Property II - Landlord/Tenant Flashcards
Types of Non-Freehold Estates
- Estate for Years
- Periodic Tenancy
- Tenancy at Will
Operation of Law: - Tenancy at Sufferance
- Statutory Tenancy
Key distinction between freehold and non-freehold estates.
Non-Freehold Estates are treated as personalty (chattel real).
Estate for Years
- Lease for a specified term.
- Has a definite ending date.
- Can be by day, year, etc.
- AUTOMATICALLY ends (NO NOTICE required)
How are Estates for Years created?
Express agreement.
- May be written or oral, but oral may violate the States of Frauds.
- Must have a specific ending date.
Periodic Tenancy
- Lease for specified periods (i.e., month-to-month).
- Continues indefinitely until party decides to end.
- Can only ends when party provides notice.
Notice for Periodic Tenancy
Common Law:
- One period.
- If year-to-year, 6 months notice.
- Extends to the end of the period (i.e., month-to-month tenancy cannot end in the middle of the second month after notice)
How are Periodic Tenancies created?
- By express agreement.
- Operation of Law.
a. Court can determine period (i.e., paid monthly)
b. Tenant takes possession under void lease
(takes 5 year lease without writing; St. of Frauds)
c. Hold-over-tenant (landlord takes rent after lease)
Tenancy at Will
- Tenancy continues as long as both parties agree.
- May be terminated by either party.
- Indefinite length.
- No ADVANCED noticed required (notice = terminated).
- Statute may require notice in some jurisdictions.
How are Tenancies at Will created?
- Express Agreement (rare)
- Operation of Law
a. Attempted lease that is void (without basis for periods)
b. Rent-free situation without ending date (pay with upkeep)
c. Housing provided with at-will employment.
d. Tenancy for years with renewal creates perpetuity
(Womack v. Hyche)
Tenancy at Sufferance
Relationship resulting when tenant remains in possession after lease ends (holdover tenancy). [May be close to a Tenancy at Will.]
Leasehold - Property or Contract?
Leaseholds function as both Property (chattel real) and contract.
Modern Trend is to emphasize contractual nature of lease.
What does a lease do?
A lease give the tenant exclusive possession and use of property.
- Use may be regulated (i.e., no pets, etc.)
- Landlord may gain access (???)
Distinguish a Lease from (1) Easement and (2) License.
- Easement - interest in land without possession.
- License - no interest in property
- freely revocable- unless there is (1) reliance and (2) substantial expenditure
What happens when an Estate for Years has a renewal provision?
The initial lease with a renewal may be renewed once, but the renewal provision does not get renewed, thereby creating a perpetuity. (Womack v. Hyche)
- Renewal option creates a Tenancy at Will
- Courts will only enforce a perpetual renewal option if expressly intended in the language of the lease.
Selection of Tenants
Common Law v. Modern Rules
Common Law: Landlords could discriminate/serve who they pleased.
Statute: Federal/State statutes may influence when a landlord may discriminate or other restrictions.
- May limit family size based on unit size
Federal Fair Housing Act
Landlords may not discriminate based on race, color, religion, sex, familial status, or national origin.
Exception:
1. Single family home rented by owner if does not advertise or use real estate agent/broker
a. Unless owns 3 or more houses
b. May advertise if not violate 3604c (i.e., responsible, bachelor, able-bodied)
2. Dwelling occupied by no more than 4 families and owner lives there too
a. Rationale - Choose who you live with in close quarters
Implied Duty to Deliver Possession
English Rule v. American Rule
LL must give legal possession (right of use and enjoyment) to tenant on first day of agreement.
English Rule (Majority) - Landlord is liable for duty to deliver actual possession of property (i.e., if there is a holdover tenant) - Tenant may terminate lease
American Rule (Minority) - Duty falls on tenant for actual delivery of property (tenant must seek eviction of holdover tenant). - Rationale: freedom of contract; quicker proceedings
Holdover Tenants/Tenants at Sufferance
LL may treat a voluntary hold-over tenant as:
- a tresspasser; or
- a tenant for a similar term if hold-over is:
a. intentional; AND
b. injustice would be avoided
Hold-over tenant is “at sufferance” during the decision period
Implied Covenant of Quiet Enjoyment (Future Covenant)
Protects tenant’s from interference of possessory right.
- assures tenant will not be OUSTED
- Ouster cannot be:
1. actual or constructive eviction by LL or agents; OR
2. legal ouster of one who gains superior title through:
a. quiet title
b. foreclosure
c. or remainder following a lessor’s life estate*
Examples of Breach of Implied Covenant of Quiet Enjoyment
- Death of Life Estate Owner/Lessor
- Foreclosure of pre-existing mortgage
- Third-party claims superior title
Wrongful Evictions
Implied Covenant of Quiet Enjoyment
- Actual Eviction
- Partial Eviction
- Constructive Eviction
Evictions and Rents
Implied Covenant of Quiet Enjoyment
If actual evicted wrongfully, tenant may withhold rents.
If partial eviction, tenant could withhold rents under Common Law.
Constructive eviction is only a defense of withholding rent.
- Elements to prove:
1. Condition severe to practically oust;
2. Condition attributable to LL (within LL’s control);
3. T must give NOTICE to LL;
4. LL must have reasonable time to cure; AND
5. T must vacate premises (within reasonable time)
Constructive Eviction Requirements
Implied Covenant of Quiet Enjoyment
- Problem - severe enough to interfere with use of apartment
- Notice & Opportunity to Repair
- Within Landlord’s control
- Must vacate within reasonable time
Remedy:
C.L. - tenant cease paying rent
M.A. - (some juris.) T may collect damages
Implied Warranty of Habitability/Suitability
Implied warranty that Landlord will deliver and maintain a safe, clean and fit dwelling for human habitation.
- Implied in Tenancies for specific period or at-will
- Covers all patent and latent defects in essential facilities
Not all jurisdictions apply this Implied Warranty to commercial leases.
- (Min.) some Ct. hold Implied Warranty of Suitability with commercial leases
Approaches of Implied Warranty of Habitability/Suitability
- Housing Codes (Ordinances)
- Legislation (detailing Landlord’s duties and Tenant’s remedies)
- Status of Common Law (general requirements to maintain safe and sanitary conditions)
Substantial violations:
- T may seek rent abatement without abandoning premises
Effects of Defense of Illegal Lease/Constructive Eviction
- (Brown) Housing Code violations = illegal lease (withhold rent)
- (Saunders) Cannot claim illegal lease if Code violations enacted after
- Must be significant evidence violation occurred
- Tenant can sue for damages or withhold rent
Residential v. Commercial Leases
- Legal duties/remedies do not always extend to commercial leases
- Typically, commercial leases have Implied Warranty of Fitness
Duty of Continuous Operation
Contractual provision requiring business doors to remain open during term of the contract. (Not a storage unit.)
- Piggly-Wiggly case
- Loss of Rental income when K based on % of profits
- Must be expressed (not implied)
- However, Cts. may hold intent from language enough?
Factors of Duty of Continuous Operation
- Express terms (i.e., rent plus % of profits)
- Assignability
- Actively negotiated
- Non-compete provisions
Permissible Uses Clause
Must maintain same type of occupancy (no porn shop) (Stroup)
- Must be express
- Lessor must know type of lessee in space
Yielding of Possession Rule
Fixtures may be removed if removal would not cause property damage. [Favored]
- T retains this right as long as he is in possession of the premises
Forfeiture Rule
Fixtures are forfeited if abandoned. [Not widely followed]
- T loses right to remove improvements if renews lease without expressly reserving right to remove
Tenant Default
C.L., M.A., and K
C.L.: When tenant defaults, Landlord may hold personal property (distress) and sale to recover damages (distraint).
M.A.: Statutory remedies exist.
- LL may place lien on tenant’s property
- In minority, LL may seek judgment where governmental officials may seize chattels for sale at auction
K: Parties may contract to:
- acceleration of rents on default
- Right of entry and repossession
- Lien
Tenant Default
Common Law
- Breach of lease covenants does not give rise of default.
2. If allowed to retake possession, landlord may re-enter.
Tenant Default
Modern Approach
Statutory remedies
- Remedy for Ejectment (long, cumbersome)
- Summary Eviction (most states) - quicker proceedings (for non-payment of rent or other material breach)
- Some states allow Landlord to sue for rent
Renewals (Estate for Years)
Perpetual renewals are disfavored by the law.
- only express language intending a perpetuity will be allowed
- otherwise, renewal construed as one time only
Material Breach
If lease terms so significant as to be mutually dependent, breach of one term would excuse performance of the other (under a material breach theory of contract).
Permissible Uses
T may be restricted when:
- Lease explicitly limits;
- Implied restriction would be indispensable to effectuate parties’ intent and belief uneccessary to put in writing (in contemplation of the parties)
- LL:
a. relies
b. on statements of T’s intent
c. T’s statement was a misrepresentation
d. LL suffers damages
Abandonment by Tenant
C.L.:
Acts as offer for LL to retake estate.
1. LL may require rents for duration of lease; OR
2. Regain possession and re-lease the property (releasing the T of further liability)
M.A.:
Abandonment = forfeiture
- LL has duty to mitigate and must accept surrender of premises
- T is liable for damages not recovered by mitigation
Assignment v. Sublease
C.L.:
Assignment - T transfers entire remainder of his term.
Sublease - T retains reversionary interest.
M.A.:
Ct. look at intent through lease language. (Provisions that touch and concern)
Privity
Privity of K:
Parties are only in Privity of Contract if they are direct parties to the Contract.
Privity of Estate:
Parties’ interests in estate are sequential.
- Covenants that “touch and concern” then land bind holder of Estate even though not party to lease.
Restriction of Assignment/Sublease
Restrictions of assignments and subleases are not favored by the law.
- Restrictions in original lease bind all future parties
- Ct. will strictly construe restrictions
- Both parties may waive by acting inconsistent with restriction
Rule in Dumpor’s Case (Maj.)
When a LL allows an assignment against the lease, he waives his control over future assignments.
Novation
T may be release from lease when:
- T assigns his interest
- LL expressly agrees to release of first T
- New T agrees to undertake first T’s obligations
