Unit 3: Landlord Tenant

Lease

A document that the owner of the land and the tenant execute to create a leasehold estate in the property

Uniform Residential Landlord Tenant Act

Sets out obligations between the landlord and the tenant

Leasehold

A transfer of real property for either a determinant or indefinite amount of time.

May be…

• Term of Years (voluntary)

• Periodic Tenancy (voluntary)

• Tenancy at Will (voluntary)

• Tenancy at Sufferance (implied at law)

Term of Years

Leasehold for a specific term

• has a definite beginning and a definite end.

• Tenant’s possessory right automatically terminates at the end of the term.

• No notice required to terminate.

Periodic Tenancy

Lease for some fixed period

• Definite beginning, no definite ending.

• Must give notice to terminate.

• A year-to-year requires 6 months to terminate, or else it will be held for another year.

• A lease for less than a year requires notice equal to the term of the lease, with a maximum of 6 months.

Tenancy at Will

Lease for no fixed duration. Lasts as long as both the landlord and tenant desire.

• Can be terminated at will by either party or…

  • Death of party

  • Tenant abandonment of leasehold

  • Landlord sells the property

• At common law, it’s terminated at notice of either party.

• Today, many states require some notice to terminate

Tenancy at Sufferance

Not a voluntary tenancy. Created when a tenant stays on the property after the lease terminates.

• A landlord may…

  • Treat the tenant as a trespasser & evict.

  • Bind the tenant to a new periodic tenancy.

What is the new term if a landlord elects to bind the tenant to a new periodic tenancy?

• If the original lease was for a year or more, the new tenancy would be a year-to-year periodic tenancy.

• If the original lease was for less than a year, it’s based on how long it was on the expired lease.

• The terms of the new lease would be the same as the original.

Term of Years

What kind of lease is this?

“Landlord conveys to T for one year.”

Periodic Tenancy

What kind of lease is this?

“Landlord conveys to T from year to year beginning January 1, 2000.”

Term of Years

What kind of lease is this?

“L conveys to T for one month.”

Periodic Tenancy

What kind of lease is this?

“Landlord conveys to T from month-to-month beginning January 1, 2000.”

Tenancy at Will

What kind of lease is this?

“Landlord conveys to T so long as both of us wish.”

Tenancy at Sufferance

What kind of lease is this?

X’s term expired on January 1st, 2000. X remained on the property until January 15th, 2000.

Statute of Frauds requirement for leases

• For a lease more than 1 year, it must be in writing to be enforceable,.

• Leases for an indeterminate amount of time doesn’t require a writing.

Yes

Does this need to be in writing?

• “L leases to T for 10 years.”

No

Does this need to be in writing?

“L leases to T from month-to-month”

No

Does this lease have to be in writing?

“L leases to T ‘as long as you want to stay.’”

What are the steps to a FHA analysis?

1. Does the plaintiff fall within a protect class?

2. Does the rental unit qualify as a dwelling?

3. Does an exemption apply?

4. Is there evidence of prohibited discrimination?

• Direct

• Indirect

  • Member of protected class.

  • Applied and qualified.

  • Rejected.

  • Property remained available.

What happens after a plaintiff has met their initial burden of completing an FHA analysis?

The burden shifts to the landlord to show they have a legitimate reason for rejecting the application. (Yes, they have bad credit).

Then, the burden shifts to the plaintiff to show pretext or material factual disputes. (Yes, in the past, they rented to people with bad credit.)

What are the remedies for a violation of the FHA?

• Attorney’s fees

• Punitive damages

• Penalties per violation

**SOL is two years.

“Protected Class”

• Must prove the landlord knew or suspected they were a member of a protected class.

• List protected classes…

  • Race

  • Color

  • Religion

  • Male/Female

  • Familial Status

  • National Origin

  • Handicap

“Dwelling”

For residential or habitation purposes.

• Not applicable to roommates

Exemptions

1. Roommate Situations where the landlord is looking to share common space with the tenant.

2. Landlord owns less than 4 units in a complex and lives within one of those units and does not advertise discriminatorily

3. Single family houses. Landlord owns three or fewer single family homes, does not advertise with an agent, and does not advertise discriminatorily.

“Evidence of Discrimination”

• Must prove he was directly or indirectly discriminated against.

  • Direct - discrimination that is obvious and easy to prove.

  • Indirect - must satisfy the elements of a prima facie case.

    • i. Member of a protected class and defendant knew or suspected he was.

    • ii. Applied for and was qualified.

    • iii. Defendant rejected his application.

    • iv. Property remained available thereafter.

Burden Shifting

1) Defendant must prove a legitimate, nondiscriminatory reason for his conduct, such as a reasonable business purpose.

(Analysis).

2) Plaintiff must prove the explanation was a pretext for discrimination or material facts are disputed.

(Analysis)

Conclusion: Plaintiff would have an FHA claim on the basis of indirect discrimination for rejecting his application.

Requirements of a Lease

• More than 1 year? Must be in writing.

• A written lease must include… parties, price(rent), property, duration.

Tenant’s Rights - American Rule

The landlord must only provide legal possession.

• Tenant has the power to protect her tenancy against a hold-over tenant.

• Landlord should not be held liable for the wrongdoing of a third party.

Tenant’s Rights - English Rule

The landlord must provide actual possession.

• If the landlord does not deliver physical possession of the dwelling to the tenant, the tenant is not required to pay rent until possession is delivered.

The tenant may…

1) Terminate the lease by giving notice in a writing to the landlord at anytime before the landlord delivers possession; OR

2) Demand performance of the lease by the landlord and recover damages/obtain possession or obtain possession from any person wrongfully in possession by any lawful means.

Leasehold as an Estate

• Freedom from landlord interference

• Condition of structures on property

• Legal standard - caveat emptor.

  • With the industrial revolution, the US adopted Housing Codes which required minimum living standards.

What do the US housing codes require?

Minimum living standards…

• Structural elements

• Facilities

• Services

• Occupancy Limits

A covenant of Quiet Enjoyment

Every lease implies …

• A promise by the landlord that the landlord will not wrongfully interfere with the tenant’s possession.

Constructive Eviction

Defense of a tenant facing a cause of action for not paying rent. Tied to breach of the covenant of quiet enjoyment.

1) Wrongful conduct- An act or omission, such as failure to perform an obligation in the lease, failure to adequately maintain and control common areas, failure to perform promised repairs, and failure to alleviate nuisance-like behavior.

2) By the landlord - not a third party

3)That substantially interferes with tenant’s use/enjoyment of property. Must be a material interference, such as one to affect health and safety.

4) Must notify the landlord and give an opportunity to fix the defect.

5) Must move out in a reasonable time.

uThe time given to allow the landlord to fix the problem.

uThe nature of the business – For instance, the time it took to find a new place. Also consider that it may be hard to find another place for certain businesses.

Wrongful Conduct

uFailure to perform an obligation in the lease

uFailure to adequately maintain and control common area.

uFailure to perform promised repairs.

uFailure to alleviate nuisance-like behavior.

By the landlord

Not a third party

That substantially interferes with the tenant’s use/enjoyment of property.

Must be a material interference, such as one to affect health and safety.

Facts about the Implied Warranty of Habitability

• Within the terms of the lease.

• Applies ONLY to residential leases.

• Not waivable.

• Can be a defense (against not paying rent) or affirmative cause of action.

• If tenant causes a condition, they can’t recover.

Remedies for a Breach of the Implied Warranty of Habitability

1. Withhold Rent (force landlord to sue)

2. Repair and Deduct.

3. Sue for damages.

• Special Damages (Damages suffered as a result of the breach)

• General Damages (Understand all three approaches!)

  • Fair Rental Value - Fair Rental Value…

    • ( price w/o condition - price w/ condition )

  • Contract Rent Amount - Fair Rental Value…

    • ( K price - price w/ condition )

  • Percentage Diminution

    • (Rent - percentage of use)

Requirements for an Implied Warranty of Habitability Question

1) Implied into every lease & cannot be waived.

• If there’s a provision trying to waive it, that’s not enforceable.

2) Requires the landlord to maintain “bare living requirements.”

• Are the bare living requirements met?

• uConcerning the health and safety that the premises:

  u1. Does it Meet Bare Living Requirements and

  u2. Is it fit for human occupation

3) Must give landlord notice and opportunity to resolve.

• Did they give the landlord notice and opportunity to resolve?

4) Tenant can withhold rent and sue for damages

• Special Damages (Damages suffered as a result of the breach)

• General Damages (Damages recovered because of the direct result of breach.)

• Understand all three approaches!

  • Fair Rental Value - Fair Rental Value…

    • ( price w/o condition - price w/ condition )

  • Contract Rent Amount - Fair Rental Value…

    • ( K price - price w/ condition )

  • Percentage Diminution

    • (Rent - percentage of use)

Assignment

Tenant transfers all interest under the lease for the entire unexpired term.

• LL may sue both tenant and assignee to receive damages for unpaid rent.

• Assignee assumes obligations of the lease that ‘run with the land.’ i.e. pay rent, property taxes, conduct business in a specified manner.

Sublease

When a tenant transfers the leasehold for a period less than the full remaining time on the lease.

• If a sublessee fails to satisfy their obligations, the landlord can only sue the tenant because the landlord lacks privity with the sublessee.

What are the privities of an assignment?

Landlord-Tenant. Privity of Contract.

Landlord-Assignee. Privity of Estate.

Tenant-Assignee. Privity of Contract.

What are the privities of a sublease?

Landlord-Tenant? Privity of Contract & Privity of Estate.

Tenant-Sublessee? Privity of Contract.

Who can a landlord sue in an assignment?

Tenant and assignee

Who can a landlord sue in a sublease?

Original tenant only

Sole Discretion Clause

• Look for exact language!

• Tenant shall not assign this lease or sublet the premises without the prior written consent of the landlord.

• Consent may be withheld in the landlord’s sole and absolute discretion.

Reasonableness Clause

Tenant can’t assign or sublet without the prior written consent of the landlord.

• Consent can’t be unreasonably withheld, conditioned, or delayed.

No Standard (Silent Consent Clause)

Tenant may not assign the lease or sublet without the prior written consent of the landlord.

Complete Prohibition

Tenant may not assign or sublet at all.

How to determine if it’s a sublease or assignment if ambiguous?

1. Objective Approach. Majority. “What was actually conveyed.” Characteristics of the obligations between the parties.

2. Subjective Approach. Minority. “What the parties actually agreed to.” Actually stated in the contract.

JX Split: Reasonableness required for Landlord to not consent to assignment/sublease?

A. Landlord can withhold consent for any reason.

B. Landlord, where discretion is granted in commercial leases, must base decision on reasonable commercial grounds. (N/A for residential leases).

FHA applies to sublease/assignment.

Ambiguous Assignee/Sublease Question

In a commercial lease with a silent consent standard, the court should apply the “reasonableness standard.” There must be a valid reason for rejecting the assignee/sublessee on a commercial lease.

Valid reasons?

• Bad Credit, Modification to the property, Legality in business.

Invalid reasons?

• demanding higher rent, personal taste, convenience.

Abandonment

COA for Landlord to demand rent.

• Tenant vacates, does not intend to return, and doesn’t have justification for leaving property.

• Tenant is liable for rent subject to LL’s duty to mitigate.

A landlord may…

• Sue for rent at the end of the tenancy. (keep premises vacant until the end of the term & sue for rent).

• Terminate the lease. (implied offer of surrender).

• Mitigate damages and sue for unpaid rent. (seek to find new tenant and sue old for damages).

Abandonment & Duty to Mitigate

1. Landlord doesn’t have to accept tenant’s surrender.

2. Landlord doesn’t have to accept less rent to mitigate. However, if they do, they can sue original tenant for the difference so long as it’s in good faith.

3. Landlord doesn’t have to accept lower tenant standards.

4. If they can’t mitigate damages, they will receive lost rent and costs associated with abandonment.

5. To mitigate damages, the landlord must…

• Determine there’s abandonment

• Advertise

• Follow their usual procedures of showing the unit

Surrender

Lease is terminated by both parties.

• Unpaid rent is not due for the surrendering tenant.

Eviction

COA for a tenant violation of a material term of the lease. (i.e. unpaid rent)

A landlord may…

A. Use Self Help. Physically enter the premises and cause the tenant to leave, so long as…

• Uses a reasonable amount of force.

• Is able to do so peacefully.

B. Sue to obtain a judicial order of eviction.

Sublease/Assignment Hypo Steps

1. Identify what types of leases there are.

2. Is the lease assignable? (Look for clauses, if none… it will be allowed)

3. Identify whether it’s a sublease or assignment.

4. Discuss Privities of Parties

5. Conclude

Privity of Contract

Relationship existing between both parties to a contract

Privity of Estate

Relationship existing because two people have mutual interest in the leased premises