PROPERTY I SPRING 2011-MALAGRINIO

PART III. LEASEHOLDS: THE LAW OF LANDLORD & TENANT

Chapter 6. Tradition, Tension, and Change in Landlord Tenant Law

A. The Leasehold Estates
a.) 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 writing
b. Subject to the statute of frauds
G.) 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.
1
st



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. 1
st

iii. 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. 16
th
2010, that she would vacate as of
Nov. 30
th
2010. T subsequently vacated on that date and
paid no further rent to L.
Classification: Month to month periodic tenancy
Notice 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 tenancy
5.) LL transfers his interest in the property
(sale of property); or
6.) 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 seisin
a.) 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; or
4.) 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) or
2.) 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 tenancy
b. 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. I ntent-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. I ncidental 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 17
th
century English Statute of Frauds
b.) 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 parties
ii. Description of property
iii. Amount of rent
iv. 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
covenant
6.) 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 contract
1.) 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: FORMALI STI C 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: I NTENT 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 courts
ii. The rule has been rejected by the
Restatement of property.




c.) THE TENANT WHO DEFAULTS

1.) The Tenant in Possession
a.) 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 damages
2.) Terminate the lease and sue to recover possession
ii. 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 replacement
3.) 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 breach
5.) Wait for the end of the lease and sue for the
entire amount
iv. 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 tenants
2.) Advertised the premises in a local newspaper
3.) Obtained a realtor; or
4.) Advertised the lease in some other forum
d.) Consequences for failure to mitigate damages:
i. Damages are reduced
ii. 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.476
iv. 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 DEVICES
i. 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 possession
3.) 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
EVICTION
i. Reste Realty Corp. v. Cooper
1.) 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 disclose
c. 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.) I ndependent 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 dependent
9.) 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 CE
13.) 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.) I ndependent 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; OR
b.) 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, etc
h.) REMEDIES AVAILABLE TO TENANT IF THE
LANDLORD FAILS TO ACT:
1.) Stay and sue for damages
2.) Leave and stop paying rent
PARTIAL EVICTION
a. 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 Questions
1.) 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 Lease
1.) 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 3
ii. 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
DEFECT
h.) 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 condition
b. 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 damages
d. 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 again
iv. 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 appropriate
i.) 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
tenant
c. Even if T agreed to stay in bad conditions, IWH cannot be
waived, and T can sue for damages and be awarded!
RETALIATORY EVICTION
o At CL LL had virtually unlimited right to terminate
periodic and tenancy at will upon proper notice and to
refuse to renew!
o MODERN LAW retaliatory eviction is prohibited
(almost everywhere) for residential leaseholds (for
commercial leases it is prohibited almost nowhere)
o 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 controlled
2. Lessor is liable if dangerous condition is known to him
but not to lessee
3. LL was negligent in failing to use speed bumps in
apartment parking lot as means of protection against
speeding bicycles
a. LL did not owe duty to tenant to protect him
from criminal assaults on lot not under his
control
b. 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 security
a. 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 protection
b. (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 principles
6. 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
REMEDIES
a. The Tenant has a present possessory interest; the LL has a
future interest reversion.
b. REPAIRS
i. 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. FIXTURES
i. 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
him
iv. 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. WASTE
i. THREE TYPES OF WASTE
1. 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 AND
b. Changes reflect neighborhood AND (or
OR) premises would be significantly
reduced in value if unchanged
ii. 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 WASTE
iii. There is no line between waste and lawful activities, it is
factual issue
iv. 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 LAW
1. 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 pay
ii. 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 negligence
f. ILLEGAL PURPOSE
i. The lease for illegal purpose will be unenforceable if
(whats that)
g. The Problem of Decent Affordable Housing
i. Chicago Board of Realtors, Inc. v. City of Chicago
a. The case just gave an idea that governmental
regulations in the field can be contradictory and
far from the goal they intended to reach
b. 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 LAND
A. 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).
Budget and pre-
approval
View properties
Negotiate
Purchase sales
agreement
Executory period:
30 days or longer

a.) Execute purchase and sale
agreement:

When K is signed. Atfter the signing you
have equitable title.

Executory period :
30 days or longer

b.) Closing :

executory transaction where the
title is being sent to the byar.
Recordation
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.

o 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
o 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 SALE
a. 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 result
iii. 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
price
v. 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 PERFORMANCE
1. Details depend on JD
2. 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 evidence
4. It is an equity remedy
5. Hickey v. Green
a. 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 situation
c. The promisees reliance must be
reasonable in changing his position,
and before the promisor properly
repudiated his offer
6. Problems on page 477
1. 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 agreement
2. E applies when there is unjust enrichment by
one of the parties
3. E recognized as a defense in law
ix. THE STATUTE OF FRAUDS AND ELECTRONIC
TRANSACTIONS
1. 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 record
2. GENERALLY SAYING THE COURTS SPLIT
WHETHER ELLECTRONIC WRITINGS SATISFY
THE REQUIREMENTS OF SOF.
b. MARKETABLE TITLE
i. 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 unmarketable
2. BUT, contract covenants and other private
restrictive agreements do!
3. A marketable title is one which is free from
reasonable doubt
4. A title is doubtful and unmarketable if it exposes
the party holding it to the hazard of litigation
5. Violation of municipal restrictions renders
title unmarketable, despite the fact that
restrictions themselves do not render a title
unmarketable
6. 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 marketable
iv. EASEMENT (canalization, stochnie vodi) is an
encumbrance (obstacle, prepyatstvie) even though
it does not diminish the value of the property
v. Knowledge of easement is irrelevant, title is
unmarketable
vi. Easement known to B, or open and obvious, does
not make title unmarketable
vii. Some courts say a land with lack of access is
unmarketable, others say it is not
viii. Presence of hazardous waste on the premises does
not render title unmarketable
c. 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 contract
i. RISK OF LOSS
1. Most jurisdictions say that EC applies, and
the buyer bears the risk.
2. The minority says it is the seller who bears
the risk
3. If there is a special covenant about the risk
of loss, the matter is regulated by that
covenant
ii. INHERITANCE
1. If EC applies, S has personal property
(money, the price) starting from the date of
the agreement, and B has real property
d. THE DUTY TO DISCLOSE DEFECTS
i. 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 489
1. 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 defects
ii. Soil problems
iii. Undergoing sewage or storage
tanks
iv. Presence of hazardous materials
v. 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 appuretenant
2.) 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
parcel
b.) 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.