Tenant’s ability to transfer leasehold interest
In the absence of some prohibition in the lease, Tenant is permitted to transfer her leasehold interest in whole or in part.
Assignment
When T transfers her entire leasehold interest to T2. T2 is the assignee.
e.g. T1 transfers all of the remaining 10 months on her term of years lease to T2.
Sublease
When T transfers less than her entire leasehold interest. T2 is sublessee
Landlord’s relationship to T2
- If the transfer is an assignment, L and T2 come into privity of estate.
- This means that L and T2 are liable to each other for all covenants or promises in the original lease that “run with the land”.
- Most, if not all, promises in the original lease run with the land, meaning that they pertain to the leased premises. Common examples incl. promise to pay rent, paint, and insure, etc…
- L and T2 are not in privity of contract, unless T2 has expressly assumed the performance of all promises contained in the original lease.
L’s relationship to T1 after assignment
L and T1 are no longer in privity of estate. But, they remain in privity of contract because they exchanged those original promissory words. So, L and T1 will be secondarily liable ot each other.
Privity example
- L leases to T1. T1 assigns to T2. T2 assigns to T3, who engages in flagrant abuse to the premises.
- Landlord can sue T1, because they have privity of contract. T1 will also be liable if T3 flees.
- L can sue T3, because they have privity of estate
- L cannot sue T2, because no privity of contract or estate.
Privity if the transfer is a sublease
- Relationship between L and T1 remains fully intact.
- L and T2 don’t share privity of estate or contract.
- T2 is responsible to T1, and vice versa. T2 must pay rent to T1 who pays L. T1 must enlist L to remediate any problems on the premises.
Common Law of Caveat Lessee
Let the tenant beware. L was under no duty in tort to make the premises safe.
Caveat Lessee exceptions
CLAPS
- Common areas
- Latent Defects
- Assumption of Repairs
- Public Use Rule
- Short term lease of furnished dwelling
Caveat Lessee Exception- Common areas
L has duty to keep common areas safe
Caveat lessee exception- latent defects
L has duty to warn T of hidden defects of which L has knowledge or reason to know. (no duty to repair)
Caveat Lessee exception- assumption of repairs
Once undertaken, L must complete repairs with reasonable care. If repairs are negligent, L is liable for injury
Caveat Lessee Exception- Public Use Rule
L who:
- leases public space, and
- should know that T will not repair,
- due to the significant nature of the defect and short length of the lease,
- is liable for any defects on the premises.
Caveat Lessee exception- Short Term Lease of Furnished Dwelling
L who leases out for short terms (ie. hotels) is liable for guests’ injuries if :
- they come as a result of the negligence of the owner in allowing the dwelling to degenerate into a state of disrepair, or
- if the owner’s negligence results in a dangerous condition that causes an injury to a guest.