Flashcards in Assignments and Subletting Deck (11)
o LL’s Transfer of Interest
Who is entitled to collect the rent?
The landlord of record, on the date the rent is due, is entitled to that rent.
EXAMPLE: T pays rent six months at a time, $6,000, on the first of January and $6,000 on the first of July. On July 1st, T pays $6,000 to LL. On July 2nd, LL sells the property to LL1. Because LL was the landlord on July 1st, LL is entitled to the rent paid on that date.
what is the difference between an assignment and a sublease?
• Assignment = Tenant transfers all of the remainder of the interest (rental obligation) to a new party.
• Sublease = Tenant transfers less than the entire interest in the contract.
EXAMPLE: Tenant leases a two-bedroom apartment for five years. One year into the lease, Tenant transfers his interest to New Tenant for the remainder of the term. New Tenant is ?
o Assignee = If a tenant transfers all of the remainder of the rental obligation.
EXAMPLE: Tenant has a five-year lease and after one year, he decides that he wants to vacation in Europe for a year. He transfers his interest in that one year to New Tenant, intending to return after that one year and occupy the final three years on the lease. New Tenant is a?
o Sublessee = If a tenant transfers only a portion of the time left on the rental obligation.
what are the liabilities of the parties for an assignment ?
o The assignee comes into privity of estate with the landlord, while the tenant remains in privity of contract with the landlord.
o Assignee is liable to the landlord for rent, unless he or she re-assigns to a new assignee who takes over privity of estate.
o The tenant is liable to the landlord for rent, even after assignment, unless there is a contract novation.
what are the liabilities of the parties for a sublease?
o The sublessee comes into privity of estate and privity of contract with the tenant, owing the tenant rent. The tenant continues to owe rent to the landlord.
EXAMPLE: If LL is not paid rent and T assigned to T1, LL can sue?
EXAMPLE: If T1 is a sublessee, T1 ?
LL can sue either T on privity of contract or T1 on privity of estate to collect that rent.
EXAMPLE: If T1 is a sublessee, T1 is not in privity of estate with LL so LL cannot sue T1. LL has to sue T.
• If there is more than one transfer, only the original tenant and the current tenant are liable to the landlord for rent. Middle-of-the-chain assignees are not liable to the landlord, only to the original tenant.
EXAMPLE: If T1 assigns property to T2, this ends T1’s privity of estate—T1 is no longer liable for rent on the premises. LL can
LL can sue T or T2, but no longer T1.
• Generally, interests in leases are fully transferable.
• To prohibit both an assignment and a sublease, the lease must?
the lease must specifically state that both are prohibited.
• Consent: A consent clause in the lease that does not state a standard or condition for giving or withholding consent is commonly known as a “silent” consent clause.
o Traditional/Majority Rule: effects?
o Traditional/Majority Rule: A silent consent clause gives the landlord the right to withhold consent for any reason, or for no reason at all, even if withholding consent is arbitrary and unreasonable.
This rule is subject to any applicable statutory housing discrimination laws.
o Minority Rule: Requires the landlord to be reasonable in withholding consent for an assignment