The leasehold estates

A. The leasehold Estates Tenancies or leaseholds are non freehold estates

3.5 Tenancies 1. The Term of Years 2. The Periodic Tenancy 3. The Tenancy at Will 3.5. Tenancy at sufferance: Holdover Tenancy 1. The Term of Years A term of years is an estate that lasts For some fixed period of time or for a period computable by a formula That results in fixing calendar dates for beginning and ending, Once the term is created or Becomes possessory Ex. Lease from January 1st, 2012 to March 1st, 2012 Some American state statutes limit the duration of terms of years A term must be for a fixed person, but it can be terminal earlier upon the happening of some event or condition Because a term of years states from the outset when it will terminate, no notice of termination is necessary to bring the estate to an end

Note When any leasehold is created, a future interest necessarily arises In the landlord or o If the landlord has retained the right to possession, o The future interest is reversion In a third party o If third party is to take possession o The future interest is a remainder

2. The Periodic Tenancy A periodic tenancy

Is a lease for a person of some fixed duration that continues for succeeding periods until either the landlord or tenant gives notice of termination EX: to A from month to month to B from year to year If notice is not given, period is automatically extended for another period Under common law rules Half a years notice is required to terminate a year-to-year tenancy EX: tenancy is from January 1 to December 31. Notice must be given before July 1. OR tenant can be held over for another period (a year) The notice must terminate the tenancy on the final day of the period, not in the middle of the tenancy In many states Statutes have shortened the length of notice required to terminate periodic tenancies and have permitted a month-to-month tenancy to be terminated at any time following 30 days notice The death of the landlord or tenant Has no effect on the duration of a term of years or periodic tenancy, but it does on the tenancy at will

3. The Tenancy at Will either party can terminate A tenancy at will Is a tenancy of no fixed period that endures so long as both landlord and tenant desire A unilateral power To terminate a lease can be introduced on a term of years or a periodic tenancy EX: a lease by L to T for 10 years or UNTIL L sooner terminates Creates a term of years determinable It ends When one party terminates or At the death of one of the parties Modern statutes Ordinarily require a period of notice - say 30 days or a time equal to the interval between rent payments In order for one party of the other to terminate a tenancy at will

3.5 Tenancy at Sufferance: Holdover Tenancy Lease is expired

Tenant has not moved out

Under Common Law All leases fall under the 3.5 categories

Garner v. Gerrish Court of appeals of N.Y. 1984- Tenancy at will terminable by tenant N.Y. and California courts are more liberal and progressive. And Willing to move away from OLD rules Parties: Facts Donovan owned a house, that he leased to Gerrish The lease provided that The lease will continue for and during the term of quiet enjoyment from the first day of May, 1977 which term will end Lou Gerrish has the privilege of terminating this agreement at the date of his own choice The lease gave Gerrish the control over when to terminate the lease The lease also contained Landlords right of reentry If the rent is not paid on time and Gerrish will have 30 days grace for payment Gerrish moved into the house and paid his rent on time Donovan died in 1981 Garner, executor of Donovans estate, served Gerrish with a notice to vacate the premises Gerrish refused Garner sued him Garner executor of Donovans estate Donovan deceased owner of the property Gerrish is the tenant

Procedure County court granted summary judgment for Garner Court held that lease contract was indefinite and uncertain as to the length of time for the lease therefore tenancy was based on month to month term and created a tenancy at will permitting Garner to evict the tenant A lease for so long as the lessee shall please, is said to be a lease at will of both lessor and lessee

Issue -

Gerrish appealed Appellate division affirmed

Whether the lease created a life tenancy terminable at the will of the tenant or a tenancy at will?

PL Arg Garner wants it to be a tenancy at will (either party can terminate) because the lease failed to state a definite term and Garner would have to the choice to terminate the tenancy. Under common law it must fit within 3 categories.

Defs Arg He has always paid his rent on time and the lease granted him a tenancy for life unless he chooses [elects] to terminate it. Lease says he has the right to termination. Doesnt say anyone else has that right.

Holding At early common law If the lessee holds the will to terminate, lessor holds the same This view is Highly criticized and has its origin in the doctrine of livery of seisin Where clod of dirt was suppose to be handed over to convey an interest in land In modern society There is no need for that There is no reason why a lease granting tenant alone the right to terminate at will should be invalid and made into tenancy terminable by either party The rule that The lease creates a determinable life estate in a tenant, terminable at tenants will or on his death Has increasingly gained acceptance In this case The lease granted Gerrish to terminate the tenancy at a date of his choice The lease created A life tenancy terminable at the will of the tenant (Life Tenancy Determinable) determined by looking at the intent of the party The lease does NOT Give the landlord the same right

Notes -

That would violate the terms of agreement and the express intent of the contracting parties Appellate decision Should be reversed and petition dismissed Look at the intent of the parties to determine which category the lease fits into.

Under the system of estates in land There is no such things as a lease for life One can create a life estate or a lease In Garner The court was willing to follow the intent of the parties to the point of recognizing a new type of estate a lease for life the decision is ambiguous. (life tenancy terminable at the will of the tenant) Philpot v. Field A lease to T for a term of 20 years so long thereafter as T used the premises for particular purpose It appears that the parties intended to create a perpetual (never ending) right to lease the land Although T can terminate this lease when he desires by his voluntary choice, this lease does not create a tenancy at will terminable at the will of either party Myers v. East Ohio Gas Co. Leases which clearly and unambiguously terminate at the will of only one part are to be controlled by their express terms But ambiguous leases- those leases which do not clearly state whether they are terminable at will of one or both parties are subject to a rebuttable presumption that they are at the will of both The lease in Myers was similar to the lease in Philpot. The court found it unambiguous and enforced it according to its terms

4. The Tenancy at Sufferance: Holdovers Tenancy at Sufferance Arises when a tenant remain in possession (holds over) after termination of the tenancy Common law rules Give landlords confronted with a holdover essentially two options 1. Eviction (plus damages) or 2. Hold tenant as a trespasser 2. Consent (express or implied) to the creation of new tenancy

Some jurisdictions have changed these rules Landlords have THREE options 1. Eviction plus damages 2. Hold tenant as a trespasser 3. Consent (express or implied) to the creation of new tenancy Landlord needs to choose one or the other. Once you make your choice, you cannot change it later. - Garner

Crechale & Polles, Inc v. Smith tenancy at sufferance/Holdover Parties Facts Crechale leased a property to Smith from February 7, 1964 to February 6, 1969 (5 years) When Smith was near the end of his lease He learned that his new place would still take about a month or two to complete after his lease with Crechale was suppose to be over He arranged a meeting with Crechale To negotiate an extension of the lease on month-to-month basis Smith claims That he reached an oral agreement with Crechale for month-to-month lease until Smiths new place was ready to be occupied Crechale claims That he rejected Smiths offer because he needed to sell the property However there were letters exchanged among both parties Feb 4, 1969 Smith sent a letter confirming their oral agreement Feb 6, 1969 Crechale wrote back, denying any oral agreement and telling Smith to vacate the property by midnight of February 6th, 1969 or pay double rent for any holdover March 3, 1969 Smith sent a check to pay rent for the period of February to March The check was accepted and cashed by Crechale April 6, 1969 Smith paid rent for the period of March to April for final payment The check was not accepted April 7, 1969 Crechale landlord Smith tenant

April 19, 1969 2 months after the lease expired, Crechales attorney wrote to Smith stating that since Smith had held the property beyond the leased term, the lessor was treating this as a renewal of the lease for the new lease expiring in 1974 (5 years) April 24, 1969 Smith again sent a check for the final months occupancy and it was rejected April 29, 1969 Crechales attorney wrote another letter to Smith stating that Smith had a new leases contract for another 5 years There was no communication between the parties for more than a year May 15, 1970 Crechale wrote to Smith requesting the Smith either pay the past due rent or vacate the premises May 2, 1970 Smiths attorney turned over the keys to the premises to Crechale Crechale files a lawsuit To recover back rent and damages to the premises

Smith sent a letter stating that he was tendering the premises so Chechale could inventory the building Chechale refused

Procedure Lower court [Chancery Court] Awarded Crechale 1,750 dollars in back rent payment and 760 dollars for damages Crechale appealed Claiming that lower court made a mistake by 1. Not holding Smith liable as holdover tenant 2. Damages awarded were inadequate

Issue Whether Smith had a renewed lease contract as holdover tenants?

Holding Crechale used the rule that

By remaining in possession of leased premises after the expiration of his lease, a tenant gives the landlord the option of treating his as a trespasser or as a tenant for another year Smith is not liable to pay rent for a new term of the rental contract as a holdover tenant Because when Smith wrote to Crechale to extend the lease on month-tomonth basis, it was denied by Crechale There is also a rule that states When a tenant continues in possession after the termination of his lease, the landlord has an election either to evict him, treat his as a trespasser or hold him as a tenant When Crechale denied the oral contract with Smith and told him to vacate the premises in Feb. 6 letter, he treated Smith as a trespasser After having elected Not to accept Smith as a tenant, Creschale could not at a later date, after failing to pursue his remedy to evict him, change the election to hold him as a tenant for a new term Crechale Also cased the rent check for the month of February to March Which shows that he gave Smith extension on the lease o The Rule states that A landlord who accepts rent from his holding-over tenant will be held to have consented to a renewal or extension of the learing Rule is accepted by overwhelming weight of authority Once Crechale Elected to treat the tenant as a trespasser and refused to extend the lease on a month-to-month basis, but fails to pursue his remedy of ejecting the tenant, and accepts monthly checks for rent due, he in effect agrees to an extension of the lease on a month-to-month basis Affirmed

Overview Shift in law, every tenancy had to fit in 3 boxes but the modern view looks at tenancy with the intent of the parties, not try to limit them to 3 boxes. Garner - Pros and Cons from ex-anti and ex-post choice. Ex-anti future leases will be clearer in their intent. Expost decided upon the intent of the parties instead of limiting the lease to one of the 3 boxes

Notes

Crechales lawyer initially took the position that The Smiths were liable as holdover tenants, for an additional five years But the maximum length in each case is limited to one year According to the Restatement Holding over results in a periodic tenancy measured by the way rent is computed, up to a maximum period of one year Tenancy resulting from holding over Is usually subject to the same terms and conditions as those in the original lease Unless, the parties agree otherwise or unless some term or condition is regarded as inconsistent with the new situation The court endorsed the view that If a landlord neglects to evict a holdover tenant and to demand double rent for the holdover period, choosing instead to accept monthly rend payments, the lease is extended on a month-to-month basis Suppose the tenant stays on after the end of the term because her doctor has advised her that it would be dangerous, for the time being, to move her very ill child Is the tenant liable as a holdover? No, because the tenant did not stay on voluntarily

B. The Lease A lease indeed, an arrangement explicitly declaring itself, in writing, to be a lease might nevertheless be held by courts to amount to something else, such as a license Or loan, even though the document speaks in terms of a lease In re Pittsburgh Sports Associates Holding Co. the judge said Such an indefinite term is inconsistent with the requirement htat a lease be for a prescribed period But that is wrong An arrangement that does not announce itself as a lease might still be regarded as one License The Angermans were given exclusive possession of a single-family dwelling and adjoining land located in a national recreation area No rent was called for, but the Angermans were obligated to restore and maintain the dwelling and watch for forest fires in the area The Angermans argues that their agreement was a license, not a lease, and hence not subject to the leasehold tax They Lost What do leases involve? Intention of the parties

The number of restrictions on use The exclusivity of possession The degree of control retained by the granting party The presence or absence of incidental services And so on It matters primarily whether or not an arrangement amounts to a lease Because leases give rise to the landlord-tenant relationship, which carries with it certain incidents certain rights and duties and liabilities and remedies that do not attach to other relationship Conveyance vs. contract Is a lease a conveyance or a contract? It is both A lease transfers a possessory interest in land, so conveyance that creates property rights A lease contain a number of promises (or covenants, which originally referred to promises under seal) such as promise by the tenant to pay rent or a promise by the landlord to prove utilities so the lease is a contract, too, thus creating contract rights If is a facts that Courts today commonly rely, explicitly, on contract principles to reshape the law of leases with respect to such questions as 1. Are the covenants in leases mutually dependant, such that a material breach by one party excuses further performance by the other party, even if the lease does not so provide? 2. If the leased premises are destroyed, is the tenant still liable for rent? 3. If the tenant wrongfully abandons the leased premises, must the landlord take steps to reduce the damages, say by seraring for a suitable new tenant? 4. Is a warranty of quality that the leased premises are habitable or fit for their purpose to be implied in leases? The Statute of Frauds Leases for more than one year must be in writing Few jurisdiction permit oral statutes But there must be an oral lease plus payment of rent, which creates periodic tenancy that is not subject to the Statute Form leases and the question of bargaining power A lease contemplates a continuing relationship between landlord and tenant Leases can be wordy, full of clauses to handle various contingencies

Quite typically, landlords use form leases standardized documents offered to all tenants on take-it or leave-it basis, which no negotiation over terms Contract of Adhesion This assumes an absence of competition If one seller offers unattractive terms, a competing seller, wanting sales for himself, will offer more attractive terms Underlying problem is not forms but monopoly power created, say, by a shortage of rental housing. The courts can respond by policing lease terms on ground of unequal bargaining power