Transfers of Leasehold and Landlord's Tort Liability

Question 1

What is an assignment in the context of a lease? What is a sublease?

Answer 1

In an assignment, a tenant transfers their interest in whole for the entire remaining term of the lease.

In a sublease, a tenant transfers their interest in part, meaning the tenant has retained some part of the remaining term, other than a right to reenter upon breach.

Question 2

May a landlord prohibit assignment or subletting? Exceptions?

Answer 2

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

EXCEPTION: 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 reserves the right.

Question 3

What is the relationship between an assignee and a landlord?

Answer 3

The assignee stands in the shoes of the original tenant in a direct relationship with the landlord. In other words, the assignee and the landlord are in “privity of estate,” and each is liable to the other on all covenants in the lease that “run with the land” (e.g., promises to pay rent and repair).

NOTE: The assignee is NOT in privity of contract with the landlord because they were not party to original lease agreement (i.e., the never exchanged the original promissory words of contract that created the lease). The assignee IS in privity of contract with the original tenant (the assignor).

Question 4

What is the relationship between landlord and a tenant who has assigned their interest in the lease to another?

Answer 4

After assignment, the original tenant is no longer in privity of estate with the landlord, but their lease contract remains in effect and enforceable. In other words, the original tenant remains liable on the original contractual obligations, such as to pay rent (i.e., privity of contract) because they shared the original promissory words of contract that created the lease.

The landlord and original tenant (assignor) remain secondarily liable to each other (e.g., should the assignee fail to pay rent or breaches some other covenant in the lease, the original tenant is liable).

Question 5

HYPO: L leases Blackacre to T1. T1 assigns to T2. T2 assigns to T3. T3 then engages in flagrant abuse to the premises.

(1) Can L proceed against T3, the direct wrongdoer?
(2) Can L proceed against T1, the original tenant?
(3) Can L proceed against T2?

Answer 5

(1) Yes, because L and T3 are in privity of estate.
(2) Yes, because L and T1 are in privity of contract.
(3) No, because L and T2 are neither in privity of estate (T2 does not have possession) nor privity of contract (T2 never directly contracted with L1).

Question 6

What is a covenant that “runs with the land”?

Answer 6

A covenant runs with the land if the original parties to the lease so intend and if the covenant “touches and concerns” the land (i.e., benefits the landlord and burdens the tenant (or vice versa) with respect to their interests in the property).

Question 7

True or false: Because a covenant to pay rent runs with the land, the assignee owes rent directly to the landlord.

Answer 7

True

Question 8

True or false: If an assignee reassigns the leasehold interest, their privity of estate with the landlord ends, and they have no liability for the subsequent assignee’s failure to pay rent.

Answer 8

True

Question 9

How does a sublease arise? What is the legal effect?

Answer 9

A sublease arises when T1, the original tenant, transfers less than her entire interest to T2.

The result is that the landlord and sublessee are in neither privity of estate nor privity of contract. Instead, T2 is responsible to T1, and vice versa (e.g., T2 pays rent to T1, who then pays L). Thus, a sublessee is not personally liable to the landlord for the rent or for the performance of any of the covenants in the main lease unless the sublessee expressly assumes the covenants.

Question 10

What are the landlord’s remedies in the event of nonpayment of rent or breach of other covenants when the original tenant has sublet the premises to another tenant?

Answer 10

The landlord may terminate the main lease if the lease so states or the power is given by statute. The sublease automatically terminates with the main lease.

Question 11

What are the rights of a sublessee as against the landlord?

Answer 11

A sublessee cannot enforce any covenants made by the landlord in the main lease, except a residential sublessee may be able to enforce the implied warranty of habitability against the landlord.

Question 12

How may a landlord prevent a tenant from assigning or subletting?

Answer 12

A landlord may prohibit a tenant from assigning or subletting without the landlord’s prior written approval if the lease with the original tenant permits.

Question 13

May a prohibition against assignment be waived? How?

Answer 13

Yes. A valid covenant against assignment is considered waived if the landlord was aware of the assignment and did not object (e.g., by knowingly accepting rent from the assignee).

Once a landlord consents to one transfer by a tenant, the landlord waives the right to object to future transfers by that tenant (T1), unless the landlord expressly reserves that right (known as the Rule in Dumpor’s Case).

Question 14

Lease covenants restricting assignment and sublease are strictly construed against _______.

Answer 14

the landlord

Thus, a covenant prohibiting assignment does not prohibit subleasing and vice versa.

Question 15

If a tenant assigns or sublets in violation of a lease provision, what results?

Answer 15

The landlord may terminate the lease or sue for damages, but the transfer is not void.

Question 16

May a landlord assign their interests? How?

Answer 16

A landlord may assign the rents and reversion interest they own. This is usually done by deed when the landlord conveys a building to a new owner.

The tenants’ consent is NOT required.

Question 17

What are the rights of a landlord-assignee against tenants?

Answer 17

Once tenants are given reasonable notice of the assignment, they must recognize and pay rent to the new owner as their landlord. The benefit of all tenant covenants that touch and concern the land runs with the landlord’s estate to the new owner.

Question 18

What are the liabilities of the landlord-assignee to tenants?

Answer 18

The burden of the landlord’s covenants that touch and concern the land runs with the landlord’s estate to the assignee; thus, the assignee is liable for the performance of those covenants.

The original landlord ALSO remains liable on all of the covenants they made in the lease.

Question 19

Under the common law, what is a landlord’s tort liability to lessees? Exceptions?

Answer 19

“Caveat lessee”: let the tenant beware. In tort under the common law, the landlord is under NO DUTY to make the premises safe.

EXCEPTIONS (“CLAPS”):
(1) Common areas

(2) Latent defects
(3) Assumption of repairs
(4) Public use rule
(5) Short-term lease of furnished dwelling

Question 20

Under the common law, what is a landlord’s duty regarding common areas?

Answer 20

A landlord has a duty of reasonable care in maintaining all common areas (e.g., hallways, stairwells, elevators).

Question 21

Under the common law, what is a landlord’s liability in tort regarding assumption of repairs?

Answer 21

A landlord is under no duty to make repairs, BUT once repairs are undertaken, the landlord must complete them with reasonable care. In other words, if the repairs are completed negligently and those repairs are the proximate cause of a tenant’s injury, the landlord is liable in tort.

Question 22

Under the common law, what is a land’s duty regarding latent defects?

Answer 22

A landlord must warn a tenant of hidden defects (i.e., a dangerous condition that the tenant couldn’t discover by reasonable inspection) of which the landlord has knowledge or reason to know. Otherwise, the landlord will be liable for any injuries resulting from the condition.

If the tenant accepts the premises after disclosure, the tenant assumes the risk, and the landlord is no longer liable in tort.

NOTE: The landlord’s obligation in tort is a duty to WARN, NOT a duty to REPAIR.

Question 23

Under the common law, what is the public use rule in the context of landlord liability?

Answer 23

A landlord who leases public space (e.g., a convention hall or museum), and who should know, because of the significant nature of the defect and the short length of the lease, that a tenant will not repair, is liable for any defects on the premises that cause injury to members of the public.

The rationale here is that a tenant will have neither the time nor the expertise to make the repairs herself.

Question 24

Under the common law, what is the effect of a short-term lease of a furnished dwelling on a landlord’s liability in tort?

Answer 24

A landlord who rents a fully furnished premises for a short period (e.g., a summer cottage) is under a stricter duty. Such landlords are responsible for ANY defective condition which proximately injures a tenant (whether or not they knew of the defect).

The rationale here is that a tenant will have neither the time nor the expertise to make the repairs herself.

Question 25

What is the modern view regarding landlords’ duties to tenants in tort?

Answer 25

Many courts now hold that a landlord owes a general duty of reasonable care towards residential tenants, and will be held liable for injuries in tort resulting from ordinary negligence if the landlord has notice of a defect and an opportunity to repair it.

Question 26

Under the modern view, what is a landlord’s duty regarding defects arising after a tenant takes possession?

Answer 26

A landlord generally is held to have notice of defects existing before the tenant took possession, but is NOT liable in tort for defects arising after the tenant takes possession UNLESS the landlord knew or should have known of them.

Question 27

Under the modern view, what is a landlord’s duty to repair?

Answer 27

If the landlord has a statutory duty to repair (e.g., housing codes), the landlord is liable in tort for injuries resulting from the landlord’s failure to repair or negligence in making repairs.

Question 28

Under the modern view, what is a landlord’s duty to provide secure premises?

Answer 28

Some courts hold landlords liable in tort for tenant injuries inflicted by criminal conduct of third parties in cases where the landlord failed to comply with housing code provisions dealing with security, maintain ordinary security measures, or provide advertised security measures (e.g., functional surveillance cameras).

Question 29

What is a fixture?

Answer 29

A fixture is a chattel that has been so affixed to land that it has ceased being personal property and has become part of the realty. A fixture passes with the ownership of the land and must stay put.

Question 30

There are 2 ways to tell whether a given chattel is a fixture and must stay put:

Answer 30

(1) When items are incorporated into the realty so that they lose their identity
(2) When its removal would cause considerable damage to the premises

Common examples: plumbing, heat ducts, a furnace

Question 31

What is a common ownership case? How does it affect the analysis of fixtures?

Answer 31

A common ownership case is one in which the person who brings the chattel to the land owns both the chattel and the land (e.g., when X installs a furnace in his home). That item is a fixture if the party who made the annexation objectively intended to make the item part of the realty.

This intention is determined by:
(1) the nature of the article,

(2) the manner of attachment,
(3) the amount of damage that would be caused by its removal, and
(4) the adaptation of the item to the use of the realty

Question 32

What is a divided ownership case? How does it affect the fixture analysis?

Answer 32

In divided ownership cases, the chattel is owned and brought to the realty by someone other than the landowner (e.g., by a tenant, licensee, or trespasser).

Question 33

What is accession?

Answer 33

Accession describes the annexor’s intent to make the chattel a permanent part of the real estate.

Question 34

In a divided ownership case regarding a landlord and tenant, how does one determine whether the chattel is a fixture?

Answer 34

An agreement between the landlord and tenant is controlling on whether an annexed chattel is a fixture.

Absent an agreement, a tenant is deemed to lack the intent to permanently improve the property, and thus may remove his annexed chattels if removal does not substantially damage the premises or destroy the chattel.

Annexed chattels must be removed by the end of the lease term (or within a reasonable time after the termination of an indefinite tenancy), and the tenant is responsible for repairing any damage caused by the removal.

Question 35

In a divided ownership case between a life tenant and a remainderman, how does one determine whether the chattel is a fixture?

Answer 35

An agreement between the life tenant and remainderman is controlling on whether an annexed chattel is a fixture.

Absent an agreement, a life tenant is deemed to lack the intent to permanently improve the property, and thus may remove his annexed chattels if removal does not substantially damage the premises or destroy the chattel.

Annexed chattels must be removed within a reasonable time after the life tenant’s death, and the life tenant’s estate is responsible for repairing any damage caused by the removal.

Question 36

In a divided ownership case between a licensee or trespasser and a landowner, how does one determine whether the chattel is a fixture?

Answer 36

Licensees are treated much like tenants.

Trespassers normally lose their annexations. Thus, absent a contrary statute, an adverse possessor or good faith trespasser cannot remove fixtures (e.g., house erroneously constructed on a parcel that possessor believed she owned).

Some courts, however, allow a good faith trespasser recovery measured by the value added to the land (not construction costs).