Transfering a tenant's interest

Question 1

What is the majority rule for assignments?

Answer 1

Assignments transfer of a tenant’s right of possession for the entire of the remainder of the lease term

Question 2

What is the majority rule for Sub-leases?

Answer 2

A sub-lease transfers of a tenant’s right of possession for less than the entire remainder of the lease term

Question 3

What are the minority rules for assignments and sub-leases?

Answer 3

Whether a transfer is an assignment or sublease depends on the intent of the parties

Question 4

What is privity of contract?

Answer 4

Both parties have rights and duties under the same contract

Question 5

What is privity of estate?

Answer 5

Both parties have rights and duties in the same land

Question 6

How does privity work in an assignment?

Answer 6

○ The lessor and lessee have both privity in contract and estate until the lessee assignee their interest to the 3rd party.

○ The lessor and the assignee only have privity of estate because they never formed a contract between each other

○ The Assignor and assignee only have privity of contract because the assignor has no more rights in the land

Question 7

How does privity work in a sublease?

Answer 7

○ The lessor and lessee have both privity in contract and estate, privity of estate is severed during the term of the sublease

○ The lessor and the sublessee have no privity between them

The sublessor and sublessee are in both privity of estate and contract for the entirety of the sublease

Question 8

Who can be sued in an assignemnt/ sublease?

Answer 8

○ In an assignment the LL can sue the lessee under privity of contract and the assignee under privity of estate

○ In a sublease the LL can only sue tenant because there is no connection between them

Question 9

What is a novation?

Answer 9

Substitution of a new contract between the same or different parties it requires
○ Existence of a valid contract (first K)
○ Mutual agreements of all parties to the first K and to the replacement K

Question 10

What is the purpose of a novation?

Answer 10

• Novations are typically do one of the following
  ○ Replaces a party to the first K with a new party ( the party to the first K is released from the obligation to perform)
  ○ Replaces an obligation to perform with another obligation
  ○ Adds an obligation to perform

Question 11

LL consent restrictions

Answer 11

• If lease requires LL consent for assignment, 3 possible types of clauses
  ○ Sole discretion clause: LL may refuse consent for any reason whatsoever (majority/ traditional)
  ○ Reasonableness clause: LL may refuse consent only for a commercially reasonable basis (minority)
  ○ No standard in lease: Lease requires LL consent but contains no standard to guide the decision
  § Called a silent consent clause