Property II – Outline
Professor Finnegan
Hilary 2006
I. THE LAW OF LANDORLD AND TENANT
A. The Leasehold Estates
1. The Term of Years (TY)
a. Definition: TY is an estate that lasts for some fixed period of time or for a period computable by a formula that results in fixing calendar dates for beginning and ending, once the term is created or becomes possessory.
b. Fixed period: a term must be for a fixed period. There must be a certain ending date (or the ending date can be calculated).
c. Limits on the number of years: common law had no limits, but some state statutes have limited the years.
d. Examples “L to T for six months, for 1 years, etc.”
e. Notice of Termination: TY ends automatically at the end of the term and no notice of termination is required.
f. Death: the death of the L or T has no effect on the duration of a term of Y
g. Transferability: interests in TY are assignable absent a contrary stipulation.
2. The Periodic Tenancy (PT)
a. Definition: PT is a lease for a period of some fixed duration that continues for succeeding periods until either the L or T gives notice of termination. There is no certain ending date, but certain period is identified: i.e. month-to month or year-to-year.
b. Notice of Termination is required: if no notice, then the period is extended for another period.
(1) How much notice?
i. Common Law:
1. Year to Year tenancy: 6 months notice.
2. Less than 1 year: notice equal to the length of the period, but no more than 6 months.
3. The notice must terminate the tenancy on the final day of the period, not in the middle of the tenancy.
ii. Modern Statutes: month-to-month tenancy can be terminated after 30 day notice.
c. Death: of the landlord or tenant has no effect on the duration of periodic tenancy.
d. Types of PT: Two types:
(1) Express periodic tenancy: “to A from month-to-month; or year-to-year.”
(2) Periodic tenancy by implication: created by informal agreement: i.e., if the tenancy has no fixed period but rent is paid periodically.
3. The Tenancy at Will (TW)
a. Definition: is a tenancy of no fixed period that continues so long as both landlord and tenant desire.
b. Termination: either the L or T can terminate the TW at his will.
c. Death: of the parties terminates TW.
d. Rent: no requirement of the rent charge. And generally no rent is charged in TW.
e. Transferability: interests in TW are not assignable, not devisable, and not inheritable.
IMPORTANT: The problem arises when the instrument is not clear whether it is creating a TY, PT, or TW. In these situations, following to Garner case, focus on the intent of the parties, and if it does not fit in these 3 categories, find something else such as term of years determinable or life estate determinable.
4. The Tenancy at Sufferance: Holdovers
a. Definition: tenancy at sufferance arises when a tenant remains in possession (holds over) after termination of the tenancy. The tenant’s entry onto the premises was rightful, but continuing there is not.
b. Landlord’s remedy: L has two options:
(1) Evict the tenant (as a trespasser): L can treat the tenant as a trespasser and evict the T only through judicial process rather than self-help. Once L elects to treat T as a trespasser, the L cannot change his mind and try to extend the lease. (Crechale case).
(2) Hold T as a new T (new leasehold): if L elects to treat T as having renewed the lease, holding over gives rise to a periodic tenancy, and the length of the new term will be determined according to how the rent is computed, but with a maximum of 1 year period. (Restatement View)
c. Examples
(1) T vacates leased premises in time but leaves some office equipment behind: no holdover because the equipment did not interfere w/ L’s use of the property.
(2) T stays on the premises after the end of the term because her doctor advised her that it would be dangerous to move her very ill child: no holdover because the T did not stay on voluntarily.
B. The Lease
1. It’s important to be able to distinguish between the lease and other arrangements that look like a lease because a lease gives rise to the L-T relationship, which carries with it certain rights, duties, liabilities, and remedies, that is different with other type of arrangements.
2. Factors to consider in determining whether an arrangement is a lease:
a. Is it a conveyance of a right to possession? If not, it’s a not lease.
b. If an agreement refers to a specific quantity of land, it’s likely to be a lease.
c. Intent of the party.
d. Exclusivity of the possession,
e. Etc.
3. Is the lease a Conveyance or a Contract?: It is both. A lease transfers a possessory interest in land, so it is a conveyance that creates property rights. But it is also a K because the leases contain promises (to pay rent/to provide utility). Today, courts rely more on K principles to reshape the law of leases w/ respect to the following questions:
a. Are the covenants in leases “mutually dependent” such that a material breach by one party excuses further performance by the other party, even if the lease does not so provide?
b. If the leased premises are destroyed, is the T still liable for rent?
c. If the T wrongfully abandons the leased premises, must the L take steps to mitigate the damages by searching for a suitable new T?
d. Is the warranty of quality to be implied in the lease?
4. The Statute of Frauds:
a. Leases for more than 1 year must be in writing.
b. Leases of 1 year or less are enforceable w/o writing.
c. Contents of the writing in a long term lease:
(1) The parties must be identified;
(2) The leased premises must be described;
(3) The extent of term or period must be identified;
(4) If rent is involved, the amount of the rent or the formula for calculation must be specified;
(5) The agreement must be signed by the party to be bound.
5. Form leases and the “Bargaining Power”: The form leases –take-it-or-leave-it, does not necessarily means that T lack bargaining power. The seller is trying to avoid the costs of negotiating and drafting a separate agreement w/ each purchaser. The assumption that the T has no bargaining power is not true. It assumes that there is no competition. If the seller does not offer something attractive, T will go to other sellers. In the absence of monopoly, the Ts are in no unequal bargain power.
C. Selection of Tenants (Unlawful Discrimination): There are three types of protection against discrimination of the L toward the T.
1. 14th Amendment: Equal Protection Clause – Suits based on this is unlikely.
2. Civil Rights Act 42 U.S.C. § 1982
(1) This act is narrower than FHA
i. It reaches only racial discrimination
ii. It does not deal with discrimination in the provision of service and facilities
iii. It does not prohibit discriminatory advertising.
(2) This act is broader than FHA
i. It contains none of the exemptions of FHA.
(3) Burden of Proof
i. P must prove intentional or purposeful discrimination.
3. Fair Housing Act 42 U.S.C. § 3061, 3603, 3604 – Apply only to residential leases.
(1) Scope of Prohibited Conduct – 3604: It basically prohibits the seller or renter to discriminate against persons because of race, color, religion, sex, handicap, familial status, or national origin. It’s unlawful:
i. To refuse to sell or rent a dwelling because of r/c/r/s/h/fs/no.
ii. To discriminate against any person in terms/conditions/privileges of sale or rental of the dwelling b/c…
iii. To make, print, or publish any notice/statement/advertisement that indicates any preference, limitation, or discrimination based on…
iv. To represent that a dwelling is not available for sale or rental when such dwelling is in fact so available.
i. L & T (original) are in privity of K and in privity of Estate.
ii. If T subleases the premises to T1, and T1 fails to pay the rent, L can sue only T and cannot sue T1 for rent, because there is no privity of K, nor privity of E, unless T1 expressly assumes to pay the rent to L. When T1 assumes to obligation of the head lease, L is in privity of K with T1 as the 3rd party beneficiary.
(2) Assignment: the original T conveys his entire rights. Therefore:
i. L & T are in privity of K and in privity of Estate.
ii. When T assigns his rights to T1, between L & T there is privity of K; and between L & T1 there is a privity of Estate. So L can sue both T and T1 for rent.
iii. If T1 assigns his interest to T2, T1 is in no PE/PK, T1 is liable only for past due rents related to his time in possession. T2 is in PE with L. So T is liable based on PK, and T2 is liable based on PE.
iv. If T1 instead subleases his interest to T2, T2 is in no PE; L cannot sue T2.
v. Even if in the lease there is a consent clause, this does not terminate the privity of K, and does relieve T from liability. For T to escape liability, there must be a novation.
d. Modern approach: look to the intention of the parties.
(1) The actual words used (sublease/assignment) are not conclusive; but they can be persuasive.
(2) The courts are inferring the intention from an interpretation of the document as a whole.
(3) This approach is in accord with K principles, but it provides less certainty.
e. Cases and Hypos
(1) Lessee transfers all of his interests in some physical part of the premises: partial assignment.
(2) Lessee transfers his entire interest, but the instrument of transfer provides that if the transferee breaches any obligation of the lease, the original lessee may terminate the arrangement and retake possession: sublease.
(3) If the primary lease b/t L and the original T is prematurely terminated:
i. If L exercises the power to forfeit the primary lease because of some breach by the original T, then the L is entitled to possession as against sublesees and assignees.
ii. If the original T merely gives up the primary lease voluntarily, the rights of possession of subleases and assignees remain intact. In the case of a sublease, surrender by the original tenant leaves the sublessee holding of the landlord.
f. The L’s consent clause to a sublease or assignment
(1) If there is no provision in the lease prohibiting the sublease or assignment, the T has the right to alienate his interest.
(2) T’s right to assign or sublet can be restricted by an express provision of the lease so long as the restriction is reasonable.
An express restriction is strictly construed against the L.
