Leasehold Estate

Implied Warranty of Habitability How to determine whether breach has occurred Once warranty has been breached Remedies (3)

Habitable premises is an implied warranty by law. It requires the landlord to maintain the premises fir for human habitability of a residential dwelling. In determining whether warranty has been breached: Courts can look to local municipal housing code/minimum state housing code standard. A Breach occurs when the leased premises are "uninhabitable" in the eyes of a reasonable person Once the warranty has been breached the Tenant must notify landlord & allow him time to remedy the effect. Remedies for beach include: (1) terminate the leasehold and vacate the premises, (2) stay and withhold rent, and (3) stay and repair or collect damages. Does not apply to commercial leases. (constructive eviction not a defense for L, meaning T does not have to abandon premises); or TERMINATE & LEAVE Tenant may terminate lease, vacate premises & recover damages STAY & WITHHOLD RENT Tenant may remain in possession & withhold rent pending landlord correction of defects. Withheld rent must be paid into escrow account pending court order. Tenant must notify landlord STAY & REPAIR Tenant may remain in possession and use reasonable amount of rent to make repairs sufficient to bring premises into habitable condition Some states made this into statute (Repair & deduct provisions that specify how much rent may be used for repair purposes & how frequently this remedy may be invoked) Stay & Recover damages Tenant may remain in possession and recover damages in some form of rent abatement or deduction and in some jurisdictions for discomfort and annoyance

➢ Partial Eviction by landlord

If T is evicted from any portion of the leased premises by L, then his rent obligation abates entirely until possession is restored.

Privity of contract

Relationship between parties to a contract, allowing them to sue each other but generally preventing a third party form doing so. • Rests upon the existence of an agreement, regardless of whether a landlord-tenant relationship exists • Looks at whom has agreed to certain rights and obligations under the POK • Does not run with the land like POE • The original lease will not bind a new tenant under POK unless the new tenant ASSUMES the lease agreement.

Assignment v. Sublease

SUBLEASE: A sublease is the transfer by tenant of less than his entire interest. The SUBLESSOR remains in privity of estate & privity of contract with the landlord The SUBLESSEE is in privity of estate & privity of contract with the sublessor ASSIGNMENT: An assignent is the transfer by T of his entire interest in the leased premises. Thus he must transfer the entire remaining term of his lease. ASSIGNOR (Original tenant) remains in privity of contract with the landlord [Unless released by the landlord]; No longer in privity of estate with landlord The ASSIGNEE is in privity of estate with the landlord; Is not in privity of contract with the landlord [Unless the assignee assumed the lease obligations]

➢ Actual Eviction

T is physically evicted from the entire leased premises (by L or one with paramount title). • Ts obligation to pay rent ceases • T treats the lease as terminated; his liability for future rent under the lease is discharged • T may also collect damages from L for breaching this covenant

Tenant who defaults: T in Possession (2) or T not in possession(3)

When a tenant defaults who is in possession of the premises a landlord has two options: (1) landlord can evict, or (2) Landlord can choose to continue the relationship with the tenant and sue for rent owed. When a tenant defaults and is not in possession of the premises the landlord has three options: (1) Landlord can accept the tenants abandonment as a surrender; (2) ignore the abandonment and hold the tenant responsible for unpaid rent; (3) re-let the premises on the wrongdoers behalf and hold the tenant liable for any deficiency. To surrender the premises is an agreement to prematurely terminate a tenancy. Express surrender is subject to the statute of frauds and if the lease had to be in writing , so much the surrender. Abandonment occurs when the tenant vacates the leased premises without justification or an intention of returning and defaults in on the payment of rent. Its an implied offer to surrender, which the landlord is free to accept or reject.

Privity of Estate

A mutual or successive relationship flowing from the ownership of property interests by landlord and tenant in the same land. • Rests upon a L-T relationship (right of exclusive possession) • Certain lease covenants run with the land, e.g., rent covenant or duty to repair, quiet enjoyment, etc. • Acquisition of a leasehold interest by the new T, regardless of whether it is an assignment or sublease, established privity of estate.

• Duty to Deliver of Possession( Majority v Minority)

American rule (Minority Rule )he landlord is obligated only to deliver legal possession, i.e., the legal right to possession of the premises when the lease term begins. English Rule (Majority Rule)the landlord must deliver not merely legal, but actual possession. Upon the landlord's default, the tenant may terminate the lease and sue for damages. ➢ Legal Possession-• Tenant has contractual right of possession ➢ Actual Possession- Tenant has right to physically enter the property when lease starts

Assumption agreement Novation

An assumption agreement allows the landlord to sue the assignee/sublessee who assumes terms of original lease for: Failure to pay rent due under terms of original lease Any other breach of the contractual terms of the original lease Landlord's mere consent to original tenant's assignment/sublease does not relieve original tenant's assignment or sublease of the property does not relieve the original tenant of her obligations under the lease Landlord must grant a NOVATION Novation: Granted where landlord expressly agrees to release the original tenant from her obligations under the original lease

Consent Clauses:Approval Clause (Majority v Minority)

Approval Clause: Clause requiring lessor's approval before lease can be assigned or sublet Applies only to commercial leases Parties to a commercial lease are typically deemed to be sophisticated business persons MAJORITY RULE: When lease contains approval clause, lessor may arbitrarily refuse to approve proposed assignee no matter how suitable assignee is or no matter how unreasonable lessor's objection MINORITY RULE: WHEN lease provides for assignment only with lessor's approval, consent may be withheld only where lessor has commercially reasonable objection to assignment

The covenant of quiet enjoyment

The covenant of quiet enjoyment is an obligation implied by law. It provides that the tenant has a right to quiet use and enjoyment of the premises without interference from the landlord. There are two ways that the covenant of quiet enjoyment can be breached: (1) if the landlord actually and wrongfully excludes the tenant form any or party of the premises ; and (2) the landlord commits constructive eviction. Constructive eviction consists of: (1) substantial interference, (2) notice, and (3) vacating the premises. Substantial interference occurs when the landlord substantially interferes with the tenant's use and quiet enjoyment so much that a reasonable person could not enjoy the premises as they had intended. The second element, notice, requires that the tenant must five notice of the problem and give the landlord a reasonable amount of time to remedy the problem. The third element, vacate, requires the tenant to vacate the premises within a reasonable time after the landlord fails to correct the problem.

Rule block

There are four types of leasehold estates: (1) Term of years, (2) periodic tenancies, (3) Tenancies at will, (4) Tenancies at sufferance. A term of years is a lease for a fixed, determined period of time. No notice is required for termination. A term of years greater than one year must be in writing to satisfy the statute of frauds. A periodic tenancy continues for successive intervals until either the landlord or tenant give proper notice of termination. Unless otherwise agreed, the common law default rule requires notice to be given at lease equal to the long of the period itself. A tenancy at will has no fixed time or period, and it may terminated any moment by either party. Reasonable notice must be given to terminate fancy at will. A tenancy at sufferance is created when the tannin has wrongfully held over after the expiration of the original lease. It is usually short-lived and will continue only until he landlord either evicts or gives tenant a new leasehold. Unless otherwise agreed upon by the landlord and tenant, the tenancy at sufferance is subject to those same terms and conditions as the ordinal lease. When the tenant holds over, the landlord has two options; (1) the landlord can evict the tenant and recover damages; or (2) the landlord can give the tenant as new leasehold, expressly or impliedly. Majority rule is that the creation of the new leasehold is a periodic tenancy, which has the same terms as the original lease unless otherwise agreed upon.

➢ Partial eviction by paramount title Result ??

when T is evicted from part of premises by 3rd party with paramount title. Paramount title is ownership that is superior to the ownership with which it is compared. As a result, T can receive abatement (reduce rent) for not being able to use that part of land. OR may terminate the lease, recover damages.

Landlords Duties : (4)

• Deliver possession of the premises • Duty to satisfy the implied covenant of quiet enjoyment in every residential and commercial lease • Provide habitable premises • Not evict the Tenant with a retaliatory motive

Duty to refrain form Beaching the doctrine of retaliatory eviction

• L is barred from penalizing T if T, lawfully reports L for housing code violations • T has to prove that L had a retaliatory motive when he/she evicted T or raised T's rent • If T can show that L's actions were: • Discriminatory against the defendant T; and • Followed the Tenants reporting of violations at the first opportunity, then the burden shifts to the landlord to prove her primary motivation is not retaliatory.

• Landlords' duty for conduct of other tenants:

➢ L has duty not to permit a nuisance on the premises; and ➢ L has duty to control common areas. ➢ Common law rule didn't make L liable for conduct of other Ts.