Property Law Outline - Landlord Tenant Law

  1. 3 Types of Leaseholds
    1. Term of Years
      1. Expressly created.
      2. Written (satisfies statute of frauds).
      3. Extends for some specific period of time.
      4. Terminates automatically at the end of that period. Terminates if both parties agree, if premises destroyed, and if eminent domain. Might not terminate on death.
    1. Periodic
      1. Expressly created.
      2. Written (satisfies statute of frauds).
      3. Customary, no specific period of time stated for lease.
      4. Renews automatically unless there is 1 period notice that the lease will end.  Terminates if both parties agree, if premises destroyed, and if eminent domain. Might not terminate on death.
    1. At Will
      1. Not expressly created, no valid lease.
      1. Tenant took possession with landlord's permission and pays rent.
      1. Can be terminated at any time by either party (law usually requires some notice now). Usually terminates on death.
  1. Recent Changes
    1. Shift in leaseholds from property to contract law/remedies.
      1. Invalidation of leases
        1. Under property, could only invalidate lease if landlord violated covenant of quiet enjoyment or tenant failed to pay rent.
        2. Under contract, more equitable solutions - habitability, unconscionability.
      1. Statute of frauds must be satisfied, just like in contract law.
        1. Exceptions to statute of frauds only for equitable estoppel or partial performance.
    1. Statutes provide tenant rights, leases provide landlord rights.
      1. Concerns about disparities in bargaining power has lead to legislative action for tenants.
  1. Landlord Rights (usually found in leases)
    1. Tenant owes 3 duties to landlord.
      1. Duty to fulfill the express obligations in the lease (pay rent).
      2. Implied duties not to commit waste or maintain a nuisance.
      1. Duty to vacate at the end of the lease term.
    1. Remedies for tenant's breach and for holding over
      1. Landlord's primary goal is to evict the tenant. Collecting damages is a secondary consideration.
      2. Self Help: Forcible Entry and Forcible Detainer
        1. Forcible entry - breaking in or threatening the party in possession.
        2. Forcible detainer - keeping property by force.
        1. Sometimes, lease provisions expressly allow the landlord to enter and physically retake possession (by changing locks, seizing belongings, etc.).
        1. However, landlords usually may not use self-help.
          1. Forcible entry and forcible detainer have been illegal for as long as there has been an English landlord-tenant law.
          2. Courts want landlords to use the court system.
            1. Courts have created a summary proceeding for eviction, usually called an unlawful detainer action.
            2. These provide short periods for notice, filing pleadings, and setting a trial date so as to resolve the issue as quickly as possible.
            1. After winning this action, the landlord can get a sheriff to evict the tenant quickly.
          1. Ex. Jordan v. Talbot (p.602)
            1. Tenant failed to pay rent. Landlord used key to open apartment while tenant was out, put tenant's furniture in storage, told tenant to get out when they returned.
            2. Held that right of re-entry from a lease is not a defense to forcible entry. Forcible entry does not require violence/force, can find implied violence. Landlords must use the judicial process.
            3. However, some states responded by allowing forcible entry and detainer as long as no force/violence is used. Not allowing this type of self-help has lead to high deposit requirements.
      1. Holding Over and Negotiations
        1. Holding over occurs when a tenant does not leave at the end of the lease period.
        2. Tenant might stay in the property while attempting to negotiate new lease.
          1. Usually, the fact that negotiations over terms of a new lease broke down is not enough to protect tenant from having to pay the landlord if tenant remains in possession after expiration of the lease.
          1. However, if a tenant rejects a landlord's proposed higher rent, but the landlord then accepts tenant's payments of original rent price, the landlord has tacitly agreed to hold the tenant on for another term at the lower rate.
  1. Remedies for tenant's abandonment
    1. A tenant abandons the premises when he leaves the premises and does not pay rent when due.
    2. Three remedies for landlord:
      1. Terminate the lease (accept surrender)
        1. Usually a deliberate choice, but can also occur inadvertently if the landlord uses the property in a manner inconsistent with the tenant's right of possession.
      1. Sue tenant for the rent as it becomes due
        1. Can sue for rent each month or sue for entire rent when the lease expires.
        1. Traditionally, no mitigation of damages was required, but now most jurisdictions require the landlord to mitigate damages by making reasonable efforts to relet the premises.
          1. Ex. Somer v. Kridel (p.614)
            1. Tenant backed out of lease before he started living in apartment. Third party later came and asked about renting that apartment, was turned away. Landlord sued for total amount of rent.
            2. Held that a landlord has a duty to mitigate damages. Must treat the vacated property just like other vacant stock. Should offer evidence that apartment was shown. Tenant can rebut with evidence that good candidates were turned away.
      1. Retake possession to relet the premises on the tenant's account
        1. This common law remedy allows the landlord to find a substitute tenant and use the  rents to offset the original tenant's obligations.
        2. This remedy now exists only in the minority of states that don't already require mitigation of damages by landlord.
        3. If the new rent does not cover old obligations or the new tenant leaves, the old tenant remains liable.
  1. Tenants' Rights (usually found in state/city codes)
    1. Implied Covenant To Deliver Possession
      1. Two different rules...
        1. American Rule
          1. Landlord is only required to put the tenant in legal possession.
          2. Could be someone squatting, not the landlord's problem.
        1. English Rule
          1. Covenant to place the tenant in actual possession of the entire premises at the beginning of the lease.
          2. Is the majority rule in the U.S.
      1. Conditions for breach
        1. Breach occurs under the American Rule only if the landlord, someone with paramount title, or someone with the landlord's consent is in possession when the tenant is first entitled to possession.
        1. Breach occurs under the English Rule if anyone is in possession, regardless of the circumstances, at the beginning of tenant's lease.
          1. Landlord should know the status of possession before the date the tenant is entitled to possession, that the landlord is the only one who can evict, and that the landlord has the resources to proceed quickly with eviction.
        1. However, parties are allowed to contract around this covenant in some states.
      1. Remedy for breach
        1. Under both rules, the tenant may terminate the lease and receive consequential damages if landlord does not deliver possession within a reasonable time.
  1. Implied covenant of quiet enjoyment
    1. No landlord or party with paramount or anyone acting with the landlord's consent will disrupt the tenant's possession of the premises.
    2. Most commonly tenants raise breach of covenant of quiet enjoyment as a defense to a landlord's suit for rent after the tenant has relinquished the leasehold.
      1. Usually does not cover third party disruptive behavior.
      2. However, courts have increasingly been willing to make the landlord responsible for the actions of other tenants. (Is LL in better position to call police than other tenants?)
    1. Common breaches
      1. Actual eviction
        1. Most common reason for suit.
        2. Tenant can cease rent payments and get consequential damages or can terminate the lease and get relocation costs repaid.
        3. Tenants have a right against retaliatory eviction (i.e. for whistle blowing).
          1. Difficult to prove because retaliation might not be the only reason for eviction. (sole v. substantial motive)
          2. Only some states apply this doctrine to business leases.
          3. Tenant bears the burden of proving the requisite elements:
            1. That the tenant undertook a protected activity, and
            2. That the landlord subsequently declined to renew the lease (or took some other action)
            1. For retaliatory reasons.
          1. In some jurisdictions, burden then shifts to the landlord to show absence of improper motive.
          1. Tenant must also show that there is no unpaid rent in most jurisdictions.
  1. Constructive eviction
    1. Landlord does something or fails to do something that substantially interferes with a tenant's reasonable use of the premises, making it unsuitable for the tenant's use.
    2. Must abandon the premises within a reasonable period of time.
    3. Problems for tenants
      1. Reasonableness standard makes it unclear if the landlord has actually breached.
      2. High transaction costs to use courts to resolve these issues, most will not resort to courts.
      3. Risk if tenant decides to breach and rent somewhere else that tenant might have to pay 2 rents if tenant loses quiet enjoyment case.
  1. Right to Habitable Premises (Implied Warranty of Habitability)
    1. When warranty is breached, tenant can seek damages, injunctive relief, or rescission for breach of the warranty.
    2. Main emphasis, however, is on self-help remedies. Fall into one of three categories:
      1. Rent application
        1. Also called "repair and deduct."
        1. Tenant can use some of the rent money to make repairs and can then successfully defend a suit for back rent.
        1. Tenant must give LL notice and can usually invoke it a limited number of times and can only spend a limited amount of money.
      1. Rent withholding
        1. Tenant can withhold rent until landlord corrects health-threatening defects.
        1. In some states, no prior judicial determination of uninhabitability is required.
        1. Tenant usually has to pay into court-administered escrow account instead.
          1. Once repairs are complete, money goes to the tenant.
      1. Rent abatement
        1. Tenant can simply stop paying rent, and then has a defense against a suit by LL.
        2. Also often paid into escrow.
        1. After judgment, amount of set-off of the tenant's damages for breach can be
          1. Difference between the reserved rent and the actual rental value of the premises during the breach period,
          1. Difference between the fair rental value of the premises as warranted and the fair rental value of the premises in their present condition, OR
          2. A reduction in rent by a percentage equal to the percentage reduction in value due to the breach.
        1. Ex. Javins v. First National Realty Corp. (p.634)
          1. Three tenants failed to pay rent. LL sued; tenants defended on basis of numerous violations of the housing regulations.
          2. Held that a warranty of habitability is implied into leases for urban dwellings. Breach is measured by violation of housing code standards. Up to jury to decide if violations were present in month tenants failed to pay and how much of a write-off from their rent the breach should require.
    1. Reasons for implied habitability warranty
      1. Tenants lack the incentive, and sometimes the ability, to make repairs.
      2. Inequalities in bargaining power between tenant and landlord (need for paternalism).
      3. Public enforcement of building codes isn't enough; need private enforcement as well.
    1. In general, implied warranty is breached only when the defect has a substantial impact on health or safety (look to building codes).