PROPERTY I SPRING 2011-MALAGRINIO

PART III. LEASEHOLDS: THE LAW OF LANDLORD & TENANTChapter 6. Tradition, Tension, and Change in Landlord Tenant Law

A. The Leasehold Estatesa.) Freehold estates have seisin (ownership)

b.) Non-Freehold estates are present possessory interest that does not include seisin. Landlord-tenant relationship without ownership (seisin):

1.) THE TERM OF YEARS

A.) FIXED PERIOD OF TIME or A PERIOD COMPUTABLE BY A FORMULA.a. A term of years must have a specific commencement date and a specific termination date.B.) CAN BE FOR ANY SET DURATION OF TIME: one day, two months, or 3,000 years. Both parties must agree to the specific duration or term of years. a. Common Law-imposed no time limit. However, some states do. C.) CAN BE DEFEASIBLE: Determinable/Subject to condition subsequent.a. A term must be for a fixed period, but it can be terminable earlier by the happening of some event or condition. b. Cannot have a term of years that say the tenancy will end at the end of the war.D.) NO NOTICE of termination is required (because a term of years states from the outset when it will terminate.)E.) DEATH HAS NO EFFECT on a term of years estate. F.) STATUTE OF FRAUDS: State statutes generally provide that leaseholds for over one year, or in some states a longer period, must be created by a written instrument. A few states require that all leaseholds be so created. Only Louisiana and New Mexico have no such statutes.a. Must be in writingb. Subject to the statute of fraudsG.) Cannot be created by operation of law

H.) Examples:a.) Example 1: L leases to T for one year.b.) Example 2 (p.422/Q1): to T for one year, beginning Oct. 1st

2.) THE PERIODIC TENANCY

A. Definition: A lease for a period of some fixed duration of time that continues for succeeding periods until either the landlord or tenant terminates.B. Notice requirement: if notice of termination is not given, the period is automatically extended for another period (tenant is treated like a holdover).a. Common Law-notice must be equal to the length of the period. However, if the period was a year or more, six months was required to terminate the lease.1.) For any periodic tenancy less than a year, notice of termination must be given equal to the length of the period, but not to exceed six months.2.) Notice must specify the date of termination: Notice must terminate the lease at the end of the period and not in the middle of the tenancy (not another day).b. Modern Majority Rule: In some states the common law notice requirement has been changed by statute. Many states require only 30 days notice regardless of the period involved.C. DEATH HAS NO EFFECT: The death of a tenant or a landlord has no effect on the duration of the periodic tenancy. D. Can be created by agreement of parties and operation of law (a change or transfer which occurs automatically due to existing law)a. Holdovers- if a tenant holds over into another period the landlord has two options: 1.) Treat the holdover tenant as a trespasser and evict; or 2.) Treat the tenant as a holdover tenant and hold the tenant over for another period.

E. Examples: i. Example 1: L leases to T on a year-to-year basis.ii. Example 2(p.422/QI): to T from year to year, beginning Oct. 1stiii. Example 3 (p.422/Q1): Lease for no fixed term at an annual rental of $24,000 payable $2,000 per month on the first of each month? (Classification: Annual Periodic tenancy/Rationale: it is not within the parties intent to allow the landlord to increase the price after a month or six months. We could also take the larger of the two estates).iv. Example 4 (p.422/Q2): T, a month to month tenant, notified L on Nov. 16th 2010, that she would vacate as of Nov. 30th 2010. T subsequently vacated on that date and paid no further rent to L. Classification: Month to month periodic tenancyNotice req.: Modern Jurisdiction (30 days req.): insufficient notice/responsible for Decembers rent only. CL jurisdiction (needed at end of period): Notice is insufficient. Tenant should have renewed notice at the end of Nov. /Tenant is responsible until landlord is able to mitigate damages by finding a new tenant. b.) Note 4, p.423: Under a tenancy for no fixed period, rent is reserved or paid periodically, by implication a periodic tenancy instead of a tenancy at will arises in most jurisdictions.

3.) THE TENANCY AT WILL

A. NO FIXED PERIOD, can terminate at any time. B. CREATION: 1.) Generally, arises in the case of an agreement between the parties that either party may terminate the tenancy at any time.2.) Can also arise when lease is for an indefinite period (e.g. a term of years that does not have a termination date) or when a tenant goes into possession under a lease that does not satisfy SOF (e.g. oral lease for 5yrs). However, rent payments will usually convert it into a periodic tenancy (by implication). 3.) A conveyance that grants tenant an estate for the duration of an event.C. TERMINATES:1.) ENDS WHEN EITHER PARTY, landlord or tenant terminates it.2.) At the DEATH OF EITHER PARTY.3.) Tenant commits waste 4.) Tenant attempts to assign tenancy5.) LL transfers his interest in the property (sale of property); or6.) LL executes a term of lease to a third person.

D. IF THE LEASE GIVES ONLY THE LANDLORD THE RIGHT TO TERMINATE AT WILL, a similar right will generally be implied in favor of the tenant so that the lease creates a tenancy at will. a. HOWEVER, a lease may provides for termination at the will of TENANT ONLY: i. E.g. for so long as the tenant wishes: courts usually do not imply a right to terminate in favor of the landlord. The courts look to the terms of the agreement to determine what type of lease has been created.1.) Garner Rule: A lease that grants the tenant the right to terminate at the date of his choice creates a determinable life estate (or a life estate subject to a condition subsequent) terminable at the will of the tenant (or his death or incapacity). ii. At common law: a lease for so long as the lessee shall please was interpreted as a lease at the will of both the lessee and the lessor.E. Common Law: No notice required.F. NOTICE GOVERNED BY STATUTE: most states have enacted requirements of some notice to terminate, usually 30 days.G. Can be created expressly and by operation of law.

H. Garner v. Gerrish: (Issue: Tenancy at will or Determinable life tenancy/life estate determinable?)I. Court says we no longer require livery or seisina.) Numerus Clauses-standardization in estates (p.425): Garner, a New York case confronting the lease-for-life problem suggests that courts in the future may simply defer to the parties intention to create a new type of leasehold. The opinion attacked the harsh application of numerus clauses as being grounded in the antiquated notion that a life estate cannot be created livery of seisin.

I. Questions and Problems:a.) Example 1 (p. 426/Q2): to T for as many years as L desires.Rationale: more akin to a leasehold than a freehold (no indentured servitude). If it is terminable by the landlord than it is terminable by both parties)b.) For rent payment of $500 a month L leases Greenacre to T for the duration of the war. Classification & Rationale: 1.) NOT term of years-no fixed period/NOT periodic tenancy-does not seem to be what the parties intended/Not tenancy at sufferance-no prior relationship/ Not life estate determinable-language specifically states it is a lease, MUST BE Tenancy at will-because there is no fixed period.

4.) THE TENANCY AT SUFFERANCE: HOLDOVERS

A. Often called HOLDVERS.B. Might arise when tenant holds over after the termination of the tenancy.C. A LEGAL LIMBO: the tenant has no right to be there, but he is not automatically treated as trespasser either (mostly to avoid triggering adverse possession).D. WHAT CONSITUTES A HOLDOVER: a. At common law a tenant held over if he stayed for a tick of the clock past the old term. Excuses however compelling were not accepted.b. MODERNLY-LL cannot bind T to a new tenancy if 1.) T remains in possession only a few hours after termination of the lease, or 2.) T leaves a few articles of personal property on the premises; 3.) the delay is not the tenants fault; or4.) T has a seasonable lease (e.g., summer cottage)E. NOT REALLY AN ESTATE (not part of the estate system) but rather a situation.F. Common law (Two options): 1.) Eviction (plus damages) or2.) Consent (express or implied) to create a new tenancy (by accepting rent).

G. Landlord has three options (MODERN-Majority): The LLs election once exercised, is binding on the LL as well as T. 1.) Eviction + damages 2.) Create a new tenancy: Allow holdover without a new lease agreement, which implies a renewal of prior lease (but no longer than one year because of the Statute of Frauds)a. Majority-creates a periodic tenancyb. Minority-based on prior lease terms c. SAME TERMS APPLY: The terms and conditions of the expired tenancy apply to the new tenancy.d. If the original lease term was for one year or more, a year to year tenancy results from holding over. If the original term was for less than one year, the periodic term is determined by the manner in which the rent was due and payable under the prior tenancy. e. ALTERED TERMS: If LL notifies the tenant before termination that occupancy after termination will be at an increased rent, the tenant will be held to the new terms even if he objects to the increased rent, provided that the rent increase is reasonable.3.) Treat holdover as a trespasser initially, but then accept rent, implicitly creating a new tenancy based on the rent payment. H. In most jurisdictions (Majority) a hold over gives rise to a periodic tenancy I. Minority (p.427): a few jurisdictions cover the holdover tenancy into a tenancy at will and provide that the tenant shall be liable for the reasonable value of use and occupation-even though this may be less than the rent agreed upon in the original lease!

B. THE LEASE

a.) Licenses, Leases, and life estates (Differentiating factors)I. Intent-leases give rise to the landlord-tenant relationship, which carries with it certain incidents certain rights and duties and liabilities and remedies-that do not attach to other relationships.II. Breath of exclusivity (right to exclude)-if you have seisin you have more of a right to exclude.III. Rent (how rent are paid)IV. Control (the amount of control each party has)V. Incidental services (what you are able to use the property for)b.) The dual nature of the lease as a conveyance and a contract: A lease is both a conveyance and a contract. A lease transfers a possessory interest in land, so it is a conveyance that creates property rights. But it is also the case that leases usually contain a number of promises (or covenants-promise to pay rent/ or to provide utilities) so the lease is a contract, too, creating contract rights.I. Property law v. Contract law-today the courts are trying to reform property law of landlord and tenant by importing into to it the modern law of contracts (p.429). i. Independent covenants v. Dependant covenants (later clarified) ii. Implied warranties (later clarified) iii. Statute of Frauds (p.430):a.) Patterned after the 17th century English Statute of Fraudsb.) American statutes provide that leases for more than one year must be in writing. All but a few jurisdictions permit oral leases for a term less than a year.II. Historical shift (Conveyance v. Contract): i. Historically courts viewed a lease-as-conveyance, but over the last decade this has changed to some degree, in favor of a view emphasizing the contractual nature of leases.ii. The objective of the new orientation has been to reform property law of landlord and tenant by importing into it much of the modern law of contracts.iii. Though leaseholds eventually came to be recognized as interest in land, they were and still are classified, like contractual interest, as personal property.III. Form leases (Contracts of Adhesion, p.430): do not allow any bargaining power on behalf of the tenant. Terms the tenant cannot negotiate for. Market competition creates balance and negotiation power (landlords will compete with each other, usually competition forces sellers to incorporate in their standard contracts terms that protect the purchasers).i. The seller is trying to avoid the costs of negotiating and drafting a separate agreement with every new purchaser-which tenants will end up baring the cost for.ii. In general lease forms are okay, beacause1.) landlords are competing for tenants business and 2.) the cost of drafting different leases is expensive and the cost will be placed on the tenant.IV. Factors the court looks at when dealing with lease issues: i. ID partiesii. Description of property iii. Amount of rentiv. Length of time (important for notice/to know when lease ends/actual notice is not needed for term of years).IV. Dependant covenants (if some stops performing you can stop performing)V. Lease v. License:1.) Lease= a lease is a conveyance of property with the right of exclusive possession retained in the tenant. The right of exclusive possession retained in the tenant. The right of exclusive possession gives the tenant the right to remove anyone from the property. Most states require that a lease for more than a year, be in writing in compliance with SOF. 2.) License= a license does not give the tenant (or possessor) the right to exclusive possession. It only gives them the right to use the property. 3.) Differences: with a license there is no exclusive right to possession (E.g. street/hotel vendors are licensees. Dorms/billboards are licenses)VI. Servitude-less of an interest in property

C. SELECTION OF TENANTS (Herein of Unlawful Discrimination)

a.) In the past landlords were free to discriminate as they wished in selecting tenants (on the grounds of race, gender, national origin, and so forth).b.) Today LL are constrained from discriminating in the selectio of tenants in a number of ways, namely the Fair Housing Act and 1982 of the U.S.C.c.) The Fair Housing Act (FHA) enacted in 1968 and amended several times: prohibits the advertising or publication of discrimination.d.) The FHA does NOT APPLY TO (3603)::1.) Any single-family house sold or rented by an owner;2.) Rooms or units in dwellings of which the owner actually maintains and occupies at his residence.e.) The FHA MAKES IT UNLAWFUL TO (3604): i. Portions of the Fair Housing Act prohibit discrimination in the financing of housing and in the provision of brokerage services (can sue for injunctive relief and damages, including punitive damages).

1.) Refuse to rent or sell, after making an offer to a person, based on race, color, religion, sex, familial status, or national origin.2.) To discriminate against a person in the terms, conditions, or privileges of rental or sale based on persons color, race, religion, sex, familia statuts, or national orgin.3.) To advertise with respect to rentin or selling a dwelling based on race, color, religion, sex, handicap, familial status or national origin.4.) To discriminate based on handicap.i. To bring a suit under the handicap provision, the handicap must be substantially limit a major life function. ii. Pursuant to the FHA AIDS is a handicap and refusal to rent to person because of AIDS is discrimination.5.) Discrimination based on handicap means= a refusal to permit reasonable modifications for the handicapped person. i. LL, when renting to a handicapped person must: a.) make reasonable accommodations; b.) which are necessary to afford the handicapped person an equal opportunity to enjoy the housing. ii. E.g: if a renter has a mental disability that requires him to rely solely on his pet as a companion, the LL cannot evict the tenant even if he has a no-pets policy because it is a violation of the FHA.f.) NOT A VIOLATION OF FHA: 1.) Refusal to rent to an unmarried heterosexual couple 2.) Refusal to rent to a homosexual couple because the LL objects to the couples sexual orientation g.) VIOLATION OF FHA:1.) LL rents to a female tenant and then demands sexual favors.h.) A discriminatory motive need not be proved in order to make out a prima facie case under the Fair Housing Act; proof of discriminatory impact or disparate treatment is sufficient.I. Burden of Proof: A defendant must justify his/her action as one taken in pursuit of a bona fide, compelling governmental purpose, with no less discriminatory alternative available to achieve the goal. In the case of private defendants, one taken pursuant to a rational and necessary business purpose.

II. Catalog of taboo troublesome, and safe words for real estate advertisement :i. UNACCEPTABLE-able-bodied/bachelor/near churches/couples only/ empty nesters/exclusive/executive/responsible/no smokers/no alcoholics. ii. ACCEPTABLE-mentioning that a location is near bus lines/to say a credit check is required/ no drugs or drinking/to refer to school districts/senior citizen discount/presence of a nursery. CAUTION-fishermans retreat, no gays, no lesbians, handymans dream, prestigious, a nannys room, quality neighborhood, and secure.

i.) Civil Rights Act 1866, 42 U.S.C.A. 1982: All citizens of the United States shall have the same right, in every state, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property. (p.433)I. Had no impact on private housing until Jones v. Alfred-when the court held that the 1866 provision bars all racial discrimination, private and public, in the sale or rental of property.II. The 1866 law is narrower than the Fair Housing Act in that it REACHES ONLY RACIAL DISCRIMINATION and does not deal with discrimination in the provision of services and facilities. The Civil Rights Act also does not prohibit discriminatory advertising. III. PUNISHES ACTIONS ONLY!IV. Courts interpret race: cases interpret statutes/legislature write statutes/we look to legislative intent.V. No Mrs. Murphy exceptions (p.434).VI. HOWEVER, it is broader, in that it is not limited to dwellings and contains none of the exemptions found in the Fair Housing Act.1.) Example: discrimination based on national origin by a family renting out a basement apartment in their home is not in violation of the FHA, but is in violation of Civil Rights Act. VII. The 1866 legislation also had no cap on damages in comparison to the Fair Housing Act originally when it was enacted limited punitive damages to $1,000.VIII. Proof: claims under the Civil Rights Act 1866 probably require proof of intentional or purposeful discrimination.

D. DELIVERY AND POSSESSION

a.) Hannah v. Dusch-the court follows the American Rule

I. American Rule (Protects Landlords-Minority view): The landlord is not bound to put the tenant into actual possession, but is bound only to put him in legal possession. i. [Where the new tenant fails to obtain possession of the premises because a former tenant wrongfully holds over, his remedy is against such wrongdoers and against the LL, this is because:]1.) The LL is not responsible for the acts of third parties. 2.) There is no implied covenants in a lease 3.) T has the legal right and possession and can use state law to remove or eject holdover pursuant to a summary disposition statute or forcible entry and detainer statute.4.) If T had wanted an express actual possession provision in the contract he would have requested or negotiated for an express covenant in the lease giving him actual possession. 5.) It is cheaper for the LL if there is no implied covenant6.) It was a conveyance and therefore there cannot be any implied covenants.II. English Rule (Protects tenants-Majority view): In the absence of stipulations to the contrary, there is in every lease an implied covenant on the part of the landlord that the premises shall be open to entry by the tenant at the time fixed by the lease for the beginning of his term. The landlord is required to put the tenant in actual possession (p.439).i. Five Policy Reasons for English Rule:1.) Most consonance with good conscious, sound principle, and fair dealing.2.) A T would not enter into a lease if they had knowledge at the time that they would not be able obtain possession the day they were scheduled to move in, but would be compelled to begin a lawsuit.3.) It is unreasonable to suppose that a man would knowingly contract for a lawsuit, or take a chance of one.4.) The landlord is usually always aware of whether or not a tenant in possession intends to hold over or assert a right to future term. The LL is in a better position to know than a prospective tenant.5.) The burden should be placed on the person (landlord) within whose knowledge the facts are most likely to lie, given that the lessee would be compelled largely to rely on the lessors testimony in court. ii. Under English Rule even if legal delivery has been provided, failure to provide actual delivery is a cause of action. iii. If there is no legal and actual delivery, there is a cause of action in any jurisdiction (both English Rule and American Rule jurisdictions). I. If after the first day of the lease, a stranger trespasses upon the property and wrongfully obtains or withholds possession of it from the tenant, his remedy is against the stranger and not the LL.

b.) SUBLEASES & ASSIGNMENTS: Unless the lease is to the contrary, a tenant my assign or sublease his interest.I. Leases- typically gives rise to both privity of K and privity of estate. The two types of privity reflect the dual nature of a lease as a contract and conveyance.i. Privity: denotes a voluntary transactional relationship between two or more people or entities.

ii. Privity of Estate: A relationship based on shared interests in the same estate. 1.) The consequence of being in privity is that the assignee is obligated to perform all the lease covenants that run with the estate. 2.) Subsequent possessory interest- a reversion, remainder, or future interest bring in privity of estate.

iii. Privity of K: A relationship arising from contract1.) Promises by one party to the other.

iv. Assumption: 1.) Creates privity of K, by placing the original tenant and the assignee in privity of K. 2.) Can occur without a release 3.) Once privity of contract is created by assumption, it remains until and unless the contractual obligations are released

v. Release and Novation: 1.)When the LL and the original tenant release one another from the lease. There must be clear evidence of a LLs intent to release, usually found in some explicit agreement. This express release, when coupled with a promise by the assignee to assume performance of the lease obligations, is called a NOVATION.

vi. Subrogation:1.) When the assignor tenant stands in the shoes of the defaulting assignee tenant. The assignor tenant will be entitled to recover from the assignee tenant any amount he pays to the landlord on behalf of the assignees default.

II. Assignment or sublease?

i. Assignment:1.) the transfer of rights in all or part of the premises for the remaining amount of the entire term. . 2.) In an assignment privity of estate exist between the LL and the assignee, meaning the assignee and the landlord are liable to each other for performance of lease obligations that carried over from the prior estate holder. The privity of estate between the lessor and original lessee is terminated, but the privity of K between them remains unaffected.

ii. Sublease:1.) Occurs when the lessee transfers anything less than his entire interest in the leasehold, because the lessee is said have retained a reversion; the right of possession goes back (revert) at the end of the designated in the transfer. a. At CL a transfer was an assignment unless the tenant retained a reversion, no matter how brief its duration.b. A minority of states treat the retention of the right of entry as sufficient to create a sublease. At common law, this right, which was not a reversion lacked any certain duration, it was not considered an estate and thus not enough to create a sublease.E.g. Even if the term of the sublease is just one day less than the remainder of the term; it is a sublease rather than assignment. 2.) A minority of states treat the retention of the right of entry as sufficient to create a sublease. 3.) A sublessee have neither privity of contract nor privity of estate with the principal lessor, rather they remain between the original lessee and the lessor.

iii. Difference between Assignment and sublease: An assignment conveys the WHOLE term, leaving no interest or reversionary interest in the grantor or assignor. Whereas, a sublease may be generally defined as a transaction whereby a tenant grants an interest in the leased premises less than his own, or reserves to himself a reversionary interest.

iv. TEST for Determining Assignment or Sublease:

1.) Common Law-If the instrument purported to transfer the lessees estate for the entire remainder of his term it is an assignment regardless of its form or the parties intention. (p. 446). a. Majority: FORMALISTIC APPROACH: An assignment arises when the lessee transfers his entire interest (if 2yrs remain on the lease and the lessee transfers for a term of 1 yr, a sublease results). 2.) Modern trend: The courts have abandoned technical rules in the construction of conveyances and instead look to the intention of the instrument alone-the intention is derived from the language of the instrument read in light of the surrounding circumstances. a. Minority: INTENT APPROACH (less common approach to the sublease assignment problem)- considers the intention of the parties. The actual words used sublease or assignment are not conclusive, though they may be persuasive. [Ernst v. Conditt]i. Note 1/Problem: Suppose a lessee transfers all of his interest in some physical part of the premises; is this a sublease or a partial assignment? (Most courts say partial assignment/ a substantial minority of jurisdictions say its a sublease).

v. Subleases and privity: If the original tenant sublease his property to a third party then:

1.) Privity of K (PK)and Privity of estate (PE) still exists between the landlord (LL) and original tenant (OT) (based on the original lease).

2.) PK and PE exist between the QT (sublessor), and the sublesee with respect to the lease that they entered into which granted the sublessee the property for some term during the subleasors whole term.

3.) If the sublessee fails to pay rents to the LL, the LL cannot sue the sublessee because PE does not exist between the LL and the sublessee.

4.) However, if a sublease is signed with the LL stating that in consideration for allowing this sublease, the LL, allows the original tenant to sublease to the sublessee and the sublessee and the LL sign, then privity of contract exists between the two. vi. Third party beneficiaries to a contract: A landlord is usually a third party beneficiary in contracts involving an assignment or sublease. (Test-did the parties intend to bestow a benefit on the third party, if so he may maintain an action).

viii. Approval Clause: if the lease contains an approval clause, that is, a clause which states that T must secure the LLs approval before assigning or subletting the premises, it is strictly construed as being a restraint on the transfer of land.

a. The courts generally favor the free alienability of property, hence unless a lease expressly limits or prohibits assignment or sublease, a tenant is free to transfer the leasehold by either method. ix. Covenants against assignment or sublease are strictly construed against the LL: Many leases contain covenants on the part of the tenant not to assign or sublease without the consent of the LL. These are strictly construed against the landlord. Thus, a covenant prohibiting assignment does not prohibit subleasing and vice versa. x. Express restrictions only apply to inter vivos transfers. Does not apply to gift by devise and intestate succession do not.xi. When an express restriction does apply (inter vivos transfers), the LL may consent to a transfer. xii. Limits on LLs power to deny consent:a. Common law (Majority Rule): Where a lease contains an approval clause the LL may arbitrarily deny consent to transfer for any reason, or for no reason at all, no matter how suitable the proposed assignee appears to be and no matter how unreasonable the LLs objection. i. Policy reasons: 1.) LL exercised a personal choice in the selection of T and provided that no substitute shall be acceptable without his prior consent, is under no obligation to look to anyone but the tenant for rent. 2.) An approval clause is an unambiguous reservation of absolute discretion in the LL over assignments of the lease. The tenant could have bargained for the addition of a reasonableness clause to the lease. The tenant having failed to do so the law should not rewrite their contract for them. 3.) The courts should not depart from CL majority because many leases now in effect covering a substantial amount of real property and creating valuable property rights were carefully prepared by competent counsel in reliance on the majority view point. 4.) Tradition and public policy dictate that the LL has a right under the circumstances to realize the increased value of his property: a.) in a commercial lease, the LL must specifically reserve the right in the lease to be able to capture the increased rent if there is a transfer of the leasehold.

b. Modern Rule (Minority view): Where a lease provides for assignment only with the prior consent of the LL, such consent may be withheld only where the LL has a commercially reasonable objection to the assignment, even in the absence of a provision in the lease stating that consent to an assignment will not be unreasonably withheld [Kendall-ONLY APPLIES TO COMMERCIAL LEASES]. i. The determination of whether the LLs refusal to consent was reasonable is a question of fact. Some of the factors that may be considered (indicators of good faith and reasonableness)ii. Commercially reasonable- for the protection and operation of the LLs business:1.) The assignees history of damaging or destroying property.2.) The ability of the prospective tenant to pay rent. [The inability to pay rent is reasonable in both commercial and residential lease]. 3.) Example: LL withholds lease to a prospective competitor.iii. Factors that are unreasonable: 1.) Denying consent solely on the basis of personal taste, convenience, or sensibility; and 2.) Denying consent in order that the LL may charge a higher rent than originally contracted for (mere economic loss).3.) Example:a. LL withholds consent to an assignment to make more money, especially when he withholds the transfer because the potential assignee is a tenant in another building and the landlord does not want to lose his income [Krieger v. Helmsley-Spear Inc]. b. Withholding a lease for moral purposes.

iv. The modern/minority rule (Kendall): this rule only applies were there is a approval clause in the lease.v. An outright prohibition of an assignment or sublease will usually be enforced (majority view). c. Anti-discrimination statutes limit the LL ability to reject prospective tenants, including assignees or subleases. d. RULE OF DUMPHORS CASE: Where the LL expressly consents to one assignment; *the covenant thereafter becomes unenforceable. The first approval, will be an approval for all subsequent cases, unless the LL had reserved the right originally to approve each subsequent transfer. The rationale being that the covenant is single, and once waived, the covenant is destroyed. i. The rule is not followed much by American courtsii. The rule has been rejected by the Restatement of property.

c.) THE TENANT WHO DEFAULTS

1.) The Tenant in Possessiona.) Berg v. Wiley (Modern/Majority Rule: NO SELF HELP!)- Court held that a LLs reentry in the Ts absence by picking the locks and locking T out, although accomplished without actual violence, is usually considered forcible as a matter of law (Applies to commercial and residential leases). 1.) Policy: Prevent breaches of the peace: A breach of peace is not limited to a physical altercation; rather, a breach of the peace exists when there is the potential for real altercation. The policy of the law is mainly to discourage LLs from taking the law into their own hands- disfavors any use of self-help to dispossess a tenant in circumstances which are likely to result in breaches of the peace.2.) In some cases, self-help is still allowed in commercial lease, if a reentry clause is specifically stated in the lease, because commercial tenants are presumed to be in a more advantageous bargaining power position.b.) Common law LL is permitted to retake the premises using self-help when two requirements were met:(1) the LL was legally entitled to the premises and(e.g. T holds over after the lease term/T breaches a lease containing a reentry clause) (2) the LL used reasonable force (peaceable-requires factual analysis/ hard to satisfy/unclear).c.) Example: Hanging from an oning and peering through a window is not peaceable because there could have been an altercation if the tenant had been around. d.) The common law allowed for self-help because it was cheaper and easier for the LL than an ejectment action. e.) Modern Rule-A LL may not resort to self help to retake possession of leased premises from a tenant in possession; the only lawful means to disposes a tenant who has not abandoned or voluntarily surrendered the property and claims possession adversely to the LLs claim of breach of a written lease is by resort to judicial process [Berg v. Wiley].

f.) Summary Proceedings or forcible entry and detainer statutes:1.) Purpose of summary proceedings is to provide a quick and efficient means of recovering possession.2.) Problem with summary proceedings is that they can be time-consuming and expensive even if uncontested.i. The hearing usually takes up to 3-10 days on average to get T out, however, in larger cities it can last 100 days or so.3.) LL advocates complain that judges drag out summary proceedings because the judges are biased in favor of tenants; T advocates argue that Ts are unable to effectively represent themselves in litigation, and have insufficient resources to retain a lawyer.

2.) THE TENANT WHO HAS ABANDONED POSSESSION a.) Sommer v. Kridel: Court held that D (who was dumped by his fianc before moving in) was not liable because P (LL) did not mitigate his damages.i. TENANT IN POSSESSION breaches a covenant: 1.) Sue for back rent and damages2.) Terminate the lease and sue to recover possessionii. TENANT ABANDONS: an abandonment of leased property by the tenant occurs when he vacates the leased property without justification and without any present intention of returning and he defaults in the payment of rent (P.477/FN 39).

iii. LLs Remedies when a Tenant abandons:

1.) Accept tenants surrender. (Surrender- a tenants offer to end a tenancy. If the surrender is effectuated this extinguishes the lessees liability for future rent, but not for accrued rent or for past breaches of the other covenants. Note 2, P.476)2.) Sue to recover possession as well as back rent and costs of finding a replacement3.) Relet the premises on the tenants account. Most commentators say any amount in excess should be kept by the landlord taking into consideration the landlords expectations.4.) Sue for damages based on anticipatory breach5.) Wait for the end of the lease and sue for the entire amountiv. Recovery of damages will be reduced based on duty to mitigate: The landlord must treat abandoned premises like one of his vacant stock (Sommer). The landlord must make at least the same effort to rent the abandoned premises as he makes to rent other vacant units

v. DUTY TO MITIGATE:1.) Common Law- the LL did not have a duty to mitigate the damages caused by a defaulting tenant because he was not the possessor of the estate. a. Property law equated a lease with a transfer of property interest in the owners estate.b. The law of contracts, which has been imported to property law places many burdens and duties on both the LL and T that were not present at common law.c. Burden of Proof: The tenant has the duty to show that the landlord did not mitigate damages.2.) Modern Trend: A LL is under a duty to mitigate damages caused by a defaulting tenant when he seeks to recover rents due from a tenant who has abandoned the property. The LLs duty arises under the contract aspect of the lease because under contract law the non-breaching party to a contract has an obligation to mitigate damages if the other party breaches the contract. If the LL has many vacant apartments he must treat the abandoned apartment as one of his vacant stock and make reasonable efforts to re-let it. a. The courts emphasize the contractual duties of good faith and fair dealing.c. Burden of Proof: The landlord bares the burden of proving that he used reasonable diligence in attempting to re-let the premises. b.) Policy reasons behind mitigation: A mitigation requirement returns the property to productive use rather than allowing it to remain idle [by preventing the LL from sitting idly by and watch the damages mount when he can prevent those damages]. Also, it helps prevent property damage. If the L is encouraged to let the property remain unoccupied, the possibility of physical damage to the property through accident or vandalism is increased. (P.477).c.) Factors in assessing whether the LL satisfactorily fulfilled his burden of mitigation: 1.) Personally, through an agency or broker, offered or showed the property to prospective tenants2.) Advertised the premises in a local newspaper3.) Obtained a realtor; or4.) Advertised the lease in some other forumd.) Consequences for failure to mitigate damages: i. Damages are reducedii. T will only pay for actual damages loss that occurred after.e.) The Restatement is AGAINST imposing the DUTY TO MITIGATE on LL: An abandonment of property is an invitation to vandalism, and the law should not encourage such conduct by putting a duty of mitigation of damages on the landlord. P.476.iii. Another reason against duty to mitigate (from cases) is that the efforts by to LL to relet premises might be held to constitute an unwilling acceptance of the surrender. P.476iv. NYC still goes by the inferior common law rule that the landlord may but need not mitigate, reasoning that parties who engage in commercial transactions based on prevailing law must be able to rely on the stability of such precedents. P.478.f.) LANDLORDS REMEDIES AND SECURITY DEVICESi. Rent and Damages Re-cap: 1.) Sue for back rent and for damages occasioned by the tenants breach of lease obligations.2.) LL may terminate the lease and recover possession3.) In some jurisdictions the remedy of anticipatory repudiation is made available by statute.4.) Absent a statute, it appears that the anticipatory breach remedy is generally unavailable, at least as to failure to pay rent. 5.) In cases of a tenants abandonment anticipatory breach will apply if the JD in question extends that contract doctrine to leases. ii. Security devices: (P.480-81)1.) Security deposits: the purpose of such deposits is to protect the landlord in the event a tenant defaults on rent, damages the premises, or breaches the lease.2.) Limits placed on security deposits: p.481 a.) Deposits must be place in a trust or escrow account b.) Deposits are not to be comingled with other funds c.) The tenants claim to the deposit is made prior to the creditors, include in some instances, a trustee in bankruptcy d.) Statutes in some states require LL to pay interest on the security deposit. But there is no general CL rule that the LL must pay interest (look at statute). e.) The LL must submit an itemized list of deductions from a deposit f.) Penalties are levied for violations

3.) Other techniques: P.481 a.) The lease may characterize a payment as consideration or bonus an approach that tends to work as long as there is no provision for return of payment upon termination. b.) Designating the payment as advance rent has been even more successful (a number of JD all L to keep the deposit on termination for default). c.) A deposit may also be classified as liquidated damages. This will be tolerated only when the amount is reasonable and the actual damages are difficult to determine. Most of the time such clauses are regarded as unenforceable. Not ideal for landlords: Once default has occurred the tenant has little incentive to minimize damages. If the Landlords attempts to guard against this by charging to hold the tenant to the damages over and above the deposit it will be viewed as a penalty clause. d.) Rent acceleration- upon tenants default, all rent for the entire term is due and payable. It is accepted by a majority of courts in regard to default in rent payments.

d.) DUTIES, RIGHTS, & REMEDIES (Especially Regarding the Condition of the leased Premises)i. Once a lease is entered into, the landlord has an incentive to neglect everyday repairs because the cost of the neglect are borne primarily on the tenants.ii. Tenants also have an incentive to neglect maintenance, especially toward the end of the term, because the cost of neglect will soon shift to the landlord.

1.) Landlords Duties; Tenants Rights and Remedies

a.) QUIET ENJOYMENT AND CONSTRUCTIVE EVICTIONi. Reste Realty Corp. v. Cooper1.) Similar case: Hannan v. Dusch the landlord failed to insure quiet enjoyment.a. The word premises is construed in most favorable for the tenant meaning, exterior walls, driveways, foundation under the leased ground are not part of that premises.b. If LL knows about some bad conditions, which is latent (hidden), he has a duty to disclosec. If LL or his agents make a promise to fix defective condition, and T renews the lease in reliance on that promise, LL has a duty to fix, and it does not mean that T accepted the premises at their present defective condition.

ii. THE COVENANT OF QUIET ENJOYMENT:1.) Definition: A covenant on the part of the LL promising the tenant that they shall enjoy the leased premises in peace without disturbance.2.) Expanded to encompass beneficial enjoyment.3.) The covenant can be expressly provided for in the lease or if not implied.4.) The implied covenant of quiet enjoyment cannot be waived.5.) The covenant is implied because ANY material breach need not be included in the lease.6.) The covenant of quiet enjoyment can be breached by either actual eviction, partial eviction, or constructive eviction. 7.) Independent or dependent covenant: Common Law: Until the advent of the application of contract law in leases covenants in leases were independent with one major exception: The LLs duty not to interfere with the tenants quiet enjoyment of the premises (dependant covenant). 8.) Today all covenants in leases are dependent9.) Originally this covenant was limited to cases where T was OUSTED, but in time included beneficial enjoyment.10.) A covenant of quiet enjoyment is IMPLIED in a lease. (Majority view)11.) When the covenant of quiet enjoyment, implied or expressed, substantially breached by LL, it is a CONSTRUCTIVE EVICTION (CE)!i. E.g. Failure to provide heat, when it was assumed by the lease, during cold days is CE.ii. Whenever the condition on premises does not allow use of premises for leased purposes it is CE and T can abandon the premises.12.) For CE- the breach (inhabitable conditions) must be PERMANENT, but continuous recurrence (e.g. every time when it rains) is sufficient to meet the test of CE13.) The covenant of quiet enjoyment and covenant to pay the rent by T are MUTUALLY DEPENDENT, meaning that if LL failed to repair and improve premises, T CAN leave or stop paying rent! At CL those covenants were INDEPENDENT, T could not stop paying rent or abandon.14.) The implied covenant of quiet enjoyment cannot be waived.15.) The covenant is implied because ANY material breach need not be included in the lease.16.) Independent or dependent covenant: Common Law: perceived covenants as independent (exception: constructive eviction), now modernly viewed as a dependant covenant read into every clause.g.) Theory of CONSTRUCTIVE EVICTION: CONSTRUCTIVE EVICTION:a. Unlawful disturbance by LL must be so substantial to amount to eviction.b. What if LLs breach is significant, but does not amount to an eviction? T does not have a right to vacate, however SOME JDs ALLOW T TO VACATE (when dependency of covenants applied)1.) Cause due to BREACH of implied covenant of quiet enjoyment: a.) premises are substantially unsuitable for leased purposes; ORb.) Seriously interferes with beneficial use and enjoyment-very fact intensive to show proof of.2.) Exception to landlord No Duty Rule (Caveat leases).3.) Tenant MUST LEAVE in order to claim constructive eviction within a REASONABLE TIME. B reasonable time is a matter of fact. Courts are sympathetic to T because it is a difficult process, if he is found wrong he will be liable to LL, etch.) REMEDIES AVAILABLE TO TENANT IF THE LANDLORD FAILS TO ACT:1.) Stay and sue for damages 2.) Leave and stop paying rent PARTIAL EVICTIONa. ACTUAL: i. Partial actual eviction occurs when the tenant is physically excluded from any part of the leased premises. (The part which T is excluded from need not be a substantial part of the premises for breach to occur.) Ts remedies for breach will differ depending on whether the partial eviction was caused by the LL or by one with paramount title. ii. If there is an actual eviction of a part of the premises only, T is relieved of ALL liability for rent! (LL cannot apportion his wrong).b. CONSTRUCTIVE.i. MAJORITY T cannot leave if the constructive eviction is on part of premises and the rest might be beneficially used.c. Remedies available to Tenant if the landlord fails to act:3.) Stay and sue for damages (always available, and always desired)4.) Leave and stop paying rent (claiming constructive eviction, not available to constructive partial eviction)i.) Notes and Questions1.) It has been said the doctrine of constructive eviction serves as a substitute for dependency of covenants.j.) Problems 1-3 (p.491-492)1.) Question 1(a&b). T is a tenant at will of L. L causes a nuisance that interferes with Ts business on the leased premises. T vacates, rents equivalent space at a higher rent, and subsequently sues for damages on the theory of constructive eviction arising from a breach of the covenant of quiet enjoyment. What result? ANSWER: (a) Landlord is not liable-There cannot be a constructive eviction in a tenancy at will because both tenant and landlord can end tenancy at anytime (no notice is required at CL). (b) Land lord is liable-In Kent v. Humphries, the lawyers argued that it was a periodic tenancy rather than a tenancy at will. Because the court felt sorry for the tenant the accepted the argument, ruling in favor of the tenant.2.) Problem 2A (Part1). T (has a term of years) vacates the leased premises prior to the end of the term and stops paying rent. I a subsequent suit by L for unpaid rent. T asserts a defense of constructive eviction, claiming that L breached the covenant of quiet enjoyment. What results when L fails to control the excessive noise made by neighboring tenants of T who commonly party long and loud into the night? ANSWER:This case depends on whether the landlord has control and fails to act (omission). If the landlord has control the landlord needs to act.Problem 2A (Part2). What if the disturbance was not noise but cigarette smoke seeping from neighboring units into the unit of a nonsmoking tenant? ANSWER: Since landlord has control over the premises inside the landlord will be liable. In most apartments complexes in California smoking is prohibited.3.) Problem 2B.The building has been the site of criminal activity-acts of burglary and vandalism by unknown third parties. L installs deadbolt locks on all entrance doors and hires private security guards, but the problem continues. What results? ANSWER: Since the landlord does not have ocntrol over acts of third party only the premises and the land lord has taken reasonable steps to ensure the safety of the premises which he has control over he will most likely not be found liable. 4.) Problem 2C. T a gynecologist whose practice includes performing elective abortions, has been the target of ongoing demonstrations by anti-abortion protestors. During the protests, singing and chanting demonstrators picket in the parking lot and inner lobby. They approach patients to speak to them and distribute literature against abortions. ANALYSIS: The gynecologists activities are what is causing the protest and the protestors are third parties. ANSWER: The landlord will be held liable if he does not take reasonable measures to ensure control over the common areas (parking lot and inner lobby) which he has control over.5.) Problem 3. T believes that L has breached the covenant of quiet enjoyment and wishes to abandon the leased premises, claiming constructive eviction. Rather than vacate, T brings suit for equitable relief in a declaratory judgment that L substantially breached the covenant, and that if T leaves within 30 days of the requested judgment he will have vacated within a reasonable time. ANSWER: Requesting a declaratory judgment is very expensive, but it is a good safety net (when you need factual findings before claiming constructive eviction/used a lot by commercial businesses) before proceeding with vacating the premises and stopping rent payments.k.) Note: The Illegal Lease1.) If lease is unenforceable (illegal lease)2.) Tenant is treated as if at sufferance (3 options) and the landlord is entitled to the reasonable rental value of the premises, given their condition-The Three Options:a. ) Eviction plus damages-create a new tenancy,b.) Allow holdover without a new lease agreement, which implies a renewal of the prior lease (but no longer than a year because of the Statute of Frauds),c.) Treat holdover as a trespasser initially, but then accept rent, implicitly creating a new tenancy based on the rent payment. 3.) The chief attraction of the illegal lease defense was the leverage it provided: Unlike a claim based on quiet enjoyment and constructive eviction, the tenant could withhold rent and still stave off the landlords inevitable action to evict for nonpayment. THE IMPLIED WARRANTY OF HABITABILITY (P.496)I. The implied warranty of habitability only applies to residential leases because that is where people live. It exists in residential leases, whether oral or written that the landlord will deliver over and maintain, throughout the period of the tenancy, premises that are safe, clean and fit for human habitation.II.Definition of habitable: safe, clean, and fit for human habitation.III.Some jurisdictions, use an objective approach, and look to statute to as guidelines others use a subjective approach and consider whether the defects affect the particular tenant.IV.Common Law: has a narrow interpretation of the landlords duties. Modern Law: Ls duties are broadened to include: delivering and maintaining premises in a habitable condition. V.The landlord must put tenant on notice (notice requirement)VI. It is not waivable: landlord cannot ask tenant to waive away the implied warranty of habitability.VII. Affirmative cause of action brought by tenant (usually the tenant is the defendant sued by the landlord for not paying rent).VIII. Usually used as a defense to the landlords cause of action.i. Hilder v. St. Peter- Court granted PLs suit for prior rent payments: Tenant had paid rent and remained in possession, then later sued for reimbursement and damages, claiming breach of the implied warranty of habitability. The court held that IWH cannot be waived: (Policy) because generally people who lease such housing are poor. Also, L has superior information about the law and the facts regarding the quality of the premises, there is a low probability that it will be cost effective for tenants to acquire sufficient information to negotiate over the issue. Most JDs agree with Hilder that the IWH cannot be waived, but a few might permit knowing waiver by the tenant if bargaining power is essentially equal.The courts CALCULATED the DAMAGES by taking the difference between the value of the dwelling as warranted and the value of the dwelling as it exists in its defective condition (the agreed rent served as evidence of fair rental value as warranted). P.500/Note 3ii. MORE COMMON SENERIO (WITHHOLD RENT): T remains in possession but withholds rent. L sues for possession and back rent and T asserts breach of warranty as a defense-Virtually all JDs permit the T to raise the defense in a SUMMARY EVICTION. If T is SUCCESSFUL, rent is reduced partially or totally (depending on the degree of the breach), and the tenant may retain possession if he pays whatever reduced amount is determined (see d for more info). 1.) Historically, relations between landlords and Tenants was controlled by the (Common law): doctrine of CAVEAT LESSEE the tenant took possession of the premises irrespective of their state of disrepair. The landlords only covenant was to deliver possession to the tenant. 2.) DUTY TO MAKE REPAIRS: Common Law-The landlord was under no duty to render the premises habitable unless there was an express covenant to repair in the written lease. The tenants obligation to pay rent existed independently of the landlords duty to deliver possession, so that as long as possession remained in the tenant, the tenant remained liable for payment of rent. Under traditional common law property concepts (originated from the Middle Ages), a lease was viewed as a conveyance of real propertythe land not the dwelling, was regarded as the essence of the conveyanceThe tenant in the Middle Ages was a farmer, capable of making whatever repairs necessary to his primitive dwelling. 3.) Modern-Majority-Todays tenants enter into lease agreements, not to obtain arable land, but to obtain safe, sanitary and comfortable housing. (P.494-95)4.) The TENANT MUST SHOW that (1) the landlord had notice of the previously unknown defect and failed, within a reasonable time, to repair it; and (2) the defect, affecting habitability, existed during the time for which rent was withheld.4.) An EXCEPTION to the rule of caveat lessee was CONSTRUCTIVE EVICTION.

a.) The IMPLIED WARRANTY OF HABITABILITY (IWH) does not render pointless the doctrines of quiet enjoyment, constructive eviction, and illegal leases because: (1) a small number of JDs have yet to adopt the warranty; (2) even though the warranty is generally applicable, it come commonly does not apply across the board to all residential leases; SINGLE FAMILY residences, AGRICULTURAL leases, LONG-TERM leases MIGHT BE EXCLUDED, or causal leases by NON-MERCHANT LANDLORDS (i.e. when a law professor goes on a sabbatical and rents her house to a visitor); (3) A majority of JDs have declined to extend the idea to an IW of fitness or suitability for purpose in commercial leases.b.) IWH COVERS ALL LATENT (obvious) AND PATENT (hidden) DEFECTS (INCLUDING DEFECTS IN COMMON AREAS)c.) IWH CANNOT BE WAIVED: if the tenant enters having knowledge of the defect the TENANT DOES NOT assume the risk. Also, IWH cannot be waived expressly in the agreement!d.) Standards of IWH are statutory and local, check local code! But, (see the next j , the standard is of a reasonable person!)e.) P.500/Note2: Breach occurs when the leased premises are uninhabitable in the eyes of a reasonable person. Violations of housing code provisions are compelling, but not conclusive.f.) Even where there is no code, breach of IWH is factual; the court will decide whether habitability was endangered! (defect had an impact on safety and health of T). This means more than just avoiding slum conditions! (i.e. continued loud noise in an apartment might be breach, as well as failure of a central air conditioning system, bedbugs, and second hand smoke).g.) TO BE ABLE TO SUE, T MUST SHOW THAT HE NOTIFIED LL ABOUT THE DEFECT AND GAVE HIM REASONABLE TIME TO CORRECT THE DEFECTh.) REMEDIES FOR BREACH-DAMAGES!!!-A number of JDs agree with Hilder that a tenant may avail himself of all basic contract remedies-damages, recession, and reformation. The remedies vary from JD to JD.a. the difference between the value of the dwelling as warranted and the value of the dwelling as it exists in its defective conditionb. Damages can also be awarded for DISCOMFORT and ANNOYANCE resulting from the LLs breach of IWH.c. T can also terminate the lease and sue for damagesd. Another remedy for T is to WITHOLD PAYMENT of future rent: T may withhold rent, retain possession, and have the agreed rent reduced by virtue of the landlords breach (with IWH there is no need of the doctrine of constructive eviction).i. For this remedy, T has to show that (1) LL had notice of the defect and failed to fix it within reasonable time (2) defect existed during time when rent was not paid (IN SOME JDs COURTS REQUIRE T PAY THE RENT TO LEGAL CUSTODY DURING THE TIME THE RENT IS WITHHELD) ii. Also, courts in SEVERAL JDs hold that despite breach of IWH by L, the tenant cannot defend an eviction action for nonpayment of rent unless Ls breach is substantial enough to have total abatement of rent or unless a partial abatement is justified and T has managed to calculate the amount to be abated and tendered the balance to L. (p.501 FN 50)iii. Once LL corrected the defect, T has to pay againiv. Three methods used to CALCULATE RENT REDUCTION DAMAGES: (1) Used in Hilder: value of dwelling as warranted [MINUS] value of dwelling as it exists in its defective condition (the agreed rent is evidence of fair rental value as warranted); (2) Some JDs use: Agreed rent [MINUS] the fair value of the premises as they were during their occupancy in unsafe, unsanitary or unfit condition; (3) Other states still use- Percentage-diminution: Where the agreed rent is reduced by a percentage equal to the percentage of lease-value lost by the tenant in consequence of Ls breach.e. REPAIR & DEDUCT (P. 502, end of Note 3): Equitable remedy-If LL failed to repair and T did it himself, subsequently T can deduct the amount from his rent!f. OTHER REMEDIES: Breach of IWH can be used as a defense for: a.) justifying rent withholding, b.) retention of possession, and c.) rent abatement; (1) or to stay in possession, and bring an AFFIRMATIVE COA for damages; (2) T can terminate the lease and sue for damages (special and consequential damages should be recoverable in any of these cases and on occasion punitive damages); (3) the equitable remedy of specific performance has been mentioned in dicta, but Ts tend to ignore it.g. PUNITIVE DAMAGES they might be available if LLs conduct is reckless and wanton. When after receiving the notice LL fails to repair conditions dangerous to Ts health, PUNITIVE damages are appropriatei.) Abandonment is not necessary, constructive eviction is also unnecessary, T can stop paying rent, or continue to pay and sue later to recollect payments.j.) PROBLEM [4a-d] (P.439):a. Even if the reason for breach is a strike, LL still breaches and T can reduce the rent payment for the duration of breach (no garbage collection) b. Implied warranty of habitability does not require that premises be maintained in accordance with reasonable expectations of tenantc. Even if T agreed to stay in bad conditions, IWH cannot be waived, and T can sue for damages and be awarded! RETALIATORY EVICTION At CL LL had virtually unlimited right to terminate periodic and tenancy at will upon proper notice and to refuse to renew! MODERN LAW retaliatory eviction is prohibited (almost everywhere) for residential leaseholds (for commercial leases it is prohibited almost nowhere) Retaliatory eviction can be Rent increase Decrease of services LANDLORD TORT LIABILITY (problems P.441)1. There was sufficient evidence from which the jury could find that under Connecticut law the landowners were liable for defects on the premises which the lessees controlled2. Lessor is liable if dangerous condition is known to him but not to lessee3. LL was negligent in failing to use speed bumps in apartment parking lot as means of protection against speeding bicyclesa. LL did not owe duty to tenant to protect him from criminal assaults on lot not under his controlb. Ts daughter is injured OFF of LLs property: LL had duty to exercise retained control over tenants' use of premises so as to protect them from danger located outside premises! BUT at the same time: (1) apartment owner did not have duty to fence premises to keep young children inside, and (2) apartment complex was not product within meaning of strict products liability tort law.4. LL had no general duty to protect tenants against criminal intrusion and could only incur such a duty voluntarily or by specific agreement if to attract or keep tenants he provided a program of securitya. If LL was aware of conditions which created a likelihood that further criminal attacks on tenants would occur and thus, at time of attack, landlord was under a duty of protectionb. (1) LL's general knowledge of prior unrelated incidents of criminal activity occurring in area is not alone sufficient to impose duty on LL to protect tenants from criminal activity, and (2) police reports of crimes previously occurring on premises of mobile home park did not impose duty on LL to protect tenants from criminal activity of third parties.5. Private residential lease provision exculpating landlord from liability for injury to tenant due to negligence of landlord was invalid under common law principles6. Even if shortage of housing had caused such disparity of bargaining power between lessors of residential property and their lessees that exculpatory clauses in residential leases should be held contrary to public policy, subject was one appropriate for legislative rather than judicial action

2.) TENANTS DUTIES; LANDLORDS RIGHTS AND REMEDIESa. The Tenant has a present possessory interest; the LL has a future interest reversion.b. REPAIRSi. At CL if premises T had to do all the repairs.ii. Now, almost all repairs are done by LL (e.g. even if a tree fell and damaged the roof). T does only small repairs.c. FIXTURESi. Fixture is something that T attaches to the property.ii. Normally fixtures stay after T vacates.iii. COMMON LAW used objective standard. Will it be reasonably to allow T take that particular thing with himiv. MODERN RULE it is a subjective standard; depends on intent. The most important thing with fixtures is the intent of the Tenant. Did he intend to attach permanently? If yes, has to live a fixture, if no can take with him.v. LAWS OF ACCESSION labor theory and emotional connection If T has emotional connection to something, e.g. babushkina lustra, T can take it with him given that he never assumed permanency! If T put so much labor in it that it is associated with him!d. WASTEi. THREE TYPES OF WASTE1. AFFIRMATIVE. Duty to avoid damages.2. PERMISSIVE. Duty to repair.3. AMELIORATIVE. Obligation to return premises in the same nature and character unless:a. Increases Value ANDb. Changes reflect neighborhood AND (or OR) premises would be significantly reduced in value if unchangedii. Replacement by the tenant of the ceiling, installation of a new ceiling light fixture, and attachment of a wooden closet to the wall and a wooden frame around a window is not WASTEiii. There is no line between waste and lawful activities, it is factual issueiv. Removal by tenant of kitchen sink and cabinet combination, exhaust fan, and carpeting, where such items were easily replaced, did not constitute waste.e. DESTRUCTION [WITHOUT FAULT]i. COMMON LAW1. At CL if premises were destroyed T had to pay the rent anyway, unless otherwise was expressly written in the lease. The idea is that it is the land that conveyed. 2. However, if T was leasing only the part of destroyed building, he is FREE from obligation to payii. MODERN RULE impossibility or frustration of purpose relives T of rent.1. Force Major (flood, hurricane) no liability to pay rent.iii. Repairs for fire can be imposed on LL even if T caused fire by negligencef. ILLEGAL PURPOSEi. The lease for illegal purpose will be unenforceable if (whats that)g. The Problem of Decent Affordable Housingi. Chicago Board of Realtors, Inc. v. City of Chicagoa. The case just gave an idea that governmental regulations in the field can be contradictory and far from the goal they intended to reachb. MALAGRINO people vote and choose policies without having information about the subject matter. Only few out of the population are LLs, so often the laws intent one thing but promote quite opposite.

CHAPTER . TRANSFER OF LANDA. INTRODUCTION TO BUYING AND SELLING REAL ESTATE

1.) Byars asses how much they can afford to pay given their income and saivings (lenders usually require a contribution of 10-20% of the purchase price as down payment). The byars can also try to pre-qualify for a loan.2.) Search for properties begins. Byars will consult with a broker with access to Multiple Listing Service (MLS). [The commission for the broker will typically be paid for by the seller].3.) They will begin negotiation a purchase and sales agreement. It is usually best o hire an attorney to do this. 4.) The contract will set forth the legal description of the property, its price, provisions for an earnest money deposit, and the date for the closing or settlement (the transfer of title).

I. PROCESS:

B. BROKERS: Agents acting between buyer and seller

Listing Brokers (seller): Agent acting between buyer and seller. Traditional type-obvious that he represents the seller.

Selling brokers (seller): If often only a fiduciary to the seller. May look like he or she is a representative for the buyer but is not.

Buyers Brokers (buyer/rare): Fiduciary to the buyer. Is not compensated by the buyer. They can share commission with the listing broker (but the listing broker has the option of refusal).

LISTINGS:1.) Open (least protection): No security for broker, the seller can sell it and undercut the broker. Usually there is a higher commission because of the risk.2.) Exclusive-agency:3.) Exclusive right to sell (most protection): For a certain period of time, no matter what (even if the seller finds the purchaser) the broker still gets commission.

COMMISIONS: Majority: Commission is earned when broker brings and the contract is signed by - an able and willing buyer. (Does not matter if the buyer does not actually go through with the purchase). i. However, brokers usually wait until to claim their commission in order to protect the work reputation and preserve the goodwill with their clients who may recommend them to other clients. Minority: Commission is earned when the transaction is complete and the sale closes. Note: Traditionally, brokers have been prohibited from offering legal advice and closing. If either is done it can be viewed as an unauthorized practice of the law. Licari v. Blackwelder Real estate broker is a fiduciary to the seller. A real estate broker cannot put himself in a position antagonistic to his principals advantage Has to disclose all the relevant info S subagent to other broker has THE SAME responsibilities as a direct broker Note (and a problem) on Real Estate Brokers Traditionally a broker is the SELLERs agent and owes fiduciary duty to him. Although the buyer can feel otherwise, later he might be punished for such a belief, because B has to share all info with S. However, the problem begins when a broker worked for several months with a buyer before having a contact with the seller, so whom does he owe the duty? Modern concept- there are buyers brokers, who owe duty to the buyer. Dual brokers. Some states permit that, such a broker owes a fiduciary duty to both the seller and the buyer. Brokers are prohibited from fixing commission rates. (it is violation of antitrust law)

C. THE CONTRACT OF SALEa. THE STATUTE OF FRAUDS: Transfer of real esate for over one year must be in writing and signed by the party to be bound. i. Except for leases for less than three years, no interest in land could be created or transferred except by instrument in writing signed by the party to be bound.ii. Some courts quite strict in enforcing SOF; others give effect to oral agreements based on circumstances when the fraud is unlikely or injustice may resultiii. SOF requires written instrument to be signed by the party to be bound; describe the real estate, and state the price.iv. If there is no price, the court can assume reasonable pricev. Uniform Land Transaction Act requires price. Within the meaning of the act fair market price is a definite price.

vi. There are two principal exceptions to SOF: (1) PART PERFORMANCE and (2) ESTOPPEL

vii. PART PERFORMANCE1. Details depend on JD2. One theory suggests that PP is evidence that there was an agreement.3. Evidence of an oral agreement can be:a. Payment of purchase price b. Taking possession c. or making substantial improvements to the property]:d. taking possession of the land AND paying all or part of the rent or purchase price or making valuable improvements. HOWEVER, if the existence of an oral agreement is proven or is admitted by the other party, there is no essential need in evidentiary support, PP can apply without that evidence4. It is an equity remedy5. Hickey v. Greena. Contract for the transfer of an interest in land may be specifically enforced notwithstanding SOF if the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the other party, has so changed it position that injustice can be avoided only by specific performance b. Payment of purchase money, under modern majority view, is not enough for SPECIFIC PERFORMANCE, restitution is more adequate in that situationc. The promisees reliance must be reasonable in changing his position, and before the promisor properly repudiated his offer6. Problems on page 4771. Walker v. Ireton. The seller and the buyer agreed to transfer a farm. B sold his own farm without telling that to S. later S changed his minds. The court did not apply PP. i. If Bs conduct is not foreseeable to S PP cannot apply.2. a. O executes and delivers a deed of Blackacre to A. deed was not recorded. Later O demands Blackacre back. A gives deed back to O. O tears up the deed. Q who owns Blackacre? A b. O executes and delivers a deed conveying Blackacre to O and A as joint tenants. Later A wants to convey her interests to B and O agrees. A withes out her name and ads Bs name. Deed is then recorded. Q who owns Blackacre? A the deed that is altered by whiting out one name and adding another before recording is invalid.

viii. ESTOPPEL: occurs when unconscionable injury would result from denying or not enforcing an oral K when one party is induced and changes position in reliance or when there is an unjust enrichment. 1. E applies when one party seriously changes its position in reliance to oral agreement2. E applies when there is unjust enrichment by one of the parties3. E recognized as a defense in lawix. THE STATUTE OF FRAUDS AND ELECTRONIC TRANSACTIONS1. WHAT CONSTITUTES WRITING?a. Electronic Signature an electronic sound, symbol, or process, attached or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record2. GENERALLY SAYING THE COURTS SPLIT WHETHER ELLECTRONIC WRITINGS SATISFY THE REQUIREMENTS OF SOF. b. MARKETABLE TITLEi. If the seller cannot convey a marketable title, the buyer can rescind the sale.ii. Lohmeyer v. Bower. 1. Municipal restrictions (such as no more than 2 stories, no commercial use, things like that) do not make a title unmarketable2. BUT, contract covenants and other private restrictive agreements do!3. A marketable title is one which is free from reasonable doubt4. A title is doubtful and unmarketable if it exposes the party holding it to the hazard of litigation5. Violation of municipal restrictions renders title unmarketable, despite the fact that restrictions themselves do not render a title unmarketable6. If it is said in the agreement that S can make the title marketable in a reasonable time, and to do so he has to change the nature of building or the land materially it is not what B agreed to pay for!iii. Agreement by insurance company that it will insure purchaser against the defective title does not make the title marketableiv. EASEMENT (canalization, stochnie vodi) is an encumbrance (obstacle, prepyatstvie) even though it does not diminish the value of the propertyv. Knowledge of easement is irrelevant, title is unmarketablevi. Easement known to B, or open and obvious, does not make title unmarketablevii. Some courts say a land with lack of access is unmarketable, others say it is notviii. Presence of hazardous waste on the premises does not render title unmarketablec. EQUITABLE CONVERSION(Works as accrual method in accounting) The buyer is viewed in equity as the owner of the real property from the date of contracti. RISK OF LOSS1. Most jurisdictions say that EC applies, and the buyer bears the risk.2. The minority says it is the seller who bears the risk3. If there is a special covenant about the risk of loss, the matter is regulated by that covenantii. INHERITANCE1. If EC applies, S has personal property (money, the price) starting from the date of the agreement, and B has real propertyd. THE DUTY TO DISCLOSE DEFECTSi. STAMBOVSKY When the seller reports about ghosts in his property to nationwide publications, the house is haunted as a matter of law. Having undertaken to inform the public-at-large, to whom the seller has no legal relationship, about the supernatural occurrences on his premises, the seller owes a duty to inform to the buyer. Where a condition which has been created by the seller materially impairs the value of the contract and is peculiarly within the knowledge of the seller or unlikely to be discovered by a prudent buyer exercising due care with respect to the subject transaction, failure to disclose constitutes a basis for rescission as a matter of equity.ii. CAVEAT EMPTOR. Caveat emptor requires a buyer to prudently assess the fitness and value of his purchase. Failure to exercise due diligence will result in bar from seeking the equitable remedy of rescission. According to caveat emptor, the vendor has no duty to disclose any information about the premises unless the fiduciary or confidential relationship exists between parties, or there is active concealment.iii. MISFEASANCE (ACTION) V. NONFEASANCE (NONACTION). Johnson v. Davis At CL there was liability upon the commission of affirmative acts of harm, but the courts did not want to become an institution for forcing men to help one another. There can be no liability for nonfeasance. Where the parties are dealing at arms length and the facts lie equally open to both parties, with equal opportunity of examination, mere nondisclosure does not constitute a fraudulent concealment. Where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer. This duty is equally applicable to all forms of real property, new and used.iv. Notes on page 4891. B saw the roof leaking. S assured there was absolutely no problem with the roof because the leak was fixed. The roof leaked again. The court decided: either S knew and it was fraud, or S did not know and it was a mutual mistake that the roof didnt leak. In both cases rescind.2. Caveat Emptor is being steadily eroded. a. Majority, the seller has a duty to disclose ALL known defects. Nondisclosure is either fraud or misrepresentation.b. Majority, the seller has to deliver to prospective buyer a written statement disclosing facts about the property. The disclosure may include:i. Significant structural defectsii. Soil problemsiii. Undergoing sewage or storage tanksiv. Presence of hazardous materialsv. Alterations or repairs made without necessary permission, or violating codes and zoning ordinances, etc.c. In any case, the defect must be material. There are two tests assessing materiality of the defect:i. Objective Test: whether a reasonable person would attach importance to it in deciding to buy.ii. Subjective Tests: whether the defect affects the value or desirability of the property to the buyer.d. In California the seller must disclose neighborhood noise problems or other nuisances. i. In Alexander v. McKnight the court decided that if noisy neighbors fail to comply with injunction to stop noise bothering P, they would have to pay $24,000, because if P decides to sell his property, he will have to disclose the noise problem, and thus he will be able to sell it for less. e. Very often the sellers add a provision that any claim arising from failure to disclose defects will be arbitrated and not sued upon. Such provisions might be unenforceable, for example it was found unconscionable when hidden in a 70 pages contract. 3. v. MERGER vi. DEEDS

vii.

A. EASEMENTS AND PROFITS

I. They do not give the holder a right to possession but a right to use or to take something from land, the possessory estates in which are owned by others. II. Some of the sticks have been taken from the bundle that comprise the estate and have been transferred to the holder of the easement or profit. III. Distinction between profits and easements: Easements allow some use of land to be made of the burdened land, while profits allow some substance to be severed or removed. IV. Characteristics of a license- a license is terminable at the will of the creator landowner, whereas easements and profits exist for a determinate time or perpetually.V. Easements and profits are interest in land; licenses are not. Licenses may be granted orally; easements and profits are subject to the Statute of Frauds. VI. Factors that indicate that a relationship is an easement or profit (NOT a license) are: a.) it is for a specified time, b.) its us for a designated area, c.) substantial consideration was paid for it, d.) the holder is allowed to make improvements and repairs or somehow exercise control. VII. American jurisdictions recognize hunting and fishing as easements.VIII. There are two ways to classify easements: (1) affirmative or negative and (2) appurtenant or in gross (resulting in four basic types of easements): 1.) affirmative appuretenant2.) negative appurtenant 3.) affirmative in gross 4.) Negative in gross

IX. Easement Appurtenant- an easement that benefits the owner of another parcel of land:a.) Dominant estate- the benefited parcelb.) Servient estate- the burdened parcel

X. An easement appurtenant passes with the dominant estate whenever the dominant estate is transferred to a new owner. XI. Easement in gross- An easement that is designed to deliver a personal benefit, rather than to benefit the landowner. They are not attached to or appurtenant to, any parcel of land. They create a personal right to use the servient estate, but that personal right may be assigned if the parties so intended.

XII. Ambiguous grants: Courts prefer to construe ambiguous grants as creating easements appurtenant. Reasons why:1.) Historically England did not recognize easements in gross and 2.) Policy preferences- a.) easements appurtenants are easier to eliminate because the easement owner is easier to locate, b.) they are more likely to create value, c.) they are more likely to be intended than an easement in gross.

XIII. Creation of easements: Easements may be created by grant, by estoppel, by implication, and by prescription (close cousin of adverse possession). XIV. Easements by grant- Most easements are created expressly by deed or by grant. Because an easement is an interest in land, its creation is subject to the Statute of Frauds, which requires a writing signed by the grantor. XV. Exceptions to the Statute of Frauds requirement, permitting the creation of easements absent a writing signed are- a.) easements by estoppel, b.) by implication, and c.) by prescription. a.) Easements By reservation- grantors sometimes convey land and, in the same deed, purport to reserve an easement in favor of the grantor or a third party. 1.) In favor of grantor-Early common law did not recognize easements reserved in favor of grantor. Modernly, the reservation of an easement in favor of the grantor is valid. 2.) In favor of a third party-Common law did not recognize the validity of easements reserved for a third-party, who was a stranger to the deed. Though the reasons for this refusal no longer exists, the majority of modern courts continue to treat reserved easements in favor of a third party as void. In such states it is necessary to use two conveyances to create an easement in favor of a third party. XVI. Easements by estoppel- An irrevocable licence, the functional equivalent of an easement, can be created by estoppel. XVII. Easement by implication-Easements may be implied in law under two circumstances: (1) XVIII. Easements Implied From Prior Use require:(1) Common owner-(2) Reasonable necessity(3) Continuous use-(4) Intended continuation-(5) Existing use-(6) Apparent-XIX. SCOPE OF EASEMENT- XX. NEGATIVE EASEMENTS: A negative easement gives its holder a right t require the owner of the burdened land to do or not to do specified things with respect to the land but not to go upon or to use it. [a restriction that burdens one parcel of land and benefits and benefits a separate.