Property II Outline

PROPERTY II OUTLINE FOR FINAL EXAM
LANDLORD/TENANT LAW- PART I
 
D. Delivery of Possession
 
Hannan v. Dusch- P leased land from D. When lease was to begin, the tenant in possession failed to vacate. D failed to put P in possession. P contends that D must deliver actual possession and that he should have evicted the holdover tenant. D contends that he need only deliver the legal right to possession. There is no covenant in the lease to the effect that D must put P in possession. Issue: Must the landlord deliver actual possession to the tenant. Holding: No. It is clear that a landlord must at least provide the legal right to possession. It is also clear that once the tenant takes possession, he is responsible for ejecting a trespasser. If there would have been a covenant in the lease stating either the landlord did or did not have the duty to put the tenant in possession, the covenant would prevail. Where there is no covenant, there are 2 rules:
1.      English Rule- Almost ½ of the jurisdictions in the US follow the English rule. The landlord has implied obligation to put the tenant in possession. The landlord can enter into a contract with the tenant saying that isn’t so, but you have to actually put it in the contract. It has to be explicitly stated to put the obligation is on the tenant. LESSOR PUTS LESSEE IN POSSESSION.
2.      American rule says – tenant, you’re on your own. If someone’s holding over and hanging out, that’s your problem. The landlord must only give the tenant the right to possession. You’re the one that has to step up to the plate. American jurisdictions can also explicitly state that the landlord (negotiate) and put a provision in the lease having the landlord assume obligation. There is a right to contract otherwise in both jurisdictions. TENANT IS ON HIS OWN.
 
American rule says that if the tenant didn’t write it in, the court is not going to imply it for you, if you want it in, then you have to put it in. The English rule pretty much puts it in there on it’s own. This court says that the American rule is better in this case because it is unfair to hold the landlord liable for the wrong of another.
 
PROBLEMS P. 482
No, the Moore v. Cameron Parish School Bd case says that one of the primary obligations of the landlord to the lessor is to place the lessee in actual possession of the premises. This is in Louisiana, and this is a perfect example of the application of the English Law. 
There is always an implied covenant that the tenant will have legal possession (from Hannan). Here the landlord has given the right of possession to someone else who is not in possession. If you were the judge, how would you analyze this case? Campbell rules that the landlord was entitled to the money because they were both aware of each other. Campbell v. Henshey. Damages have to be proved. You have no right to stop paying rent so long as you’re in possession. You are liable for unpaid rent. Campbell says that there is liability for rent once the tenant is in undisturbed possession. Basically, unless you are disturbed in possession, you have no right to stop paying rent. 
There are 3 positions on this situation.   In Hartwig case, it says that if it is delivered in a reasonable time of delivery date. When determining what reasonable you have to look at a bunch of factors. In Hartwig, 8 months was unreasonable time. The judge has to get on the bench and make a reasonableness determination or put it to a trier of fact. Think about Pierson v. Post from last semester. The Fox case says that the court can’t save people who don’t take care of themselves when contracting. The court says no way dude, in the approach in the Fox case. Fox was even worse, they had the boiler plate and there was a second condition stating that the term was not to commence until the work was done (MALPRACTICE). There is another approach that I didn’t get. Seabrook where the doctrine of unconscionability, to protect those who cannot protect themselves. They wouldn’t be able to take their time just because the clause.
 
E. Subleases and Assigns
 
Ernst v. Conditt- racetrack lease- In determining whether an assignment or a sublease has occurred, the court looks to the intentions of the parties. An assignment allows the landowner to recover from the assignee. A sublease does not allow the landowner to recover from the sublessee. 
Common Law/Formalistic Approach- (Jaber v. Miller)- the following rule was used to determine whether a lessee assigned or sublet the premises: AN ASSIGNMENT CONVEYED THE ENTIRE INTEREST IN A LEASE, IT LEFT NOTHING TO THE ORIGINAL LESSEE (A sublease granted an interest that was less than that owned by the orginal lessee; the orginial lessee retained a reversionary interest.). If the instrument purports to transfer the lessee’s estate for the entire remainder of his term, it is an assignment, regardless of the parties’ intentions. 
      
Modern Rule- to determine whether there has been an assignment or sublease , you look at the intentions of the parties. The actual words used are not conclusive (sublet or assignment).
 
In the present case, D is liable to P under both the common law and the modern rule. By the terms of the agreement between Rogers and Conditt, Rogers retained no reversionary interest, he conveyed all that he had, thus assigning his lease. If the transfer is a sublease no privity of K exists b/w the parties and D could not be liable to P. But if the transfer is an assignment of the lease, privity of K does exist b/w the parties and D would be liable.
-the court didn’t have to go through this whole schpeal, they could have just used a third party beneficiary theory to justify the privity of K between the lessor and the assignee.
 
Assign
Privity of Contract                  Privity of Estate
T          Yes     
T1                                                        Yes
 
            Sublease
            Privity of Contract                  Privity of Estate
T          Yes                                          Yes
T1       
 
 
Problems
a. L has rights against T to recover for rent because T is a subleasor. L cannot sue T1 because he is not in privity of contract with T1 because it is not an assignment because T’s sublease was only for 1 year. T has privity of contract and privity of estate.
 
 In the second part of the question, since there was an express agreement to assume the obligations of the initial lease, then the landlord can sue T1 because he is the 3rd party beneficiary. T1 agreed to assume the obligation expressly but it does not relieve T of privity of contract unless there is an expressed release on the part of L releasing T.
 
b. Under privity of contract T still has it. Can L sue T1? Yes under privity of estate, this is an assignment.
 
c. L à T (3 years) àT1(assumes obligations)àT2 àT3 (defaults)
L can sue T (T is a surety, so he can sue T1 and T3 under a subrogation theory, if T gets sued by the landlord first); (if T proceeds against T1, T1 can proceed against T3 under a subrogation theory, if T just sues T1.)
L can sue T1 because T1 assumed the obligations of the lease. He is in privity of contract
L cannot sue T2 because he didn’t breach and he has no privity of contract or estate with L so he cannot be touched unless he breached, which he didn’t. T2 did not assume the covenants in the lease.
L can sue T3 under privity of estate with L. 
 
T2 is not liable because he has to breach while in possession.
 
Many times in the real world, there is someone in the chain with no money, that’s usually why there is a breach. As a litigator, you should look for someone with the deep pockets. 
 
 
Provision for Approval Clause
Kendall v. Ernest Pestana, Inc.- hangar rental- The minority rule says that where a lease provides for assignment only with the prior consent of the lessor, such consent may be withheld only where the lessor has a commercially reasonable objection to the assignment, even in the absence of a provision in the lease stating that consent to assignment will not be unreasonably withheld.   This seems like a good rule because it balances the interest of both parties. 
A lessor may withhold consent only when he has a commercially reasonable objection to the assignment because:
1.      public policy favors free alienability;
2.      the relationship b/w the lessor and the lessee has become more and more impersonal
3.      the lessor’s interest are protected by the fact that the lessee remains contractually liable to the lessor
4.      a lease is increasingly viewed as a contract.
Because of this, the lessor can withhold consent only in good faith, for example:
1.      the property is ill suited for the proposed use
2.      the proposed use is illegal
3.      the proposed use requires altering the premises
This is because the original lease already exhibits an agreement b/w the lessor and the lessee, the lessor may not attempt to get more than he bargained for.
 
The majority rule says that where a lease contains an approval clause, the lessor may arbitrarily refuse to approve a proposed assignee no matter how suitable the assignee appears to be and no matter how unreasonable the lessors objection
There are 4 reasonas advanced for allowing arbitrary withholding of consent:
1.      lessor has picked his tenant and he should not have to look elsewhere for the rent
2.      the lessee could have bargained for a contract clause that provided that consent could be withheld only if reasonable
3.      the court must follow the rule because of stare decisis
4.      the lessor has a right to realize the increased value of his property by demanding higher rent.
These were all rejected in this case. A lessor may not arbitrarily withhold consent to an assignment. The doctrine of good faith is applied in this case. This promotes the free alienability of property.
 
The present court decided based on the minority rule. The landlord is empowered to negotiate a provision in the lease which says: despite the fact that the present parties to this lease reside in a jurisdiction that says the minority rule, both parties freely agree and have negotiated on the provision that the present landlord must agree. Such a provision is fine, but there has to be free negotiation. Either rule gives you the leeway to contract out of it. This decision applies to commercial leases. 
 
Should this rule apply to residential leases? Should the Kendall minority rule apply to residential leases? No, commercial leases are impersonal business transactions where residential leases are more personal and the landlord should be empowered to arbitrarily say no. 
 
F. The Tenant Who Defaults
 
1. The Tenant in Possession
Berg v. Wiley- restaurant remodeling. The tenant was in possession, claiming a right to continue in possession adverse to the landlord’s claim of breach of the lease, and had neither abandoned nor surrendered the premises. This case deals with two issues: abandonment issue and whether the ouster of the tenant was wrongful.
The abandonment issue was settled in favor of Berg, there was no abandonment.
 
Self-help issue: the court follows the common law notion that says that a landlord could use self help if:
1.      the landlord is legally entitled to possession, such as when a tenant is a hold over
2.      the landlord’s means of entry are peaceable
This means that you don’t need to resort to judicial procedures. A tenant who is evicted by his land-lord may recover damages from wro