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Terms in this set (58)
The transfer of the legal right of possession, in exchange for rent
Common Law: viewed as a transfer of a property interest (property approach).
Modern Trend: viewed as a contract (contracts approach).
Statute of Frauds (One Year Rule)
If a lease is larger than 1 year, it has to be in writing. Never applies to tenancy at will (if exactly 1 year it can be oral).
1. signed by the party being charged
2. party to be charged is the one trying to get out
3. with material provisions (parties, property, & price)
If oral agreement, SoF brought in → invalidates agreement. What if parties unaware of SoF? Still invalidated, so it becomes tenancy at will. At end of first month, becomes periodic tenancy (bootstrap).
3 Types of Tenancies
1. Term of Years
2. Periodic Tenancy
3. Tenancy at Will
Under modern trend you basically create whatever kind of tenancy you want (contracts/intent based approach).
Tenancy at Will
A tenancy of no fixed period that endures so long as both landlord and tenant desire.
SOF doesn't apply.
Both parties have the right to terminate
Common Law: there is no notice for termination. Any act inconsistent with a tenancy at will is a termination.
Modern Trend: some notice is required especially if termination is coming from landlord's end.
Death: terminates at death because any act inconsistent with a tenancy at will is a termination.
Term of Years
A non-renewable estate that lasts for some fixed period where the final day of the term is calculable on the first day. Exchanges legal possession for cash.
Single fixed period -- no renewal (terminates at end of period)
Future interest is the lessor, but doesn't kick in until the term of years is complete
Termination: by definition, notice is given of termination on first day of lease in the duration of the lease.
Death of Landlord does not affect tenancy
Death of Tenant: heirs get it
A lease for a renewable fixed period that automatically renews until either landlord or tenant gives notice of termination (typically month to month or year to year).
Continues for succeeding periods until either Landlord or Tenant gives notice of termination
Notice - must end on the last day of the term
Common Law: notice equal to the period but not to exceed 6 months. The lease must end on the last day of the term.
Modern Trent: all notice is reduced to thirty days. The lease still ends on the last day of the term, but in a month to month periodic tenancy lease can end any day after the 30 day period.
Death of the Tenant or Landlord does not affect the tenancy
Term of Duration Clause vs Payment of Rent Clause
Term of duration clause trumps payment of rent clause but if there is not term of duration clause look to rent clause.
The Effect of Defective Notice
Common Law: equals no notice at all.
Modern Trend: becomes effective on the first day it would have been an effective notice.
When a tenant remains in possession (holds over) after termination of the tenancy.
Actual possession without legal possession.
Landlord can accept or reject
- Reject = eject
- Accept = Express or Implied
If landlord accepts the holdover tenant's implied offer: in no event can it be over a year because of SoF.
If landlord accepts, then they cannot change their mind once they've accepted.
Fair Housing Act 1968
Protects specific statuses & broad coverage
Prohibits racial discrimination in the sale or rental of real property and with respect to advertisements for the sale of real property.
Generally does not apply to small-time family operations (4 or less)
Exception: applies to small operations if they advertise or use a real estate agent and indicate they will discriminate.
Civil Rights Act 1866
Prohibits racial discrimination for tenants. Very narrow. No exemptions.
Guarantees equal property rights, no discrimination based on race.
Does not cover advertising.
Landlord Granting Legal Possession (& potentially actual possession)
American Approach: The essence of the lease is legal possession only, but as long as the legal bundle of rights has been transferred to the new T the L has done what they are obliged to do
English Approach: L guarantees actual possession on the first day of the term/lease and legal possession for the entire term/lease
Sublease & Assignment
Common Law: focus on the property interest they actually convey.
Modern Trend: apply the meaning based on the intent of the parties in the language of the conveyance
- commercial: might use CL or MT to analyze
- residential: say they'd use MT but might use CL bc might not understand
Must have privity -- contract or estate
Privity of Contract
Parties to an agreement
There is always privity of k between the original landlord and tenant.
A landlord is in privity of contract with a tenant or subtenant if the two are parties to an agreement or, under third party beneficiary principles, if the subtenant expressly assumes liability.
Common Law Transfers of Interest
There is always privity of contract between the original landlord and tenant.
If the tenant transfers her interest, that will affect privity of estate, not contract. From the contract perspective, original tenant is still a guarantor of the rent (absent novation). Assignee is liable to landlord under privity of estate for rent.
Third Party Beneficiary Agreement
If when T enters the agreement with T1, T1 agrees to assume the obligations of the lease, T1 can be sued due to privity of contract if it is express in the lease
T can still be sued if T1 does not perform
Not needed with an assignment because in an assignment there is privity of estate
Express Assumption Clause
Modern Trend: In transfer agreement between tenant and subtenant, subtenant expressly agrees to assume obligations in original lease between landlord and tenant.
Landlord is third party beneficiary, thus landlord under this theory would have privity of contract between tenant and subtenant (only in the case of an express assumption clause).
Landlord can be in privity of contract with multiple parties, but can only be in privity of estate with one party.
Looks to parties intentions in written instruments transferring leasehold interests
Privity of Estate
Exists between any 2 parties that exchange the legal right to possession. The landlord is in privity of estate with whoever has the legal right of possession on the last day of the lease.
Test: is giving legal right of possession back to L at the end?
Cannot exist between more than 2 parties.
Can be used to determine liability for rent.
Whether a lessee assigns or subleases will effect whether the lessee will be in privity of estate or contract with the landlord.
Subleases will not effect privity of estate, but assignments will.
Grants the sublessee an interest in the leased premises less than the lessee's own with a reversionary interest remaining with the lessee.
Does not establish privity of estate or privity of contract between the landlord and the subtenant.
Original tenant retains both privity of estate and privity of contract with the landlord.
Conveys the whole lease interest (whatever the lessee has left), leaving no present or reversionary interest in the lessee. Assigning the remainder of the lease.
Alters privity of estate, but not privity of contract.
Substantial minority of jurisdictions find that if a lessee transfers her interest through an instrument that gives her the right of entry/power of termination to the sublessee if the lessee uses the land the wrong way, the transfer is a sublease (most find an assignment).
If lessee transfers all of his interest in some physical part of the premises.
Lessee can't assign or sublease without landlord's approval. Usually narrowly construed to promote the public policy of the transferability of land.
Common Law: Landlord can be arbitrary (not in an illegal way)
Modern Trend: must be reasonable in commercial context
Common Law: Absent this express release, the privity of contract between original landlord and original tenant will not be affected by assignment or sublease.
Modern Trend Dispossessing Tenants
The only lawful means to dispossess a tenant who has not abandoned nor voluntarily surrendered, but who claims possession and rights adverse to those claimed by landlord, is by resort to judicial process.
Eviction Under Common Law
Compliance with terms under the lease, and covenant to provide possession were independent.
Thus the breach of one didn't necessarily allow a breach of the other.
Thus breach of lease did not necessarily permit eviction. Would have to sue for damages.
A Landlord may rightfully use self-help to retake possession if:
1. The landlord is legally entitled to possession (such as where a tenant holds over or where a tenant breaches a lease which contains a forfeiture clause / right of reentry clause); and
2. The landlord uses no more force than reasonably necessary.
Landlord Right of Reentry
Common Law: landlord must have a clause in lease
Modern Trend: no clause needed
Right of Reentry
Prior to entry, owner needs a legal right to possession (before they can take actual possession) in commercial and residential
Common Law - Self Help: Landlord can invoke the clause and reclaim actual poss using as much force as reasonably necessary
Modern Trend - Judicial Priocess: It is a default and mandatory rule, parties should go to the courts
Self Help to Acquire Actual Possession (Common Law)
A landlord could resort to self help if
(1) the landlord was legally entitled to possession of the premises. LL can show if
(a) there is a holdover tenant, and
(b) if there is a right of entry clause in the lease that has been triggered; and
(2) the landlord used no more force than reasonably necessary.
Self Help Rule (Modern Trend to Common Law Approach)
Landlords, in some jurisdictions, are permitted to use self help as long as it's peaceable. But there is no bright line test as to what that means, so practically it is a great risk.
Self Help (Modern Trend)
No self help. Landlord must use judicial process.
Can Landlord Terminate Lease because Tenant Breaches?
Common Law: provisions in lease independent of each other (landlord's duty to perform is independent tenant's performance) so it is not automatically grounds for terminating.
Modern Trend: might be grounds for termination (lead with common law).
Voluntary agreement to terminate the lease, which transfers legal possession back to Landlord
Express: w/ a letter
Implied: Tenant vacates, time passes without rent payment
Common Law: no duty to mitigate
Modern Trend: make an attempt to mitigate damages, there is an implied duty to act in good faith (even if other party breaches, Landlord has a duty to mitigate).
If they fail to mitigate then they lose the right to sue for prospective rent
- a failure to properly mitigate is an acceptance of the implied offer of surrender and a loss of ability to recover money from that point forward
- if commercial, can contract out of duty
- if Landlord gets more $ than original lease, Tenant gets extra $ because still has legal possession and you rejected his offer
- if mitigating and new lease longer than original --> Landlord CANT do that because acting as Tenant's agent; only have as much power as Tenant would have
Landlord Options After Surrender: Landlord Accepts (terminating the lease)
Tenant is liable for rent up until the acceptance
Landlord Options After Surrender: Landlord Rejects and Does Nothing
Tenant is still in legal possession and they can mitigate if they desire
Landlord Options After Surrender: Landlord Rejects and Mitigates (CL)
Landlord has option to mitigate
- Landlord becomes Tenant's agent and Tenant is guarantor for replacement Tenant
- if Landlord is acting for their own benefit as opposed to mitigating on the tenant's behalf it can be construed as an acceptance. In this instance, conduct trumps words and it can be determined to be an implied acceptance
Landlord Options After Surrender: Landlord Rejects and Mitigates (MT)
Landlord has duty to mitigate (duty to act in good faith)
- Landlord must treat vacant apartment like any other vacancy
A duty on Landlord's part; Landlord breaches the duty, and as a result of the breach there is a condition, wherein Tenant gave notice, waited for Landlord to cure but didn't, and Tenant vacated in a timely manner
Constructive Eviction Elements
- Duty to disclose latent defect in the premises that existed at the time the lease was entered into, and L knew or should have known of the defects
- -Latent: can't be discovered during an inspection by T
- Maintain common areas
- Undertake any repairs
- Abstain from fraudulent misrepresentation as to the premises condition
3. Breach led to a condition that made the property substantially unsuitable for the purposes it was leased, or interferes with T's quiet title
4. Gave notice
5. Waited for L to cure, and when they didn't a rx time had passed
6. T vacated in a timely manner
Time For Constructive Eviction (privilege to vacate)
If problem not fixed within a reasonable amount of time, tenant must vacate in a timely manner or privilege of constructive eviction is waived.
Implied Covenant of Quiet Enjoyment
No one with a superior legal right will disrupt your tenancy
Modern Trend: Tenant can sure Landlord as its own CoA under CQE
Common Law: Tenant cannot sue Landlord as its own CoA under CQE
6 Implied Duties Under Covenant of Quiet Enjoyment (CL)
1. Duty to disclose latent defects that the LL knew of or should have known.
2. Duty not to fraudulently misrepresent the condition of the property.
3. Duty to make any promised repairs or repairs voluntarily undertaken.
4. Duty to maintain common areas.
5. Duty to maintain furnished dwellings in leases for short terms (boarding houses).
6. Duty to abate immoral conduct or nuisances which arise on property owned by LL.
American Rule for Leasehold Tenancies
The lessee has a right to legal possession, but absent an explicit covenant, the lessor has no duty to deliver actual possession.
The rationale is that the landlord no longer has the right to actual possession, so she doesn't even have the right to bring an action in ejectment against trespassers (landlord only has a future interest).
English Rule for Leasehold Tenancies
Implies a covenant requiring the lessor to put the lessee in actual possession. Only applies to the first day of possession, then it is up to the lessee.
Rationale is that landlord has the most experience of dealing with this problem, has the best resources, better suited to spread the risk by raising the rent, etc.
Partial Constructive Eviction
Common Law: Landlord cannot apportion wrongduty so Tenant is released to pay rent on any of the property
Modern Trend: Tenant is not released completely from their duty to pay rent, the just pro rate reduce the rent Tenant
Landlord evicts Tenant from part of premises
Common Law: Can't apportion rent and Tenant is absolved from duty to pay rent
Modern Trend: rent is reduced pro rata
Implied Warranty of Habitability
Tenants duty to pay rent is dependent on LL's duty to provide habitable premises. Standard varies from jurisdiction to jurisdiction but appears to be what a reasonable person would consider habitable.
Basically, ensures that premises are safe and healthy. Tenants must still give LL notice and reasonable opportunity to cure. Tenants can use this as a shield or sword.
When the landlord breaches the implied warranty of habitability, tenant can withhold rent, repair defects and deduct this cost from rent payments, seek rent already paid, and seek punitive damages in the appropriate cases. If tenant uses self help, can deduct from rent.
Common Law: promotes health and safety, usually comes from housing codes
Modern Trend: average rx person standard
Scope of Implied Warranty of Habitability
The warranty of habitability covers all latent and patent defects in the essential facilities of the residential unit.
Essential facilities are facilities vital to the use of the premises for residential purposes.
Waivability of Implied Warranty of Habitability
A tenant cannot assume the risk by acknowledging a defect, nor can the implied warranty of habitability be waived by a covenant in the lease.
Waste and Repair (Implied Warranty of Habitability)
Because of the unequal bargaining power of LL and tenants, general rule is that parties to a residential lease cannot shift the burden to repair under the implied warranty of habitability from the LL to the tenant.
Standard and Breach of Implied Warranty of Habitability
Vary among jurisdictions. Generally, breach occurs when the premises are uninhabitable in the eyes of a reasonable person. Housing codes and their provisions are compelling but not conclusive.
Means more than avoiding slum conditions: continuous loud noise may be a breach.
Remedies for Breach of Implied Warranty of Habitability
Based on contract principles, and in the event of a breach, the tenant may avail himself of contract remedies (damages, rescission, reformation).
Almost all jurisdictions permit the tenant to raise breach of the warranty as a defense to a summary eviction action for non payment of rent.
If the tenant is successful the rent will be reduced partially or totally and the tenant will remain in possession and pay whatever reduced damages are determined. Tenant may also terminate the lease and sue for damages (similar to constructive eviction doctrine).
Doctrine of Retaliatory Eviction
If L responded to T's proper assertion of their rights under the implied warranty of habitability by doing anything to increase burden on T within 3-6 months of T's action, the court presumed improper motives and estopped L from doing that
Illegal Lease Doctrine
Modern Trend: If there is a latent material breach of the local housing code that the Landlord knows or should know about on the first day of the lease that goes to the health and safety of the premises, then the original lease is void, tenant doesn't have to leave but can, and can reduce the rent owed to reflect the condition of the premises.
3 Duties Which Govern the Landlord Tenant Relationship
1. The Covenant of Quiet Enjoyment (CL)
2. The Illegal Lease Doctrine (MT)
3. The Implied Warranty of Habitability (MT)
Discrepancy between way Rent is Reserved and way Rent is Paid
Where the way the rent is reserved (the amount of rent over an express period of time set forth in the lease) is different from the way the rent is to be paid, the general rule is that the way the rent is reserved controls.
So, if rent is reserved on an annual basis, to be paid monthly, the new term would be a year to year lease (not month to month).
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