F. Tenant Obligations and Landlord Remedies

F. Tenant Obligations and Landlord Remedies

1. Duty to Pay Rent -- Greenfield v. Kolea

a. Common Law Rule

i. absolute duty to pay rent

a) in the absence of a lease provision to the contrary, a tenant is not relieved from the obligation to pay rent despite the total destruction of the leased premises

ii. Two Exceptions

a) when only a portion of the bldg is leased, total destruction of the building relieves the tenant of the obligation to pay rent -- bargained for use of the bldg and not the land underneath

b) impossibility of performance

iii. Justification?

a) lease seen as a conveyance -- therefore even if the bldg was destroyed the land is still there and therefore rent still has to be paid

b. Modern Trend?

i. duty to pay rent is now dependant upon performance of the landlord's obligations if the premises are residential. If the LL does not preform, the tenant can terminate the lease and move out, withhold rent, or receive a rent abatement

ii. lease now seen as a contract with mutual obligations by the lessor and lessee -- dependant convenants

iii. bldg was part of what was conveyed and the LL is no longer providing what was bargained for

c. Allocating loss among innocent parties?

i. who can most effectively bear the loss -- least cost avoider?

a) who has control of the risk creating activity?

ii) buy insurance? LL?

iii) spread the risk amog all of the tenants? Does this work with only one tenant?

b) Can LL best acheive these results?

ii) but he doesn't have control over the risk creating activity

c) Not clear who can best bear the risk?

d. Inalienable right?

i. NO ---- parties can allocate the risk among themselves through the contract

ii. only reason the court became involved is b/c the parties did not address the issue -- it's a gap filler

2. The tenant who defaults ---- the tenant in possession (Berg v. Wiley)

a. Issue

i. Can a LL resort to self-help to repossess the premises

b. Old Rule

i. LL can use self-help to retake leased premises from a tenant in possession without incurring liability for wrongful eviction provided two condiions are met:

a) the landlord is legally entitled to possession, such as where a tenant holds over after the lese term or where a tenant breaches the lease containing a reentry clause and

b) the landlord's means of reentry are peaceable

c. Modern trend

i. landlord cannot use self-help to regain possession -- must resort to the judicial process

ii. where quicker action is necessary to prevent damage to the property, landlord can get a TRO

d. Reasoning for modern trend?

i. prevent violence

ii. summary proceedings are available

a) but how long do these actually take?

e. Positive things about rule of self-help?

i. lower transaction costs

ii. summary help not really a quick process

iii. stops the tenant from wasting the property

f. This right is inalienable -- tenant cannot bargain it away

i. was in the contract and the court still did not allow it

g. Efficiency consequences of making a rule an inalienable entitlement?

i. LL will raise rent to account for the chance that he will have to go to court

a) same result if it were a gap filler and he can't get it into the contract

ii. efficient result may not occur depending on who values the entitlement the most

a) person who wants the entitlement the most might not get it ---

b) but you are not taking into account the externality of the cost of preventing violence --- but there are also costs to society of forcing people to court

3. The tenant who has abandoned possession (Sommer v. Kridel)

a. Issue

i. Does a landlord seeking damages from a defaulting tenant have a duty to mitigate damages by making reasonable efforts to re-let an apartment wrongfully vacated by the tenant?

b. Common Law Rule

i. a landlord is under no such duty to mitigate damages

c. New Rule

i. landlord has a duty to make a reasonable effort to mitigate damages --- Inalienable right

d. Justification for new rule?

i. contract law

ii. basic fairness and equity -- what does this mean?

iii. some efficiency justification

e. Landlord's responsibility under this rule?

i. must treat the apartment as he would treat a normal unlet apartment

f. Is the efficient result going to occur under the new rule?

i. arguments for:

a) LL in better position to find a new tenant -- lower transaction costs / better information / advertisements / connections

ii. Arguments against:

a) inefficient result would probably not occur under common law b/c the tenant would assign the lease -- LL can't withhold consent unreasonably

b) under new rule you don't have two people looking to relet the property

iii. Thus it is not clear which rule will lead to the efficient result --- It is merely a question of who we want to place the burden on ------ but what about fairness?

g. Unfairness to the Landlord

i. Problem of lost volume?

a) court assumes that all real estate is unique and therefore discards this problem

ii. Landlord is not always in the better position (does he have more money?)

iii. does this apply to commercial leases as well?

iv. tenant should not by his own wrongdoing impose a duty on the landlord

h. Issues?

i. what if the LL relets but a less than the previous tenant paid? Or rents the apartment for more than the previous rent?

ii. What is the consequences of failure to relet an apartment?

a) can the LL recover no rent?

4. Additional remedies and security devices

a. Suing for back rent and damages

b. Security deposits

c. Rent acceleration

d. Advance rent