Property-3

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Part III - LANDLORD/TENANT RELATIONS III. Subleases and Assignments

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List the Types of tenancies

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1. Term for Years – TFY 2. Periodic Tenancy – PT 3. Tenancy at Will – TW 4. Tenancy at Sufferance – TS

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Define: 1. Term for Years – TFY – \\\ how long can it last for? Requrement of notice for termination? What may happen at the end of tenancy?

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1. Term for Years – TFY – typically used for residential rentals or commercial leases a) Can last for a fixed amount of time – 1 day / 999 years b) No requirement of notice for termination c) At end of tenancy: (1) T can leave (2) L and T can make new arrangement (3) T can stay w/o new arrangement (at sufferance)

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Define: 2. Periodic Tenancy – PT – \\ how does it renew?

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2. Periodic Tenancy – PT – for a period of some fixed duration which continues for succeeding periods until either L or T gives notice of termination a) Automatically renews unless notice of termination. Month to month tenancy is most obvious example. Residence of lower economic classes (money protects older renters)

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Define: 3. Tenancy at Will – TW – \\\ How is it usually cretaed? When does it terminate? what if the granting language gives the will to T? Who likes it?

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3. Tenancy at Will – TW – has no fixed period, endures only so long as both L and T desire or “will” it. a) Usually created by implication. b) Terminates by death of either party or conveyance of reversion by L c) Even if the granting language gives the “will” to T, L can terminate and vice versa. d) TW is the Cinderella of tenancies – no one likes it

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Define: 4. Tenancy at Sufferance – TS – \\ What are L's options under TS?

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4. Tenancy at Sufferance – TS – label for the situation where the T entered rightfully but stayed after the lease ended (squatters). Entered rightfully, stayed wrongly a) Ls options under TS (1) L can treat T as a hold over and bind the T to the local holdover arrangement (consent) (2) L can treat T as a trespasser and evict T (a) L has an election and a reasonable period of time to decide (b) Used to be able to hold the T over for 1 year under terms of new lease, legislature eased the 1yr rule and C/L courts found ways around it

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What does the court grant T in this case? What is special about it?: Garner v. Garrish – L leases apartment to T and then dies and is replaced by L1 who wants to increase Ts rent. L1 is saying that it is a TW (so it would terminate at the death of L), T is saying it is a Tenancy for Life (non-existent)

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Garner v. Garrish – L leases apartment to T and then dies and is replaced by L1 who wants to increase Ts rent. L1 is saying that it is a TW (so it would terminate at the death of L), T is saying it is a Tenancy for Life (non-existent) 5. Court grants T a Tenancy for Life (terminable only by him at death or his will). a) Tempting to say this case is an anomaly, other courts fit cases into the 4 existing tenancies, BUT courts are willing to expand the categories.

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What could L have treated T and how held over? -- Crechale v. Smith – holdover Ts (those who stay on after expiration of TFY). L leased to T for 5 years. T learned the building he was moving to after term was up wasn’t ready. The TFY ended and the T stayed, at that point he was a TS

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Crechale v. Smith – holdover Ts (those who stay on after expiration of TFY). L leased to T for 5 years. T learned the building he was moving to after term was up wasn’t ready. The TFY ended and the T stayed, at that point he was a TS 6. L could have a) Treated T as a trespasser b) Treated L as holdover 7. L sent a letter that said you are trespasser, and also talks about increasing rent if T stays. Court decided that L treated him as a trespasser. Ls letter “blows hot and cold”, have to be one side and to the point. 8. L cashes Ts check for 1 mo. rent after TFY ended, court held there was a new TFY arrangement for a month followed by a trespass period of one month + 12 days. Then court calculated rent for 42 days based on check amount. 9. This is not typical – usually one or the other, holdover or trespasser. This court found a way to do both. Holdovers are usually formalistic (eroding) a) Ts are NOT usually held over – courts have a more modern compassionate view

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LEASE – conveyance v. contract – which one is it? \\\ Is K law more flexible in L/T relationship? What of power to imply promises (called what)? What has it historcially been viewed as?

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II. LEASE – conveyance v. contract – which one is it? A. Basics – it is considered to be both a conveyance and a K (Dobie thinks the conveyance is what gives the lease its life, but can accept K notions) 1. K law is more flexible in the L/T relationship 2. Law has the power to IMPLY promises (called covenants) a) Courts imply important, essential promises (rent, possession, quiet enjoyment) 3. Lease historically viewed as conveyance, lately recognizing the K nature

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What are the 2 views on implied conveants of possession? What is the english rule? Who do they protect? Where is the burdeon put? is it waivable?

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B. T’s right of actual possession – 2 views on implied covenants of possession 1. English rule – majority view – L has the duty to deliver actual possession as well as legal possession. a) Protects tenants from other tenants who make no effort to move b) Puts burden on L who is better equipped to deal w/TS’s. c) This rule of actual possession should be waivable (not in some Jx). If you think L’s will trick Ts then you think it should be non waiveable because Ls will put it in lease w/o telling T.

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What are the 2 views on implied conveants of possession? What is the American rule? Minority or Majority? What does L have to deliver? Who does it protect?

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2. American rule – minority view – L has duty to deliver ONLY legal possession (not actual). a) Protects owners, more efficient. Puts responsibility on the person w/greater incentive (incoming tenant). BUT the rule is old fashioned and mean spirited.

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Define: Legal possession

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a) Legal possession – L is promising T he has the right to rent the place

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Define: Actual possession

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b) Actual possession – L is promising T that the property will be empty and open for T.

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Hannah v. Dusch-  rents property and there are previous tenants in place. T sues L. There is an express covenant to pay rent, but nothing in lease about if there are TS’s (sufferance). \\\ What kind of covenant does the court make? Which rule do they use? Who wins?

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4. Hannah v. Dusch-  rents property and there are previous tenants in place. T sues L. There is an express covenant to pay rent, but nothing in lease about if there are TS’s (sufferance). a) Court makes an implied covenant to put P in possession. Uses the English rule saying that the L must give both actual and legal possession. T wins. (WHAT? This is wrong.)

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When is Implied covenant of quiet enjoyment implied? What has been augmented to include this?

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5. Implied covenant of quiet enjoyment – always implied if not expressed in the lease. The covenant of possession has been augmented to include the covenant of quiet enjoyment

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What does an Assignment do? \\\ Who hands what to who? What does T give up? Who pays the landlord as long as what? Who does the burden of the proise to pay rent run down to? When is the assignment complete?

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1. Assignment – transfer of ALL of the interest of the transferor. T hands the TFY to T1 a) T gives up all of his piece of the timeline b) T1 (not T) pays the landlord as long as T1 is in possession c) Burden of the promise to pay rent runs down to assignee d) Assignment is complete upon acceptance

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What does a Sublease do? \\ Who retains what? What does T give up? a Sublease is a re-renting of what? Who would pay T? What is the default rule?

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2. Sublease – transfer of LESS THAN ALL the transferor has. T retains either a RVN (in TFY) and/or power of termination (ROE). a) T gives up just a bit of his piece of the timeline b) Sublease is a re-renting of the Ts interest w/T acting as sub-L. c) T1 would pay T, not L d) Default rule is that Ts can sublease – we hate restraints on alienation

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B. Privity of estate and Privity of K – original L and T are in privity of ___ and privity of ____?

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B. Privity of estate and Privity of K – original L and T are in privity of estate and privity of K

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Define: Privity of estate –

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1. Privity of estate – parties share the timeline, they don’t need to exchange promises. (TFY w/ a RVN)

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Define: Privity of K –

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2. Privity of K – they made promises to each other (pay rent [burden T and benefit L] and covenant of enjoyment [burden L benefit T]).

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Assignment - If T assigns to T1, then L and T are no longer in _____. T1 is now in ____ w/____. a) BUT L and T remain in privity of ___? WHY? b) L and T1, if a naked assignment, are ONLY in ___ __ _____. Not in privity of K because ________..

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3. Assignment - If T assigns to T1, then L and T are no longer in privity of estate. T1 is now in privity of estate w/L. a) BUT L and T remain in privity of K. Still connected by promises that T made to L b) L and T1, if a naked assignment, are ONLY in privity of estate. Not in privity of K because no promises were made between them (1) T must keep all the promises he made. T1 must keep only those promises that relate (touch and concern) to the tenancy (rent..), those that “run” with the land

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Assignment plus assumption - If T1 says “I assume all the burdens of the lease”, I promise to keep all promises, that is an _______ which puts ___ in privity of K w/____ and ____ (L being a ________). If T1 later assigns to T2, he doesn’t get off the hook because ____ made the unnecessary assumption promise. ___, after the transfer to ____, has a K cause of action against ___ as does ___. ___ and ___ are both promisees of the assumption promise. ___ may choose his defendant (1) If the TFY went from T1 to T2 by way of a naked assignment, ____ has a K cause of action against T2 because __...___

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4. Assignment plus assumption - If T1 says “I assume all the burdens of the lease”, I promise to keep all promises, that is an assumption promise which puts T1 in privity of K w/T and L (L being a TP beneficiary). If T1 later assigns to T2, he doesn’t get off the hook because T1 made the unnecessary assumption promise. L, after the transfer to T2, has a K cause of action against T1 as does T. T and L are both promisees of the assumption promise. L may choose his defendant (1) If the TFY went from T1 to T2 by way of a naked assignment, no one has a K cause of action against T2 because T2 made no promises

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Ernst v. Conditt – Ernst lease to T(Rogers) for 1 year (TFY). T promised that he would remain liable in the case of an assignment (default rule anyway). T transfers property to T1. T1 did not pay bill, so L sues T1. \\\\ T1 found to be what? And why?

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T1 found to be an assignee – he paid the L directly and T gave up all his rights to the property.

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Define: “Naked assignment” \\\ Assignment of this makes ___ liable. Assignments are complete w/o the _____. The transfer of the piece of the timeline is sufficient to accomplish an ______

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5. “Naked assignment” – an unadorned assignment w/ no promises “I assign this TFY to you”. Assignment of this makes T1 liable. Assignments are complete w/o the return promise. The transfer of the piece of the timeline is sufficient to accomplish an assignment

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2nd theory of liability – Privity of K. T1 promises T that he will keep the promises in the original lease. L is a ____ of that promise, therefore L is in ___ of ___ w/___.

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6. 2nd theory of liability – Privity of K. T1 promises T that he will keep the promises in the original lease. L is a third party beneficiary of that promise, therefore L is in privity of K w/T1.

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Example – L rents to T. T promises to pay rent in the lease. T wants out of the lease (lottery). L says no, T has 2 options, assign or sublease. Here lease is silent, so default rule is that assignment or sublease is OK. T1 gets the assignment, just by accepting the TFY, says nothing \\\ T1 then defaults, what is he still liable for? What is T secondarily liable for? If T1 assigns to T2 a naked assignment, T1 is no longer what? --- What could T do?

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C. Example – L rents to T. T promises to pay rent in the lease. T wants out of the lease (lottery). L says no, T has 2 options, assign or sublease. Here lease is silent, so default rule is that assignment or sublease is OK. T1 gets the assignment, just by accepting the TFY, says nothing 1. T1 then defaults. He is still liable for rent because he is in privity of estate w/L. The rent runs w/estate. T is secondarily liable because T is in privity of K w/L. If T1 assigns to T2 a naked assignment, T1 is no longer in privity of K w/T (right?) a) T could have sublet to T1. T becomes sub-L. T rents out the apartment for one day less and gives himself an ROE. That agreement has no TP beneficiary – T1is not in privity of K w/L.

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Example – L leases to T who promises to pay rent and keep premises in repair. T then assigns interest to T1 who “assumes the covenants in the lease” between L and T. Then T1 assigns to T2, then T2 assigns to T3. T3 defaults on rent. 1. L v. T – T liable? 2. L v. T1 – T1 liable? 3. L v. T2 – T2 liable? 4. L v. T3 – T3 liable? a) If T1 or T gets sued by L, they can go to who and why?

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D. Example – L leases to T who promises to pay rent and keep premises in repair. T then assigns interest to T1 who “assumes the covenants in the lease” between L and T. Then T1 assigns to T2, then T2 assigns to T3. T3 defaults on rent. 1. L v. T – T is “tertiarily” liable to L because he is in privity of K – he made promises to L (rent, repair) 2. L v. T1 – T1 is also liable, “secondarily” liable to L. He assumed promises that T made to L. He promised to fulfill T’s promises and L is a TP beneficiary. 3. L v. T2 – T2 is NOT liable. He made no promises – T1 engaged in a “naked assignment” of the TFY to T2. He is no longer in privity of estate and has made no promise. 4. L v. T3 – T3 is “primarily” liable. The rent promise runs w/estate. T3 is in privity of estate w/L (sharing timeline). T3 has to pay rent only because he is in privity of estate. The promises essential to the L and T relationship, those that touch and concern the estate, run down to assignee. Burdens of applied promises run. a) If T1 or T gets sued by L, they can go to T3 because he is primarily liable

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How does this case answer: Self Help – when T defaults, is L able to use self help? 1. Berg v. Wiley- L rents to T who gives it to T1, who promises to pay for repair and remodeling (had to have authorization) and to run a clean restaurant. L had right to take land back if T1 not compliant. T1 assigns lease to T2 – her corporation. L says she has to complete remodeling by 6/13, she begins that day. L comes down, peeking through windows and banging on door. T2 calls cops and they say leave it till Monday. \\\\ Was self help wrongful? Majority & Minority.

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E. Self Help – when T defaults, is L able to use self help? 1. Berg v. Wiley- L rents to T who gives it to T1, who promises to pay for repair and remodeling (had to have authorization) and to run a clean restaurant. L had right to take land back if T1 not compliant. T1 assigns lease to T2 – her corporation. L says she has to complete remodeling by 6/13, she begins that day. L comes down, peeking through windows and banging on door. T2 calls cops and they say leave it till Monday. a) Was L’s self help wrongful? (1) Majority – self help OK as long as it is “peaceable” (a) “Peaceable” is very narrowly defined, some states require the T to allow the L in knowing L intends to lock out T. Non-violent entry may not be peaceable, Implied force in T’s absence is not peaceable. (2) Minority – L must use courts to evict T. (3) Best to negotiate and then take it to court (carefully)

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Pro’s of self help

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2. Pro’s and cons of self help a) Pros (1) Efficient – faster than going to court – summary proceedings are inefficient (2) Will encourage landlords-to-be, and make more places to rent, lower rent, price cap (3) People will do it anyway, lets make rules

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Cons of self help?

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b) Cons (1) Could lead to violence - unfair, unrefined (2) burden falls on poor members of society

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L will use a _____ to evict T. If T has been there for awhile, they will get a _____ ______. T will get full ______ and ____ hearing will be necessary, not just summary proceeding.

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3. L will use a summary proceeding to evict T. If T has been there for awhile, they will get a special privilege. T will get full litigation, and ejectment hearing will be necessary, not just summary proceeding.