Tuesday, October 25, 2011

Property Law Outline : Leases (Exam Outline)

I used this outline on my Property law exam, and received an A in the course. When the issue of Covenants came up, I worked through this outline quickly and wrote as much as I could applying the rules to the facts outlined on the exam.

---Leases---
A lease is a temporary conveyance of the right to possess and use.
IS THE STATUTE OF FRAUDS SATISFIED?
What TYPE of lease is it?
Term of Years

A term of years has a fixed time at which the lease terminates or ends. It can be less than a year. Neither the landlord nor the tenant is required to give notice to the other before terminating the relationship. On the stated day of termination, the lease ends.

Periodic Tenancy Was there proper notice to vacate?

A periodic tenancy is a lease that automatically rolls over for a stated period of time, usually a year or a month (such as a month to month or year to year lease). A periodic tenancy renews under the same terms and each party must give notice to the other in order to terminate. There must be proper notice to vacate. A month to month tenancy requires 31 days and a second notice for termination (i.e. one “period” of tenancy plus one second).

Tenancy at Will

A tenancy at will lasts only so long as the parties wish it to continue. Either party can terminate it at any time and for any reason.

Tenancy at Sufferance Did a T hold over after their right to stay has ended?

A tenancy at sufferance arises when an individual, one in right of possession, holds over after the right has ended. A person holding over in tenancy at sufferance differs from a trespasser in that his original entry wasn’t wrongful.

Did a tenant convey their interest? (see transfer of interests)

WHAT interest(s) did the T convey?

Assignment

An assignment is the transfer of all of the tenant’s interest for the remainder of the term.

Assignment Pro Tonto

An assignment pro-tonto is the transfer of part of all of the tenant’s interest for the remainder of the term.

Sublease

A sublease is a transfer or less than all of the tenant’s interest in the remainder of the lease. It is the transfer of any interest that is not an assignment. When an sublease is made, there is instantaneous privity of estate at the time of transfer between the current sublessor and the sublessee, but it disappears after. The sublessor reserves a reversionary interest, and the sublessee’s interest is carved out of the sublessor’s interest.

Is there PoK? PoE?

-For privity of estate, the parties to be bound must 1. have interests such that one is directly carved out of the interest of another and 2. one of the parties must be in actual possession of the property.

-Privity of contract arises from the obligations that come from being a party to a binding bilateral contract. A way to find privity of contract is to look to the lease and see who has signed it.

Did A sublessee, assignee, or prime tenant default?

Default on Covenants? (see small green notebook).

---COVENANTS OF THE LL/T RELATIONSHIP---

Does the lease STATE covenant to pay rent?

If the lease states that there is a covenant to pay rent, there is both privity of estate and privity of contract.

Paradine v. Jane held that all covenants must be performed without regard to whether other covenants have been or can be performed.
[Remedy] Aggrieved party can sue for breach of covenant.
Covenant of quiet enjoyment is a promise by the landlord to not interfere with the tenants permission of the leasehold estate during the term of the lease.
Covenant to pay rent rent rises out of the land, duty to pay rent, even if land is dangerous.
Has the T’s property been detrimented or otherwise hurt/damaged?
Pardine v. Jane held that the as the tenant has the advantage of casual profits, the tenant must also run the risk of causal losses.
Has there been a WRONGFUL EVICTION? - partial ouster, encroachment?
Smith v. McEnany, a case dealing with a wall built with the landlords assent, with knowledge that it encroached upon the tenants land, held that a wrongful eviction of the tenant by the landlord from a non-de minimus part of the premises suspends the rent under the lease. The rent issues out of the land, the whole rent is charged on every part of the land.
Even if the duty to pay rent is suspended due to a wrongful eviction, it does not mean that the tenant is absolved from performing on other covenants, such as the covenant to repair.
[Remedy] sue for wrongful eviction.
Is the T claiming the lease is not fit for T’s intended purposes?
In Sutton v. Temple, it was held that there is no implied warranty that the leased premises is fit for the tenant’s purposes.

Is there a k to protect T? Is there a MIXED CONTRACT such as in Smith v. Marrable for house and furniture?

Smith v. Marrable held that the party furnishing the goods is bound to furnish that which is fit to be used.

Did the L know of a detriment to the land before the lease was made?

[Remedy] could sue the L for fraud. Poisoned land = nuisance.

Was there a WRONGFUL eviction, BREACH of WARRANTY OF QUIET ENJOYMENT?
Blackett v. Olanoff held that for a breach of the warranty of quiet enjoyment, the landlord must perform some act with the intent of depriving the tenant of enjoyment and occupation of the whole or part of the leased premises. ((explain--show INTENT))
Sometimes, however, no intent is required or needs to be shown. The court may find that the conduct of the landlord, not the intentions, is controlling. ((show CONDUCT))

Did the L have it within their control to CORRECT the condition?

What did the lease state? If it stated something regarding the problem, it shows the landlord could stop the problem. Did the LL complain to the person causing the problem to end the problem? Was the person committing the problem a tenant or agent of the L? The L could have evicted? The landlord has a duty to protect the tenant’s implied enjoyment of the premises.

Continuous + recurring?

If there is a wrongful eviction, the tenant has to vacate and argue that his vacating was within a reasonable time? ((LL argue not reasonable, T argue reasonable))

Does L have responsibility (owns the premises) or no agent relationship (no nuisance)

Can the LL control?

NY garbage strike - LL could have controlled (argue).

Did the T ABANDON the premises?
[Remedy] The landlord has three ways to respond to the tenant’s abandonment of the premises. First he can treat the tenant’s abandonment as a surrender and the landlord can sue the tenant for rent. The landlord can sue for damages, the difference between rent due under the lease and fair market value. The tenant would be released from the obligations under the lease. Second, he can relet the premises for the tenant, and the landlord can sue the tenant for difference between his rent and the current rent collected from the second tenant (not fair market value). Third, he may be able to do nothing and sue for rent. The landlord can sue the tenant for rent as it comes due and may be found, as at common law, to have no duty to mitigate damages.

---Cases---
Paradine v. Jane (691) Was there a breach of L’s covenant of quiet enjoyment? T’s cov. to pay rent?
Covenant of Quiet Enjoyment - Landlord’s promise not to interfere with tenant’s possession of land during the lease.
Covenant to pay rent - by the tenant, promising to pay rent owed on the property/land.

All covenants must be performed without regard to whether other covenants have been or can be performed.

Duty of T to pay rent, even if land is dangerous.

Duty to pay rent rises out of the land.

Remedy: Aggrieved party can sue for breach of covenant.

Statute of limitations begins to run at the end of the lease.
Smith v. McEnany (694) Was there a breach of covenant to repair or a partial ouster? Encroachment?
Wrongful eviction of the the tenant by the landlord from part of the premises suspends the rent under the lease.

Obligation to pay rent cannot be apportioned.

The rent issues out of the land, the whole rent is charged on every part of the land.

Covenant to pay rent is dependent on the covenant of quiet enjoyment.

If the L or L’s agent, or someone claiming paramount title based on a prior conveyance from the L evicts T, then T’s covenant to pay rent is suspended so long as the eviction lasts.

[T must show evicted from part of the land.]

Any encroachment is a trespass.

Suspension of duty to pay rent does not mean that T is absolved from performing on other covenants, such as the covenant to repair.

Was the encroachment de minimus?

The rule does not apply to a de minimus encroachment.

Sutton v. Temple (696)
1. If a person contracts for the use and occupation of land for a specific time and at a specified rent, he is bound by that bargain, even though he took it for a particular purpose, and that purpose was not attained.
2. Where one undertakes to pay a specific rent for a piece of land, he is obligated to pay the rent, whether it answers to the purpose for which he took it or not. Benefit by occupation of land is irrelevant.

Smith v. Marrable held that in a mixed contract for the letting of a house and furniture, that the party furnishing the goods is bound to furnish that which is fit to be used. If a person takes a ready furnished house upon the faith of it’s being suitably furnished, the owner is under an obligation to let it in a habitable condition. This means furnished in a proper manner and fit for immediate occupancy.

There is a warranty for possession and use, but not for value thereof.
Had landlord known beforehand of land’s condition?
T may have had a remedy: If the L knew, T could have sued for fraud. Poisoned land is a nuisance.
Blackett v. Olanoff (703) Implied Warranty of Quiet Enjoyment.
A constructive eviction by an alleged breach of an implied covenant of quiet enjoyment sometimes has stated that the L must perform some act with the intent of depriving the T of the enjoyment and occupation of the whole or part of the leased premises.

Sometimes no intent is required or needs to be shown.

L’s conduct, not intention, is controlling.

Does the L have it within his control to correct the condition?
Tenants must vacate within a reasonable time.

Case v. Minot

Landlord entered into a lease with one tenant which L knew permitted that T to engage in an activity which would interfere with the rights of the other tenant.

Landlord should not be able to collect rent for the residential premises which were not reasonably habitable.
---
Landlord may not directly interfere with T.

Trespass -> T vacate -> lease ends

Once L trespasses, duty to pay rent ends.

If landlord doesn’t have responsibility or not an agent of L, no nuisance.

L has to have control.

Is there a clause in the lease which shows the L is aware of nuisance?

If yes: shows L could have stopped noise

If failed to do so: wrongful action of L = constructive eviction

In re Kerr (707) Doctrine of Surrender.
Surrender occurs when a tenant agrees to return the leased premises to the L before the expiration of the lease and the L agrees to accept the return of the premises.
Mutual agreement b/t L and T
T and L enter into an agreement that they don’t want to be in the lease. T has released all rights, L accepted release.

Acceptance has to exist.

(In freehold estate, no acceptance has to exist, i.e. X releases LE, O has FSA).

Abandonment is the unilateral act of vacating on the part of the tenant.
Medico-Dental (712) Dependent Covenants Model.
The covenants which run to the entire consideration of a contract are mutual and dependent.

Privity of Estate (PoE): In rem relationship b/t parties during entire lease. (L not to evict, T to pay rent).

Privity of Contract (PoK): Promise by L and T, contracts.

A portion of the building was leased to Boonshaft for a drugstore (consideration). P did not take immediate action to abate the drugstore, which was held to be a breach of the lease. (see notes)

F.S. subject to covenant, no other drug stores.

covenant = outstanding equity against property.

Every portion of the building subject to that equity against it.

Remedy: T can sue L for injunction. Enforcement judgement against property itself.

Covenants more than rent+quiet enjoyment = PoK, also on subsequent tenants.
Javins v. First National (719) Implied Warranty of Habitability
Held that warranty of habitability is implied by operation of law into leases of urban dwelling units, and breach gives rise to usual remedies for breach of contract.

At common law, a landlord had no right to fix and repair land.

However, currently, landlord must comply with building code.

Remedy: T can sue for fair rental value of defective premises.

Sommer v. Krindel (735) Duty to Mitigate Damages.
Held that a landlord seeking damages from a defaulting tenant is under duty to mitigate damages by making reasonable efforts to relet an apartment wrongfully vacated by the tenant.

Old rule: No duty to mitigate damages. It was said that a lease conveyed to the tenant an interest in property, and foreclosed any control by the landlord. Tenant had an estate with which the landlord was not able to interfere.

New rule: Matter of basic fairness.

A landlord has a duty to mitigate damages where he seeks to recover rents due from a defaulting tenant.

Must make reasonable efforts to re-let apartment.

T will not necessarily be excused from obligations under the lease simply by finding another person who is willing to rent the vacated premises.

T must bear costs of reasonable expenses incurred by L attemptingn to re-let.


Mullendore Theatres (743) Transfer of Interests.
A lease covenant does not run with the land unless it touches or concerns the land.

To run with the land, it must be related to the land as to enhance its value or confer a benefit upon it.

“T may use premises for residential uses only”. Restriction on right to use runs with land.
General Rule: Security deposits, covenants for security deposits do not run with land.

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