VIII. Landlord/Tenant Law

VIII. Landlord/Tenant Law

A. LEASEHOLD ESTATES

• 
  Courts are more likely to take a common law approach to residential leases as opposed to commercial leases due to a lack of bargaining power and expertise
  
• 
  About half of the states have adopted the Uniform Residential Landlord and Tenant Act
  

• 
  Term of Years: lasts for a specified period of time determined by the parties. Period can be of any length, but can be terminated before the end of the fixed period on the happening of some event stated in the lease agreement
  

• 
  The landlord’s future interest is a reversion while interest in a third party is a remainder
  
• 
  Death of either party does not terminate the tenancy
  
• 
  Landlord entitled to evict only in material breach
  

• 
  Periodic Tenancy: renew automatically at specified periods unless either the landlord or the tenant chooses to end relationship; no written lease or specified end (“month-to-month”)
  

• 
  Many states require notice (usually a month’s notice) before either party can terminate
  
• 
  Death of either party does not terminate the tenancy
  

• 
  Tenancy at will: like a periodic tenancy except can be ended with no notice by either party
  

• 
  Many states have basically abolished this by requiring notice
  
• 
  Death of either party terminates the tenancy at will
  

• 
  Tenancy at sufferance (holdover tenant): a tenant rightfully in possession who wrongfully stays after the leasehold has terminated
  
  • 
    Eviction proceeding and court judgment generally required to evict
    
  • 
    Landlord accepting rent checks from holdover tenant may be held to have agreed to new tenancy
    

• 
  Procedural regulations: impose formal requirements for creating relationship: (1) procedures for termination, (2) notice and eviction proceeding, (3) summary process
  
• 
  Substantive regulations: define parties’ obligations to each other including housing codes and common law rules
  

• 
  Facts: Glassboro supplies living quarters for migrant workers and discharges worker unable to speak English and without funds to return home, not permitting him to remain overnight in barracks despite open spaces
  
• 
  Rule: In absence of contractual provision or legislation addressing issue, courts are empowered to exercise equitable jurisdiction in revising contracts or otherwise devising remedy where there is inequality in bargaining power
  
• 
  Holding: Dispute concerning dispossession of migrant farmworker should proceed in a summary judgment manner
  

• 
  Contracts should be regulated when parties have unequal bargaining power
  
• 
  Freedom of contract: parties should be free to make whatever arrangements suit their purposes
  
• 
  Contracts should be regulated to ensure they comply with minimum standards compatible with legal framework of free and democratic society
  

• 
  Majority rule: landlord has duty to deliver actual possession at beginning of leasehold and failure to do so is breach of lease; entitles tenant to terminate and recover damages, or affirm, withhold rent, and recover damages
  
• 
  Minority rule: landlord only has duty to deliver right of possession; tenants responsibility to evict holdover tenant and legally obligated to pay even while not in possession; only remedy is against holdover tenant and not landlord
  

• 
  If property is mortgaged and foreclosed on, lease or mortgage takes precedent based on whichever was established first
  
• 
  In absence of statute to contrary, tenant’s lease ends immediately in foreclosure
  
• 
  If landlord owns property subject to life estate, tenant’s lease ends immediately when landlord dies
  

• 
  When the lease is silent about assignment or sublease: A tenant can transfer her leasehold by assignment or sublease; promotes alienability
  
  • 
    Assignment conveys ALL the tenant’s remaining property interests, whereas a sublease retains some future interests. Main difference in practice is that an assignment has any covenants run with it, whereas a sublease does not have covenants run with the land and landlord cannot sue to enforce it unless the subtenant expressly promises to follow them, such as paying rent to the landlord. Landlord can sue original tenant.
    
• 
  When the lease prohibits assignment or sublease: restraints on alienation of leaseholds (“no subletting” or “no assignment”) likely to be upheld in courts; protects landlord from being forced to accept less creditworthy substitute tenant
  
• 
  When lease requires landlord’s consent: modern trend is to focus on intent of parties. Uniform Residential Landlord and Tenant Act (URLTA) imposes obligation of good faith in performance of all residential landlord-tenant leaseholds
  

• 
  Facts: Hangar space leased at San Jose airport, assignable subject to landlord’s consent. Landlord refused consent of assignment without potential lessee consenting to increased rent and other unfavorable terms.
  
• 
  Rule: where a lease provides for assignment only with the prior consent of the lessor, such consent may be withheld only where the lessor has a commercially reasonable objection to the assignment
  
• 
  Rule: Factors the landlord can reasonably consider are (1) financial responsibility of the proposed assignee, (2) suitability of the use for the particular property, (3) legality of the proposed use, (4) need for alteration of the premises, and (5) nature of the occupancy.
  
• 
  Holding: Adopts minority rule supported by Restatement (Second)
  
• 
  Dissent: contributes to proliferation of unnecessary litigation
  

• 
  Facts: Tenant allows unauthorized person to occupy apartment without landlord’s consent and Board refuses to evict due to implicit lease provision for landlord to not withhold consent unreasonably.
  
• 
  Rule: lease provision requiring the landlord’s consent to an assignment or sublease permits the landlord to refuse arbitrarily or unreasonably
  
• 
  Holding: Adopts majority rule; should not impose on residential landlords a reasonableness requirement they have not agreed to
  

• 
  Landlord entitled to evict tenant for material breach
  
• 
  Tenant with term of years cannot be evicted absent material breach
  
• 
  Landlord has no obligation to renew a leasehold
  
• 
  Entitled to end periodic tenancies by giving requisite notice
  

• 
  Federal and state antidiscrimination statutes prohibit landlords from failing to renew on discriminatory grounds
  
• 
  Tenants in rent controlled units are protected from eviction absent just cause
  
• 
  States/localities may regulate eviction for purposes of converting apartment units into condominiums
  
• 
  Federal law protects occupants from eviction if landlord acts in retaliation for asserting right to habitable premises
  

• 
  Possession and back rent
  
• 
  Holdover tenant and renewal of the tenancy: if a holdover tenant continues to pay tent then most states say the new tenancy is a periodic tenant based on the rent payment (e.g. acceptance of one month’s rent establishes “month-to-month” tenancy); landlord also free to sue for possession
  
• 
  Self-help: almost all states hold landlord may not use self-help
  

• 
  Accept tenant’s surrender: landlord agrees the tenant will not be legally obligated to pay the future rent
  

• 
  Landlord can still sue for back rent owed
  
• 
  Landlord may also sue for damages based on the breach of the lease (agreed upon rental price – fair market price)
  

• 
  Re-let on the tenant’s account: refuse surrender and, after notice to tenant, seek new and re-let the apartment on the tenant’s account.
  

• 
  Landlord may sue the for the difference between the old rental price and the new rent if the new rent is lower than original (new rent must be reasonable)
  

• 
  Most states require LL to mitigate damages: landlord can no longer do nothing and wait until the end of the lease term to sue for back rent
  

• 
  Facts: Defendant paid first month’s rent and security but then decided to abandon lease due to changed circumstances. Defendant wrote letter that was not answered by landlord. Third party sought rental, but was told it was already rented to defendant. Landlord then sues defendant prior to re-letting apartment.
  
• 
  Rule: Landlord has a duty to mitigate damages where he seeks to recover rents due from defaulting tenant
  
• 
  Holding: Reversed and remanded
  

• 
  Some courts enforce on grounds parties voluntarily agreed to them, but will not enforce if clause constitutes a “penalty” or amount owed is “unconscionable” (must constitute reasonable estimate of actual damages likely to be suffered by landlord)
  

• 
  Claims by landlord against tenant seeking (a) back rent, (b) possession, (c) damages
  
• 
  Tenant may respond by (a) denying breach, (b) raising defenses, or (c) counterclaiming for damages, abatement (reduction in rent), or injunctive relief
  

• 
  Partial eviction constitutes breach of lease and allows tenant to move out without liability for rent
  
• 
  If tenant chooses to remain following partial eviction
  

• 
  Traditional rule alleviates rent obligation completely
  
• 
  Trend is to abate rent to fair market value of remaining portion
  

• 
  Restatement (Third) abandons traditional requirement that tenant abandon premises before taking advantage of constructive eviction doctrine
  

• 
  Facts: Plaintiffs signed lease for loft space used as residence and music studio. Health spa equipment business on floor above creates massive water leaks and sand in plaintiff’s loft. Landlord commences construction work that sends dust into loft causing health issues and bricks/concrete falls on plaintiffs.
  
• 
  Rule: tenant may assert the defense of constructive eviction for the nonpayment of rent, even if he has abandoned only a portion of the demised premises due to the landlord’s acts
  
• 
  Holding: NY invents concept of “partial constructive eviction”; punitive damages sustained
  

• 
  Facts: Plaintiffs warranty of quiet enjoyment violated by nearby premises leased by landlord to bar/cocktail lounge.
  
• 
  Rule: When a landlord permits conduct of third persons that substantially impairs the right of quiet enjoyment of other tenants, and disturbing condition is natural and probable consequence of permitted conduct, it is a constructive eviction
  
• 
  Holding: Affirmed
  

• 
  Before 1970s, courts held landlords had no implied duty to repair rented premises or implied representations that apartment was in habitable condition; also held obligations of landlord and tenant were independent and not contingent on other party’s performance (obligation to pay rent enforceable even if landlord in breach of covenant to repair)
  
• 
  Modern trend repudiates lack of duty to repair and maintain and independent covenants rule
  

• 
  Facts: Appellants defaulted on rent but alleged numerous violations of housing regulations as an equitable defense
  
• 
  Rule: leases of urban dwelling units contain an implied warranty of habitability, and a breach of this warranty gives rise to the usual remedies for breach of contract
  
• 
  Holding: Appellants entitled to equitable defense
  

• 
  Many courts hold that the implied warranty is not violated until the landlord has been notified of the problem and had a reasonable opportunity to fix it,
  

• 
  Rescission or right to move out before the end of the lease term
  
• 
  Rent withholding: right of tenant to stop paying rent and remain in premises
  
• 
  Rent abatement: most states reduce the rent by a percentage that reflects the seriousness of the violation and the amount of discomfort experienced by the tenant.
  
• 
  Repair and deduct: tenant may be able to pay for the needed repairs and then deduct the cost of the repairs from the rent paid
  
• 
  Injunctive relief or specific performance
  
• 
  Administrative remedies: procedures for enforcement by local housing inspectors
  
• 
  Criminal penalties
  
• 
  Compensatory damages
  

C. RETALIATORY EVICTION

• 
  Facts: Tenants formed tenant’s association. Meeting between association representatives and management becomes violent. When tenant’s refused to sign new park rules, all families who participated in violent meeting evicted.
  
• 
  Rule: Tenants may organize and join a tenant’s association and may participate in activities designed to legitimately coerce a landlord into taking action to improve living conditions without fear of retaliation
  
• 
  Rule: Engaging in physical threats or violence is not a legitimate method of coercion
  
• 
  Rule: Factors defeating defense of retaliatory eviction: (1) decision was reasonable exercise of business judgment, (2) landlord in good faith desires to make a different use of the leased property, (3) landlord lacks the financial ability to repair the leased property, (4) landlord was unaware of the tenant’s protected activities, (5) landlord did not act at first opportunity after learning of conduct, (6) landlord did not act in discriminatory fashion
  
• 
  Holding: Tenants who did not actually participate in physical altercation (although present) entitled to defense of retaliatory eviction
  

• 
  Facts: Plaintiff employed as coal miner and resides in lot allegedly owned by mining company. Plaintiff eventually evicted for failure to pay rent, but alleged retaliatory eviction based on participation in union activity and strike.
  
• 
  Rule: retaliatory eviction defense must relate to the tenant’s exercise of rights incidental to the tenancy
  
• 
  Holding: Plaintiff not entitled to retaliatory eviction defense
  

• 
  Facts: Landlord brings lawsuit against plaintiff seeking to end month-to-month tenancy after she successfully defends against eviction proceedings on breach of warranty of habitability
  
• 
  Rule: Landlord’s right to discontinue rental of all units in no way justifies partial closing designed to intimidate remaining tenants
  
• 
  Holding: Court held tenant could successfully raise defense of retaliatory eviction
  
• 
  Dissent: Landlord must be able to exercise discretion with respect to property and ruling will discourage business investment for rental purposes
  

• 
  Some states apply doctrine to landlord’s refusal to renew
  
• 
  Some states prohibit retaliatory eviction of month-to-month tenants, but allow landlords to refuse renewal of term-of-years or fixed term leases
  
• 
  Some stats specify fixed time where retaliatory eviction is prohibited