Pg 27

Question 1

What is the difference between privity of contract and privity of estate when it comes to transfers of property?

Answer 1

– Privity of contract: person is the party to the contract and the only one that can enforce it
– privity of estate: sequence of occupiers to the real property that follow the landlord. This is only between the landlord and the present tenant.

Question 2

When a tenant transfers to a new tenant, what do you have to decide?

Answer 2

If it is an assignment or a sublease

Question 3

What is the difference between an assignment and a sublease?

Answer 3

– an assignment transfers all of the time left on the rental obligation
– a sublease only transfers part of the time left on the rental application

Question 4

Who is in privity with the landlord when an assignment happens?

Answer 4

The assignees, but that is not true for a sublease

Question 5

Is it possible for there to be multiple transfers of property?

Answer 5

Yes, there can be as many transfers as the parties want.

Question 6

What is the touch and concern test?

Answer 6

If performance of a covenant makes land more valuable or more useful, then it touches and concerns the land

Question 7

If a contract provision says that the tenant needs permission from the landlord to assign or sublease, what does that permission depend on?

Answer 7

The landlord’s good faith and reasonableness in granting or withholding it

Question 8

What is an assignment?

Answer 8

When the tenant transfers his right of possession to all or part of the premises for the full time remaining on the term. The tenant has no reversion.

Question 9

If a tenant just transfers some of the demised premises for the rest of the term, what is that called?

Answer 9

A partial assignment

Question 10

Who is the assignee in an assignment in privity of estate with?

Answer 10

The landlord. This makes them liable for rent due directly to the landlord. The landlord can sue the second tenant for unpaid rent.

Question 11

How do you end privity of contract in an assignment?

Answer 11

It can only be ended by novation.

If there is a three party agreement where T2 expressly agrees to take on the responsibilities of the lease, and the landlord agrees to discharge T1 and accept T2’s performance in T1’s place, and T1 agrees to step out. Without this T1 stays liable for the unpaid rent. Without a novation both tenants are jointly and severally liable. T2 is primarily liable and T1 is secondarily liable

Question 12

What is pro tanto?

Answer 12

This only transfers a portion of the premises for the full balance

I.e.: if you rent an apartment and then you transfer one bedroom to a new tenant for the rest of the lease. Time is that issue here, not physical space

Question 13

Does assignment relieve the original tenant of his duties?

Answer 13

No, because those were contractual promises based on privity of contract. This means the landlord can come against both the tenant and the assignee.

Question 14

Once a tenant assigns a lease, does he have any further interest in the land?

Answer 14

No, so he cannot enforce the landlords‘s covenants

Question 15

What is the suretyship relationship that is involved in an assignment?

Answer 15

The assignee agrees to perform the tenant’s running covenants/has the primary duty to perform them, and the tenant has a concurrent duty/secondary duty that creates a suretyship relationship where the assignee is the principal and the tenant is the surety. If the landlord compels the tenant to perform, the tenant can come back on the assignee

Question 16

If a landlord releases the assignee from a major duty, does that release the original tenant from all duties?

Answer 16

Yes.

Question 17

What is a sublease?

Answer 17

When the tenant transfers the right of possession to all or part of the premises for less than the full-time remaining. This means the original tenant transfers less than all of his rights to the transferee. The tenant keeps a reversion after the subtenancy.

Question 18

How does privity of estate and privity of contract work for a sublease?

Answer 18

The sub-tenant is not in privity of estate or privity of contract with the head landlord, but he is in rightful possession and he’s considered to be a tenant. The head landlord cannot sue the sub tenant for unpaid rent, but he can sue the sub tenant for eviction

Question 19

If a tenant transfers the whole term, but he retains the power of termination, is that still considered to be a sublease?

Answer 19

Yes, but only according to the minority opinion

Question 20

If you transfer all but one day of your term to another person, what have you created?

Answer 20

A sublease

Question 21

If two years into a five year lease the tenant moves to Europe for one year, and transfers that year to a second tenant, intending to come back for the final two years, what has he created?

Answer 21

A sublease

Question 22

What are some factors to consider if you’re deciding whether an assignment or a sublease has happened?

Answer 22

Sublease: if they are paying rent to a tenant instead of the head landlord, if there’s language that says it’s a sublease, if they are paying higher rent, etc.

Question 23

If a tenant charges more rent on a sublease, is he entitled to that extra money?

Answer 23

Yes, because he is in privity of contract with the sub tenant

Question 24

Where are the true landlord tenant relationships in a sublease?

Answer 24

– There is one between the head tenant and the sub tenant (although the sub tenant has no direct relationship with the head landlord, so there’s no privity, so he’s not liable to pay rent to him).
– There is also one between the head landlord and the original tenant.

Question 25

Is it possible to have multiple subleases on the same property?

Answer 25

Yes

Question 26

Who pays rent to who in a sublease?

Answer 26

The sub tenant pays rent to the sub landlord (who is the original tenant) under the terms of the sublease. The sub landlord (who is the original tenant) pays rent to the head landlord under the original lease

Question 27

If the main leasehold ends during a sublease, what happens to the subtenancy?

Answer 27

It also ends

Question 28

Can a head tenant terminate a sublease by voluntarily surrendering his head lease?

Answer 28

No

Question 29

If a landlord and tenant have a lease agreement, then the tenant subleases to someone else, and doesn’t pay rent to the landlord. Is the sublessee liable for that rent?

Answer 29

No, because he is not in privity with the head landlord. But he can be evicted because it would technically be an eviction of the first tenant

Question 30

If there’s no language referring to the landlord’s consent to agree to a sublease or assignment, is the Landlord allowed to be unreasonable in withholding his approval of this?

Answer 30

Yes, but if written consent is required from the landlord, then his consent must be reasonable

Question 31

Is it OK to ban subleases or assignments in the original document?

Answer 31

Yes

Question 32

Is it possible for a landlord to convey his reversion in a sublease?

Answer 32

Yes. Then the grantee takes subject to the ongoing leasehold. The grantee is the owner of the reversion, and thus he is in privity with the tenant.