II.

Adverse Possession
THINK ABOUT POLICY: What does court want to discourage/encourage? Howard v. Kunto: Summer occupancy for more than 10 yrs by APer and his predecessors, together w/continued existence of improvements, constitute uninterrupted possession. It isnt necessary that occupant be actually on premises continually. Van Valkenburgh v. Lutz: Under the statute, to acquire by AP one must clearly and convincingly show that for at least 15 yrs there has been actual occupation of land (enclosing land or cultivating/improving) under claim of title. Actual possession a. Real, physical possession of the land or some part of it. b. Making use of the land as (1) the true owner would, or (2) comports with the normal use of the land as recognized by the community; acts necessary to meet this requirement vary from parcel to parcel, depending on the nature, character, and location of land. Minority: When AP is on claim of right, claimant must cultivate, improve, or substantially enclose proper. Claimant who holds CoT may also meet actual possession by cutting firewood/timber for fences. Open & notorious possession a. Visible/known to the public; must be so obvious that reasonable owner who diligently inspects land will notice APers claim of title. Residing on land, building fences/improvements, cultivating crops, maybe no trespassing signs = sufficient, but where land is wild, unimproved ie forests, prairies, wetlands, or deserts is difficult bc acts of possession are minor/infrequent..so most cts accept lower degree of openness and notoriety. b. Put the owner on notice (though he need not actually know) that someone is occupying his land under claim of right (constructive notice). Exclusive possession possessor shows that no one has interfered with the claim, especially the true owner. Absolute exclusivity isnt required, just as exclusive as an owners normal use. TO must retake possession to interrupt exclusivity: APer regularly cuts timber on Greenacre (uninhabited 100acre forest owned by O).If O merely visits on occasion, no interruption. O must retake possession by using in manner suited to its condition eg removing firewood, cutting Xmas tree.Also, 3d parties dont destroy excl. APer must exclude 3d parties only to extent a reasonable owner would bc it would be difficult/expensive for APer to absolutely bar all 3d parties fromt respassing on large tract of unimproved land. And many owners allow 3d parties to pick berries, dig clams, hung, hike, fish, etc. Continuous and uninterrupted possession - measured by location, nature and character of land; APers acts only as continuous or as sporadic as reasonable owners. If TO interrupts APers actions, and reenters and retakes in open and notorious manner, then continuity ends Exception: TACKING See below Adverse/Hostile (APers state of mind) a. Requires AP under claim of right Claim of Right/Claim of Title- The APers actions must look like they are claims of ownership of someone elses land, and under a claim of right - meaning the APer is occupying the land w/o permission of owner. Three Views: 1. State of mind is irrelevant (objective test): Actions count more than words. (Majority View) Under obj test, claim of right/title is fiction; possessor neednt prove rightful title claim or any actual intent to claim title at all.
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Only test: Did TO authorize possession? If not, and other criteria satisfied, then AP is established. Rationale: mental state is guesswork and sometimes impossible; objective test provides bright line standards. 2. Good faith claim: Potential APer must have a good faith belief that he has title, no AP for squatters. Rationale: solving minor title defects and protecting title of intended owner (Minority) 3. Aggressive trespasser: Aper must know doesnt actually own land & subj intends to take title. Rewards intentional wrongdoers and gives no protection to good faith occupants. *Helps w/difficult boundary disputes. (few courts) Boundary Line Disputes: Ex: Most jx apply obj test, so he owns land. However, some jx apply Maine doctrine = to prove hostility in boundary line dispute, Aper must intend to claim title to all land up to specific line (fence, hedge, road) whether or not its true boundary. Mannillo v. Gorski- When the encroachment of an adjoining owner is of a small area, and the fact of an intrusion is not clearly and self-evidently apparent to the naked eye but requires an on-site survey for certain disclosure, the encroachment is NOT open and notorious. Howard v. Kunto1. Where the transfer is not voluntary, no privity. Privity required bc title by AP is viewed as something to be gained by meritorious conduct, and an involuntary transfer is not regarded as meritorious.

ADVERSE POSSESSOR: A. Requirements:

Adverse possession is possession of property that is (1) actual entry giving exclusive possession, (2) open and notorious, (3) adverse (hostile) to the true owner, (4) continuous for the statutory period. Adverse possession applies to real and personal property. 1. Actual entry giving exclusive possession a) Objective: Actual entry is possession that the community could reasonably regard the adverse possessor as the owner. (1) NY (minority) requires that actual entry absent a deed required the property be protected by a substantial enclosure or usually cultivated or improved. E.g. In Van Valkenburg v. Lutz, the court held that the Lutzs had not acquired the property through AP because the Lutzs chicken coops and junk were not improvements. b) Exclusive: An adverse possessor with exclusive possession can not share the property with the owner or the public generally. The possession can be shared with other adverse possessors. c) Starts the clock: The date of actual entry starts the statute of limitations. d) Sets the scope of property acquired through AP: (1) Generally, an adverse possessor will only gain an interest in the property that is actually occupied. (2) Exception for Color of Title: Actual possession under color of title is constructive possession that gives an adverse possessor rights to the property that is described in the defective deed. (a) Color of title is a claim founded on a written document (e.g. a deed or a will) that is defective and invalid. (b) Constructive possession covers the property that the writing describes so long as the lots are contiguous (adjacent) and the lots belong to the same owner. If theres no color of title,
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theres no constructive possession. If one occupies small portion of land and has a deed then theyre deemed to be in constructive possession of the whole. Lappage: 1. This occurs when two deeds describe an area that overlaps on both tracts of land. 2. Who gets the lappage depends on possession a. If neither is in actual possession of the lappage: law gives possession to the person who has better title (an application of first in time) b. Actual possession of any part of the lappage by one party and no actual possession by the other party: Actual possessor gets the entire disputed portion. c. When both are in actual possession of some part of the lappage, the party with better title gets all of the lappage (by constructive possession) except that portion actually possessed by the other party; the other party gets it. (c) Superior to true owner: If the partial (i.e. actual) possession meets the requirements for adverse possession, the constructive possession is superior to the true owners claim. (d) Superior to actual possession: (e) Limitation: The actual possession must be reasonably proportionate to the constructive possession. 2. Open & Notorious a) The possession must be open, notorious, and in a visible manner that reasonably informs an attentive landowner about the presence of the adverse possessor. 3. Adverse & under a claim of right a) Adversity: The adversity requirement differs among jurisdictions but generally for the possession to be adverse or hostile it must be without the owners consent and not subordinate to the owner. b) Under a claim of right: (1) Objective Restatement test & general rule (Majority View): Possession is adverse if the actions look to the community as claims of ownership. The intent of the possessor, whether good faith (claim of title or mistake) or bad faith (trespassing or squatting), is not relevant. (2) Subjective test (Minority View): Dont need hostile trespasser test if you enter under color of title: The possessor must have a good faith belief that the possessor holds title. (3) Aggressive Trespasser standard: A few states require that the adverse possessor know that the property is not theirs and intends to take it, i.e. adverse possession must be intentional. Dont need hostile trespasser test if you enter under color of title Howard v. Kunto 4. Continuous for statutory period: a) Scope of Continuity: Possession is continuous if the possessor uses the property the way an average owner would use the property under the circumstances. The key is that property be used in a customary manner. So, if farmer farms someone elses field for enough years, she may get title by AP even though never lived on land; same w/summer cabins. E.g. Howard v. Kunto: Summer occupancy of a beach house considered sufficiently continuous. b) Abandonment breaks continuity: If the possessor intentionally relinquishes possession for any amount of time, the continuity is broken.
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c) Tacking by adverse possessor: Tacking of a predecessors adverse possession is allowed if there is a reasonable connection between subsequent occupants. In order to tack there must be privity of estate b/w two APers. In most instances, this requires a document giving the successor not only physical possession but also right to physical possession. Some cts permit parol transfers (transfers where all the following APer gets is physical possession Howard v. Kunto (1) Exception: Tacking is not allowed if A2 kicks out A1 by force or if A1 abandons the property without transferring the claim to A2. d) Disability Rule: If, upon actual entry by the adverse possessor, the owner is a minor, of unsound mind, or imprisoned, then the owner may bring suit at the end of the statutory period or within 10 years of the removal of the disability, whichever is longer. e) Sufficiency of an interruption: Possession is not continuous if the true owner reenters the land openly and notoriously for the purpose of regaining possession. Generally, acts of possession are viewed objectively, i.e. the statute of limitations stops when the owners acts are ordinary acts of ownership that would give notice to a reasonable person. ANOTHER TAKE ON TACKING: 2. Requires "privity of estate": mutuality of interest/ interest derived from, or dependent upon, interest of previous owner/occupier; 3d parties not party to the conventional transfer cannot invade and have no interest in the privity. a. intestate succession (ancestor-heir) b. valid will (devisor-devisee) c. title by deed (grantor-grantee) d. Any other agmt, oral/written, where it can be inferred that prior possessor intended to transfer title to subsequent possessor. 3. EXCEPTION: Trespassers may not tack the prior possession by other trespassers. (Trespasser SP ousts Trespasser PP: 4. Ousting, tacking, and the SOL: When an APer is ousted by another APer, and later the first APer ousts the subsequent a. Majority rule: SOL is tolled (stopped) while A is out of actual possession, since he did not abandon the property b. Minority rule: SOL begins ticking and does not stop 5. Property tax payments (minority rule) a) A minority of states, mostly western, require an adverse possessor also pay the property taxes to sustain an adverse possession claim. 6. Disabilities-only matters when time accrues or when time/possession begins. SOL doesnt run if APer begins when TO is insane, or disabled and not unable to know of APer possession. Cant tack disabilities. 1. Definition: A legally recognized status which might excuse a landowner for failing to bring an action for recovery of land within the time set by the SOL. 2. Disabilities recognized a. Majority: (1) infancy/minority (2) mental incompetence/insanity b. Minority: (1) imprisonment (2) military service
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3. Timing of the disability is CRITICAL: Some states toll (stop stat. time period) until disability ends; others say entire stat. period begins only after disability ends. Most common: allow suit for limited time after disability ends. Many states say disability extends only if it already existed when AP began. 7. Cotenant as Owner: In order to AP, cotenant in possession must unequivocally claim sole ownership of land by 2) physically ousting cotentants or 2) taking other steps that clearly notify cotenants of claim. Absent physical ouster, many jx insist on actual notice to cotenants, while others imply require open and notorious actions that demonstrate hositility. 8. LL as Owner: Generally cant AP bc of permission of LL to be there, however SOL will run if T explicitly repudiates (rejects) status as T and claims title to land. 9. Future Interest Holder as Owner: Future interest holding is immune from AP until interest holder is entitled to immediate possession of land. Until that point, interest holder doesnt have right of action against APer. Ex: L holds life estate in Brownacre, followed by an indefeasibly vested remainder in R. APer occupies Brown in 2004 and remains through 2014. Assuming that 1)jx uses 10yr SOL and 2)APer meets AP requirements, A acquires only Ls life estate in Brown in 2014. The stat period for APer against Rs remainder doesnt begin running until R is entitled to possession (when L dies) If L dies in 2016, ending life estate, R now holds FSA. If A still possesses when L dies, stat. period for AP against Rs title begins. III. Balance of the Hardships Where expense and difficulty of removal would be great compared to neighbors inconvenience in continuing encroachment, or its removal would result in little benefit to neighbor. However, if encroachment was in good faith, court should weigh the circumstances so that it shall not act oppressively. Where Ds encroachment is unintentional/slight, Ps use not affected and damage small and fairly compensable, while cost of removal is so great causing grave hardship or make its removal unconscionable, mandatory injunction may properly be denied and plaintiff relegated to compensation in damages. Manillo: Equity may require true owner to convey the disputed land to the APer upon payment of its fair market value). This is to do w/ whether the likelihood of AP harm is outweighed by the likelihood of harm to the APer if injunction were granted; IV. Equitable Estoppel: Must claim you relied in detriment by act or omission. However, if Aper loses house, land, etc. in fire or something then they no longer have detriment and probably couldnt rebuild on land theyre trying to adversely possess. So, in Manillo, APer could argue that Aper relied on true owners lack of objection and so TO should be estopped. Measures parties attachments to land, people might have close personal tie to land and absentee owner might never use it. Justice is served by vesting title in A. Laches Successful invocation of laches requires that a party with the knowledge of facts giving rise to its right, unreasonably delays asserting them for an excessive period of time and the other party suffers legal detriment.

B. Scope of Land Acquired through Adverse Possession

1. Actual possession & without color of title: An adverse possessor without color of title can only take title in land actually occupied or controlled. 2. Constructive possession (with color of title): An adverse possessor receives title in all the land described in the defective deed so long as:
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a) the possession is in good faith, b) the lots are contiguous & owned by same owner, and c) the actual and constructive possession are not disproportionate.

C. Nature of Title Acquired by Successful Adverse Possession

1. 2. Date of Title: Adverse possessor receives a new title that relates back to date of entry. Title is non-transferable until a quiet title action is filed against the former owner.

3. Type of Title acquired: The adverse possessor acquires the same kind of title held by the present possessor at the time of entry. E.g. Where A enters against an owner with fsa: O fsa SoL A enters O conveys B-life rem. to C. A acquires fsa but where A enters against present possessor with less than fsa: O fsa and conveys B-life, rem to C. A enters SofLim A acquires life estate per autre vie (for the life of B), rem. to C 4. Improvements: a) Common law: Buildings and fixtures added to land where the adverse possessor is kicked off are the property of the true owner even if the adverse possession was in good faith.

V. Co-ownership A. Common law concurrent interests

1. Tenancy in common a) Tenants in common have unity of possession. (1) Tenants in common have separate but undivided interest in the property. (2) A tenant in common can not prohibit the possession by another tenant in common. b) It is presumed that shares are equal but interest and title can be different. c) Interest is alienable, devisable, and descendable. d) There is no survivorship right. 2. Joint tenancy a) Definition: Joint tenants have separate and undivided interests with survivorship rights. b) Creation: (1) Joint tenancy must have unities of time, title; interest, and possession. [Peterson says the unities are dumb.] (a) Time: The interests must be acquired or vested at the same time. (b) Title: The interests must be created in the same instrument. 1. Some jurisdictions require a writing so AP will not create a JT. (c) Interest: The interests must be identical as to fractional share and duration.
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(d) Possession: Joint tenants have right to possession. (2) Modern general rule: (a) An owner can create a joint tenancy by a conveyance to the owner and another person (including a will). (b) Equal fractional share still generally required. 1. Sometimes a court partitions according to contribution. (c) Tenancy in common presumed to be created unless the conveyance expressly and unequivocally declares an intent to create a joint tenancy. Peterson recommends: To A and B as joint tenants with the right of survivorship and not as tenants in common. c) Destruction/Severance of a joint tenancy: (1) Unilateral: (a) The universal rule is a joint tenant can unilaterally and without notice destroy the joint tenancy by converting it to a tenancy in common. Riddle v. Harman (2) by Mortgage: (A split of authority) (a) Lien theory: 1. A joint tenant who mortgages his interest merely puts a lien on that interest that does not sever the unity of title The joint tenancy survives the mortgage. 2. Surviving tenant becomes sole owner absent the mortgage. 3. E.g. Harms v. Sprague (b) Title theory: 1. The mortgaging of one interest transfers title to the mortgager and thus, by destroys unity of title. The mortgage severs the joint tenancy 2. The surviving tenant is tenant in common with the holder of the mortgage. (3) Transfer of lesser estate: Example: Where A & B are joint tenants and A leases his interest to C. (a) No severance (CA): 1. A has a reversion as a joint tenant. When the lease expires, A and B are joint tenants. 2. If A dies before the lease expires, Bs survivorship rights terminate As interest and Cs lease dies. (b) Temporary Severance via Conditional Severance: 1. Joint tenancy is destroyed but is revived on the condition that the lease expires before A dies. 2. If A or B dies before the lease expires, no joint tenancy and C lease is preserved by As heirs. (c) Temporary severance via Partial Severance: 1. Joint tenancy is destroyed but will revive when the lease ends. 2. If A or B dies before the lease expires, the lease is preserved by the surviving tenant. (d) Permanent severance: (common law) 1. Joint tenancy is permanently severed because the four unities have been destroyed. (i) No unity of possession since A has a future possessory interest and B has a present possessory interest.
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(ii) No unity of title since A has a remainder and B has a fee simple. (4) Simultaneous Death: The Universal Simultaneous Death Act 3 distributes interest along fractional shares when joint tenants die simultaneously. (5) Murder: A joint tenant who murders another joint tenant severs the joint tenancy and converts it into a tenancy in common. Uniform Probate Code 2-803(c)(2)(1990) 3. Tenancy by the Entirety: a) In general: (1) Tenants by the entirety have a separate and undivided interest with an undefeatable survivorship right. (2) Tenancy by the entirety requires a fifth unity of marriage in addition to time, title, interest and possession. (3) The general rule is that creditors can not reach the property held in tenancy by the entirety. (a) Minority rule: Some states allow unilateral alienation. (4) Some jurisdictions and all states with community property have abolished the tenancy be the entirety. b) Creation: Common law & general rule: A TIE was presumed when spouses acquired property. c) Scope: (1) Common law: Only real property can be held in TIE. (2) Modern rule: Real and personal property can be held in TIE, with the possible exception on bank accounts. d) Destruction: (1) Unilateral severance is impossible. (2) Divorce terminates a TIE and the property is generally presumed to be a TIC. (a) Minority rule: Some state presumes a TIE is converted to a JT upon divorce. 4. Relations amount co-owners a) Partition Partition is an equitable proceeding in which the court divides (partition in kind) or sells the common property and divides the proceeds (partition in sale) among tenants. (1) Partition is available to tenants in common and joint tenants, but not available for tenants by entirety. (2) Partition in kind preferred. A court should partition in sale only when: (a) the physical attributes of the land make partition in kind impractical or inequitable; or (b) the interest of the owners would be better promoted by the sale. (3) An agreement not to partition is enforceable so long as it is for a reasonable purpose and for a reasonable length of time. Otherwise, the court will refuse enforcement on the grounds that it is an unreasonable restraint on alienation. b) No Rent due absent an ouster (1) General rule: A co-tenant in possession is not liable to co-tenants for rent.
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(2)

Exception for ouster: Rent may be due if the co-tenant in possession (a) denies co-tenants the right to enter and (b) the co-tenant out of possession demands payment or attempts to enter. E.g. Spiller, a demand to vacate or pay rent is not sufficient. (3) Minority rule: A co-tenant in exclusive possession is required to pay rent to co-tenants. c) No fiduciary duty (1) General rule: Co-tenants do not have a formal fiduciary duty to other tenants. (2) Exceptions: (a) Confidential relations: A co-tenants who are in confidential relations with each other will have a fiduciary duty to the other. (b) Family: Co-tenants who are kindred or who inherited under the same will have fiduciary duties to each other. This makes it difficult for adverse possession requirement of holding adversely. d) 3rd party rent owed to other co-tenants. (1) A co-tenant who leases his interest to a 3rd party can collect the rent without sharing with the other co-tenants. (2) The remaining co-tenants options are: (a) an injunction; (b) damages 1. the share of fair rental value from the 3rd party if ousted, or 2. partition among co-tenants); or (c) affirmation of the lease The co-tenant gets the fractional share of the rent collected, i.e. if co-tenant has a 50% interest and the rent is $800, then the tenant gets $ 400. e) Right of contribution? (1) Yes, for necessary charges: (a) General rule: Since co-tenants are jointly responsible for the taxes, mortgages, etc., a cotenant who pays more than share of taxes, mortgage payments, and other necessary charges has a right of contribution from the other co-tenants. (b) Exception: There is no right to contribution to a tenant in sole possession where the possession value equals or exceeds the amount paid. (2) No, for repairs: (a) Absent a separate contractual agreement, a co-tenant has no right of contribution for repair costs. (b) Exception: A co-tenant can receive a credit for the repair costs in a partition. (c) Rationale: Courts say that repairs are beyond the courts ability to determine. No, for improvements (a) A co-tenant has no affirmative right to contribution or credit in a partition for improvement costs. (b) Caveat: An improvers has right to added value of market price or rental value. A court will protect the improvers interest if possible without damaged the other tenants. 1. If partition in kind, the improvements will be on the improvers lot. 2. If partition in sale, improver is given any increase in market value the improvement cause.
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(3)

3. Owelty: sum of $ given after exchange of land, having differing values orafter unequal partition 4. In an accounting, improver receives any benefit of increase in value that the improvements resulted in. (4) Off-set rule: Even where there is no right to contribution, when one tenant wants repair or improvement costs in a partition, the court will off set value of reasonable rent from the costs. f) Adverse possession A co-tenant who wishes to possess adversely must do so unequivocally and notoriously so that the other co-tenants have actual notice.

VI. Landlord-Tenant Law A. Leasehold Estates:

Leaseholds are distinguished from nonpossessory interests ie buying ticket to see play at theater, renting room at Os hotel, a farm worker, living in barracks provided by O as part of his compensation or D holds perpetual right to walk across land. All have mere right to use Os land for limited purpose subject to Os control; not right of exclusive possession necessary for leasehold estates. To determine differences: Whether party occupies specific, distinct area; how much control party has over area; whether parties used lease-like terms and provisions in defining relationship; and duration of occupancy. 1. Term of Years a) Definition: A leasehold estate is an estate that lasts for some period of time fixed at the outset or computable by a formula that fixes calendar dates for the start and finish of the lease. No notice is required for termination. b) Common law: A lease could be for an unlimited number of years. c) Modern law: Some jurisdictions statutorily limit the leasehold duration. E.g. In California, agricultural leases are limited to 51 years and urban leases to 99 years. d) Term of Years Determinable: L leases Green to T for 25 yrs, so long as Green is used as farm This creates a type of defeasible estate, lease term is fixed, even if lease may end sooner due to uncertain event. 2. Periodic tenancy (like evergreen clause) a) Definition: A periodic tenancy is a lease of a fixed duration that will continue for succeeding periods until notice of termination by LL or T. b) Creation: A period tenancy can be created by: (1) express agreement or (2) agreement on the computation of rent. (Annual rent payable month might be periodic or a year lease) c) Termination:
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Common law: oral or written (a) A year-to-year tenancy required six months notification. (b) For shorter tenancies, notification is the length of the tenancy but not to exceed 6 months. (c) Terminations must be on the final day of the lease. (2) Modern statutory changes: requires written notice to other party (a) Reduced for a year to year lease (b) A month-to-month tenancy can terminate at any time following the 30 day notice. (3) Death of parties does not terminate lease. (4) Complexity arise when parties fail to reach complete agmt: T leases Green from L for $800/mo in rent but w/o agmt about term. American cts usually construe as periodic, monthto-month tenancy (rather than TAW) based on presumed intent of parties. But if T leases Green for $9600/year, $800/mo w/o agreed term. date, then most cts see as creating yr-to-yr periodic tenancy, although some would find month-month, if its residential prop (5) May arise by implication based on parties conduct, even w/o express agmt. If L lets T move in to her house w/o agmt, and T later gives L $700 for rent which L accepts and cashes, and this pattern continues, this creates a periodic, mo2mo tenancy in T. 3. Tenancy at will a) Def: Tenancy at will has no fixed period and both the L and T can terminate at will or upon the death of either party. Usually occurs w/o agmt on duration or rent payment; when T enters possession 1) under unenforceable lease or 2) before lease has been negotiated. Suppose L and T agree for T to occupy premises for as long as she wants Tenancy at will or life estate? intention of parties. b) Creation: (1) A tenancy at will can be expressly or implied be created. (a) For so land as the lessee shall please might create a TAW but courts are increasingly unwilling to create TAW. (b) Barter of services for the lease can create by implication a TAW. (2) Periodic tenancy preferred: Where a lease does not have a specified or fixed term, courts prefer periodic tenancy over a tenancy at will. Tenancy at will is rare. (3) TAW reciprocal: If the lease is at will of the leasee, then the LL also has right to terminate at will. c) Termination: (1) Notice: (a) Common law: Notice was not required to terminate a tenancy at will. Conduct by L or T showing intent to terminate would suffice eg abandonment, sale of prop, or death (b) Modern trend: Some states require notice for termination by statute, usually 30 days which converts at will into periodic tenancy. (2) Death terminates: (a) A tenancy at will terminates at the death of either party. (b) Parties can create a life estate determinable so that the tenant has the right to terminate but not the LL.

(1)

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Page 11/27

4. Tenancy in Sufferance: Holdovers a) Definition: A tenancy in sufferance exists when a tenant remains in possession after the termination of a lease. (also occurs where mortgagor retains possession after mortgage foreclosed, or vendor remains in possession after conveying title to vendee) b) At common law, length of new tenancy is defined by length of original tenancy. Today, maximum tenancy is one year, regardless of original. c) Problem: Split Jx when B leases Green From C for 1yr term, w/monthly rent and C holds over after year ends. C holds B to new tenancy: 1) Is it a periodic tenancy or term of years? 2) Is term or period one year or one month? Most Jx view Bs tenancy as periodic, some finding relevant period to be one year and other saying its 1 mo. Minority jx says that B has term of years tenancy, either for fixed 1 year term or 1 month. d) LLs decision to can hold T by conduct ie LL conduct inconsistent w/intent to treat holdover T as trespasser like demanding rent/accepting rent indicates intention to bind T to new tenancy. e) Remedy: A LL (or incoming tenant with the right to possession) can either evict and collect damages when new T cant occupy and cancels lease, or consent to new tenancy. (1) Eviction: The election of eviction is binding on the LL and T. (a) Common law: Damages include the fair rental value and any special damages. (b) Minority rule: Some state statutes allow double rent as damages (punitive?) (2) Consent: Consent to a holdover is binding on LL and T and creates a periodic tenancy measured by how the rent is computed and not to exceed one year. f. (a) Length depends on the way rent was calculated, 1. Maximum is one year because of the SOF. (b) Rent is usually the same as original lease, unless contract provides otherwise. 1. If a LL increases rent and tenant stays, the new rent is an implied offer of new lease and occupation is acceptance. 2. Notice to create periodic tenancy required.

* Deteriorating Housing: Affordable rentals in short supply in urban areas, LL had little market incentive to
maintain rental prop in habitable cond and T was unable to protect interests by negotiating acceptable lease. Traditional LL/T law imposed no repair duty on LL. Habitable housing: adequate heat, light and ventilation, secure windows/doors, working plumbing facilities, proper sanitation, proper maintenance, hot/cold water, no infestation of insects/vermin rodents, safe electrical wiring, watertight roof, minimum living standards. T may lack access to fix defects (whereas medieval T could fix fire in hut, modern T has no right of access to central heating system of 100 unit apt complex) Under Modern Lease: 1) LL obligated to maintain premises in habitable condition, 2) T has no obligation ot pay rent if structures crucial to lease are destroyed, 3) T may terminate lease and stop paying rent if LL materially breaches lease obligations, and 4) LL may be obligated to mitigate (alleviate) damages if T abandons premises. (because of dependent covenants) Distinction between Res &Comm: Not affected by LL-T IWH bc comm. T is able to protect its interests through bargaining processstill seen as conveyance governed by pro-LL prop rules. Some cts provide enhanced protection for small-scale comm. Ts, however. Selection of Tenants:
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Common law rule: LL can refuse to rent for any reason or none at all, except when due to race, gender, religiton, national origin, or certain other discriminatory reasons. So, LL can refuse to rent bc T is left handed or likes scary movies or for no reason at all, however Ls lack of good faith reason might suggest discriminatory motive. Fair Housing Act: bars discrim based on race/color, religion, sex, familial status, natl origin or handicap; only for dwellings. Doesnt prohibit marital status or sex orientation. Dwelling: most types of housing, except 1) single-family homes rented w/o RE broker/salesperson, and 2) owner-occupied building w/four or less units. a. Violations of Act if undertaken bc of covered discrimination: 1) refusing to rent/sell or to negotiate, 2)discriminating in terms, conditions, facilities, or services in rental, 3) falsely representing that prop isnt available for inspection, rent, and 4) publishing any advert that indicates any preference/limitation on prospective Ts. b. If discriminatory intent cant be shown: P can get prima facie case by showing discriminatory effect: Burden then shifts to D to prove legitimate, nondiscrim reason for conduct, such as reasonable business purpose. If reason is shown, burden shifts back to P to prove explanation is pretext (excuse) for discrim. i. ii. Disparate (unequal) Impact Approach: using statistical evidence: ie L rents to 75% white applicants, Ls conduct produces discriminatory effect based on race. Disparate Treatment Approach: P must show that 1)shes a member of protected class and D knew/suspected this, 2) she applied for/was qualified to rent dwelling, 3) D rejected app, and 4) dwelling remained available after.

c. discrimination against families with children d. discrimination based on handicap: blindness, mental dis, AIDS, paralysis, and alcoholism Civil Rights Act of 1866: a. Applies to all property w/o special exceptions for single-fam homes/owner-occupied prop. Narrower: only applies to race discrim, doesnt cover ads, only bars intentional discrim.

B. Lease
Privity of Estate v. Privity of Contract: Privity denotes voluntary transactional relationship b/w 2 or more people/entities. The 2 types of privity reflect the dual nature of a leaseas a contract and as a conveyance. a. Privity of Estate: A mutual or successive relationship to the same right in property, as between grantor and grantee or landlord and tenant. b. Privity of Contract: If lease contains promise by one to other (and leases almost always do). Neither are of much interest if case doesnt involve transfer to 3rd party. 1. What constitutes a lease? a) A lease grants exclusive possession for lawful purposes that are not inconsistent with the terms. b) Agreements might also create: (1) some other type of estates (e.g. a life estate determinable) or (2) a license, i.e. the personal right to use land for some specific purpose. c) The broader the possession, the more likely the possessor has a lease. d) Considerations include: (1) intent of parties, (2) number and degree of restriction on the use, (3) exclusivity of possession, (4) degree of control maintain by lessor, (5) presence or absence of incidental (accompanying) services.
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2. Is a lease a transfer of a property interest or a contract? a) A lease is both because it conveys possessory interest and promises. b) Leases are affected by both property and contract law.

C. Delivery of Possession
1. In general a) Landlord must deliver legal right to possession at the start of lease. (1) Superior title: Where a 3rd party holds superior title to the premises (or part of): (a) If tenant was unaware of existence of superior title, tenant can terminate lease prior to entry. (b) If tenant is aware of superior title and takes possession, tenant is presumed to waive objection. (c) If the 3rd party interferes with tenants possession of property, tenant can ??? b) After entry, tenant must protect themselves from trespassers. c) Tenant can not offset cost of ejecting trespassers from rent owed. 2. The English Rule (Maj Rule, remember to look at exam instr. To see if jx adopted any part.) a) The landlord must deliver actual possession and legal possession. (1) Implied covenant that premises will be vacant to new T (2) Actual possession required. Doesnt allow parties to alter implied promise to delivery actual possession. b) Rationale: (1) The bargain was for actual possession and not legal right to possession. (2) Landlord is in a better position to avoid problems and to take action to evict if necessary. (3) LL more likely to know whther old T intends to hold over; in better position to offer testimony; LL typically more sophisticated about eviction process and better able to bear costs involved. c) Tenants remedies: (1) Tenant can terminate lease and recover damages. (2) T can take affirm lease, take partial possession and receive a proportionate abatement of rent. (3) Tenant can sue/evict holdover tenant or trespasser. 3. American rule (minority) a) The landlord must deliver only legal possession but not actual possession. b) Rationale: (1) Accords with property law that leasehold is an interest in land that tenant is responsible for. (2) Tenant can evict trespasser on his own; T hasgreater incentive to sue (3) Landlords should not be held liable for the wrongs of another. (4) Landlord is not obligated to protect tenant from ouster by later trespassers. (5) Tenant should have inspected the premises Law is no aid to the sleepy. (6) Economic waste: LL might refuse to enter into new lease until prior T leaves, leaving LL with unoccupied rental if next T cant move in until next month or something. Facilitates full use of housing unites thereby reduces rent c) Tenant remedy is to sue holdover/trespasser for possession or damages (1) Landlord can also sue holdover if new tenant terminates lease.
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D. Assignments and Subleases

1. Assignment: Think, who has right to possession on last day of the term a) An assignment conveys the entire term leaving no interest or reversion in the original tenant. (1) A partial assignment transfers all the interest in only part of the land. Ie T transfers all of his rights to south half of prop. b) Tenant is still liable to landlord if T assigns c) Assignee is in privity of estate (but not privity of contract, which is just K label for parties who enter into K w/eachother) with the landlord, i.e. each can sue the other on the covenants in the lease. Privity of estate = Lessor has right to possession (reversion) once Lessees estate ends d) Assignor/assignee (B/C): Privity of K arises bw assignor B and assignee C, bc B-C assignment agmt is K; B or C will be liable to other if she breaches terms of agmt e) Lessor/lessee (A/B): Prior privity of K bw lessor A and lessee B continues, unaffected by assignment bc A-B lease still exists; A or B will be liable to the other if lease is breached. Ex: B is still obligated to pay rent to A. Change occurs in priv of est, however: Assignment dissolbes prior priv of est bw A/B, b B transferred entire interest. f) Lessor/assignee (A/C): Assignmt creates new priv of est bw lessor A and assignee C, bc C obtained Bs entire interest. C was substituted into Bs place as holder of Bs nonfreehold estate (note: As reversion and Cs estate adjoin; once Cs estate ends, A is immediately entitled to possession) Priv of est bw A/C gives each right to sue each other if covs of original lease breached. Priv of est continues until assignee reassigns interest to another, vacates, or lease ends. Law imposes obligations on lessor and assignee w/o their agmt. No privity of K bw A/C, unless C expressly agrees to assume lessees obligations under original lease. g) Privity of estate gives rights/duties to both assignee and lessor; each obligated to perform covs of orig lease that run with land. For covenant to bind: 1) original parties must intend successors be bound by cov, 2) cov must touch and concern land (meaning that it must affect parties in their use/enjoyment), and 3) assignee must have notice of cov before acquiring interest. Most covenants in most leases run with land ie pay rent, repair, furnish heat/utilities, quiet enjmnt, pay taxes, utilize leased prem w/purpose, provide parking, arbitrate disputes. Disputed covs: Ts security dep, pay attorneys fees, insure premises for LLs benefit, refrain from operating competing business. h) Successive assignments: pg 281 Understanding Prop

Sublease a) A sublease conveys a lesser estate or reserves a reversion in the original tenant. b) Tenant is still liable to the landlord. c) Sublessee is not in privity of estate (or in privity of contract). (1) Sublessee is liable to the original tenant, not the landlord, for rent. (2) Sublessee and landlord can not sue each other on the covenants in the lease (absent an express assumption of master lease terms.) 3. Effect of Contingent Right of Reentry: a) Does Ts reservation of contingent right of reentry (or power of termination) creat a sublease? Es: T gets 10yr lease on Ls orchard, lease says that T maintains trees in good cond. 2 yrs later, T transfers entire right to X, who promises T that he (x) will care for trees. Regardless of form of transfer used, Ts liable to L if X fails to safeguard trees. T might retain right to terminate Xs occupancy and retake if X neglects, to minimize liabilities.

2.

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b) Does a sublease result if T retains such a cont. right of reentry? Most jx find an assignment bc the right, which may never be exercised, is too insubstantial to trigger sublease. Minority holds that its sublease bc T simply failed to transfer entire right. 4. Is it a sublease or assignment? a) Common law & general rule: Objective Test: Determination depends on proplaw definitions and the intent of the parties is irrelevant. (might be unjust bc layman dont know common law rules) (1) If the original tenant retains a reversion, the transfer is a sublease. E.g. On a month-to-month and the tenant retains the right to come back (e.g. after the summer), then the transfer is a sublease. (2) If there is no reversion, then the transfer is an assignment; (3) If a right of entry is retained, then (a) Common law: The transfer is an assignment because a right of entry is not the same as a reversion. (b) Modern rule: Depends on the jurisdiction but Rest. 2d 15.1, says the transfer is a sublease and the original tenant has a contingent reversionary interest. b) Modern minority view: Subjective Test: Intent of the parties is determinative. (1) Rationale: Intent accords with contract law. 5. General rule: Absent an express prohibition, a tenant can freely assign or sublet. a) When a lease is ambiguous, courts will favor the tenant. b) Implied Waiver of Consent Requirement: If LLs consent to one assignemtn impliedly waived right to object to future assignments. c) Exception arises if special skill/ability of original lessee is crucial to lessor: If consent requirement is silent where a percentage rental formula is used (bc lessor relied on anticipated finances of lessee) or rent includes personal services performed by lessee d) Express prohibitions are strictly construed because they are a restraint on alienation. e) If conditional upon landlords consent: (1) Common law & general rule: The landlord can withhold consent for any reason (or no reason.) (a) Rationale: 1. Courts should leave contracts as written. 2. Legislature and not judiciary should change rule. 3. Rule is consistent with property theory. (2) California & a modern minority rule: A landlord (by law) can not unreasonably withhold consent and the tenant bears burden of proof. 1. Rationale: Public interest to prevent tenant forfeiture. Consistent w/ no unreasonable restraints against alienation doctrine. Consistent with modern contract theory regarding reasonability Consistent with the modern duty to mitigate when tenant abandons. The laws protection does not include windfalls. (3) Consequence of consent: If the landlord expressly consents to the assignment or sublet, the assignee/sublettor become 3rd party beneficiaries. (4) Reasonableness Clause if Lease Allows Transfer if LL Consents: Reasonableness is considered by: 1) financial responsibility of proposed transferee, 2) nature of new use
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proposed, 3) suitability of proposed use for premises, 4) legality of use, 5) need for alterations to premises, and 6) whether use will compete w/LLs business or other Ts. Cant consider things like dislike for transferee, marital status, religious beliefs, or desire to obtain higher rent for premises bc these desires are unrelated to legit reasons for consent clause: to preserve LLs prop and ensure performance of lease covs. (5) Sole Discretion Standard v. Reasonableness Clause in Comm Leases: Majority view applies sole discretion bc parties prob intended to give LL total control; if parties intended reasonableness, wouldve put it in lease! Also, parties to comm leases should know rules bc of custom/practice, so have purposefully used silent consent clause to invoke sole discretion. Also LLs interest in protecting land that will revert back in fsa outweighs Ts nonfreehold. Also, reasonableness encourages litigation bc of disagmt on whats reasonable. Minority (modern) view applies reasonableness for comm. leases. May w/hold only if theres commercially reasonable objection to transferee. Prop law rationale: restricts alienability, K law rationale: pub policy favors interpretation least restrictive of right to transfer. 5. Obligations a) General rule: Assignment & sublease do not release tenants from lease obligations. (1) Exceptions: A tenant obligations end if there is a release or a novation. b) Assignment (1) The original tenant has the duty under contract to pay rent to the landlord. (a) T is surety. The landlord can collect rent from either T1 or T2, but if T1 is required to pay L, T1 can collect against T2. (b) Exceptions: 1. Change in lease: If L and T2 materially alter lease to prejudice T1, T1 is released as surety. 2. Release: If L expressly or impliedly releases T from the contract, then Ts obligations cease. Ls consent to assignment and acceptance of rent from T2 is not sufficient to imply a release. 3. Novation: If L releases T and in exchange for the release, T2 assumes the lease obligations, there is a novation and T is released from future liability. (2) An assignee is obligated to pay rent accrued during assignment only. (a) An assignee is not liable for rent accrued before or after the assignment. (b) Rationale: There is no privity of estate or contract between the landlord and assignee except during the assignment. c) Sublease (1) The original tenant has duty under the contract to pay rent to the landlord. (2) The sublessee is not personally liable to the landlord for rent. (a) Rationale: There is no privity of estate or contract between the sublessee and the landlord. (b) Landlord options if rent is not paid: The landlord can: 1. terminate master lease and evict or d) Third party beneficiary agreements (1) Assuming master lease obligations make assignee/sublessee liable for rent. If an assignee/sublessee expressly assume the master lease obligations, the landlord is a 3rd party beneficiary to the sublease contract and the assignee/sublessee is directly liable to the landlord.
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(2) Landlords agreement to a sublease makes landlord liable to the sublessee. Sublessee has the right to quiet enjoyment that was promised in the master lease and can proceed directly against the landlord. e) Transfers by LL: LLs future interest (reversion) is freely transferable to 3d parites. f) When the landlord terminates the primary lease: (1) If tenant voluntarily surrenders lease, then assignees and sublessee remain in possession. (2) If tenant does not, then assignees and sublessee are not under a contract. 7. Policy: Pro and Con a) Arg: Lessor is under no obligation to look beyond tenant for rent. But, lessor has duty to mitigate and tenant is still obligated even after assignment/sublease. b) Arg: Approval clause is an absolute reservation of power over assignment of lease. But, restraints and contract terms should be reasonable. c) Arg: Lessor should be able to capture the appreciation value. But, lessor bargained away that right in the lease.

E. A Tenant who defaults

1. Tenant in Possession a) Tenants duty to pay rent (1) Modern general rule: Failure to pay rent is cause for eviction. (a) By statute and precedent the covenant to pay rent is mutually dependent on the covenant to possession. b) Landlords remedy self help (On exam: Can LL retake?) (1) Common law: A landlord is entitled to use self-help. 8. General rule: A landlord can use self-help if the landlord is legally entitled to possession, e.g. holdovers; and the re-entry is peaceable. (a) Peaceable re-entry usually is non-violent entry or entry not against the tenants will. In Berg, even where the landlord used self-help in the absence of the tenant, the court found that the entry was non-peaceable since it could have resulted in violence. (b) Some jurisdiction limit self-help to commercial leases. (c) Risks of self-help: Self-help can create a cause for a tort, criminal prosecution for forcible entry, violate 4th amendment if public officers assist the landlord. (3) Modern trend: Self-help prohibited; landlord must seek a judicial remedy. (a) Other jurisdictions prohibit self-help but allow waiver. (b) Rationale: Judicial remedy better serves the public interest in preserving the peace. (c) Criticism of judicial remedy: 1. Summary proceedings can take a long time to evict a tenant. 2. Narrow focus does not allow tenant to assert affirmative defenses adequately.

2. Tenants who abandons (difficult to distinguish abandonment and continued possession) a) Abandonment occurs when a T leaves premises w/o justification and no intent to return; defaults in rent payment, bc this is question of fact, LL may be uncertain if its abandonment

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b) If L suspects T abandoned premises and is right L can terminate, reenter and retake; if wrong, then reentry may be forcible eviction and Ls liable for damages; to determine cts look to Ts statements, nature/quantity of T prop left behind, duration of Ts absence c) Landlords obligation to mitigate damages: (1) Common law & Restatement: No duty to mitigate (a) Rationale: 1. In accordance with prop theory rather than K bc T can assign sublease. 2. Landlords should not be required to contract with new parties. 3. Rule discourages abandonment. 4. Tenants abandonment should not impose duty on landlord. (2) Modern rule: Duty to mitigate (a) Duty to mitigate includes: 1. Landlords must use reasonable efforts to relet; 2. Landlords can not discriminate against premises and vacant stock. 3. Landlords have the duty to prove diligence in effort to relet. 4. Tenant must pay reasonable expenses incurred in reletting efforts. 5. Rationale: to lessen waste of hosing resources.

(b) Failure to mitigate can either: 1. terminate lease or 2. result in deducting avoidable amount from landlords recovery c) Landlords right to terminate: Cant be retaliatory or illegal (discriminatory) d) Landlord remedies: Surrender, sue or relet (1) Termination and Surrender If a landlord terminates the lease when a tenant abandons, the landlord is entitled to rent accrued and damages caused by the abandonment. (a) Common law 1. The landlord could not rescind the lease and sue for full rent. 2. Rationale: The landlord is not entitled to the rent until it becomes due. (b) Some jurisdictions damages for anticipatory repudiation allowed. The landlord can recover rents due less fair market value of lease. (2) Sue (a) A landlord can leave premises vacant and sue tenant for rent as it becomes due. (b) Duty or no duty to mitigate affects the amount the landlord can recover. (c) Acceleration clause enforceable: Many leases contain acceleration clauses that make all the rent due immediately upon default. (3) Relet (a) A landlord can repossess and relet the premises. (b) Courts disagree on the consequences of reletting: 1. Relet is a surrender that relieves tenant from further liability unless the tenant consents to the relet. 2. Relet without notice is a surrender. If the landlord gives tenant notice then the landlord is reletting on behalf of the tenant and the tenant is still liable. 3. Intent of landlord determines whether relet is a surrender or not. (c) Duty to mitigate jurisdictions either follow 2 or 3 above.
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F. Duties, Rights and Remedies

1. Landlord duties & Tenant rights a) Delivery of Title and Possession. (see section C above) b) Quiet Enjoyment & Constructive Eviction (1) Generally. (a) Covenant of quiet enjoyment is always implied, if not express, in the lease. (b) The covenant to pay rents is dependent on the covenant of quiet enjoyment. (c) If a landlord actually or constructively evicted the tenant, the covenant was breached and the tenants obligations ceased. (d) Protects T against interference by LL, LL successors, superior title holders (parties can modify, limit or exclude) (e) Remedies: recovery of possession (benefit of bargain), terminate lease, damages, rent abatement (2) Common law: Any affirmative act by landlord or agent that substantially disrupts the tenants use of the premises was a breach of the implied covenant of quiet enjoyment. (a) Condition must be permanent. (3) Modern rule: Actual or constructive eviction is a breach of quiet enjoyment that terminate tenants obligations. Tenant must act within a reasonable amount of time. (a) Condition had to be reoccurring but not permanent. (4) Actual eviction occurs when a landlord denies tenant possession (part or all) of premises. (a) Upon total actual eviction, a tenant can: 1. Vacate within a reasonable amount of time and terminate lease. Criticism: This remedy puts tenant at risk if the court determines later that there was no constructive eviction, that the tenant waited too long, or the tenant moved out too soon (e.g. without giving reasonable notice or time to cure). 2. Sue for damages, I.e. the reduced value, relocation expenses, and recover benefit of the bargain in the lease. 3. Stay in possession and sue for damages. Note: This remedy is available in California and is a modern trend but not a general rule. (b) Upon partial eviction by landlord: 1. General rule: T is relieved from rent obligations and may stay or quit premises. Rationale: Imposes penalty on interfering LLs and is efficient rule for protecting the tenant because it does not require a lawsuit or require the tenant to leave. (c) Upon partial eviction by a party with superior title: 1. General rule: When a 3d partys superior title interferes with the use contemplated in the lease, T can terminate lease, recover damages, or receive a proportionate rent abatement. 2. If tenant stays, then the tenant must pay reasonable rental value.

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(4) Constructive Eviction occurs when a LL (or agent) wrongfully and substantially interferes with the enjoyment of the property (but does not physically evict the tenant), T gives LL notice of the condition, and T vacates the premises within a reasonable amount of time. (a) Wrongful Conduct: i. Any affirmative act that seriously interferes w/Ts enjoyment of premise: ie bringing loud women/prostitutes, loud construction, repeatedly trespasses, nuisance. ii. Failure to act also constitutes wrongful conduct, when LL has duty to act ie fails to comply w/stat duty to provide heat or the like, or fails to comply w/limited repair duties traditionally imposed at common law like maintain common areas, perform promised repairs. iii. Conduct of 3d Parties: Common law says LL not responsible for conduct of 3d parties (LL rents to T1 and T2, T2 is too loud, LL knows and does nothing), unless LL causes or consents to conduct. Modern trend says LL responsible if LL has legal right to control 3d partys conduct. Ex: T rents retail space in Ls shopping center for fur store, but activists stand on parking lto in front deterring customers. If L ignores Ts complaints, CE may result. As owner of lot, L has legal right to control conduct of trespassing activists, even though theyre not Ts. L can file complaint or start civil action to restrict behavior. (b) Substantial Interference: i. Minor intf dont count: failure to fix broken window is insufficient. (reasonable person standard) Failure to provide heat or comm. premise are unusable for normal bus hrs, ie failing to eradicate rodents in day care. Doesnt need to be permanent or totally prevent T from occupying. If T is aware of LLs wrongful conduct when taking possession, CE is waived. ii. Partial CE: Ex: T rents 2 floors, basement and 1st, Every time it rains, basement floods and is unusable for intended purpose. T vacates basement, but still occupies 1st floor. Majority says T can claim CE; Minority says you can and T need only vacate part of premise. (a) The LL (or agent)s acts must be wrongful or be a failure to act when the LL has a legal duty to act. Although, IWH reduces importance of CE, its now most commonly used in commercial leases. (b) Common law: Constructive eviction can not occur from the acts of a 3d party. 1. A LL is not responsible for the acts of other Ts even though LL has some legal control over such Ts. 2. Exceptions: A landlord has a duty to: (i) control persons acting with the express or implied consent of the landlord (agents); (ii) prevent nuisances, and (iii) maintain common areas. 3. The modern trend is to hold LL responsible for the acts of other Ts where LL has legal ability to correct the conditions, and fails to do so. (c) Substantial interference is measured objectively. 1. Determination depends on: i. the purpose of the lease, ii. the foreseeability of the interference,
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iii. the potential duration, iv. the nature and degree of harm caused; and v. the availability of means to cure the interference. 2. A landlord has a duty to disclose known defects. 3. If tenant knows of the conditions and takes possession, the condition is waived. (d) Notice to landlord. The tenant must: 1. give notice to the landlord and 2. allow reasonable amount of time for LL to cure the condition before vacating premises. (e) Vacate premises within a reasonable amount of time: 1. General rule: Tenant must actually vacate premises within a reasonable amount of time to claim constructive eviction. (5) Remedies: Tenant can recover damages as well as termination of the lease. T may vacate, terminate and be relieved of liability for future rent. Also, T can recover compensatory damages. Ts general damages are equal to amount which fair rental value exceeds lease rent. Special damages eg moving expenses, loss of fixtures also. i. Terminate Lease and Sue: T must take 3 steps: 1) give LL notice of interfering defect/condition, 2) allow reasonable period of time for LL to fix, and 3)vacate w/in reasonable time. Tension bw 2d and 3d requirements bc whate if T waits too long for LL to fix? Different for every case, usually 3-4 weeks is reasonable. ii. Limitations of CE: remedy is illusory for res T in tight, urban housing market bc nowhere for T to go. (6) Illegal Lease Doctrine: A lease of unsafe and unsanitary premises that violate local housing codes is illegal, if defects existed when T signed lease (no later defects). T can w/hold rent and assert illegality of lease as defense to LLs eviction action. LL can recover only reasonable rental value of prem in defective condition. c) Condition of premises & Implied Warranty of Habitability (1) Common law: Caveat lessee (let T beware) (a) Exceptions: 1. A short term lease of a furnished house has an implied warranty of habitability. Rationale: The tenant did not have an opportunity to inspect the premises prior to lease. 2. A landlord has a duty to disclose latent defects that are not easily discernable upon inspection and to make no fraudulent representations about conditions. Rationale: The tenant could not discover defects by inspection and nondisclosure borders on fraud. Tort law makes landlord liable for latent but known defects as well. 3. When the building is being constructed for a particular purposes and the lease is executed prior to completion, the landlord implies the building will be fit for such purpose. Rationale: No opportunity for inspection. (b) Tenant still obligated to pay rent. 1. Inhabitable conditions, even where there is express or implied warranty, did not release tenant from duty to pay rent.
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2. A tenants options were to sue for damages or move out claiming constructive eviction. 3. Rationale: The covenant to pay rent is independent from covenant of possession and inhabitability. (2) Restatement: Residential dwellings have an implied warranty of suitability for the use contemplated by the parties. Rest. 2d 5.4 (a) A breach requires: 1. the damage is a result of landlords conduct, failure to repair, or sudden natural disaster, 2. the tenant is not at fault and requested the repair, and 3. the landlord fails to repair after a reasonable amount of time (3) Modern law: A residential lease has an implied covenant of habitability. (a) Rent obligation is dependent on the implied covenant of habitability. (b) Residential leases only. Courts have not extended the implied warranty of habitability to commercial leases except in a few situations where the maintenance appears to have been part of the bargain, e.g. tenant only rents part of a building. (c) Scope of warranty: Courts differ on the scope of the warranty and measure breach either as: 1. Substantial violation of housing code is a breach of warranty. (i) Minor violations dont count. But, broken windows, defective door locks, leaky roofs, lead based paint, broken toilets, pipes/plumbing, defective wiring, falling ceilings, insect/rodent infest, lack of hot water, excessive noise, flooding, seweage backup, poorly maintained common areas. (LL need not maintain in perfect condition) Doesnt include special blinds, torn wallpaper, peeling paint, a few ants, and defects caused by T. (ii) Substantial compliance, not literal compliance 2. Premises must be fit for human habitation. (difficult to apply) (i) LL might breack IWH even in premises comply w/code. Always ask did defect have impact on health or safety of T? Note: Depending on application, fit for human habitation could be a higher or lower standard than substantial violation of housing codes. (d) Notice required before breach. Some courts state that the warranty isnt breached until T gives LL notice and LL fails to cure w/in reasonable amount of time. A vague complaint about a big problem is insufficient; length of time to fix varies w/nature of defect, impact on habitability, and complexity of required work. If only toilet in apt is inoperable, then 1-2 days, perhaps. But if entire roof needs replaced for minor leak, longer period allowed. (4) Waiver of warranty: (a) Common law and general rule: States (including California) that recognize implied warranty of habitability do not allow waiver of warranty. (b) Restatement 1. Waiver is not allowed if the defect makes the premises unsafe or unhealthy or if the waiver unconscionable or significantly against public policy.
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2. Otherwise, a tenant can impliedly waive the warranty when the defect is patent and the tenant recognizes that it is unsuitable for use. 3. Considerations include: - interference with the housing code enforcement; - the type of property leased; - existence of a reasonable business purpose of the waiver - whether waiver is a result of negotiations; - part of boilerplate lease agreements or adhesion contract; - tenant that has unequal bargaining power; and - whether parties were represented by council. (c) Commercial leases are more likely to have waivers enforced. Consider: 1. Is business suitable for regulation? 2. Is the service of public importance? 3. Does waiver put public at risk? 4. Is there an uneven bargaining advantage? 5. Who is liable for injuries? 6. Is the purchaser at risk of sellers negligence? (d) Policy for waivability: 1. Increases the costs of housing which hurts the poor. (e) Policy arguments against waivability: 1. Increases T bargaining power. 2. Too many defects are latent. 3. Protects property values. 4. Housing market is in failure but solution is not crappy housing. 5. Health concerns (children). (5) Tenant options upon Breach: A tenants duty to pay rent is dependent on the implied warranty and upon breach, a tenant can: (a) Terminate lease (and recover damages); 1. A tenants damages can include relocation costs and fair market value of the lease (agreed rent fmv). Damage recovery uses analysis described below 2. Tenant is at risk of being an abandoning tenant. (b) Remain in possession, continue paying rent and Sue for Damages: How to calculate reimbursement: 1) Difference bw agreed rent and fair market value (c) Use as a affirmative defense in a rent action by landlord; (d) Remain in possession and use repair and deduct. Must be reasonable (6) Calculating damages: Remedies for Remaining in Possession and Suing! (a) Hilder Green: Damages are the difference in value of the premises habitable and as is. T, fully aware that apt has leaky roof, leases from L for fmv in defective cond. $350/mo. And if L provided premises in condition required by implied warranty, the fmv as warranted would be $600. So T recovers $250/mo ($600-$350) or T rent = (agreed rent - fmv inhabited) + fmv uninhabited 200 250 + 100 = $ 50.00
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Method is designed to preserve the benefit of the bargain for a habitable dwelling. Some jx say against pub pol so its void, other say its fine as long as T knows of conditions. (b) Statutory method (inadequate): Difference bw as promised and fair market value as is. So if T leases her apt from L for $550/mo; roof leaks, but L doesnt fix. If fmv of unit w/leaky roof is only $350, the T is entitled to damages of $200/mo. However, this is inadequate if defects already exist: if S leases unit w/leaky roof from L; aware of prob S agrees to py only $350 its fmv value w/defect, S recovers nothing. Ts rent = agreed rent (agreed rent fmv uninh) = fmv uninhab. 200 200 100 = $ 100.00 (c) Percentage diminution (best formula!): Rent is reduced by the percentage that the premises are uninhabitable. T rents unit for $550/mo, but leaky roof reduces unit by 50%. T recovers $275/mo (50% of $550). Virtue: formula eliminates need for T to secure expert testimony on issue of fmv bc it gives broad discretion to trial ct to determine extent of diminished use d) Illegal leases (1) If a lease is illegal because of statutory violations at the time lease is made, then there is no lease. (2) Lease is unenforceable but landlord is entitled to fair rental value. (3) Mere code violation will not make a lease illegal. f) Landlord tort liability for personal injuries (1) Common law: Caveat lessee (commercial leaseholds still fall under this standard) Where lease doesnt contain provision about repairs, burden goes to T through doctrine of permissive waste: T obligated to exercise reasonable care to protect premises. Ex: Roof leak: T obligated to fix, if leak worsens and causes damage, and T didnt make repairs, L could recover damages. However, T doesnt need to fix major/permanent repairs nor remedy ordinary wear/tear. Comm. tenancies are largely governed by common law, not modern residential leases. (a) Exceptions: 1. Negligent repair; 2. Common areas; 3. Latent defects; 4. Public use: 5. Express covenants; 6. Housing code violations. 7. Waivers are enforceable. 8. Duty to repair furnished premises 9. Cant fraudulently misrepresent conditions of premises 10. If LL aware of latent (hidden) defects, must disclose (b) Lease assigns repair-duty to T: Comm.Ts have duty to maintain in good repair, However, many jx today reject auto liability and interpret plain lang of lease to see partiesintent. Mostly, cts say that gen repair clause doesnt intend to cover rebuilding. (c) Common law: res Ts could and would fix their own dwelling = slums, not decent housing (2) Modern rule: 1) L obligated to repair, 2) if L failed to repair after due notice, T could remain in possession and w/hold rent, or select other remedies, and 3) L might be liable in negligence for Ts personal injury (tort! bonus).
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(a) Lease Assigns Repair Duty to LL: If LL breaches, then T can terminate lease and not pay future rent (breach by one party excuses performance by other party) g) Retaliatory Eviction is not allowed. (1) Modern rule: A landlord can not evict (legally or through self-help) or increase rent in retaliation for a tenant complaining about violation of housing code or breach of implied warranty. (a) If tenant shows that a landlord acted discriminatorily within a short time of tenants complaint, there is a rebuttable presumption of retaliation. . (2) A tenant in default can not use retaliatory eviction defense. 2. Tenant Duties ; Landlord Remedies a) Waste: Tenant has duty not to make changes that: (1) affect vital and substantial portions of property, (2) change the characteristics of the premises, or (3) change the fundamental purpose, uses contemplated, or nature of premises. b) Repair Common law: The tenant had a duty to make minor repairs. E.g. repairs to keep the premises windtight and watertight. (2) Modern property law: The tenant has no real obligation to repair. (a) The landlords duties under the implied warranty of habitability abrogate much of the tenants duty to repair. (b) General duty to repair does not include the duty to rebuild. (3) Express agreements can enlarge tenant obligations beyond common law duty of wind and watertight, e.g. to keep premises in good repair. (a) Common law: A tenant who agreed to repair without exceptions was obligated to rebuild. (b) Modern law, tenants (by statute) do not have a duty to rebuild but a landlord who covenants to repair is obligated to rebuild. c) Obligation to pay rent after property is damaged. (1) Common law: Rent was due even if property is damaged (a) Exceptions: 1. the tenant leased a portion of a building that was completely destroyed, or 2. the performance of the lease agreement is impossible because of the damage and the tenant was not at fault. (RofC(2) 454) (2) Modern property law: Tenant is released from rent obligations. (a) Under RofP(2) 5.4, a tenant is release from paying rent when: 1. a nonmade force makes the property unsuitable for use contemplated; 2. the tenant is not at fault; and 3. the landlord does not correct situation within a reasonable amount of time after being requested to. (b) Exception: The parties can expressly agree to additional or fewer conditions that would terminate lease. (c) Rationale: 1. Parties in lease bargain for the building and not the right to the land.
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(1)

2. Landlords are better positioned to prevent disasters (e.g. keep building up to code). 3. Landlords are better able to insure against risk. 4. Strikes a balance between protecting tenant and allowing landlord to fix building before lease would terminate. d) Ts Duty to Pay Rent: (1) Residential leases typically provide for fixed rent eg $800/mo, many comm. Leases provide that some/all rent is based on % of Ts sales. Absent express agmt for payment, person who possesses land w/owners permission is liable for its fair market value during occupancy. e) Landlord Remedies (1) Sue for rent and damages: (see D. Defaulting Tenant, section c.) (2) Security Deposits: Usually equal to 1-2mos rent, must be placed in trust account, w/o commingling, and pay interest; deductions impermissible are ordinary wear and tear; LL must give T detailed list of deductions and refund balance win fixed time period; statutory penaly (twice amnt wrongfully w/held for example) (3) Rent acceleration clauses: (a) Generally rent acceleration clauses are enforceable. (b) Absent specific provisions, a landlord can not accelerate rent and terminate the lease.

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