Landlord Tenant Law, Fall 2013 Cavallieri 1 C.

Villanueva

Leaseholds

Leasehold = interest in land

Death of LL or T: Common Law says no effect but some crts hold leasehold to be personal, so death is then terminated.

Tenant holds property Leasehold

Landlord or LL Agent future interest (reversion/remainder, property goes back to LL or LL agent)

1. Tenancy for Years (Term of Years)

Fixed period, easy to surrender, automatic termination. Lease for a set period of time and expires without notice. Can last for days or years (dont be confused by the years in term) Begins at a fixed point, expires at a fixed point without notice

Fixed Period of Time o Can last days or years. (e.g. 10 days or 10 years) o Termination date is certain. o Always has an endpoint defined. Creation o Written under SoF if more than a year o Can be oral if less than 1 year Termination o Is automatic. o Expires at a fixed point without notice. Surrender o Does not require formalities

2. Periodic Tenancies
Continues for a designated period, no pre-determined end, technical termination: notice required to terminate Continues from year to year for periods of time. Informal lease often created by implication Example: friend says write a chek for $1K per month, let me know when you leave.

(Death of Landlord or Tenant) Common law says no effect But some courts hold leasehold to be personal, so if death occurs then terminated

Landlord Tenant Law, Fall 2013 Cavallieri 2 C. Villanueva To leave Periodic Tenancy: o Any periodic tenancy that is 6 months or more does not require more than 6 months o Less than 6 months requires 1 full period of notice. Reforms by Jurisdiction for Period Tenancy o Policy Rationale: Reforms are meant to respond to disproportionate power between LL and tenant o Reform 1- softened year notice of requiring one full period of notice. Typically says 30 days before end of term. Example: term by 12/1/13, notice by 11/1/13 o Reform 2- notice given will be effective 30 days later Many states permid a month to month tenancy at any time after 30 days notice. Example: give notice Oct 2, term ends on Nov2. Pay just 1 extra day, not month.

Periodic Tenancy Creation 3 ways: o 1. By Express Agreement E.g. L leases to T from month to month o 2. By Implication Can be an informal lease created by implication a. E.g. friend says, write me a check for $1K per month, let me know when you leave. o 3. By Operation of Law Tenant Holds Over: a. Where notice is not given, lease is automatically renewed. b. LL can treat as a new PT on same terms of old lease, or as TaW Termination- Notice Required o Goes on until one party gives notice of termination Either party may give notice to terminate. o To leave Period Tenancy: Any periodic tenancy that is 6 months or more does not require more than 6 months notice Less than 6 months requires 1 full period of notice. a. E.g. lease began 1/1/13, to terminate on 1/1/14, notice by 6/30/13 or 7/1/13. If notice by 7/6/13, term on 1/1/15. Reforms by Jurisdiction for Period Tenancy o Policy Rationale: Reforms are meant to respond to disproportionate power between LL and tenant o Reform 1- softened year notice of requiring one full period of notice. Typically says 30 days before end of term. Example: term by 12/1/13, notice by 11/1/13

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o Reform 2- notice given will be effective 30 days later Many states permit a month to month tenancy at any time after 30 days notice. Example: give notice Oct 2, term ends on Nov2. Pay just 1 extra day, not month.

3. Tenancies at Will
No fixed period Endures at the will of the parties Ends at the death of 1 of the parties Rare TaW runs into period tenancy if payment expected. Doesnt involve payment of money

Creation o No fixed period o Endures at the will of the parties o Rare o TaW runs into period tenancy if payment expected. Doesnt involve payment of money o Difficult to get a lease interpreted as tenancy at will; courts may interpret it as a periodic tenancy Termination o Indefinite renting, ends when: Terminated by either party or One party dies o Reciprocal rights: Usually 30 days notice of termination required

4. Tenancies at Sufferance (Holdover)

Arises when tenant doesnt leave Common law creates 2 choices. o 1. Eviction + money damages o 2. New tenancy as a new leashold. Major jurisdictions say its a periodic tenancy thats implied Minor jurisdictions say it is a new lease with the same terms.

Arises when T remains in possession after termination of tenancy The tenancy lasts until T is evicted or L elects to hold over for another term. o LL can evict with damages, OR o LL consents and they pay same terms or month-to-month (max new term is one year) Maj. Of juris say a periodic tenancy created on holdover, but min say a new term of years created (if holding over on original term of years lease).

Landlord Tenant Law, Fall 2013 Cavallieri 4 C. Villanueva Lease tells rights and responsibilities. If no lease, implied rights, responsibilities and duties. Lease is set up to be equal power between parties, but most of the time when a lease is formed the tenant cant negotiate, doesnt know their rights by jurisdiction.

Conveyance Common law English Rule Under traditional legal doctrine, different from K Conveyance vs. Contracts o Policy The way we deal with land from one to another is special Concerns property rights o Last 30-40 years, there has been a softening so that it now resembles K law more. Increasing movement to exchange promises Leases now are a fusion between K and leases Gives rights to tenants and new remedies with certain protections.

Fair Housing Act (FHA) Addresses how people are treated in the rental and sale of property. Is not state based.

Statues must not confliction with the Constitution, but can add weight to constitutional issues.

Constitutions Equal Protection Clause

Statutory enacted by Congress

ADA, CRA and FHA Is statutory and not constitutional. o Congress has given power to them by Const. and can regulate housing, commerce among the states

CRA (Civil Rights Act) Bared public and private discrimination (not just dwellings Only concerned with race.

FHA 3604 Exemptions

Landlord Tenant Law, Fall 2013 Cavallieri 5 C. Villanueva Religions orgs in certain circumstances, seniors, 3603 But big rule is no discrimination Ex: single family house sold or rented by owner, if they own 3 or fewer But if you are in the business of real estate you cant discriminate So only personal owners (Freedom of Association Constitutional issue, which trumps FHA) Cant advertise discrimination Stereotype threat o Is deleterious to society and affects the environment If you discriminate in advertising you lose your exemption Attorneys, title companies, other professionals can serve small landlords (Mrs. Murphy) who are discriminatory Small landlords who live on premises with no more than 5 families in rooms/units If not exempted under 3603 o Cannot refuse to rent/sell based on___ o Cannot advertise preference for o Cannot discriminate person with handicap if They pay for reasonable modification Cannot refuse to make reasonable accommodation Have to construct new multifamily dwellings accessible to handicap persons o o o

FHA applies to all single family homes owned by private citizens who use a broker & have less than for homes. All single family homes owned by corps/partnerships qualify and are under the FHA. FHA Examples from Book: Ratios/no. of children. OK 4 people OK No more than 2 children = not okay Can refuse rent to unmarried couples, gay/lesbians. But sexual harassment is not okay HIV/AIDs Status- violation Direct threat/ harm substantial damage = ok No schizos with violent tendencies who might damage the property = ok FHA says smoking not a handicap/disability. No smokers okay to use if deleterious effects of 2nd hand smoke.

FHA Applies to: Discrimination is defined as a specific class on the grounds of: o Race, color, religion, sex, familial status, national origin, disability o Needs to be on the grounds of a protected class. States can have municipality ordinances which further define protected classes o Example: gays & lesbians in SF

Landlord Tenant Law, Fall 2013 Cavallieri 6 C. Villanueva No state can nullify the FHA, it is federal law.

Holdovers: Legal vs. Actual Possession Ex: Hannan v. Dusch o P leased from D, holdover tenant was still in possession. English Rule: o LL has implied covenant to deliver possession o Only applies on the day that the lease begins Day 1: T can sue LL Day 2: T must sue holdover o T can terminate lease and then can sue LL for damages. Day 1: terminate lease Day 2: damages (hotel, storage o Contradicts public policy purpose, no one would willingly contract to a lawsuit. American Rule: o T should oust trespassers, LL to deliver legal possession, not actual possession. o No implied covenant o Day 1: T must sue holdover for possession and damages. Some juris follow American, some English Subrules for both: o 1. If you cant take possession on start date, no obligation to pay rent & may collect damages. Where entry is delayed, dont have to pay. o 2. If there is a 3rd party (holdover) only partially in possession, T can take possession of remainder and then abate the rent (subtract part you dont have possession of.) If lease says nothing about delivery of RoP, goes to default rule in jurisdiction. To get around, lease can include delivery of possession. Contracting around default rule: Default Rules American rule English rule

RoP (Solution: K around default rules) Sublease or Assignment Can have different kinds of promises passed on or retained between the two. Frequently mislabeled. Most crts will look at what the parties actually did, or look at intentions and define them as such. Sublease o Anything less than entire interest o Right of Entry is retained, reversion

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Assignment o Entire lease (residual term) is transferred Denying Assignments Ex: Kendall v. Ernest Pestana Majority rule: LL can unreasonably and arbitrarily deny consent to assignment. o Lessors decision o Court shouldnt rewrite K (response- making you live up to K) o Stare decisis o Lessor should get the benefit from the increased value (should build rent increases) Minority Rule: LL only may withhold consent for commercially reasonable justification. o 1. Financial unsuitability rationale (credit worthiness) o 2. Condition / possibility of harm to premises. Depends on: Nature of occupancy Unsuitability Need for alterations o Why minority rule is better: Modern law disfavors restraint on alienability (efficiency rationale) We like the property to go from one to another Promotes good faith & fair dealing (fairness rationale) We now prefer the K model & feel its a better approach Minority rule is now the dominant rule.

Denying Assignments w Residential Leases Follows the majority rule from Kendall Duty to mitigate undermines right to refuse

Holdovers: Self Help Ex: Berg v. Wiley Commercial lease for property, restaurant LL locked out T when closed for remodeling Contract Law says self help ok if: o LL entitled to possession AND o Peaceable entry Modern rule: o Self help is disfavored. Self help is only a remedy in the past. Law is more evolved now, must seek judicial ejectment. New Model: o Summary proceedings o Bars T from raising LLs breach o Newest rule allows T to bring some defenses

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Lease Abandonment / Surrender

Ex: Summer v. Kidel o Involved abandonment of new lease. D could not get lease because he broke off engagement. o LL did not lease out, damages were 1+ years of rent. Rule: Duty to mitigate damages, like K Surrender: o T free of obligation to pay rent but only from moment of surrender. o T must still pay back rent, retrospectively owed o Takes qualities from K law: Acts as an offer from T: Let out of lease? Acceptance: Yes from LL Abandonment: o Implied offer of surrender Common Law rule: o If you have lease, obligated to pay. o If you abandon/offer to surrender, no duty to mitigate. Modern rule: o Like K law, duty to mitigate and minimize damages. o Must act with good faith and fair dealing. o Exercise reasonable diligence in mitigation.

Duty to Mitigate
Residential LL can deny a sublease arbitrarily but must mitigate damages. o Also cannot request back rent from defaulting subtenant. DtM can fall on either party Majority rule: T must bear burden to show reasonable diligence o Reasonable diligence being advertising, showing apt, etc. o Finding someone to take over your lease. Minority rule: LL must bear burden to show reasonable diligence T in default pays expenses incurred in mitigation for LL to find new T. Residential Leases and DtM o Should original T wish to transfer lease, LL can arbitrarily refuse. o But DtM trumps, LL must show due diligence to decrease damages. Makes it harder to collect unpaid rent. Shows how conveyance is migrating toward K law o Any substitute in K law is suitable. LL cant refuse alternative & hold T liable for total unpaid rent. Reasonable good faith effort to mitigate damages, if failed then can collect damages on unpaid lease. o LL who fails to mitigate typically still tries to collect damages But crts say no damages available, therefore no $D LL could recover difference between agreed rent & avoidable loss. o Ex: If market for rent changes & price falls, LL gets incidental, consequential damages $1000 rent previously, now reasonable market cost is only $750. LL gets $250 in $D

Landlord Tenant Law, Fall 2013 Cavallieri 9 C. Villanueva If failure to mitigate, LL gets agreed rent X reasonable recovery DtM is a mandatory rule.

LL Remedy When T Breaches

1. Sue for back rent + damages a. LL can sue for retrospective rent + $D (e.g. broken window) 2. Eviction a. Terminate lease & retake possession 3. Anticipatory Breach a. Repudiated K b. LL can collect future unpaid rent which cannot be reasonable avoided despite DtM, post eviction. c. Doctrine not followed by every jurisdiction. d. If T abandons, repudiated contract. Most jurisdictions allow whole & remainder of lease as collectible. e. If the jurisdiction says no anticipatory breach (no money damages for retrospective rent) then the accelerated damage clause overrides anticipatory breach theory.

Protective Devices
Security Deposit o Supposed to be insurance for unanticipated damages. Problem is T never gets it back. o But remedy for T who wont leave & wont pay. o Remedies to T in some jurisdictions: Requirement to limit amount Make LL trustee Hold $ in escrow Require separate account for security deposit LL pays interest Return in 30 days, or itemized list of costs. If not done, then treble damages. o Once lease is signed, T responsible for damages. This makes it so T has no incentive to fix anything, doesnt bear costs other than the security deposit. o LL often will try to redefine security deposit as liquidated damages or advanced rent. Accelerated Damage Clause o In some lease contracts o When T breaches, entire remainder of the lease is due. If T pays entire remainder, can continue possession. o If the jurisdiction says no anticipatory breach (no money damages for retrospective rent) then the accelerated damage clause overrides anticipatory breach theory.

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Implied Covenant of Quiet Enjoyment (ICQE)

Refers to: What is the condition the premises need to be in and what does LL owe as per K? o Covenant = promise o Implied = goes in all leases o Quiet Enjoyment = uninterrupted & in an unencumbered fashion Ex: Reste Realty v. Cooper 1969 o Where ICQE is substantially breached, T has remedy in constructive eviction Substantial Breach of ICQE= Act/omission that renders premises unsuitable for purpose Significantly interferes w/ beneficial enjoyment Similar to implied warranty of merchantability in K law o Cons. Evic.= it is as if T has been evicted BUT T must abandon within reasonable time. Allows term of rent (must give notice) o Early Common Law: LL owed no duty after lease. The only breach of ICQE was interference with lease. o Modern Law: Has relationship between ICQE and Constructive Eviction. Breach so bad, as if T was evicted, so T has remedies.

Constructive Eviction

Breach Remedies for Landlord 1. Back rent + $D 2. Terminate lease and retake possession 3. Anticipatory breach (generally disfavored by crts) a. Only $D = mitigation D (consequential damages) 4. Repudiated Contract a. LL can collect on the whole lease b. Only some jurisdictions c. If allowed, & T has abandoned by offer of surrender / left, repudiated K available d. Narrow remedy because of requirements

K K

K K conveyance K K

Conveyance = enriched by K law

Doctrinal aspects of K law: Implied warranty of habitability Duty to mitigate damages Good faith requirements, etc.

Landlord Tenant Law, Fall 2013 Cavallieri 11 C. Villanueva ICQE: Both residential and commercial, but for residential, IWH applies Substantial breach of ICQE o You get to invoke Constructive Eviction o Relieved of rent if T departs within reasonable time. Major Breach, but less than substantial breach o Invoke dependant covenants, e.g. broken window Lesser Breach o T stays and sues for $D In exam, explain the above as: ICQE provides ____, when there is substantial breach this could be resolved by ______. Where there is major breach ___, and if lesser breach ____. This looks like ___, therefore ___ applies, which would result in ____.

(Illusory: Many people dont have $ to sue)

Illegal Lease Doctrine (disfavored, but theory to contemplate)

If lease had substantial code violation & LL knows, the lease is unenforceable as an illegal K. o Argument that its against public policy- doesnt live up to rules of the law. LL only entitled to reasonable rental value of premises. This could be $0 if bad enough.

Implied Warranty of Habitability (IWH) Runs whole lease period Covers patent (obvious) and latent (hidden) defects Implied in every residential lease Says safe, clean, fit for human habitation Must be substantial violation, not minimum. To make IWH claim o Must be uninhabitable to a reasonable person standard If the problem is made by T, claim is not available o Violation of local housing code o Violation of health & safety T must give reasonable time to resolve problem o No hot water for 12 hours? Not available. Weeks? Months? Yes. Ex: Hilder v. St. Peter LL premises uninhabitable because of water, lock, toilet, no heat etc. T stayed 14 months, paid all rent, later sued for $D Caveat Lessee= renter beware Under Common Law, T still had to pay unless abandoned for substantial breach under constructive eviction IWH is: o Only residential o Sometimes doesnt include single family homes Not adopted everywhere but the modern interpretation Examples of IWH violations:

Landlord Tenant Law, Fall 2013 Cavallieri 12 C. Villanueva o Bed bugs- even though its not a health and safety violation. o Aircondition o 2nd hand smoke Cannot contract around IWH, implied in every residential lease.

IWH: Ways to Invoke Remedy

1. Stay, pay & sue for reimbursement o Acts as rescission and reformation 2. Stay, withhold rent, when LL sues for back rent T raises IWH breach as defense o Doesnt relief all rent obligation, but no eviction & crt reforms the K. o Must give notice Have LL on notice & with ability to repair in a reasonable time. E.g. send a letter Defect occurs when withhold occurs 3. Repair & deduct $D (only in some juris) o Must give notice & time o E.g. call a plumber, save receipt, deduct $ from rent. 4. Terminate, sue for $D o In amount of overpayment from date of breach. o Money awarded = value of premises in defective condition.