Transfers of leaseholds and landlord's tort liability

Question 1

To what extent may a tenant assign her interest in the lease?

what is a valid covenant against a sublease and assignment?

How can LL waive that covenant?

what happens if T breaches that covenant?

Answer 1

FREELY ASSIGNABLE
— in the absence of a prohibition on assignment in the lease, T may freely assign her interest

COVENANT AGAINST ASSIGNMENT OR SUBLEASE
—- LL may prohibit assignment or subletting without LL prior written approval
— restrictions are strictly construed against the landlord such that a covenant prohibiting assignment does not prohibit subleases and vice versa

WAIVER
[1] if LL consents to one transfer by a T, LL waives the right to object to future transfers by that T unless LL expressly reserves the right

[2] if LL consents to one transfer by a tenant, LL waives the right to object to future transfers by that T unless he expressly reserves the right

BREACHING COVENANT AGAINST ASSIGNMENT
—LL may terminate the lease or sue for damages, but the transfer is not void

Question 2

what is a lease assignment vs. sublease?

Answer 2

ASSIGNMENT

Transfer of the entire remaining term of a lease [a T’s right to re-enter in the event of breach does not render it a sublease]

SUBLEASE

Transfer of some part of the remaining term on the lease such that T reserves some time for herself

sublessee is not in privity of estate nor privity of K with the LL; T2 is responsible to T1 for all T1’s promises to L, and T1 is responsible to T2 for all of L’s responsibilities to T1

exception: if the sublessee expressly assumes the covenants, he is liable to the LL for the performance of covenants

Question 3

what happens once T1 assigns his interest to T2?

what is required of the assignee?

Answer 3

T2 is in privity of estate with the LL
— assignee stands in the shoes of the original tenant in a direct relationship with the landlord
— assignee is responsible for all the covenants in the lease that run with the land [covenant to pay rent, repair, taxes]

T1 is in privity of contract with the LL
— original tenant’s lease K remains enforceable such that T1 is liable on the lease’s contractual obligations [such as paying rent]

Question 4

what happens if T1 assigns to T2 and then T2 assigns to T3?

Answer 4

T3 is in privity of estate with the LL

T2 is NOT in privity of K or estate with the LL and has no liability for T3’s failure to pay

T1 remains liable for T3’s failure to pay because he is in privity of K with the LL

Question 5

what kinds of tenancies cannot be assigned?

Answer 5

tenancy at will

assignment is void and terminates the tenancy at will by operation of law

Question 6

what is privity of estate

Answer 6

means you are in direct relationship with the LL and liable for the covenants that run with the land – product of possession

once you assign your interest to another T, that T is in privity of estate with the LL [NOT for subleases]

Question 7

what are some SoF issues that can arise with assignments?

Answer 7

states require that a lease creating a tenancy for more than one year, INCLUDING an assignment of an interest in a lease for more than one year, be in writing to satisfy SoF

Question 8

what covenants run with the land such that a T in privity of estate with the LL will be liable for them?

Answer 8

rent

repair

taxes

promises that benefit the LL and burden the T (or vice versa) and were in the original lease agreement

Question 9

what is privity of contract?

Answer 9

original T remains secondarily liable such that if T2 betrays a promise in the original lease, T1 is liable

Question 10

how does an assignee pay rent?

how does sublessee pay rent?

Answer 10

assignee - pay directly to the LL

sublessee - pay to original tenant

Question 11

what are landlord’s remedies when sublessee breaches

what are sublessee’s remedies when landlord breaches

Answer 11

LL’s remedies

Sublesee’s rights

A sublessee cannot enforce any covenants made by the landlord in the main lease
EXCEPTION: a residential sublessee may be able to enforce the implied warranty of habitability against the landlord.

Question 12

if LL terminates the main lease, what happens to the sub lease

Answer 12

sublease automatically terminates with the main lease

Question 13

to what extent can landlord assign their interests?

Answer 13

LL may assign rents and reversion interest they own

usually done by deed when LL conveys a building to a new owner

NO TENANT CONSENT REQUIRED

Question 14

when a LL assigns their interests, to what extent are they still liable to tenants?

to what extent is L2 liable to tenants?

Answer 14

A LL’s selling the property and keeping a rent/reversion interest does not terminate a LL’s promise to the Ts to maintain the property – L and T remain in privity of K unless there is a novation

L2 [the assignee of the LL] is liable to Ts for all covenants made in the lease that run with the land [and L1 is still liable on all covenants made in the lease of course]

Question 15

what is attornment

Answer 15

when LL sells to an assignee, and T is given reasonable notice of the assignment, Ts must recognize and pay rent to the new owner as their landlord

Question 16

RECAP ASSIGNMENT VS SUBLEASE

FOR:
(1) ASSIGNMENT BY THE LL

(2) ASSIGNMENT BY THE TENANT

(3) SUBLEASE BY THE TENANT

DESCRIBE:
(1) CONSENT

(2) PRIVITY OF ESTATE

(3) PRIVITY OF K

(4) LIABILITY FOR COVENANTS IN THE LEASE

Answer 16

(1) CONSENT

Assignment by the LL – no consent required

assignment by the T - consent needed if stated in the lease

(2) PRIVITY OF ESTATE

assignment by the LL – yes between assignee (L2) and T

assignment by the T - yes between T2 and L

(3) PRIVITY OF K

assignment by the LL – LL and T are in privity of K, not assignee tho

assignment by the T – T and L are in privity of K, not assignee tho

(4) LIABILITY FOR COVENANTS IN THE LEASE

assignment by the LL –
(1) assignee is liable to T for all covenants that run with the land

(2) original LL remains liable on ALL covenants in the lease

assignment by the T –
(1) T2 is liable to LL for all covenants that run with the land

(2) T1 is liable to LL for rent and ALL other covenants in the lease

sublease by T –
(1) sublessee not personally liable on any covenants in the original lease and cannot enforce the LL’s covenants

(2) original tenant liable for rent and ALL other covenants in the lease and can enforce LL’s covenants

Question 17

at common law, what was LL’s tort liability

what were exceptions to LL’s tort liability?

Answer 17

Caveat lessee - tenant beware = no duty to make premises safe

Exceptions [CLAPS]
(1) Common areas
– LL has duty of reasonable care in maintaining all common areas [hallways, stairwells, elevators]

(2) Latent defects
– LL must WARN T of hidden defect, which are dangerous conditions that the T could not easily discover by reasonable inspection, that LL has knowledge or reason to know [no duty to repair]
—if T accepts the premises after disclosure, she assumes the risk and L no longer liable in tort

(3) Assumption of repairs
— once LL undertakes repair, he must do them with reasonable care [if negligent, he is liable]

(4) Public use rule
– LL who leases public space and who should know, because of the significant nature of the defect and short length of the lease, that a T will not repair, is liable for any defects on the premises that cause injury to members of the public [idea is that T does not have time or expertise to make repair]

(5) short term lease of furnished dwelling
– LL who rents fully furnished premises for short period is responsible for ANY defective condition which proximately injures a T, whether or not they knew of the defect

Question 18

what is landlord’s tort liability in the modern day?

(1) defects arising after T takes possession

(2) legal duty to repair

(3) security

Answer 18

Many courts now hold that a landlord owes a general duty of reason- able care toward residential tenants, and will be held liable for injuries in tort resulting from ordinary negligence if the landlord had notice of a defect and an opportunity to repair it

(1) LL is held to have notice of defects existing before T took possession; NOT liable for for defects arising after possession UNLESS he knew or should have known about them

(2) if LL has a statutory duty to repair (housing code), LL is liable in tort for injuries resulting from his failure to repair or negligence in making repairs

(3) Some courts hold landlords liable in tort for tenant injuries inflicted by the criminal conduct of third parties in cases where the landlord failed to comply with housing code provisions dealing with security, maintain ordinary security measures, or provide advertised security measures (for example, surveillance cameras).

Question 19

what is the duty of care owed by a T as an occupier of land?

Answer 19

tort outline

Question 20

what is a fixture?

how to tell it is a fixture ?

who owns it?

Answer 20

DEFINITION:
a chattel that has been so affixed to the land that it has ceased being personal property and has become part of the realty

HOW TO TELL:
(1) Items that are incorporated into the realty such that they lose their identity (bricks, concrete)

OR

(2) removal would cause considerable damage to the premises (plumbing, heating ducts, furnace)

WHO OWNS:
Fixture passes with ownership of the land and must stay put

Question 21

fixture common ownership case

Answer 21

A common ownership case is one in which the person who brings the chattel to the land owns both the chattel and the land, as when X installs a furnace in his home. That item is a fixture if the party who made the annexation objectively intended to make the item part of the realty. This intention is determined by: the nature of the article, the manner of attachment, the amount of damage that would be caused by its removal, and the adaptation of the item to the use of the realty.

Question 22

fixture divided ownership case / accessions in general

Answer 22

In divided ownership cases, the chattel is owned and brought to the realty by someone other than the landowner (for example, by a tenant, licensee, or trespasser). Accession describes the annexor’s intent to make the chattel a permanent part of the real estate.

Question 23

How can you tell whether a tenant installation qualifies
as a fixture, in which case it must stay put because fixtures pass
with ownership of the land?

Answer 23

agreement between LL and T is controlling on whether an annexed chattel is a fixture

Absent an agreement, a tenant is deemed to lack the intent to permanently improve the property, and thus may remove his annexed chattels if removal does not substantially damage the premises or destroy the chattel.

Annexed chattels must be removed by the end of the lease term (or within a reasonable time after the termination of an indefinite tenancy), and the tenant is responsible for repairing any damage caused by the removal.

Question 24

How can you tell whether a life tenant or remainderman’s installation qualifies
as a fixture, in which case it must stay put because fixtures pass
with ownership of the land?

Answer 24

The same rules apply in the life tenant-remainderman context as in landlord-tenant situations, except that the life tenant’s representa- tive may remove annexations within a reasonable time after the life tenant’s death.

Question 25

How can you tell whether a licensee or trespasser’s installation qualifies
as a fixture, in which case it must stay put because fixtures pass
with ownership of the land?

Answer 25

licensees = treated like tenants

trespassers = lose their annexations

absent a statute, an adverse possessor or good faith trespasser cannot remove fixtures (for example, house erroneously constructed on a parcel that possessor believed she owned). Some courts, however, allow a good faith trespasser recovery measured by the value added to the land (not construction costs).

Question 26

barbri on fixture cases

Answer 26

fixture = chattel that has become attached to real property

how to determine whether there is a fixture? – first determine whether it is a residential or commercial lease

if residential, the time is a fixture depending on three factors:
(1) nature of the chattel (toilet vs. chandelier)
(2) intent of annexed to bring chattel with him or not
(2) damage to real property if chattel removed

if commercial lease, the trade fixtures doctrine applies: commercial T may remove all trade fixtures prior to expiration of the lease unless they are accessions (which are structural additions to real property, which cannot be removed, such as a deck or loft)