Professor Taggart – Spring 2014
I. The Right to Exclude Others from Private Property
A. Current thought of as a bundle of sticks – bundle can be disintegrated into distinct rights or sticks
1. Someone may have a right to use a thing but not to sell or transfer it
II. NON-FREEHOLD ESTATES à LANDLORD-TENANT
A. Non-Freehold Estate: interest in real property without seisin and which are not inheritable.
B. Four main types:
i. Estate for years: 10 year terms
ii. Estate from year to year: for a period (generally a year) that automatically renews for another period if not cancelled by either party before a certain date
iii. Tenancy at will: welcome to use the property indefinitely (unless I kick you off)
iv. Tenancy at sufferance: period expired but you have not left
C. Leasehold Estate: A possessory interest that normally gives the tenant the right to exclusive possession.
D. Lease v. License:
1. License: merely authorizes the licensee to use land in possession of another. Arises from he consent of the owner of the possessory interest.
a. Revocable: personal, revocable, unassignable permission to use land, without possessing interest in land.
b. Unassignable: Since the license has no interest in land, they cannot assign the interest to another.
c. Courts are reluctant to find that something is a license if this will create an injustice or go against public policy
2. Lease: a possessory interest in land that creates a landlord-tenant relationship, with all of the rights and obligations associated with that relationship. A lease requires no particular terminology or agreement to exist. Lease must answer:
a. Is it revocable, and under what conditions?
b. Is it assignable, and under what conditions?
c. Must include a definite description of the property to be leased. The mere fact that a tenant can be moved a to another a single apartment building does not per se preclude a landlord-tenant relationship.
d. Lessee must have exclusive, physical possession of property. However, reasonable delays in conveyance are acceptable.
3. Lease: An agreement to permit the operation of a business in a store in an in a specified area is a lease where the parties act upon it so as to relate to a specific place and use the leasehold terminology in the writing (Becket v. City of Paris Dry Goods)
4. License: A license agreement is formed when a tenant does not have exclusive possession of any interest whatsoever in the premises being leased. (Wenner and City of Phoenix v. Dayton-Hudson Corp.)
a. (Restatement 2nd § 1.1)–says this is ok, tenant shift from one location to another does not prevent this arrangement.
E. Claims Against Landlord:
1. Covenant of Quiet Enjoyment: A promise on the part of the landlord that neither the landlord nor anyone with either a superior title or a title derivative of the landlord will wrongfully interfere with the tenant’s use and enjoyment of the leased property. By signing the lease the landlord impliedly promises that she is granting the right to exclusive physical possession of the leased premises.
a. Duty to pay rent is suspended if the LL breaches the covenant of quiet enjoyment (affirmative action of the LL to interfere)
i. At common law, though of independent duties and the only remedy for tenant was to sue for damages
b. LL promise of exclusivity and tenants promise to pay rent are mutually exclusive
i. “I promise to pay rent as long as I have quiet enjoyment”
2. Tenancy: Non-freehold estate, distinguished from a freehold estate because freeholds are possessory interests for an indeterminate period, while a non-freehold is for a specific period.
3. Interference at Commencement of the Lease Term:
a. Some states: LL signing the lease is an implied promise that he is granting the right to physical possession of the leased premises. (aspect of LL’s covenant of quiet enjoyment implied in all leases).
b. Majority: LL is obligated to deliver actual physical possession to the tenant. (Restatement adopts majority)
i. Tenant not required to pay rent during a time that she is unable to obtain actual physical possession of the premises
c. 2nd Restatement: incoming tenant may not terminate if the LL removes the holdover within a reasonable time.
d. Few: It is up with the new tenant to deal with any holdover tenant, and LL doesn’t have to deliver actual possession.
4. Interference During the Lease Term:
a. If disturbed by landlord during lease: claim at both commencement and during the lease.
b. If during the terms of the lease the tenant is wronged by an independent third party, the landlord has no recourse: Claim against LL at commencement, but not during the lease.
5. Disturbed by Someone with Paramount Title: Claim against LL at commencement and during terms of lease. (Ex. mortgagor)
6. Partial Actual Eviction:
a. Restatement rejects majority rule providing for a total abatement of rent on actual partial eviction by LL, and instead relies on normal legal and equitable remedies for breach of contract.
b. Must be deprived of some degree of physical possession by the LL, including denial of access to some portion of the premises.
7. Constructive Eviction: A promise contained in a lease of a deed that the tenant or grantee will enjoy unimpaired use of the property. This could result from LL failing to maintain basic services to premises. (ex. Heat, water, etc.) –SUBSTANTIAL
a. Failure or interference on the LL’s part with the tenant’s intended enjoyment of the premises in such a way that the tenant is deprived of the enjoyment of those premises. Necessary elements: (relieved from obligation if satisfied)
i. Intentional (actual or inferred) acts of the LL that breach a duty owed to the tenant and
ii. Are the cause of substantial interference with the tenant’s enjoyment of the premises, or render it unfit for the purpose for which it was leased, and
iii. The tenant’s vacating the premises
iv. Within a reasonable time after the LL’s actions.
8. Eviction/Partial Actual Eviction/ Constructive Eviction:
a. The encroachment of a structure upon a portion of leasehold constitutes an eviction and a defense to the entire rental payment otherwise due. (Smith v. McEnany)
b. The law implies a covenant of quiet enjoyment, which obligates the landlord to refrain from interfering with the tenant’s possession of the premises during the period of tenancy (Echo Consulting Services v. North Conway Bank)
i. No claim for total eviction because of construction blocking front entrance.
ii. Not being able to use front entrance, but being able to use back entrance was still common right of entrance.
4. Deposit into escrow.
b. Sue the LL to collect damages.
c. Repair and deduct the cost from rent due.
d. If the LL wrongfully evicts the tenant, tenant can terminate.
e. **** The implied covenant of habitability and livability of fitness, which is found in every lease of residential premises, requires that the LL maintain the leased premises in a livable condition “throughout the term of the lease” and, if the land-lord fails, after timely and adequate notice of faulty conditions, to make repairs and replacements necessary to maintain the premises in a livable condition, the tenant may: (Marini v. Ireland)
i. Leave the premises with no further rent owing (constructive eviction), or
ii. Make the necessary repairs himself and deduct the cost thereof from future rents.
9. Damages: allowed to seek “difference money”
f. The difference between the fair rental value of the premises as warranted less the fair value in an unrepaired condition
g. The difference between the reserved or contract rent, less the fair value in an unrepaired condition.
h. (Some courts) The percentage of the contract rent by which the tenant’s use and enjoyment of the premises has been reduced.
i. ***Some jurisdictions only allow recovery for lost rent (general damages) and require a second action for damages from the inhabitability.
i. Special damages: when it’s a foreseeable result from LL’s breach. Emotional distress, punitive damages from “slumlord”; punitive likely when the LL flouts the tenant’s request to repair up to code or puts an exculpatory covenant on the lease.
10. A landlord’s breach of an implied warranty of habitability of rented premises constitutes a defense to an unlawful detainer action even where the tenant remains in possession of the premises after the alleged breach. (Knight v. Hallsthammar)
11. There is an implied warranty of suitability by the LL in a commercial lease that the premises are suitable for the intended commercial purpose (Davidow v. Inwood North Professional Group)
a. Non-residential: although Davidow extended an “implied warranty of suitability,” the majority does not do this.
b. Restatement: LL has an obligation to make the premises suitable for the “use contemplated by the parties” and must correct a failure to do so within a reasonable amount of time.”
1. Nature of the defect
2. Its effect on the tenant’s use of the premises
3. Length of time the defect persisted
4. Age of the structure.
5. Amount of the rent
6. The area in which the premises are located
7. Whether the tenant waived the defects.
8. Whether the defect resulted from any unusual or abnormal use by the tenant.