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Types of Leasehold estates
Pages 421-422; Problems 1 and 2 on page 422; pages 422-423 (paragraph on tenancy at will); pages 427-428.
Term of Years
Tenancy at Will
- So-called "tenancy" at sufferance
Term of Years
An estate that lasts for some fixed period of time or for a period computable by a formula that results in fixing calendar dates for beginning and ending dates.
NO notice to terminate is required - the end date is in the last or the computable formula
Tenancy at Will
Continues as long as BOTH the L and T wish it to continue.
under common law: none required.
under statutes: often 30 days
If rent it paid then periodic tenancy is created.
A lease for a period of some fixed duration that continues for succeedding periods until either the landlord or tenant gives notice of termination.
ie: from month to month
year to year = requires at least 6 months notice.
less than a year = requires notice equal to the period required; ie month to month - 1 month notice - with a maximum of 6 months.
and must terminate the tenancy on the final day of a period. ( which may fall in the middle of the month )
Implied Periodic Tenancy - annual rental of X - is payable Y per month. Common Law based on the way rent is reserved.
If rent is calculated on an annual basis but paid on a monthly basis then L & T must give 6 months notice.
Common Law rule on notice of termination of Periodic Tenancy
Under common law 6 months notice is required to terminate a year to year lease.
How is a lease hold looked at?
Thought of as a conveyance of property
Traditional view of landlord vs tenant
Landlords had more rights than tenants - ie were not responsible for fixing problems with property. Tenant looked down upon / had fewer rights.
What is a conveyance
A "conveyance" is the transfer of an interest in real property, such as a home or commercial real estate. A conveyance occurs when the owner of property, a grantor, uses words of conveyance to transfer an interest in property to a grantee, the person receiving the property.
Lease as conveyance or as contract:
Leased building destroyed by fire - NOT through fault of T; no pertinent lease provision.
Traditional View: Tenant responsible for continuing to pay rent.
Modern View: Impossibility of performance by L - so T performance is excused.
On many issues under current law there exist;
a traditional common law rule;
a modern common law rule = still considered minority view
and statutory variations
Tenancy at sufferance
When T holds over after end of a tenancy L has an election:
- 1. Evict (T)
- 2. hold T to a new tenancy - the jurisdictions law provides what kind of tenancy and for how long - called the HOLD OVER Doctrine
Courts dislike holdover tenancies.
Statute very :
CA. new tenancy created, not exceeding one month when rent is payable monthly.
Other states - L may collect double rent.
Delivery of Possession
Concept of Quiet Possession
The 3 issues
The 2 rules
When Is the Covenant of Quiet Enjoyment Violated?
A person’s rights to quiet enjoyment of property are violated if:
The landlord commits wrongful acts against the plaintiff or the property
The landlord commits negligence or some other act of omission (such as failing to repair dangerous conditions)
The property becomes uninhabitable
- A third party attempts to claim the property by challenging the lease or title
- Thus, the right to quiet enjoyment is not limited to noise violations or acts of nuisance.
Instead, the quiet enjoyment focuses more on a person’s right to possess property without having the title to the land challenged by another party.
What is Quiet Enjoyment
Quiet Enjoyment is the right to the unimpaired enjoyment and use of any property that has been leased, sold, or conveyed. The right to quiet enjoyment is sometimes expressed through a “Covenant of Quiet Enjoyment” that is contained in the lease or deed of sale. If the right to quiet enjoyment is not specifically listed in a document, most jurisdictions will imply the right if a landlord-tenant or seller/buyer relationship exists between the parties. This is also known as the “implied covenant of quiet enjoyment”, meaning that the tenant or buyer can exercise this right even if it is not specifically stated in the lease agreement.
L duty to assure T "QE"
Under older common law, lease promises were independent.
thus a breach by L DID NOT give T the right to stop paying rent. (But T could recover damages)
One EXCEPTION always existed - T obligation to pay rent was DEPENDENT on the T having possession undisturbed by L
Delivery of Possession
Distinguish 3 issues
1. Ls duty to deliver legal right to possession from (contract)
2. Ls duty to protect T against third party trespassers after T in possession
3. Ls duty to assure T physical possession at beginning of lease term
Delivery of Possession - 2 Rules
- The American Rule:
- L has implied covenant only to give T legal right to possession,
- not to put T in physical possession.
- (reflects lease as a conveyance or a contract)
The English Rule:
L has two implied covenants:
1) to give T legal right to possession AND to deliver physical
possession at the beginning
of the lease term.
QE - Remedies
English Rule - incoming T may terminate and recover damages, OR T may affirm lease, not pay during time kept out, plus damages.
American Rule - Incoming T has the remedies of L against a holdover T.
Subleases & Assignments
1. Distinguish between them.
2. The consequences of a transfer being one or the other.
L can also transfer her interest, sometimes also called an assignment. (L's interest is a reversion)
Following transfer who can L collect rent from.
- Depends on who is in PRIVITY with whom...
- Was this a transfer or an assignment
Distinguish Subleases from Assignments
1. Formalistic - "fixed legal test"(MAJORITY)
2. The " intention of the party"
Fixed legal test - in transferring
Transfer of full remaining term results in an ASSIGNMENT - So Mike renting my house until June 2015
If less than a FULL interest then transfer is a SUBLEASE - So Mike renting my house for 3 months
If T retains right to re-enter on transferee's default, still an assignment (under slight majority)
The intention of the parties test
Supposedly words used are not conclusive. (but often determinative anyway)
Search for indicators of intent, ie if T transfers for a lump sum payable up front, suggests an assignment.
Subtenancy is carved out of the head/original leasehold.
T then becomes landlord to T1 - 2 land lords and 2 privity of estate.
Bases for liability of transferees (and Landlords)
1. Privity of Contract
2. Privity of Estate
Privity of Contract
requires an enforceable agreement
3rd party beneficiaries can enforce
continues until release or end of the lease
def; Legal doctrine that a contract confers rights and imposes liabilities only on its contracting parties. They, and not any third-party, can sue each other (or be sued) under the terms of the contracts.Read more
Privity of Estate
what exists between an L and a T
created to make assignees liable to L
When a sublease occurs between T and T1 - there is NO privity of estate between L and T1
Original lease between L and T
sublease and assignment are between T and T1
Privity of Estate & Contract require T subordinate to L
Problem 3 - Pg 449
L --- T --- T1 --- T2 --- T3
What parties are liable to L ?
What liabilities among the Ts?
T ; T1 ; T3
If L collects from T - then T can collect from T1 or T3. ( T is a surety who by subrogation stands in Ls place )
Restriction on Transfer by T
The general rule re: transfers.
T shall not assign or sublease the premises without prior written consent of L.
Example of Forfeiture clause:
Failure to obtain Ls consent renders lease voidable at option of L.
Dunbar Case - 1578
Restatement (Second) 1977
Hold Over Doctrine ( not otherwise in default)
hold to new tenancy
Tenant in Possession and Holding Over
Berg vs. Wiley
T v. L for wrongful eviction; Ls defenses are abandonment and surrender.
T in Possession and in Default
A. Hold Over
T - Out of Possession
A. T expressly "surrenders"
B. T has "abandoned"
T out of Possession
T expressly surrenders - 476-477
L must accept - but can require T to pay or sue for damages.
If L accepts then lease terminates and future rent is wiped out/extinguished.
T out of Possession
Abandoned = an implied surrender
See footnote 39 - pg 477
INTENT - to not return
Sommer v. Kridel
Lease was a term of years for two years; defendant requested L to release him: "ready, willing, and able" prospective T.
Each party carries own fees :
UNLESS there is a statute that allows recovery of attorney's fees.
Where does the burden of proof lie in L/T mitigation issues.
Minority - Landlord
Majority - Tenant
Consequences of L breaching duty to mitigate?
1. Can't recover any rent
2. difference between agreed rent and losses by mitigating
Can parties agree to waive mitigation
Minority - NO
Sources of T Remedies / L Duites - re: condition of leased properties
Quiet enjoyment & constructive eviction
covenants in the lease
duties imposed by statute
implied warranty of habitability
1st - Early Common Law
2nd - Traditional Common Law
3rd - Modern Common Law
4th - Modern Statutes
Early Common Law
Caveat lessee and independent covenants rule
The common law doctrine that stated that it was the tenant’s responsibility to research leased premises before agreeing to a lease and that the landlord was not responsible for the defective condition of the leased premises; this doctrine has been changed in many ways by modern rules.
Exception - Actual eviction by L breaches covenant of "quiet enjoyment" (express or implied)
Breaches quiet enjoyment
Substantial defect in the premises is treated as an eviction - if T vacates
defect is a breach
remedy if T vacates
What is within scope of the covenant of quiet enjoyment
1) duties contained in the lease
2) duties imposed by statute
3) the standard exceptions to caveat lessee
What is Constructive Eviction
The disturbance, by a landlord, of a tenant's possession of premises that the landlord makes uninhabitable and unsuitable for the purposes for which they were leased, causing the tenant to surrender possession.
Why is the K of sale entered into early in the process?
The K of Sale
Statute of Frauds
Statute of Frauds
Basic requirement - a signed writing
Additional minimum requirements; established by judges, vary by Jurisdiction
Plus exceptions: especially part peformance
is free from reasonable doubt;
what a prudent person would be willing to accept
- An implied condition
- its definition
- defects which render title unmarketable
An implied condition
: What consequence if "condition" not met?
A party may rescind.
How do we transfer land with title defects
By drafting appropriate contact provisions and deed language
Then list the defects that buyer is agreeing to
Seller opportunity to cure defect
Present vs. Future Convenants
Only at time deed is delivered OR only thereafter
How breached - by mere existence of superior title or only by eviction?
Persons Protected Under the Recording Acts
Purchasers - ALWAYS
Lessees - always (see note)
Mortgages / Lenders - always (see note)
Creditors - sometimes
Donees & devisees - never
The Recording System
Indexes and search
The issue : priority Types of recording acts NoticeWhat is recorded
Recording Acts - Notice
A person having notice cannot be a BFP
3 types of notice
Actual Notice -
however acquired -
from recorded documents in the jurisdictions chain of title
Constructive INQUIRY notice
Charged with knowledge of...
what would be revealed by visual inspection of premises and inquiry of persons in possession.
what would be found in unrecorded documents referred to in recorded documents
Documents that are recorded BUT DO NOT provide notice
In other words what is recorded but does not constitute notice
Document with a defective property description so that searcher can't tell if this is the land she's interested in.
A document without an acknowledgement but was added to "the library" anyway
A document with significant errors in the names of the grantee or grantor
Insures title as shown by the public record - "good record title"
Covers title matters (and access) only
Insures title only as of the policy's date.
Example of Standard Exclusions
Losses arising from certain government regulations - zoning, subdivision ordinances, etc.
Defects created by the insured.
Defects NOT in public records but known to insured and not disclosed to company
Claims NOT SHOWN by the public records but ascertainable by inspection of the land.
Encroachments, boundary discrepancies, etc, witch an accurate survey wold disclose
Schedule B "variable exceptions" are specific to the property
a specific recorded easement
a specific recorded tax lien
a specific recorded CC&Rs
a specific recorded deed of trust or mortgage