Transfers of Leaseholds Flashcards
1
Q
Transfer of Leasehold - The Assignment V.S. the Sublease
A
- Absent some prohibition in the lease, tenant may freely transfer their interest in whole (an assignment - transfer of entire remaining term of a lease) or in part (sublease- tenant has retained some part of remaining
term, other than a right to reenter upon breach). - In the lease, LL can prohibit tenant from assigning/ subletting w/o LL’s prior written approval.
- However, once LL consents to 1 transfer by tenant, LL cannot object to future transfers by that tenant, unless LL expressly reserves the right
2
Q
Tip
A
Transfer will be considered a sublease, rather than an assignment, only when original tenant reserves time for herself (Ex. the last month of the lease).
3
Q
The Assignment
A
- An assignee stands in shoes of original tenant in a direct relationship w/ LL (assignee & LL are in “privity of estate,” & each is liable to the other on all covenants in the lease that “run with the land.”)
- After assignment, original tenant is no longer in
privity of estate w/ LL, but their lease K remains in effect & enforceable. - Original tenant remains liable on original K terms, such as to pay rent (privity of K).
4
Q
Assignment: Covenants that Run with the Land
A
A covenant runs w/ the land if original parties so intend & if it “touches & concerns” the land (benefits LL & burdens tenant (vice versa) w/ respect to their property interest).
5
Q
Assignment: Rent Covenants
A
- B/c a covenant to pay rent runs w/ the land, assignee owes rent directly to LL.
- If tenant’s assignee fails to pay rent (or breaches another covenant), LL can sue assignee b/c of privity of estate and, if assignee cannot pay, can also sue original tenant b/c of privity of K.
- If assignee reassigns leasehold interest, their privity of estate w/ LL ends, and they have no liability for subsequent assignee’s failure to pay rent
6
Q
The Sublease
A
- Sublessee is tenant of original lessee & usually pays rent to original lessee, who pays LL.
- Sublease occurs when T1 transfers less than her entire interest to T2.
- LL & sublessee are not in privity of estate nor privity of K.
- T2 is responsible to T1 & vice versa.
- Sublessee is not personally liable to LL for rent/ performance of any covenants in main lease unless sublessee expressly assumes covenants
7
Q
Tip
A
If there’s a sublease, relationship between LL and T1 remains fully intact. Ex. if T2 fails to pay rent, L proceeds against T1 & T1 in turn proceeds against T2. If the residential premises betray IWH, T2 proceeds against T1 & T1 in turn proceeds against L.
8
Q
Sublease: Landlord’s Remedies
A
- LL may terminate main lease for nonpayment of rent/breach of other covenants if lease so states/ power is given by statute
- Sublease automatically terminates w/ main lease.
9
Q
Sublease: Rights of Sublessee
A
- Sublessee cannot enforce any covenants made by LL in main lease, except a residential sublessee may be able to enforce IWH against LL
10
Q
Covenants Against Assignment or Sublease
A
- In the lease, LL can prohibit tenant from assigning/subletting w/o LL’s prior written approval.
- A valid covenant against assignment is considered waived if LL was aware of assignment & did not object (ex. by knowingly accepting rent from assignee).
- Once LL consents to 1 transfer by tenant, he cannot object to future transfers by that tenant, unless LL expressly reserves the right (known as the Rule in Dumpor’s Case).
- Covenant prohibiting assignment does not prohibit subleasing & vice versa
- Note: If tenant assigns/ sublets in violation of lease provision, LL usually may terminate lease/ sue for damages, but transfer is not void.
11
Q
Assignments by Landlords
A
- LL may assign rents & reversion interest they own.
- Usually done by deed when LL conveys a building to a new owner.
- Tenants’ consent not required.
12
Q
Rights of Assignee Against Tenants—Attornment
A
- Once tenants are given reasonable notice of assignment, they must recognize and pay rent to new owner as LL.
- The benefit of all tenant covenants that touch & concern the land runs to new owner.
13
Q
Liabilities of Assignee to Tenants
A
- Burden of LL’s covenants that touch & concern the land runs to assignee
- Assignee is liable for performance of covenants.
- Original LL also remains liable on covenants
14
Q
LANDLORD’S TORT LIABILITY: Common Law of Caveat Lessee
A
- CL norm is: Let tenant beware.
- In tort, LL was under no duty to make premises safe.
- The 5 exceptions to caveat lessee: CLAPS:
- Common areas
- Latent defects
- Assumption of repairs
- Public use rule
- Short-term lease of furnished dwelling
15
Q
Landlord Tort Liability: Common Areas
A
- LL has duty of reasonable care in maintaining all common areas (ex. hallways, stairwells, elevators).
16
Q
Landlord’s Tort Liability: Latent Defect Rule
A
- LL must warn tenant of hidden defects (dangerous condition that tenant couldn’t discover by reasonable inspection) of which LL has knowledge/ reason to know.
- Otherwise, LL will be liable for any injuries resulting from condition.
- If tenant accepts premises after disclosure, tenant assumes the risk; LL is no longer liable in tort.
- Note: LL’s obligation in tort is a duty to warn, not a duty to repair.
17
Q
Landlord’s Tort Liability: Assumption of Repairs
A
- While in tort LL is under no duty to make repairs, once repairs are undertaken, LL must complete w/ reasonable care.
18
Q
Landlord’s Tort Liability: Public Use Rule
A
- LL who leases public space (ex. a convention hall/ museum), and who should know, b/c of significant nature of defect & short length of lease, that tenant will not repair, is liable for any defects on premises that cause injury to the public.
19
Q
Landlord’s Tort Liability: Short-Term Lease of Furnished Dwelling
A
- A LL who rents a fully furnished premises for a short period (ex. a summer cottage) is under a stricter
duty. - Such LLs are responsible for any defective condition which proximately injures tenant (whether/not they knew of defect).
20
Q
Modern Trend—General Duty of Reasonable
Care
A
- Many cts now hold that LL owes a general duty of reasonable care toward residential tenants, and will be held liable for injuries in tort resulting from ordinary negligence if LL had notice of a defect & opportunity to repair it.
21
Q
General Duty of Reasonable Care: Defects Arising After Tenant Takes Possession
A
- LL generally is held to have notice of defects existing b/f tenant took possession but is not liable in tort for defects arising after tenant takes possession unless LL knew/should have known of them.
22
Q
General Duty of Reasonable Care: Legal Duty to Repair
A
- LL has a statutory duty to repair (ex. housing codes
- LL is liable in tort for injuries resulting from LL’s failure to repair/negligence in making repairs.
23
Q
General Duty of Reasonable Care: Security
A
- Some cts hold LL s liable in tort for tenant injuries inflicted by criminal conduct of 3rd parties in cases where LL failed to comply w/ housing code provisions dealing w/ security, maintain ordinary security measures, or provide advertised security measures (ex. surveillance cameras).
24
Q
Tenant’s Liability
A
- DOC owed by tenant, as an occupier of land, to 3rd persons is discussed in Torts outline
25
FIXTURES
- 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 must stay put.
26
CHATTELS INCORPORATED INTO STRUCTURE
- How to tell that a given chattel is a fixture & must stay put: 2 ways to tell.
- First, when items are incorporated into the realty so that they lose their identity.
- Second, a chattel affixed to realty is a fixture when its removal would cause considerable damage to the premises.
- Ex. plumbing, heating ducts, a furnace.
27
COMMON OWNERSHIP CASES
- A common ownership case is one in which the person who brings the chattel to the land owns both chattel and land (ex. X installs a furnace in his home).
- That item is a fixture if party who made the annexation **objectively intended** to make item part of the realty.
- This **intention** is determined by: the **nature** of the article, the manner of **attachment**, the amount of **damage** that would be caused by its removal, and the **adaptation** of the item to the use of the realty.
28
DIVIDED OWNERSHIP CASES
- In divided ownership cases, chattel is owned & brought to the realty by someone other than landowner (ex. by a tenant, licensee, or trespasser).
- Accession describes annexor’s intent to make chattel a permanent part of the real estate.
29
Divided Ownership Cases: Landlord-Tenant
- Suppose that a tenant installs a chandelier onto the leased premises’ ceiling.
- An agreement between LL & tenant is controlling on whether an annexed chattel is a fixture.
- Absent an agreement, tenant is deemed to lack intent to permanently improve property, and thus may remove his chattels if removal does not substantially damage the premises/destroy the chattel.
- Annexed chattels must be removed by end of lease term (or w/in a reasonable time after termination of an indefinite tenancy), and tenant is responsible for repairing damage caused by removal.
30
Divided Ownership Cases: Life Tenant and Remainderman
- The same rules apply in life tenant remainderman context as in LL-tenant situations, except life tenant’s rep may remove annexations w/in a reasonable time after life tenant’s death.
31
Divided Ownership Cases: Licensee or Trespasser and Landowner
- Licensees are treated much like tenants, whereas trespassers normally lose their annexations.
- Thus, absent a statute, an adverse possessor/ 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).
