Transfer of Leaseholds

Question 1

Transfer of leasehold

Answer 1

in the absence of some prohibition in the lease, a tenant may freely transfer their interest in whole (assignment) or in part (sublease)

However, in the lease the landlord can prohibit a tenant from assigning or subletting without the landlord’s prior written approval.

However, once a landlord consents to one transfer by a tenant, the landlord waives the right to object to future transfers by that tenant, unless the landlord expressly reserved the right

Question 2

Transfers in GA

Answer 2

a usufruct may not be conveyed without the consent to the landlord

Question 3

Assignment v. Sublease

Answer 3

an assignment occurs when the tenant transfers their entire interest under the lease (the entire remaining time)

a sublease occurs when tenant retains some part of the remaining term, other than a right to reenter upon breach.

Question 4

Assignment (highly tested)

Answer 4

The assignee stands in the shoes of the original tenant in a direct relationship with the landlord - assignee and landlord are in privity of estate

– each (assignee and landlord) are liable to the other on all covenants in the lease that runs with the land

NOTE - the assignee owes rent directly to the landlord bc it runs with the land

The original tenant remains in privity of contract with the landlord

– the original tenant remains liable on the original contractual obligations, such as the duty to pay rent

Question 5

GA Assignment of usufruct

Answer 5

Because no estate passed in the case of a usufruct, the landlord and tenant cannot be in privity of estate. Consequently, an assignee and the landlord are not in privity of estate.

Question 6

Covenants that run with the land (assignment)

Answer 6

A covenant runs with the land if the original parties so intended and it touches and concerns the land (benefits the landlord and burdens the tenant or vice versa)

Question 7

Sublease

Answer 7

A sublessee is the tenant of the original lessee and usually pays rent to the original lessee, who then pays the landlord.

A sublease arises where the original tenant transfers less than her entire interest to another party.

The landlord and subleases are neither in privity of estate nor privity of contract

The sublessee is not personally liable to the landlord for rent or performance of any of the covenants in the main lease, unless the sublessee expressly assumes those covenants.

A sublessee cannot enforce any covenant made by the landlord in the original lease (but may be able to enforce the implied warranty of habitability)

Question 8

Covenants against assignment or sublease

Answer 8

A landlord can prohibit assignment or sublease without the landlord’s prior written approval. However, a valid covenant against assignment or sublease is considered waived if the landlord was aware and did not object.

Once a landlord consents to a transfer, they consent to future transfers, unless the landlord expressly reserves the right to object.

These restrictions are strictly construed, meaning a covenant against assignment does not prohibit a sublease and vice versa.

Question 9

Assignment by Landlord

Answer 9

A landlord may assign the rents or reversion without the consent of the tenant. Once the tenant is provided notice of the assignment, they must recognize and pay rent to the new owner.

All covenants that run with the land run to the new owner.

NOTE - the original landlord also remains liable on all covenants made in the lease because of privity of contract.