Property: Transfers of Leasehold and L Tort Liability

Assignment vs Sublease

An assignment is for the remainder of the tenant’s interest in the lease, whereas a sublease only transfers part of the interest

Restriction on Transfer of Lease

A landlord can prohibit a tenant from assigning or subletting without L’s prior written approval. However, once L accepts transfer by a tenant, L waives the right to object to future transfers by the tenant unless L expressly reserves that right

Assignment Privity

The assignee and the landlord are in privity of estate, so each is liable to the other on all covenants in the lease that run with the land. The assignor remains in privity of contract with the landlord so L can sue T for contractual obligations

Covenants that run with the land

A covenant runs with the land if the original parties to the lease so intend and if the covenant “touches and concerns” the land by benefiting/burdening the landlord and tenant

Rent Covenant

A covenant to pay rent runs with the land, so the assignee owes rent directly to the landlord. The landlord can sue the assignee for failure to pay, but if the assignee cannot pay the landlord can sue the assignor under privity of contract

Sublease generally

A sublessee is the tenant of the original lessee and usually pays rent to the original lessee, who pays the landlord. A landlord and a sublessee are neither in privity of estate nor privity of contract, and so the sublessee is not personally liable to the landlord for the performance of any covenants of the main lease unless the sublessee expressly assumes the covenants

Sublease: Landlord’s Remedies

The landlord may terminate the main lease for nonpayment of rent or breach of other covenants if the lease so states or if the power is provided by statute. The sublease automatically terminates with the main lease

Rights of Sublessee

A sublessee cannot enforce any covenants made by the landlord in the main lease, except a residential sublessee may be able to enforce the implied warranty of habitability against the landlord

Covenants against Lease transfer

In the lease, L can prohibit T from assigning or subletting without L’s prior written approval. This is waived if L was aware and did not object. Once L consents to one transfer by T, L waives the right to object to future transfer by that T unless L expressly reserves the right. Lease covenants restricting assignment and sublease are strictly construed against the landlord, so a covenant prohibiting assignment will not prohibit sublease and vice versa

Lease on Improper Transfer

Usually, if a tenant assigns or sublets in violation of a lease provision, the landlord may terminate the lease or sue for damages, but the transfer itself is not void.

Assignment by Landlord

A landlord may assign the rents and reversion interest they own. This is usually done by deed when L conveys to a new owner. T’s consent is not required

Right of L Assignee against T: Attornment

Once tenants are given reasonable notice of the assignment, they must recognize and pay rent to the new owner as their landlord. The benefit of all tenant covenants that touch and concern the land runs with the estate to the new owner

Liabilities of L Assignee to Ts

The burden of L’s covenants that touch and concern the land runs runs with the estate to the assignee L; thus the assignee L is liable for performance of those covenants. The original L also remains liable on all of the covenants they made in the lease

Caveat Lessee

Caveat lessee = tenant beware. In tort, a landlord was under no duty to make the premises safe

Caveat Lessee Exceptions

CLAPS: (1) Common areas; (2) latent defects; (3) assumption of repairs; (4) public use rule; (5) short-term lease of furnished dwelling

Caveat Lessee: Common Areas

L has a duty of reasonable care in maintaining all common areas

Caveat Lessee: Latent Defects

L must warn T of hidden defects (dangerous conditions that T couldn’t discover by reasonable inspection) of which L knows or has reason to know. Otherwise, L will be liable to T for any injuries resulting from the condition. If T accepts the premises after defect disclosure, T assumes the risk and L is no longer liable in tort. Reminder: the duty here is to warn, not to repair

Caveat Lessee: Assumption of Repairs

While in tort L is under no duty to make repairs, once repairs are undertaken, L must complete them with reasonable care. If L makes the repairs negligently or if the repairs give a deceptive appearance of safety, and injury results, L is liable

Caveat Lessee Public Use Rule

An L who leases public space (such as a convention hall or museum) and who should know, because of the significant nature of the defect and the short length of the lease, that a tenant will not repair, is liable for any defects on the premises that cause injury to members of the public.

Caveat Lessee: Short-Term lease of furnished dwelling

An L who rents fully furnished premises for a short period (e.g. a summer cottage) is under a stricter duty and is responsible for ANY defective condition which proximately injures a tenant, regardless of whether L had knowledge of the defect

L Liability Modern Trend

Most courts now hold that L owes a general duty of reasonable care toward residential tenants and will be held liable for injuries in tort resulting from ordinary negligence if L had notice of the defect and an opportunity to repair it

Defects Arising After T Takes Possession

L is generally held liable to have notice of defects existing before T took possession but is not liable for defects after T takes possession unless L knew or should have known of them

Modern L legal duty to repair

If L has a statutory duty to repair (e.g. housing codes) then L is liable in tort for injuries resulting from L’s failure to repair or negligence in making repairs

Modern L Security liability

Some courts hold Ls liable in tort for T injuries inflicted by criminal third parties in cases where L failed to comply with housing code provisions dealing with security, maintain ordinary security measures, or pr provide advertised security measures

T’s Tort Liability

T has tort liability to third parties as an occupier of land

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 passes with the ownership of the land and must stay put

Chattels Incorporated into Structure

A chattel becomes a fixture if: (1) it is incorporated into the realty such that it loses its identity (e.g. a brick in a wall); or (2) the chattel is affixed to realty such that its removal would cause considerable damage to the premises (e.g. plumbing, heating ducts, furnaces)

Common Ownership

A common ownership case is one in which the person who brings the chattel to the land owns both the chattel and the land. That chattel is a fixture if the party who made the annexation intended to make the item part of the realty. This can be determined: (1) the nature of the article; (2) the manner of attachment; (3) the amount of damage that would be caused by removal; and (4) the adaption of the item to the use of the realty

Divided Ownership Cases Generally

The chattel is owned and brought to the realty by someone other than the landowner, such as a tenant. Accession describes the annexor’s intent to make the chattel a permanent part of the real estate

Landlord-Tenant Divided Ownership

An agreement between L and T is controlling on whether an annexed chattel is a fixture. Absent an agreement, T is deemed to lack the intent to permanently improve the property and thus may remove the chattel if doing so would not substantially damage the premises or destroy the chattel. Annexed chattels must be removed by the end of the lease term or within a reasonable time after the termination of an indefinite tenancy and T is responsible for repairing damage caused by removal

Divided Ownership: Life Tenant and Remainderman

The same rules apply as with Landlord-Tenant, except that the life tenant’s representative may remove annexations within a reasonable time after the life tenant’s death

Licensee or Trespasser and Landowner

Licensees are treated like tenants, whereas trespassers normally lose their annexations. Absent a statute, an adverse possessor or good faith trespasser cannot remove fixtures. Some courts allow a good faith trespasser to recover the value added to the land (not construction costs)