Real Property Flashcards
Ownership of Real Property –> Present Possessory Estates: Freehold Estates - Fee Simple Absolute (FSA)
This is the best type of estate.
- —-> A FSA holder has all possible rights that a person may have in that parcel of land.
- —-> May last forever – FSA is alienable, devisable, and descendible.
- —-> One way to terminate: Owner dies w/o a will or heirs, and property escheats to state.
EXAM TIP (terminology): Devisees take by will, heirs take by the law of intestacy in the relevant jurisdiction, and grantees take by inter vivos (literally “between the living”) transfer.
Creation
—–> “to A and his heirs” (CL); “to A” (modern law).
Ownership of Real Property –> Present Possessory Estates: Freehold Estates - Defeasible Estates (Definition + 3 types)
An estate that may terminate upon some happening or event before its maximum duration (forever in fee) has run.
3 Types
(1) Fee Simple Determinable
(2) Fee Simple Subject to a Condition Subsequent
(3) Fee Simple Subject to Executory Interest
Ownership of Real Property –> Present Possessory Estates: Freehold Estates - Defeasible Estates (Fee Simple Determinable)
Created by durational language—for so long as, during, until, or while.
- —-> “O to A for so long as liquor is not served on the premises.”
- —-> Terminates automatically on happening of a named future event.
- —-> The estate returns to the grantor.
Ownership of Real Property –> Present Possessory Estates: Freehold Estates - Defeasible Estates (Fee Simple Subject to a Condition Subsequent)
Created by conditional language (provided however, however if, but if, on condition that, or in the event that) to occurrence of a condition that will terminate estate.
- —-> Power of termination must be expressly reserved to the grantor.
- —-> “A to B, provided that in the event the premises are not used for educational purposes, then A has the power to terminate B’s estate.”
- —-> “A to B, but if B stops using the premises for residential purposes, then A may reenter and retake the estate.”
- —-> “A to B for life, on condition that B uses the land for recreation, but if he fails to do so, A may re-enter and retake the estate.”
If the language is ambiguous, courts interpret the grant as an attempt to create a FSSCS; though, this often fails and the grant becomes a fee simple absolute for lack of a specific power of termination; thus, avoiding a forfeiture of the fee simple estate.
—–> NOTE: Courts disfavor forfeitures.
Ownership of Real Property –> Present Possessory Estates: Freehold Estates - Defeasible Estates (Fee Simple Subject to Executory Interest)
Created by either durational or conditional language.
- —-> Termination occurs on the happening of an event that terminates the estate; property then passes to someone other than grantor.
- —-> “A to B so long as B farms the property during his lifetime and, if he does not, then to C.”
- —-> “A to B on condition that B gets married. If B dies without marrying, the property will pass to C.”
Ownership of Real Property –> Present Possessory Estates: Freehold Estates - Fee Tail
Common law: An estate that descended to grantee’s children only.
—–> EXAMPLE: “A to B and the heirs of his body.”
Modern law: Fee tails are disfavored and are treated in most jurisdictions as fee simple absolutes.
Ownership of Real Property –> Present Possessory Estates: Freehold Estates - Life Estate
Life estates last for the duration of the grantee’s life.
—–> EX: “A to B for life.”
“Life estate pur autre vie” = The duration of the estate is measured by the life of someone other than the grantee.
—–> EX: “A to B for the life of C.” As long as C is alive, B owns the property.
Can be made defeasible.
—–> EX: “A to B for life, as long as B farms the land.”
Ownership of Real Property –> Present Possessory Estates: Freehold Estates - Non-Freehold Estates
Term estate = Estate that is limited in duration (basically a landlord-tenant relationship).
—–> Exs: “A to B for 50 years.” or “A to B for 1 year.”
Ownership of Real Property –> Future Interests: Grantor Future Interests - Possibility of Reverter
A future interest in the grantor that follows a determinable estate.
—–> “A to B so long as B farms the land” creates a possibility of reverter in the grantor.
Creation: a fee simple determinable automatically creates a possibility of reverter; no special language needed.
—–> Upon the happening of the event, the land automatically reverts back to the grantor.
Transferability
Common Law: The power of termination could descend through intestacy but could not be devised or transferred inter vivos.
Modern law/Majority: The power of termination is freely transferable, devisable, and descendible.
—–> NOT subject to the Rule Against Perpetuities (RAP) because the grantor’s possibility of reverter has already vested.
Ownership of Real Property –> Future Interests: Grantor Future Interests - Power of Termination (Right of Reentry)
A future interest in the grantor when the grantor attempts to create a FSSCS or a defeasible life estate.
Creation: Not automatic; must be spelled out in the conveyance or it does not exist.
—–> EXAMPLE: “A to B, provided that B uses the premises for residential purposes, but if he does not do so, A may retake and re-enter.” If B ever stops using the premises for residential purposes, A or A’s heirs can enter and retake the property.
Upon the happening of the event, the property does not automatically revert.
- —-> The grantor must exercise the right of reentry and take affirmative steps to retake the property.
- —-> Courts favor a fee simple subject to condition subsequent over a fee simple determinable to avoid an automatic forfeiture.
Transferability
- —-> Common law: The power of termination could descend through intestacy but could not be devised or transferred inter vivos.
- —-> Modern law/Majority: The power of termination is descendible and devisable. However, the power of termination is not transferable inter vivos.
NOT subject to the RAP because the grantor’s power of termination has already vested.
Ownership of Real Property –> Future Interests: Grantor Future Interests - Reversionary Interest
Reversion = A future interest retained by the grantor when the grantor transfers less than a fee interest to a third person.
—–> EXAMPLE: “A to B for life.” A has given a life estate to B but has not provided for who is going to own the land after B dies. The property will return to A after B dies.
Transferability
- —-> Common law: The power of termination could descend through intestacy, but could not be devised or transferred inter vivos.
- —-> Modern law: The power of termination is freely transferable, devisable, and descendible.
NOT subject to the RAP because the grantor’s right has already vested.
—–> The RAP does not apply to any reversionary interests.
Ownership of Real Property –> Future Interests: Grantee Future Interests - Remainder
A future interest created in a 3rd person that is intended to take effect after the natural termination of the preceding estate.
EXAMPLE: “A to B for life, then to C.” C has a remainder.
Contingent Remainder = Any remainder that is not vested.
—–> EXAMPLE: “A to B for life, then to the oldest child of C then living.” This would be a contingent remainder because we do not know who the oldest child is going to be until B dies. There is a condition precedent to that person taking – they must be alive when B dies.
Vested Remainder is vested at the point that it is:
(1) Created in an ascertainable person; and
(2) Is not subject to any condition precedent, other than termination of the preceding estate.
Ownership of Real Property –> Future Interests: Grantee Future Interests - Special Types of Vested Remainders (Vested Remainder Subject to Total Divestment)
A remainder that is presently vested but may be terminated on the happening of a future event.
—–> EXAMPLE: “A to B for life, remainder to C, so long as liquor is never served on the premises.” C has a vested remainder but could lose it by serving liquor on the premises.
Ownership of Real Property –> Future Interests: Grantee Future Interests - Special Types of Vested Remainders (Vested Remainder Subject to Open)
A remainder that has been made to a class and has at least one member who is ascertainable who has satisfied any conditions precedent to vesting, but may have other members join the class later. -----> “A to B for life, then to the children of C.” As soon as C has a child, that child is an ascertainable person and there is no condition to their taking other than the termination of the preceding estate (B’s death). Child would have a vested remainder, but it is subject to open because as other children of C are born, they will also share in the gift.
Class Opening
- —-> Inter vivos conveyance: class opens at the time of the conveyance.
- —-> Testamentary conveyance: class opens at the death of the testator.
Class Closing The RAP can void a future interest. -----> Generally, does not apply to vested interests except vested remainders subject to open. -----> If any member of a class could potentially claim in a way that violates the RAP, the entire class gift fails. -----> Rule of Convenience: Class closes as soon as one member of the class becomes entitled to immediate possession of the property.
Ownership of Real Property –> Future Interests: Grantee Future Interests - Executory Interests (Definition)
Executory Interest = A future interest in a third person that cuts short the previous estate before it would have naturally terminated.
- —-> Because a fee estate has the potential to last forever, any interest created in a third party that follows the granting of a fee will always be an executory interest.
- —-> EXAMPLE: “A to B so long as liquor is not served on the premises in B’s lifetime. If liquor is served on the premises in B’s lifetime, the property will pass to C.” C has an executory interest.
Subject to the RAP.
Ownership of Real Property –> Future Interests: Grantee Future Interests - Executory Interests (Two Types)
Shifting Executory Interest: The interest passes from one grantee to another—i.e. a grantee to a grantee (most common).
—–> EXAMPLE: “A to B so long as B completes law school by age 30. If B fails to do so, then to C.” Shifts the property from grantee B to grantee C.
Springing Executory Interest: The interest transfers from a grantor to a grantee.
—–> EXAMPLE: “A to B for life. Then 20 years after B’s death, to C.” B has a life estate. When B dies, the property reverts back to the grantor, A. 20 years later, the property transfers to C. A’s reversion would be in fee.
Ownership of Real Property –> Future Interests: Grantee Future Interests - Rules Affecting Future Interests (rules abolished in majority of jdxs)
Have a brief understanding of:
• Doctrine of destructibility of contingent remainders
• Doctrine of merger
• Rule in Shelley’s Case
Ownership of Real Property –> Future Interests: Grantee Future Interests - Rules Affecting Future Interests (Doctrine of Worthier Title)
It is worthier to take by descent than by devise, meaning a grantor cannot create a remainder in his or her heirs.
• This is a rule of construction, not law.
EXAMPLE: “A to B for life, remainder to A’s heirs.” Whether or not A included “remainder to A’s heirs,” the property would have gone to A’s heirs via a reversion. Should pass by descent rather than the devise.
Ownership of Real Property –> Future Interests: Grantee Future Interests - Rules Affecting Future Interests (Waste)
Determines what someone who owns land can or cannot do with it.
- —-> Owner of a fee estate can do whatever he or she wants with the property.
- —-> Owner of less than a fee estate cannot commit waste (e.g., harm the property at the expense of the person who will hold it after them).
Three Types of Waste:
(1) Voluntary Waste = A life tenant cannot intentionally or negligently damage property. If they do, they are liable for the damage.
(2) Permissive Waste = A life tenant must take reasonable steps to avoid damage. Failure to do so constitutes permissive waste, and the life tenant will be liable.
(3) Ameliorative Waste = A life tenant makes improvements to the land.
—–> Common law: A life tenant was not allowed to make substantial alterations unless authorized to do so and could be held liable for costs of restoring the land to its previous condition.
—–> Modern law: A life tenant is now allowed to commit ameliorative waste if:
• Market value of the remainderman’s interest is not impaired; and
• It is permitted by the remainderman OR a substantial and permanent change in the neighborhood justifies the improvement.
A remainderman has standing to sue for past or future waste.
- —-> Vested Remainderman: Can sue for damages or an injunction to stop the waste from occurring.
- —-> Contingent Remainderman: Cannot sue for damages and can only sue for an injunction to stop the waste from occurring.
EXAM TIP: Watch out for situations involving the mortgagor/mortgagee relationship and the landlord/tenant relationship. Both relationships are also governed by the doctrine of waste.
Ownership of Real Property –> Special Problems: Rule Against Perpetuities (RAP)
The common law Rule Against Perpetuities provides that “no interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest.”
Purpose of the Rule:
- —> The law does not want land tied up forever with ridiculous contingencies that could go on in perpetuity.
- —> The rule attempts to place a limit on contingencies on ownership of land.
The rule deals solely with possibilities.
—-> If you can look at a future interest in a conveyance and can come up with an interpretation where someone could be claiming more than 21 years after everyone currently alive connected to the grant is dead, it violates the rule.
Application
—–> RAP does not apply to present possessory estates.
—–> RAP only applies to three future interests:
• Executory interest;
• Contingent remainder; and
• Vested remainder subject to open
—–> Two other interests subject to the rule:
• Purchase option; and
• Right of first refusal
—–> All other future interests are exempt from the RAP.
Steps for Dealing with a RAP Problem:
(1) Identify the type of interest and make sure the RAP applies:
• Executory interest;
• Contingent remainder;
• Vested remainder subject to open;
• Purchase option; and
• Right of first refusal
(2) Is it possible to interpret the facts so someone can claim an interest more than 21 years after everyone currently alive is dead?
—-> If yes, the future interest is wiped out and interpret the rest of the grant accordingly.
—-> If no, the interest will stand.
Ownership of Real Property –> Special Problems: Restraints on Alienation
EXAMPLE: “A to B for life, but if B tries to sell his interest, then to C.”
Total Restraint
EXAMPLE: “A to B, but if B ever tries to sell the property, then the property will revert to A.”
—> On a fee: This will generally not be valid.
—> On less than a fee: This will be upheld, if reasonable.
Partial Restraint (both are valid, if reasonable)
—> Purchase Option
EXAMPLE: “A to B and her heirs, but A reserves the right to buy back the property at any time during A’s life.”
—> Right of First Refusal
EXAMPLE: “A to B and her heirs, but if B ever attempts to sell during A’s life, B must first offer the property to A at the same price.”
—> Courts look to whether a restraint is limited in scope or time, the purpose of the restraint, the legitimate interests of the party, and whether the restraint is supported by consideration in assessing its reasonableness.
Ownership of Real Property –> Special Problems: Conflicts of Law Related to Real Property
If a property interest is involved, characterize it as either a “movable” or “immovable” interest.
—–> If an interest is closely connected with land (e.g., a leasehold or the right to rents), it is immovable. If it is not, it is movable.
—–> The law of the situs governs all rights in land and other immovables.
• Validity and effect of a conveyance (e.g., the form of the deed or the capacity of the grantor) are governed by the law of the situs.
• Mortgages, their creation, validity, and foreclosure are governed by the law of the situs.
• But the underlying contract or note is governed by law of the place of its making.
• Liens (e.g., mechanic’s or laborers’ liens) are governed by the law of the situs.
Ownership of Real Property –> Cotenancy: Generally
Any time property is being transferred to more than one person to be held concurrently, you have to determine how they are going to hold the property.
o Tenancy in Common = Each co-tenant owns an undivided possessory interest in the whole of the property.
o Joint Tenancy = Each co-tenant owns an undivided possessory interest in the whole of the property AND has a right of survivorship.
Ownership of Real Property –> Cotenancy: Right of Survivorship
If you have property that is jointly owned, and one of the co-tenants dies, the property passes to the surviving co-tenant automatically.
Common Law: A conveyance to two or more people to jointly own property was presumed to create a joint tenancy, unless specifically stated otherwise.
Modern Majority: A conveyance to two or more people to jointly own property is presumed to create a tenancy in common, unless specifically stated otherwise.
You MUST use language to demonstrate that you want the right of survivorship attached to the grant.
—–> EXAMPLE: If A and B own property as joint tenants and B dies, the property automatically passes entirely to A, and A owns the property outright.
The right of survivorship takes precedence over a will or inheritance by intestacy.
—-> If there is a tenancy in common (no right of survivorship) a concurrent interest held in a tenancy in common is freely transferable and can be willed away or inherited through intestacy.
Ownership of Real Property –> Cotenancy: Creation
Traditionally, a joint tenancy requires four unities (TTIP):
(1) Time: Joint tenants must take at the same time;
(2) Title: Joint tenants must take by the same instrument;
(3) Interest: Joint tenants must take equal shares of the same type; and
(4) Possession: Each joint tenant has the right to possess the whole.
Today, most jurisdictions do not require the unities of time and title, only interest and possession.
- —-> Tenancy in common only requires unity of possession.
- —-> EXAMPLE: A and B own a piece of property as tenants in common. A owns 25%, B owns 75%. Each owns the entire parcel, but A owns 25% interest and B owns 75% interest.
Main Differences between Joint Tenancy and Tenancy in Common:
(1) Right of survivorship.
(2) Four unities: time, title, interest, and possession.
Ownership of Real Property –> Cotenancy: Tenancy by the Entirety
A form of concurrent ownership reserved for married couples, which gives each spouse an undivided interest in the whole of the property and a right of survivorship, unless expressly stated otherwise.
- —> Can be created by deed or will, but not by descent.
- —> Not recognized in community property states.
Ownership of Real Property –> Cotenancy: Severance
Tenancy by the Entirety - severance only occurs when:
(1) The spouses jointly convey to a third party;
(2) One spouse conveys to the other spouse; or
(3) The couple divorces.
Severing a Joint Tenancy Creates a Tenancy in Common
—-> Done by an inter vivos act of one of the parties.
• Can seek a partition action.
• Joint tenant sells his interest in the property.
• Joint tenant mortgages his/her interest in the property.
—————> Majority View (Lien Theory Jurisdiction): Mortgage is viewed as a lien on the property, will not sever.
—————> Minority View (Title Theory Jurisdiction): Mortgage is viewed as a title to the property, will sever.
—————> Giving out a lien on the property will not sever a joint tenancy, but transferring title to the property will sever a joint tenancy.
—————> In both types of jurisdictions, the mortgage encumbers only the portion belonging to the mortgagor. In lien theory jurisdictions, if the mortgagor dies before pay-off or foreclosure, the living joint tenant(s) inherits the whole free of the mortgage. If there is a foreclosure before the mortgagor dies, the foreclosure severs the joint tenancy.
Ownership of Real Property –> Cotenancy: Partition
Each co-tenant has the right to seek partition of the property.
o Voluntary Partition: Done by exchange of deeds or selling the property and dividing the proceeds.
o Involuntary Partition: Is the result of a partition action filed by one or more co-tenants in court.
Ownership of Real Property –> Cotenancy: Rights and Duties of Co-Tenants
Possession: Each co-tenant is entitled to possess the whole property.
—–> If a co-tenant is denied possession, they can bring suit for damages and/or ejectment.
Profits
- —-> If a profit is produced by one of the co-tenant’s efforts, then the other co-tenants have no right to share in those profits (unless they’ve been ousted from the property).
- —-> If a profit is generated by a third party (e.g., rent), then all co-tenants are entitled to a proportionate share of the profits.
Expenses
—–> Taxes/Mortgage Payments: Each co-tenant must pay a proportionate share.
—–> Repairs: No direct duty of repair imposed on any co-tenant; however, a co-tenant who makes repairs to the property may be compensated for the amount of the repair by a set-off against any third party rents received or from proceeds in a partition action.
—–> Improvements: Generally, there is no duty imposed on any co-tenant to improve the property. If one co-tenant chooses to improve the property, they cannot get contribution from the other co-tenants.
• Exception: If the property is sold, any amount attributable to the improvement goes to the tenant who made the improvement.
Ownership of Real Property –> Landlord-Tenant: Creation
A lease can be oral or in writing.
—–> A writing is required for a lease term longer than one year.
An implied lease may occur through the conduct of the parties, e.g., where the written lease is never signed, but the tenant pays rent periodically, creating a periodic tenancy.
Ownership of Real Property –> Landlord-Tenant: Types of Leases - Term of Years
A lease that has a definite beginning and end (set date, months, or years).
- —> EXAMPLES: Tenant leases the property for five years; tenant leases the property for one month.
- —> Creation: Express agreement between the landlord (LL) and the tenant for a term specified in the lease. If the duration is for longer than a year, the agreement must be in writing.
- —> Termination: Automatically at the end of the period; no notice is required.
Ownership of Real Property –> Landlord-Tenant: Types of Leases - Periodic Tenancy
A lease with a set beginning date and continues from period to period (e.g., month to month) without a set termination date, until proper notice is given.
—-> Creation: Expressly or by implication with a holdover tenant.
—-> Termination: The landlord or the tenant must give appropriate notice of intent to terminate.
• Appropriate notice must be:
(1) in writing, if the lease or state statute so specifies, otherwise it can be oral; and
(2) equal to the rental period, up to a maximum of six months.
EXAMPLES:
One-month tenancy = 1 months’ notice
Three-month tenancy = 3 months’ notice
One-year tenancy = 6 months’ notice
Timing of Notice
- —-> Common law: Notice had to be given at the start of the rental period.
- —-> Modern law: Notice is good whenever given but it does not take effect until the start of the next rental period.
Ownership of Real Property –> Landlord-Tenant: Types of Leases - Tenancy At-Will
Has no fixed duration and lasts only as long as the landlord and tenant desire.
Creation: Generally, by express agreement of the parties.
Termination: This is a very fragile tenancy, it terminates:
(1) Freely as soon as either party decides (no notice requirement);
(2) If either the landlord or the tenant dies; or
(3) If either party attempts to transfer their interest.
Ownership of Real Property –> Landlord-Tenant: Types of Leases - Tenancy at Sufferance (Holdover Tenant)
Creation: A holdover situation (e.g., The tenant does not move out at the end of the agreed upon tenancy).
A holdover tenant will become either a periodic tenant or a tenant at sufferance.
The determining factor of whether the tenant becomes a periodic tenant or a tenant at sufferance is the landlord:
(1) If the landlord wants the tenant to remain on the land, the tenant becomes a periodic tenant.
(2) If the landlord does not want the tenant to remain on the land, the tenant becomes a tenant at sufferance until the landlord can get the tenant off the property.
(3) Crucial factor: Acceptance of rent from the tenant.
- —–> If the landlord accepts rent from the tenant, this is evidence that the landlord wants the tenant to stay on the land.
If the tenant becomes a periodic tenant, the period is determined by the type of jurisdiction.
——> Common law: The length of the expired lease, with a maximum of one year.
——> Modern law (most jurisdictions): Treat the period as the period for which rent is reserved.
EXAMPLE: T pays rent monthly; the period will be month-by-month.
Ownership of Real Property –> Common Disputes Between Landlord and Tenant: Fight Over Rent - How much rent can the LL sue for?
(1) Tenancy for Years = tenant liable for all unpaid rent in the lease.
- —-> CL: LL could only sue for rent as it accrued.
- —-> Modern Majority Rule: allows for anticipatory repudiation but the LL has a duty to mitigate (make reasonable efforts to re-rent the property)
(2) Periodic Tenancy = tenant liable for rental obligation up until proper notice is given to terminate the lease.
(3) Tenancy At-Will = The tenant is liable for the amount of rent stated in the agreement that is already owed.
- —-> Generally, under this type of tenancy, rent is usually not money—e.g., T can stay as long as T gardens the property.
(4) Tenancy at Sufferance
- —-> The tenant is liable for the reasonable rental value of the property.
Ownership of Real Property –> Common Disputes Between Landlord and Tenant: Fight Over Rent - Tenant’s Defenses (Failure to Deliver Possession)
Majority Rule: The landlord has an obligation to deliver possession of the property to the tenant.
Minority (“American”) Rule: The landlord has no obligation to deliver possession of the premises; the tenant must take it.
Ownership of Real Property –> Common Disputes Between Landlord and Tenant: Fight Over Rent - Tenant’s Defenses (Tenant has Been Evicted)
Actual Eviction = The tenant is physically removed from all, or part, of the property.
—–> A partial, actual eviction excuses the tenant from paying any rent. (Note, this acts as sort of a penalty for the landlord’s bad-faith behavior, which is why the tenant gets complete rent cancellation.)
Constructive Eviction = The landlord has allowed the condition of the premises to deteriorate to the point that the tenant is essentially being forced out. The use and enjoyment of the property is being substantially interfered with.
- —-> Tenant must actually move out within a reasonable time following the acts constituting the substantial interference.
- —-> Even if the acts constituting the substantial interference are due to third parties, the landlord can be liable because the landlord should have had reason to know that the interference would cause a constructive eviction.
- —-> Total Constructive Eviction - Defense to the payment of any rent.
- —-> Partial Constructive Eviction - Reduction in rent only.
Ownership of Real Property –> Common Disputes Between Landlord and Tenant: Fight Over Rent - Tenant’s Defenses (Tenant Surrenders Premises to Landlord)
In order to claim this defense, the landlord must accept the surrender and retake possession of the premises.
——> The landlord will typically be required to mitigate damages via contract law.
Ownership of Real Property –> Common Disputes Between Landlord and Tenant: Fight Over Rent - Tenant’s Defenses (Destruction)
Common law: Generally, did not excuse payment of rent because the tenant was still in possession of the actual land.
—-> Note, there would be a different result had T only leased a portion of the building.
Modern law: No distinction is drawn between leasing all or a portion of the building. Destruction will be a defense to payment of rent.
—-> Exception: If the tenant intentionally or negligently causes the destruction.
Ownership of Real Property –> Common Disputes Between Landlord and Tenant: Fight Over Rent - Tenant’s Defenses (Warranty of Habitability)
An implied warranty that the premises are fit for habitation.
The majority of jurisdictions apply the warranty of habitability to residential leases only. A minority of jurisdictions also extend the warranty of habitability to commercial leases.
Requires the landlord to maintain the premises in a habitable condition.
- —> If the landlord fails to do so, and the premises become uninhabitable, and the tenant moves out, it could be viewed as a constructive eviction.
- —> If there is a problem, but the tenant does not want to move out, the tenant must notify the landlord to correct the problem.
- —>The tenant is obligated to give the landlord a reasonable period of time to fix the problem.
- —>If the landlord has not done what is necessary, the tenant can do what is necessary and offset the costs of doing so against rent that is owed.
Rule: To claim a breach of implied warranty of habitability, the tenant must:
(1) Provide the landlord with notice; and
(2) Allow the landlord reasonable time to repair the problem.
There are other statutory obligations imposed by each state.
Ownership of Real Property –> Common Disputes Between Landlord and Tenant: Fight Over Rent - Tenant’s Defenses (Other K Defenses)
Impossibility, impracticability, and frustration of purpose.
Violation of quiet use and enjoyment of the property.
Ownership of Real Property –> Condition of the Premises and Who has the Obligation to Maintain
Landlord’s Obligations
—-> Common law: Absent an express promise in the lease, the landlord has no obligation to maintain or repair leased premises.
—–> Modern law: An implied warranty of habitability and other statutory obligations may apply.
—–> Additional Liability in Tort:
• Tort land occupier duties owed (invitees, licensees, trespassers). Who owes the duty? Not the owner, but the possessor. During the lease, the tenant has possession so the tenant owes the duties.
• The landlord retains a duty for common passageways and other areas under the landlord’s control (stairs, hallways etc.).
• If the landlord rents the premises with a known defective, dangerous condition not readily apparent to the tenant, the landlord retains liability until the tenant has had reasonable time to inspect and repair.
Tenant’s Obligations
—–> Common law: No obligation to repair the leased premises.
—–> Duty to Avoid Waste:
• Voluntary Waste: The tenant is liable if the tenant intentionally, or negligently, damages the property.
• Permissive Waste: The tenant must take steps to guard against damage to the property.
• Ameliorative Waste:
(1) Common law: The tenant had no obligation to make improvements and the landlord could hold the tenant liable.
(2) Modern law: The tenant can make improvements if expressly authorized, or if there is a change in circumstances that warrants the improvements to be made (provided that the improvement does not depreciate the value of the property).
- —-> Security Deposits: (Three kinds)
(1) A true security deposit, that is returned to tenant at end of lease, minus funds used to repair damage done by tenant;
(2) A deposit to be forfeited in the event of default; and
(3) A deposit denominated as advance rent for the last period of the lease.
Ownership of Real Property –> Fight Over Possession
Rule: The landlord can retake the property if the tenant has committed a material breach of the lease.
—-> Common law: The landlord was entitled to use reasonable force to retake possession of the premises from the tenant.
—-> Modern law: The majority of jurisdictions no longer allow the use of any force and the landlord must use the legal process.
• Generally, the landlord has to give the tenant notice to either cure the breach or vacate.
• There will then be a judicial hearing to determine whether the tenant has committed a breach, and if so, the tenant will be evicted.
Courts will not uphold a retaliatory eviction.
Ownership of Real Property –> Dispute Over Improvements
Common law: Anything, except for a trade fixture, affixed to the land became part of the land and had to stay.
—-> “Trade fixture” = Any item used in the course of the tenant’s trade or business.
• Rule: A trade fixture could be removed unless removal would cause substantial damage to the property.
Modern law: If the fixture can be removed without affecting the premises, the tenant is entitled to remove the fixture (no distinction between regular and trade fixtures).
—-> If the fixture can be removed, and the premises left in substantially the same condition as when the tenant arrived, then the tenant is entitled to remove the fixture before leaving the premises.
—-> If something is removable, it must be removed before the expiration of the lease.
• Exception: Some jurisdictions will give tenants a reasonable amount of time after the expiration of the lease, if the tenant has no way of knowing when the tenancy will terminate, e.g., a tenancy at will.
Presumption: Structural changes cannot be removed because the premises cannot be returned to substantially the same condition as when the tenant arrived.
Ownership of Real Property –> Assignment and Subletting: LL’s Transfer of Interest
Who is entitled to collect the rent? The landlord of record, on the date the rent is due, is entitled to that rent.
Ownership of Real Property –> Assignment and Subletting: Tenant’s Transfer of Interest
Assignment versus Sublease
- —> Assignment = Tenant transfers all of the remainder of the interest (rental obligation) to a new party.
- —> Sublease = Tenant transfers less than the entire interest in the contract.
Is the new tenant an assignee or a sublessee?
- —> Assignee = If a tenant transfers all of the remainder of the rental obligation.
- —> Sublessee = If a tenant transfers only a portion of the time left on the rental obligation.
Ownership of Real Property –> Assignment and Subletting: Liability of Parties
Assignment:
- —> The assignee comes into privity of estate with the landlord, while the tenant remains in privity of contract with the landlord.
- —> Assignee is liable to the landlord for rent, unless he or she re-assigns to a new assignee who takes over privity of estate.
- —> The tenant is liable to the landlord for rent, even after assignment, unless there is a contract novation.
Sublease:
- —> The sublessee comes into privity of estate and privity of contract with the tenant, owing the tenant rent.
- —> The tenant continues to owe rent to the landlord.
Ownership of Real Property –> Assignment and Subletting: Covenant to Pay Rent
Can be enforced by the landlord against the original tenant because of the contractual nature of the relationship.
In order for the original landlord to enforce against a new tenant, the requirements for a covenant running with the land must be satisfied:
- —> Key issue = Vertical privity. An assignee is in privity of estate with the landlord but a sublessee is not, so a covenant can be enforced against an assignee but not a sublessee.
- —> If the landlord is not receiving rent, this is a material breach of the lease and the landlord can have the assignee or sublessee evicted.
If there is more than one transfer, only the original tenant and the current tenant are liable to the landlord for rent.
—-> Middle-of-the-chain assignees are not liable to the landlord, only to the original tenant.
Ownership of Real Property –> Assignment and Subletting: Transfer of Interest in Leases
Generally, interests in leases are fully transferable.
To prohibit both an assignment and a sublease, the lease must specifically state that both are prohibited.
Consent: A consent clause in the lease that does not state a standard or condition for giving or withholding consent is commonly known as a “silent” consent clause.
—-> Traditional/Majority Rule: A silent consent clause gives the landlord the right to withhold consent for any reason, or for no reason at all, even if withholding consent is arbitrary and unreasonable.
o This rule is subject to any applicable statutory housing discrimination laws.
—-> Minority Rule: Requires the landlord to be reasonable in withholding consent for an assignment.
Rule in Dumper’s Case: If there is an express prohibition against an assignment in a lease, and the landlord either expressly or impliedly waives that restriction, once waived it is deemed waived for the remainder of the lease except if specifically stated otherwise.
Rights in Land –> Covenants that Run with the Land: Covenants v. Equitable Servitudes
Covenants when breached lead to an award of damages.
—-> Equitable servitudes lead to the granting of an equitable remedy, such as an injunction.
An implied reciprocal servitude, where one owner sells lots w/ restrictions that benefit the land retained by that owner, after which the owner cannot violate the same restriction.
—-> The restriction becomes mutual, benefits that owner’s land, and the land sold.
Rights in Land –> Covenants that Run with the Land: Creation of Covenants - Generally; Mnemonic
Creation: For a covenant to run with the land, the following elements must be met (mnemonic: PINT): Privity, Intent, Notice, and Touch and Concern.
Rights in Land –> Covenants that Run with the Land: Creation of Covenants - Privity
Horizontal Privity = The relationship between the original covenantor and covenantee.
Requires privity of contract in connection with the land.
- —> Landlord/tenant
- —> Grantor/ grantee
- —> Mortgagor/mortgagee
Vertical Privity = The relationship between an original party to a running covenant and the successor in interest to the original party.
—-> In order for the burden to run, privity of estate will only exist when the holder of the servient estate transfers all of his interest in the servient estate to the new owner.
Rights in Land –> Covenants that Run with the Land: Creation of Covenants - Intent
The writing (Statute of Frauds applies) must include language that shows the parties’ intent for the covenant to run with the land and bind successors in interest.
EXAM TIP: The Statute of Frauds requires that all promises made for the purchase and sale of real property must be in writing to be enforceable.
—-> Remember to check for Statute of Frauds issues anytime you see transactions involving real estate or interests in real property created or transferred for example, by a covenant or easement, on the bar exam.
Rights in Land –> Covenants that Run with the Land: Creation of Covenants - Notice
The current owner of the servient estate must take with notice of the restriction
—-> Requirement on servient side only.
Recordation will provide notice.
- —> Actual Notice (what you know).
- —> Constructive Notice (recordation).
- —> Inquiry Notice (you learned enough information that would lead a reasonable person to inquire further, but failed to do so).
Rights in Land –> Covenants that Run with the Land: Creation of Covenants - Touch and Concern the Land
Servient Estate: The restriction must reduce the use and enjoyment of the servient estate.
Dominant Estate: The restriction must increase the use and enjoyment of the dominant estate.
Affirmative restriction (reqs burdened estate to do something) v. negative restriction (reqs burdened estate not to do something)
Rights in Land –> Covenants that Run with the Land: Creation of Equitable Servitudes
Touch and Concern the Land:
(1) The burden must run with the servient estate;
(2) The benefit must run with the dominant estate.
Intent: The writing (SoF applies) must include language that shows the parties’ intent for the restriction to run with the land and bind successors in interest.
—–> NOTE: If the P cannot show intent in a writing for the covenant to run, he may nevertheless establish intent by showing a common scheme.
Notice: The current owner of the servient estate took with notice (actual, constructive, or inquiry).
Relief: Can be enforced in equity through an injunction; damages are not available.
