt, harmful acts (e.g., removing fixtures)
2. Permissive—neglect
3. Ameliorative—alterations increasing property value
•Destruction of premises without fault of landlord or tenant
» Common law—tenant held liable for any loss
» Modern law—tenant can terminate lease
Duty to pay rent—tenancy at sufferance arises upon breach
Duty to not use property for illegal purposes—if tenant uses premises for an illegal purpose, landlord may terminate lease or obtain damages and injunctive relief
• Occasional, minor illegal activities do not constitute a breach
Liability to third parties (in tort):
• Tenant may be liable for injuries to third persons from the dangerous conditions within the tenant’s control
Tenant’s Duties at Common Law
Duty to repair—can be largely modified by lease terms:
•Tenant must maintain premises and make ordinary repairs
» Residential tenants’ duty to repair is modified by the implied warranty of habitability.
•Tenant must not commit waste—three types of waste:
1. Voluntary—overt, harmful acts (e.g., removing fixtures)
2. Permissive—neglect
3. Ameliorative—alterations increasing property value
•Destruction of premises without fault of landlord or tenant
» Common law—tenant held liable for any loss
» Modern law—tenant can terminate lease
Duty to pay rent—tenancy at sufferance arises upon breach
Duty to not use property for illegal purposes—if tenant uses premises for an illegal purpose, landlord may terminate lease or obtain damages and injunctive relief
• Occasional, minor illegal activities do not constitute a breach
Liability to third parties (in tort):
• Tenant may be liable for injuries to third persons from the dangerous conditions within the tenant’s control
Landlord Remedies for Tenant Breach
If tenant breaches his leasehold duties, landlord’s options depend on whether tenant retains possession (i.e., remains on premises)
Tenant retains possession—landlord may:
a. File for notice of eviction, or
b. Continue the lease and sue for rent due
Tenant abandons premises—landlord may:
a. Surrender—treat the abandonment as tenant’s surrender and accept it, releasing the tenant from the lease,
b. Ignore (minority rule)—hold tenant liable for unpaid rent, or
c. Re-let (majority rule)—lease premises to new tenants and hold the breaching tenant liable for any losses
No self-help—landlord may not engage in self-help upon tenant’s breach (e.g., forcibly removing tenant or tenant’s belongings, changing locks, etc.)
Security deposit—required at beginning of most leases to secure landlord against damages and/or abandonment
• Landlord must return deposit to tenant once lease terminates
» Landlord may subtract damages she has suffered
Retaliatory eviction—landlord is prohibited from retaliatory eviction if a tenant lawfully reports housing code or other violations
Landlord’s Duties & Warranties
Landlords have the following implied duties to tenant:
1) Duty to deliver possession on first day of lease
» Majority (English Rule)—actual possession
* Landlord must deliver physical possession to tenant
»_space; Tenant’s remedy for breach = money damages
2) Implied covenant of quiet enjoyment
3) Implied warranty of habitability (residential leases only)
4) Tort liability
Implied Covenant of Quiet Enjoyment
A tenant has an implied right to quiet use and enjoyment of the premises, without interference from the landlord
* Breach may occur by actual or constructive eviction
* Breach may occur by landlord’s wrongful conduct causing loss of use and enjoyment by tenant
Actual eviction—landlord wrongfully evicts or excludes tenant from property
Breach by wrongful eviction: Exclusion from whole or part of the premises
Breach by constructive eviction: Landlord renders premises unsuitable for occupancy.
Constructive eviction—landlord’s actions or inactions render the property uninhabitable or unusable
* Elements:
1. Substantial interference—major and/or chronic problems (e.g., leaky roof) are caused by landlord’s wrongful conduct;
2. Notice—tenant must inform the landlord and give him a reasonable opportunity to repair; landlord must fail to act meaningfully; and
3. Vacate—tenant must vacate within a reasonable period after the landlord fails to repair.
Implied Warranty of Habitability
Residential property must be fit for basic human dwelling.
Characteristics:
* Residential only—not applicable to commercial leases
* Absolute duty—cannot be modified by lease terms
* Local code or case law specifies the standard for a breach
* E.g., no heat in winter, no plumbing, no water, etc. are types of problems that could give rise to violation of the implied warranty of habitability
Tenant’s remedies if Landlord breaches—after giving notice to landlord, tenant can:
1) Move—vacate premises and terminate the lease
2) Repair and deduct—make reasonable repairs and deduct costs from future rent
3) Reduce or withhold rent—reduce rent or stop payment until a court determines the fair rental value given the breach
» Tenant must place withheld rent in escrow
4) Remain—remain in possession, pay full rent, and seek money damages
Landlord Tort Liability to Tenant
The common law norm is: Let the tenant beware (caveat lessee). In tort, a landlord was under no duty to make the premises safe. A landlord may still be liable to tenant for injuries occurring on leased property. The five exceptions to caveat lessee:
1) Common areas—duty of reasonable care
» Landlord must exercise reasonable care in maintaining and repairing common areas (e.g., hallways, stairs)
2) Latent defects—duty to disclose
» Landlord has a duty to disclose hidden defects he should reasonably know of
3) Assumption of repairs—negligence standard
» Landlord is liable for harm caused by negligent repairs he chooses to undertake
4) Public use—landlord is liable for known defects if he knows the property is for public use and tenant is unlikely to repair
» E.g., concert hall, convention center
5) Seasonal or short term lease of a furnished dwelling
» Landlord is liable for defects that cause harm to tenant
Distinguish the Implied Promises
- Covenant of quiet enjoyment: Tenant must vacate.
- Warranty of habitability: Tenant may (but does not have to) vacate.
Fair Housing Act
Exemptions:
1. Owner-occupied buildings with 4 or fewer units.
2. Single-family homes if owner has no more than 3.
Prohibited actions:
• Refusing to negotiate, rent, or sell housing, or give mortgage
• Providing different terms for sale/rental
• Falsely representing dwelling unavailable
Reasonable accommodations for tenants with disabilities.
