What are the two basic kinds of estates?
Broadly speaking, there are two basic kinds of estates: freehold estates (fee simple, life estate, etc.) and leasehold estates. Landlord-tenant law applies to leasehold estates.
What is a leasehold estate?
A leasehold estate is a hybrid legal creature, in that it is both an interest in land and a contract.
Why are leases typically longer & more complicated than deeds?
Leases are typically longer and more complicated than deeds that transfer freehold estates because leaseholds contemplate an ongoing relationship.
Why does it matter that a court can find that a document called a "lease" is not in fact a "lease" but a license or life estates?
A court can find that a document called a "lease" is not in fact a "lease" but a license or life estates. This is significant because landlord-tenant law only applies to leaseholds. Creation of a landlord-tenant relationship automatically triggers certain rights and duties, and particular grounds for liability and remedies.
What are the four sub-categories of leasehold estates?
(1) term of years;
(2) periodic tenancy;
(3) tenancy at will;
(4) tenancy at sufferance.
Term of Years
lasts for a fixed or knowable period; no limit on time (at common law); cannot be created by implication; no notice of termination needed (because the writing specifies precisely when it will terminate); death of landlord or tenant does not terminate tenancy; can be terminable upon the happening of some event or condition.
lasts from period to period (month to month, year to year); can be created expressly or by implication; year to year terminated by half year's notice; less than a year, notice of termination = period, but not to exceed 6 months; notice must terminate the tenancy at the end of a period; death of landlord or tenant does not terminate tenancy.
Tenancy at Will
no fixed period; typically endures so long as both parties desire; but note that some jurisdictions enforce one-sided termination clauses as long as they are clear; terminates at will or by death of either party.
Tenancy at Suffrance
Tenants hold over
What are landlord's options when faced with a tenancy at suffrance?
(1) don't consent—tenant becomes trespasser—file suit to evict and seek damages; or
(2) consent to new tenancy (expressly or by implication). Landlord must choose one or the other.
When can lease termination provisions be enforced?
Leases w/ clear unilateral termination provisions may be enforced to effectuate the intent of the parties, but ambiguous leases will be presumed mutual unless proven otherwise ("rebuttable presumption").
English Rule v. American Rule
Under the English Rule, there is an implied covenant to deliver the property itself along with a legal right to the property. Under the American Rule, there is no such covenant, so the lessor's remedy is against the holdover tenant, not against the lessor. Case law in the U.S. is still very divided on this. Default rules, so can be contracted around. Safest thing is to specify in the lease whether there's an obligation to deliver the property itself.
How does the statute of frauds apply?
Leases over one year must be in writing
Transferring: Sublease vs. Assignment
A sublease transfers less than the entire term of the lease. An assignment transfers the entire term of the lease.
Privity: Sublease vs. Assignment
A sublease creates no privity of contract between the landlord and the sublessee; the original lessee retains a reversionary interest in the lease. An assignment creates privity of contract between the landlord and the assignee (who steps entirely into the shoes of the original lessee).
What is most important when determining if something is a sublease or not?
A court can find a sublease even if the transfer document says "assignment" and vice-versa. Intent of the parties usually controls, is more persuasive to the court than terminology alone.
Majority vs. Minority Rule on Subleases and Assignments
Majority rule: A landlord in a commercial lease may deny a sublease or assignment without stating a commercially reasonable objection.
Minority rule is a landlord who denies a sublease or assignment must state a commercially reasonable objection.
• Default means failing to observe a lease obligation. Both parties are capable of default.
Abandonment is when a tenant walks away from the lease without good cause.
Constructive eviction is when the tenant walks away from the lease with good cause.
When a tenant defaults what to the rules that apply depend on?
When a tenant defaults. Rules that apply depend upon whether the tenant (1) is still in possession of the property; or (2) has left the property.
How do landlords regain possession when the tenant currently has possession?
Traditional rule was landlords could use self-help to regain possession if they did so peacefully. Modern trend in the courts is not to allow self-help, but to require landlords to go to the courts and other authorities to remove holdover tenants.
Removing a tenant with summary proceedings
You can get a tenant out with "summary proceedings" which are fast but only deal with possession, not with damages. You have to follow the proper procedures so the tenant's common law and constitutional rights are respected.
When a tenant abandons the property
Tradition rule was that landlord did not need to mitigate damages by trying to find another tenant. Modern (and majority) rule is that the landlord DOES have to mitigate damages by trying to find another tenant.
* The rule requiring a landlord to mitigate damages is a default rule, it can be contracted around.
Covenant of Quiet Enjoyment
Applies to both commercial and residential leases. Breached when the conditions of the premises render them "substantially unsuitable" for the purpose for which they were leased, or seriously interfere with their beneficial enjoyment. Can be any number of things, including lack of heat, flooding, bad plumbing, bad neighbors (drug dealers, burglary, vandalism, secondhand smoke, e.g.). Does not have to be 24/7 but does have to be permanent (that is, ongoing).
Implied Warranty of Habitability
Only applies to residential leases. Requires condition of premises to be minimally adequate from a health and safety perspective ("safe, clean, and fit for human habitation"). May be electricity, gas, garbage, broken window, absence of lock, heat (in a cold place), air conditioning (in a hot place), sewage, lead paint, rotting walls/ceiling, etc. Can get punitive damages (to discourage slumlords).
Covenant of Quiet Enjoyment vs. Implied Warranty of Habitability
• All jurisdictions recognize CQE but not all recognize IWH.
• Neither warranty can be contracted around (with "as is" provision, for example).
• The Covenant of Quiet Enjoyment can be waived by the passage of time (if you haven't mentioned the problem it must not have rendered the premises "substantially unsuitable"). The Implied Warranty of Habitability cannot be waived by the passage of time.
• Both warranties require the tenant to provide the landlord with notice and a reasonable opportunity to fix the problem before filing suit or abandoning the lease.