Property II Outline

Property II Outline

1. Non-Freehold Estates: Landlord and Tenant

1. Nature and Creation of Leasehold

1. Freehold v. Non-Freehold

1. Freehold

1)Actual Interest in property

a)Bundle of sticks

1. non-freehold

1)Leasehold Interests

a)RIGHT OF POSSESSION

2)Incentives to lease

a)LANDLORD’S Interests

1. Money

1. Profits, tax planning, long term security, equity/leverage, preservation of ownership, maintenance, credit-worthiness

1. PAYMENT
2. ABILITY TO GET INVESTMENT BACK

b)TENANT

1. Location, Short Term, Save $
2. Amenities

1. pool
2. fitness center
3. free heat

1. Low Maintenance
2. Safety

3)Leases

a)legally enforceable relationship between landlord and tenant

1. Agreement between landlord and tenant AND
2. Some Level of Government Intervention—COURT ENFORCEABLE

b)CONTRACT AND CONVEYANCE

1. contract defines the agreement
2. conveyance gives possession

c. Components of an enforceable lease

1)Names of the parties

a)Landlord and Tenant, and Residents

b)Lease Works for or Against Both parties

2)Definite and adequate Description of the extent and Bounds of the Property to be leased

a)does not give tenant the right to use more property than intended

3)Duration of the Lease

a)distinguishes tenancy

1)possession begins

2)termination

b)constant flow of rental payment during the lease

c)Duration determines the definite rental price

4)Form of Payment

a)Method—cash, check, etc.

b)Date of Payment

c)Where it is sent

d)Penalties

e)Frequency

5)Execution of the Lease

a)Signature of both parties

b)Mutual obligation

6)Requirement of Delivery

a)Legal AND

b)Actual Possession

c)Interesi Termini—time between signing and actual taking

7)Limitations on Eviction

a)Retaliatory Evictions

1. example

1. Tenant complains of housing code violations
2. Threatens to report landlord to the board
3. Landlord evicts tenant for this reason

8)Other components

a)Renewal Options

b)Options to purchase

c)Subleases

d)Restrictions on tenant

e)Assignments

f)Anti-competition clauses

1. commercial

g)Duties

h)Security Deposit

i)Pets

Case Law—Brown v. Southall Realty Co.

Facts:  refused to pay  (landlord) because premises were uninhabitable before lease was created—broken toilet, railing, low ceiling in basement.

Rule: a lease violating housing regulations is void.

Holding: The court held that the existence of these conditions BEFORE the lease was created is a violation of the controlling statute.

Policy: Lease agreements treated as contracts. Insuring the habitability of housing.

Fair Housing Act

I.Policy

1. Provide Fair Housing throughout the US within constitutional limitations

II.Definitions

A.Secretary

1. Housing AND Urban Development

B.Dwelling

1. Building, Structure, or portion

1. occupied OR
2. designed or intended for occupancy AS:

1)Residence W/

a)one or more families

OR

1. Vacant Land

1. offered for sale or lease
2. for the construction of a building, structure, or portion of.

C.Rent

1. Right to occupy, not own, a premises for a consideration BY:

1. lease
2. sublease
3. let*
4. grant*

D.Discriminatory Housing Practice

1. unlawful act under § 3604 (SEE PART 3)

E.Handicap

1. Person

1. physical impairment OR
2. mental impairment AND
3. it substantially limits one or more major life activity

1. Record of impairment OR
2. Being regarded as having such impairment UNLESS

1. illegal use OR addiction to a controlled substance

F.Aggrieved person

1. Person

1. claims an injury under §3604 OR
2. believes an injury under §3604 will occur

G.Familial Status

1. Person(s) not yet 18 yrs. Old *(MINOR)
2. Domiciled With:

1. parent OR
2. person with legal custody OR
3. designated person with written permission from parent or custodian

 Protects pregnant women or persons in the process of securing legal custody of *minor

1. Discrimination in the sale or rental of housing and other prohibited practices

A.Unlawful Acts—Sales to Protected Classes

1. Refuse to sell or rent

1. after bona fide offer

1. Refuse to negotiate sale or rental
2. Make unavailable OR deny
3. to a person Based On:

1. race, color, religion, sex, familial status, national origin

B.Unlawful Acts—Terms of Sale

1. Can’t discriminate against any person regarding:

1. terms OR
2. conditions or privileges of sale or rental OR
3. provisions of service OR
4. facilities in connection with service
5. Based On

1)Race Color Religion Sex familial status national origin

C.Unlawful Acts—Advertisements

1. Make, Print, or publish OR
2. Cause to be made printed or published
3. For sale or rental a

1. Notice OR
2. statement OR
3. advertisement

1. Indicating OR Intending to indicate

1. preference
2. limitation
3. discrimination

1. Based on

1. race color religion sex handicap familial status national origin

D.Unlawful Acts—representations

1. make representations
2. to (protected classes)
3. that a dwelling is unavailable
4. when it is in FACT available

1. Unlawful Acts—SEE BANKS FOR §3604(e)

F.Unlawful Acts—Sales to Handicap

1. discriminate, refuse to sell or rent, or make unavailable because of:

1. the buyer or renter’s handicap
2. resident or intended resident’s handicap in that dwelling (SEE BANKS)

1)after it is sold OR

2)rented OR

3)made available

1. any person associated with the buyer or renter

1. discriminate against person regarding

1. terms OR
2. conditions or privileges
3. provisions of service OR
4. facilities in connection with the dwelling

1)buyer or renter

2)resident or intended resident

a)after sold

b)rented

c)made available

3)any person associated with the buyer

1. Discrimination against handicap includes

1. MODIFICATIONS FOR FULL ENJOYMENT

1)refusal to permit reasonable modifications to premises:

a)occupied or

b)to be occupied

2)at the handicapped persons expense

3)if modifications are necessary for:

a)full enjoyment

4)Exceptions

a)Rentals

1)If reasonable, landlord may:

a)require the handicapped tenant to restore to its original condition

b)before the modifications

c)wear and tear excepted

1. REFUSAL OF REASONABLE ACCOMMODATIONS

1)Reasonable accommodations in:

a)rules

b)policies

c)practices

d)services

2)Necessary to afford

a)equal opportunity to

1. use and enjoy

1. Access to the Rental Market

1. Fair Housing Act: Statutory Interpretation

1. Who are the protected classes

b. What is the prohibited conduct

c. What are the exceptions to the rule

Case Law—Jancik v. Dept. of Housing And Urban Development

Facts: Advertisement: “Mature Person Preferred.” Asked questions on race, family, age, marital status etc. to both white and black females over the telephone. Never leased to a minority.

Rule: Indication of preference: Ordinary reader test—if an ad suggests to an ordinary reader that a protected class is not preferred, or it would discourage them from answering the ad, it is a violation.

Holding: The court held that the inquires were impermissible under the act.

Policy: Free use of property UNLESS deprives others of their legal right. ***Once property is placed in the STREAM OF COMMERCE, limitations are greater as opposed to purely private ownership. PUBLIC POLICY IS ADMINISTERED WHEN PROPERTY IS OPEN FOR LEASE TO THE PUBLIC. ***

1. Tenant’s Right to Possession

1. Actual AND
2. Legal
3. Covenant of Quiet Enjoyment

1. Expressed

1)Oral OR Written

1. Implied

1)implied in fact

a)conduct of the parties

b)customs or injuries

c)operation of the law

d)expectations

1. habitable
2. actual possession

Case Law—Adrian v. Rabinowitz

Facts:  could not move in because a hold over tenant kept possession after ’s term began.  took possession one month later. D argues the American rule.

Rule: AMERICAN RULE—tenant has legal right to possession, but not protected from wrongful acts of strangers (HOLDOVER TENANT)

ENGLISH RULE—future commencement of a lease gives implied duty to give tenant actual and legal possession on the first day of the term

COVENANT OF QUIET ENJOYMENT—no interference form one with superior title

Holding: English rule adopted. Landlord is liable for the time of deprivation

Policy: Delivery on the day of the lease is the intention of the parties

Case Law—Blackett v. Olanoff

Facts:  refused to pay rent because they complained about the nightclub and landlord failed to eliminate the noise.  raises the affirmative defense of constructive eviction.

Rule: Breach of Covenant of Quiet Enjoyment GENERAL RULE—landlord performed an intentional act of depriving the tenant of enjoyment

MODERN RULE—action or inaction that deprives enjoyment—landlord has CONTROL over the interference

Holding: The court held that landlord had control over the nightclub noise

Policy: Protect tenants from interference when landlord can control the interference

1. CONTROL

1. affirmative action
2. knowledge of interference
3. inaction
4. creation of interference

1. CONSTRUCTIVE EVICTION

1. not actual deprivation of possession
2. malfeasance or nonfeasance renders premises uninhabitable
3. landlord has notice
4. failed to act/correct the problem

1. TENANT’S REMEDIES

1. Common Law

1. no rent or Withhold rent until problem is solved
2. terminate lease
3. sue for damages

D.Provisions Governing the Tenancy

1. Duration

a. Tenancy Determination

1) Terms

2)Years

a)Determines lease obligation

b)Beginning and end or term

3) Notice Required

a)Time

b)Manner

c)To whom it must be delivered

4) Prevents landlord from turning over property to next lessee

1. Holdover Tenant

1)Clariton Corp. v. Geo-Con, Inc.

a)common-law: Holdover after expiration of term, liable for anther term (yearly)

b)If the tenant has no intent to stay for another year term,

c)Treated as a periodic tenant

Case Law—Commonwealth Building v. Hirschfield

Facts:  (tenant) sent registered mail to  intending to move out. Moving lasted three days. On the last day elevator use delayed the move.  spent the night in the premises and left promptly the next day completing the move-out.  served  with notice to pay double rent because  was a hold over tenant for one day.

Rule: A tenant who voluntarily holds over after the expiration of his term may, at the election of the landlord, be held to be either a trespasser or tenant for another similar term.

Holding: did not voluntarily hold over because he intended to move out on the day of expiration. Lease required double rent for the month he held over, it was not implied that the  agreed to a lease for another term by staying one day.

Policy—Protects the tenant because if he holds over without the intent to renew the lease, protected from unequal bargaining power. Protects the landlord because the landlord can treat those who voluntarily hold over as a trespasser, or make them pay.

a.Senior Citizens and Disabled Protected Tenancy Act

2. Conditions of the Premises

a. Conditions at the time the lease is created: VALID LEASE

1)Delivery AND

2)Possession

a)LOOK TO

1. Contractual Aspects of the Lease for CONDITIONS

a. Expectations of Habitability

1)Public Policy dictates habitability

2)Must comply with housing regulations

Case Law—Javins, Saunders, and gross v. First National Realty Corp.

Facts-- did not pay rent because of housing violations that occurred after the creation of the lease.  landlord sued for possession because he could not sue for rent b/c the premises was inhabitable.

Rule—OlD COMMON LAW: NO REPAIR RULE: Lessor is not obligated to repair unless he covenants to do so in the written Lease. MODERN LAW: FIT FOR USE: A warrant of habitability is implied in all contracts for urban dwellings.

Holding--’s obligation to pay rent is dependant upon the landlord’s duty to keep the premises habitable. At a minimum, landlords must follow housing regulations.

Policy—Applies to all residential Leases. Purpose of modern dwellings is a place to live, not to cultivate the land. The old rule does not apply.

3. Rent

a. Distinction between commercial and residential

1)Commercial Tenant pays more money

2)Commercial tenant pays for a larger Sq. Footage

3)Commercial tenant has a longer lease

a)investment in property

b)requires longer time to pay off capital investment And

c)begin profiting and paying off liabilities

b. Pennel v. City of San Jose

1)US Supreme Court constitutional Challenge V Amend.

a)Hardship Clause in Statute

1. landlord can only raise rent 8%

2. landlord can raise it more than 8% IF

a. mediation hearing

b. hardship clause is considered.

1)strong public interest to regulate rent increase

3. Landlord’s Challenge: Takings Clause—V Amendment

a. government has taken my property regulatory or otherwise, for public cause, without just compensation.

b. impacts on the bundle of sticks

1)right to exclude, use, or control

c. Landlords argue that we should not be responsible for the burdens of society

d. Tenants argue a balancing of rights—private v. public

4. Use of Premises

a. Duty of continuous Operations

1)The party who did not draft the lease should be protected

2)Landlord usually drafts the lease

3)Anchor tenant

a)Ensures business traffic

b)Vacant anchor tenant:

1. landlord loses profits above base rent

2. may lose other small businesses

3. Deterioration of the building

Piggly Wiggly Southern, v. Heard

Facts—landlord drafted lease. Clause: use for any other lawful business. Tenant continued to pay base rent, but left the store vacant.

Rule—To enforce a duty of continuous operation, the agreement must express or imply the covenant of continuous operations.

Holding—The court usually looks to the intent of the parties, but here the plain language of the lease says that tenant is using it lawfully even though it is vacant.

Dissent—in an ambiguous lease, the lease is viewed most strongly against the party that drafts it. Here, the lease calls for any lawful business. This implies business use, not non-use.

Policy—Anchor business is an essential part to the community for profiting businesses.

b. Physical Alterations

Handler v. Horns

Facts—Co-Tenants in a action for partition. Division of a warehouse with all fixtures included OR division of the warehouse without the fixtures.

Rules—Ancient Rule—anything affixed to the realty becomes part of the realty

Exceptions—I. Between landlord and tenant

1. Anything affixed to the premises by the tenant is presumed to be for his benefit, not for the landlord’s benefit
2. TRADE FIXTURE—anything aiding the trade or business of the tenant affixed to the premises with the purpose of profit
3. Trade fixtures are removable by a tenant so long as he remains in possession of the leasehold, provided they are capable of removal without material injury to the realty.

Policy—Encourage trade and industry by allowing the tenant the greatest latitude to remove fixtures. Intent of the parties determines who receives the trade fixtures. FORFEITURE RULE—Inapplicable because the court hates forfeitures. INSTITUTIONAL THEORY—one economic unit theory

E.Injuries to Persons and Property

Walls v. Oxford Management Co.

Facts—There were prior acts of crime at the apartment complex.  landlord had notice of these crimes. The person who committed the assault on the  was not an employee of . There were 412 units, 14 different buildings. The assault occurred in the parking lot. Rental contract did not include security provisions.

Rules—

I. Everyone including landlords, have a duty not to subject others to unreasonable risk of harm

1. Private parties have no duty to protect others from the criminal acts of a 3rd person.

1. Exceptions

1. Special Relationships

a)innkeeper—guest

b)common carrier-passenger

c)Parent-Child BUT NOT

1)Landlord—Tenant

2. Good Samaritan—own voluntary actions create a duty if:

a)Begin to help person in need

b)Stop and leave them in need

c)Creates a duty

3. Clearly Foreseeable Risk

a)even if not causally related to physical defects of the premises

1)example—high crime area, location etc.

4. Landlord’s own actions created the unreasonable risk of harm has duty to exercise reasonable care to prevent the risk from taking effect

a)not liable for actions of a 3rd party unless the landlord could foresee the danger and his conduct increased the risk

1. ***Landlords have a duty to act reasonably in all circumstances***

1. This may give rise to a duty to protect against 3rd party attacks.

Holding—Duty to protect is not included in the implied warranty of habitability.

Policy—Tenant relies upon landlord’s provisions. At common law, there was no duty to protect against 3rd party attacks unless the landlord contractually obligated himself either expressly or impliedly. The modern law requires that the landlord must act with reasonable care—duty may be included in the implied warranty.

F.Lessor’s Remedies Against Defaulting Tenant

1. Termination of the Lease

1. Limitations

1)termination is contingent upon tenant’s breach

2)Must be a substantial breach

a)exceptions

1. reasonable expectations of the parties
2. conduct
3. lease terms

Case Law—Foundation v. Loehmann’s Inc.

Facts—20 year lese with option to renew for 2 five year periods. No provision for % rental increase during the terms. Loehmann’s always made late payments. They made a late payment and the landlord tried to terminate the lease.

Rules—trivial breach of a commercial lease will only give rise to an action for damages and will not justify forfeiture of the tenancy.

Holding—trivial breach = no complete forfeiture. The landlord’s right to termination is limited. To justify complete forfeiture, the breach must be material, serious, or substantial.

Policy—maintain the agreement between landlord and tenant despite trivial breach. Law hates forfeitures because its unfair that one party is left with nothing.

2. Eviction

Edwards v. Habib

Facts—month to month tenant. Sanitary violations. Landlord failed to correct. Department ordered corrections. Landlord retaliated and told tenant to get the fuck out.

Rules—To evict a month to month tenant, landlord is required to give 30 day notice.

Holding—although landlord can evict month to month tenant for any reason, cannot retaliatory evict tenant.

Policy—retaliatory evictions would deter people from reporting violations of the housing regulations. This would punish the tenant for making a complaint and deter others from complaining for fear of eviction. This would not further the goal of congress to improve housing conditions.

3. Damages

a. Confession of judgment

1)waive the right to go to court for all defenses after tenant’s default

b. Landlord’s waiver of liability

1)landlord cannot waive his legal duties

c. Landlord’s duty to mitigate damages

1)When tenant vacates the premises before the term ends

2)Landlord must make reasonable effort to mitigate damages

3)Cannot let damages accrue

4)Tenant is still liable for rent even if landlord relets for:

a)longer term

b)higher rent

5)Tenant’s Liability is excused depending on the lease OR

6)Landlord may voluntarily excuse tenant from lease