Module 3 - The Four Leasehold or Nonfreehold Estates:

What is a leasehold estate?

An estate in land where the tenant has a present possessory interest, and the landlord has a future interest (reversion).

What are the four types of leasehold estates?

1. Tenancy for years

2. Periodic tenancy

3. Tenancy at will

4. Tenancy at sufferance

What is a tenancy for years?

A lease for a fixed, determined period of time, which could range from as short as one week to as long as 50 years.

How does a tenancy for years terminate?

It ends automatically at its termination date with no notice required because the end date is predetermined.

HYPO 3A: If Taylor leases Blackacre to Selena from January 1, 2022, to July 1, 2022, is this a tenancy for years?

Yes, because there is a set end date.

How much notice is required to terminate a tenancy for years?

None, since the termination date is predetermined.

Can a landlord terminate a tenancy for years if the tenant breaches a lease covenant?

Yes, if the landlord reserves a right of entry, they can terminate the lease if the tenant breaches any lease covenants.

Can a landlord terminate a lease for non-payment of rent?

Yes, in many jurisdictions, a landlord can terminate the lease for failure to pay rent, even without a reserved right of entry.

Can a tenancy for years terminate by surrender?

Yes, if the tenant surrenders the lease and the landlord accepts, the tenancy for years can terminate.

What is required for a valid surrender of a tenancy for years?

The same formalities required for creating the leasehold are needed for surrender. If the unexpired term exceeds one year, the surrender must be in writing (Statute of Frauds).

Do tenancies for years need to be in writing?

Yes, a term of years longer than one year must be in writing to be enforceable, as required by the Statute of Frauds.

What is a periodic tenancy?

A lease that continues for successive intervals (e.g., month-to-month) until either the landlord or the tenant gives proper notice of termination.

What is the hallmark of a periodic tenancy?

It is continuous until properly terminated by notice from either the landlord or tenant.

How can a periodic tenancy be created?

1. Expressly2. By implication or operation of law

Give an example of an expressly created periodic tenancy.

Rihanna conveys to Olivia "month to month" or "year to year." These leases have no end date.

What are the three ways a periodic tenancy can arise by implication?

1. Land leased with no duration mentioned, but rent is paid at set intervals.

2. An oral term of years violating the Statute of Frauds, with rent paid at set intervals.

3. A holdover tenant where rent is accepted after the original lease expires.

HYPO 3B: T rents an apartment from L, starting June 1. No duration is mentioned, but T pays rent monthly. What type of tenancy exists?

Implied month-to-month periodic tenancy.

HYPO 3C: L and T agree over the phone for a five-year commercial lease, but this violates the Statute of Frauds. T sends L a check for $1,000, which L accepts. What tenancy exists?

Implied periodic tenancy, measured by the way rent is tendered (monthly in this case).

HYPO 3D: T holds over after her one-year lease expires and sends another month's rent to L, which L cashes. What type of tenancy now exists?

Implied month-to-month periodic tenancy.

How is a periodic tenancy terminated?

Written notice must be given to terminate a periodic tenancy.

How much notice is required to terminate a periodic tenancy at common law?

Notice must be equal to the length of the period itself, unless otherwise agreed.

How much notice is required to terminate a month-to-month periodic tenancy?

One month's notice.

How much notice is required to terminate a week-to-week periodic tenancy?

One week's notice.

How much notice is required to terminate a year-to-year periodic tenancy?

Six months' notice at common law, but one month under the Restatement (preferred for bar exam purposes).

Can the parties agree to lengthen or shorten the notice period required to terminate a periodic tenancy?

Yes, by private agreement, parties can modify the common-law notice provisions.

What is a tenancy at will?

A tenancy with no fixed period of duration, terminable at the will of either the landlord or tenant.

Give an example of a tenancy at will.

"To T for as long as L or T desires."

How is a tenancy at will created?

Generally, it must be created by an express agreement that the lease can be terminated at any time.

What happens if the parties do not expressly agree to a tenancy at will but there is payment of regular rent?

The court will treat the tenancy as an implied periodic tenancy.

If the lease gives only the landlord the right to terminate, what happens?

A similar right will be implied in favor of the tenant.

If the lease gives only the tenant the right to terminate, what happens?

A similar right is not implied in favor of the landlord.

How can a tenancy at will be terminated?

In theory, it can be terminated by either party at any time, but most states require notice and a reasonable time to vacate.

What are other ways a tenancy at will can be terminated by operation of law?

Death of either party or commission of waste.

What is a tenancy at sufferance?

A leasehold estate created when a tenant wrongfully holds over after the expiration of their lease.

Why is a tenancy at sufferance created?

To permit the landlord to recover rent from the tenant who wrongfully holds over.

How is a tenancy at sufferance terminated?

It ends when the landlord either evicts the tenant or elects to hold the tenant to a new tenancy.

Is notice of termination required for a tenancy at sufferance?

No, no notice of termination is required.

What can a landlord do if a tenant continues in possession after their right to possession has ended?

The landlord may (1) evict the tenant or (2) bind the tenant to a new periodic tenancy.

How is the length of the new tenancy determined under the hold-over doctrine?

The length of the new tenancy depends on how rent was computed under the previous lease.

What type of periodic tenancy is created if rent was computed on a monthly basis?

A month-to-month periodic tenancy is created.

What type of periodic tenancy is created if rent was computed on a quarterly basis but payable monthly?

A quarter-to-quarter periodic tenancy is created.

What is the maximum tenancy that can be created under the hold-over doctrine?

The maximum tenancy that can be created is a year-to-year tenancy.

How are commercial tenants held under the hold-over doctrine?

If the original lease was for one year or more, commercial tenants may be held to a new year-to-year periodic tenancy.

What happens if a residential tenant holds over after lease termination?

Residential tenants are generally held to a new month-to-month tenancy, regardless of the original term.

Can a landlord impose an increased rent on a hold-over tenant?

Yes, if the landlord notifies the tenant before the lease expires, holding over implies acquiescence to the new rent, even if the tenant objects.

What are exceptions to the hold-over doctrine?

Exceptions include cases where the tenant stays for only a few hours, leaves personal property, or the delay is not the tenant's fault (e.g., severe illness).

What is a lease?

A lease is a contract governing the landlord-tenant relationship.

How were lease covenants treated at common law?

At common law, covenants in the lease were independent; a breach of a covenant allowed recovery of damages, but the lease persisted.

How are lease covenants treated today?

Today, the landlord can terminate the lease for nonpayment of rent, and the tenant can terminate for breaches like the covenant of quiet enjoyment or implied warranty of habitability.

What is an option to purchase in a lease?

An option to purchase is a separate contract offering to sell land at a specified price, supported by consideration.

How is the exercise of an option to purchase determined?

The method of exercise is determined by the lease agreement, and the option lasts as long as the lease unless otherwise stated.

Does the Rule Against Perpetuities apply to options to purchase in leases?

No, options attached to leases are an exception to the Rule Against Perpetuities.

What remedies are available for enforcement of an option to purchase?

Specific performance is the usual remedy, but damages are also available.