Concurrent interests

:)


Download 181.89 Kb.
Page1/3
Date conversion26.06.2017
Size181.89 Kb.
  1   2   3

Property Outline - Schmudde

Fall 2001


  1. CONCURRENT INTERESTS:




  1. Overview of concurrent interests:

  1. Tenancy in common:

  1. each tenant has a joint / undivided interest in the whole

  2. it can be inherited, devised by will or sold

  3. no right of survivorship, upon death interest passes to heirs, not other tenant

  4. tenancy in common is the default rule

  5. same estates and equal shares are not necessary




  1. Joint tenancy

  1. right of survivorship: upon death of one, entire interest goes to other

  2. can be created by deed, will or by a joint adverse possession

  3. cannot be devised by will (ex. tax cannot be passed on to other joint tenants because joint tenant interest vanishes at death)

  4. No limit on # of joint tenants but the last one living keeps it at the end

  5. Requires four unities:

  1. Unity in time: the interest of the owners must vest at the same  if joint tenancy is meant to come about by conveyance, it must be done concurrently.

  2. Unity in title: title must be acquired by the same deed or will, or by adverse possession. H cannot convey to H and W and get joint tenancy. It is a violation of unity of title because H’s title was really acquired by a different instrument previously.

  3. Unity of interest: all must have undivided shares and identical interests measured by duration and size (one can't have ½ interest in life estate and ½ interest in fee simple)
  4. Unity of possession: each tenant has the right to possession of the whole. However, tenants can waive their right to such possession.


  1. Tenancy by the entirety:

  1. only to husband and wife (terminates on death, divorce, or mutual agreement and dissolves to tenants in common)

  2. right of survivorship which is indestructible (only by agreement of parties to convey to strawman and then back as tenants in common)

  3. cannot be forced partition

4 Other concurrent interests include partnerships and corporations (LLP, LLC, etc.)





  1. Creation of the concurrent interests:

  1. At common law, the preference was for a joint tenancy, and husband and wife got tenancy by entirety by preference. BUT IN AMERICAN LAW: the preference is for tenancy in common, although TBE still preferred for husband and wife.

  1. Only express words can overcome a tenancy in common preference:

  1. To A and B in joint tenancy and not a tenancy in common will create a joint tenancy.

  2. To A and B in joint tenancy may not work either.

  3. To A and B in joint tenancy with right of survivorship (JTWROS) will usually work.




  1. Example: O conveys to A, B, and C in joint tenancy.

  1. A conveys to D  this is valid, but it is a severance of the joint tenancy. But B & C have not severed as between themselves, so they still have a joint tenancy in 2/3 of the property, which exists as a tenancy in common with D’s interest to 1/3. B dies, heir is H. H doesn’t get it, because C has a right of survivorship. D and C now have a tenancy in common (2/3 to 1/3) If we had quotes on the conveyance, it was a tenancy in common and B dies intestate it goes to his heirs??
  2. T devises blackacre to A & B for joint lives, remainder to survivor. This is NOT a joint tenancy, because the right of survivorship is actually indestructible as it functions as a contingent remainder. T has a reversion as well.


  3. A & B plan to get married. They buy a house and take title as “tenants by the entirety”. But they are not married yet. This is not tenancy by entirety yet.




  1. A joint tenancy allows the benefit of no probate  when one joint tenant dies, there is no judicial intervention needed, the other joint tenant just continues their “ownership” of the whole.




  1. Severance of concurrent interests:

Any joint tenant can at any time destroy the right of survivorship by severing the joint tenancy. Severance of one or more of 4 unites destroys the joint tenancy but there are exceptions depending on intent of parties. Example: A, B, C are joint tenants. A conveys his share to D, thus destroying the unites of time and title btwn B and C and their new co-tenant, D. B and C remain joint tenants between themselves but D holds her share as a tenant in common with them. If B subsequently dies, C owns a 2/3 interest and D a 1/3 interest as tenants in common.



  1. RIDDLE V HARMON: usually you needed a straw person to unilaterally sever a joint tenancy and convert to a tenancy in common. Tenants in common who wanted to create a joint tenancy would have to convey title to one person (strawperson) then back to them as joint tenants. This was abolished, now they can do it without the strawman, through a written instrument. You can sever without the permission of the other and without recordation. No strawman is needed to create or destroy a joint tenancy…common sense and legal efficiency say that a joint tenant should be able to do simply what they would normally be able to do through elaborate legal fictions. The same is not true for a tenancy in the entirety in order to uphold the bonds of marriage. Some states require recordation of change.




  1. HARMS V. SPRAGUE: John and William own by joint tenancy. John gives mortgage to Simmons. There are two theories to mortgages:

  1. Title theory: affects severance because courts see mortgage as transference of title (8 states)

  2. Lien theory: does not affect severance because it is simply a security interest

So the mortgage here is construed as lien, the joint tenancy is not severed and Simmons cannot execute on the property. Does the lien survive the death of the debtor tenant? No, the surviving tenant has the right to the other tenant's half unencumbered by the mortgage. The lien dies with the debtor tenant. But if the non-debtor tenant had died first, the lien would still exist (it would actually expand) onto the interest of the whole in the surviving debtor. Why? The non debtor tenant did not take out the loan, but don’t we want to protect creditors? Some jurisdictions say that the surviving tenant takes the other tenant's interest subject to the mortgage to be fair to the mortgagee. Sometimes we’ll require both tenants to be in on the loan to avoid the gamble of the who dies first affect being able to collect.


Giving a mortgage over does not severe the joint tenancy (when seen as a lien)

If both tenants were in debt, then it would be ok for the creditor to come in.


  1. A death of a leasing tenant also makes the lease die. It does not survive the death of the leasing tenant. But don’t worry about it, one a one year lease, the surviving tenant (who has full rights against you) won’t evict you, it takes too long. Add in stuff here....(Gilbert pg. 156)

Joint Tenancy Bank Accounts.

Surviving tenant takes the account unless there is clear and convincing evidence that a

convenience account (only right to pay bills from account).

4) Partition – Concurrent owners might decide to terminate a cotenancy. If they can agree on a division of the property or the proceeds from a sale, there is no problem. But if such an arrangement is not possible, recourse to the equitable action of partition is necessary.

There are partitions in kind and partitions in sale.


DELFINO V. VALENCIS: Plaintiff Delfino is seeking partition of tenancy in common with the Valencis. The preference is for partition in kind, not partition in sale. Here, a partition in kind is attainable because shape of property is well suited and appraisers can decide how to split up land. The court decides for Valancis (partition in kind) because it can be easily done and since she is living on the property. A partition of sale is only ordered when:

  1. the physical attributes of the land are such that partition in kind is impractical. or inequitable, and

  2. The interest of the owner would be better promoted by a partition by sale.

Modern practice - Many times, however, a partition in sale will be ordered when both parties agree on

it or because the courts believes it is the fairest method of resolving the conflict. Schmudde likes

partitions in sale better because it promotes negotiation.

E. Rights and Duties of Co-tenants:

Rights: 1) all tenants are entitled to equal rights of possession

2) cotenant cannot exclude the other (ouster) – although parties can agree that one has

exclusive use

3) rental income received for use of the property must be shared equally (unless services)

Duties: 1) must share in the property taxes equally

2) must share the payment of the interest on the mortgage

3) must share in cost of necessary repairs but improvements are voluntary (not always clear)

FEIN V. KOHN: They had been married (joint tenants) and then Fein was sent to jail. When he gets out, he wants apartment back but Kohn had remarried and was living there with new spouse and kids. Fein claims that he was ousted by wife's remarriage and wants half of reasonable rental value. Ouster – act by one co-tenant that deprives another co-tenant of the right of possession. Court says that he was not ousted because his jail time, not his wife prevented him from being in possession.

F. Relations between concurrent owners:


  1. Sharing benefits and burdens: Agreements on use, maintenance, and improvements can be accomplished by contract law. Where these agreements don’t exist the co tenant can ask for partition, but this is a bigger production than just asking for rent…

  1. SPILLER V. MACKARERTH: Plaintiff and defendant were tenants in common (thus each having a right to use of the entire property) of a wharehouse. Defendant entered after a lease expired and started using wharehouse as a storage facility. Plaintiff demanded half of the rent or get off the property. The in tenant out tenant dilemna:

  1. If the defendant was renting the property out to someone, then the plaintiff out tenant can demand ½ of the reasonable rent of the property.

  2. But if the defendant is himself in possession, he usually is not liable for rent unless there has been ouster:

  1. ouster: the out tenant has been denied the right to enter the property resulting in:

  1. reasonable rent liability

  2. the starting of the clock for adverse possession.




  1. This rule promotes the efficient use of the property. It rewards the tenant who goes in and uses the property.

c. The tenant in possession usually has to pay the upkeep charges

while he is in sole possession.


  1. Minority jurisdictions support the idea that the out tenant should get ½ the rent even if the in tenant is in possession.

  1. This rule induces parties to set up agreements prior to invoking this rule, thus lessening litigation.

Here, the court ruled that Spiller did not owe rent since there was no ouster (physically barring Mackarerth from entry).

b. SWARTZBERG V. SAMPSON:

Plaintiff husband a wife are joint tenants (HS and WS). HS signed an agreement to lease the land to Sampson (for a boxing pavilion) because co-tenants can lease the property without giving notice to the other co-tenants. The lease does not sever the joint tenancy. Sampson took a risk here: if HS had died before WS then the property would go to the WS because the lease does not survive the death of the leasing tenant. She could force partition in kind or sale, but the physical property with the improved part leased to Sampson would likely go to the husband. Remedies:



  1. Alternative: ask the court to partition only the two acres which have been leased. or partition in sale

  2. Ask for accounting: but the property is being leased for practically nothing, so nothing to be gained there. (reasonable rental value or ½ of actual rental value.)

  3. The higher the standard of ouster, the more likely the tenant will ask for partition. Getting ousted can be hard with a high threshold.

Here, the court ruled that there was no evidence that HS or Sampson ever attempted to

interfere with WS's enjoyment of her interest. While she may be entitled to an accounting

for rents received, she has no right to challenge the lease itself.
In sum, joint tenancy can be severed when:

1) conveyances –when one joint tenant conveys an interest to the other or to themselves (becomes a tenancy in common)

2) mortgages (liens theory – no; title theory – yes)

3) leases (under common law – yes; modern law – no)

4) agreement by joint tenants

5) murder by a joint tenant of the other joint tenant (becomes a tenancy in common)

6) divorce – when there is a property settlement agreement
G. Marital Interests:

  1. Common law (English) At common law at divorce husband’s property belongs to husband and wife to wife. The husband however had the obligation to support her for life (alimony).


  2. Continental System /; community : husband and wife are seen as a community and should share what they acquire equally (all income, assets and liabilities) Pre-nuptial agreements help solve problems that may arise upon deaths and divorces which cause restructuring of assets. Without pre-nuptual, there is equitable distribution by a judge.

  3. Married Women’s Property Act: statutes removed cover and allowed women to have their own property separate from husband’s property. This was to protect wives from husband’s creditors…



  1. SAWATTA V. ENDO: Endo and his wife conveyed tenancy by the entirety to their son after Endo had been sued. Sawado argues that this is a fraudulent conveyance since it was done with the intent to deprive creditors.

  1. The Endo’s conveyed their property to their sons. Conveyance of property after an accident to avoid liability is fraud if it can be reached by the injured party…So the whole case rests on whether the Sawattas can reach the property or not, whether it is fraud or not. Court says that it wasn't fraudulent because tenancy by the entirety cannot be reached by creditors of either spouse favoring family unity over rt.s of creditors....

  2. Normally, the husband had complete control of the tenancy. Creditors to the husband as a debtor could reach the property subject to Wife’s indestructible survivorship right. But the wife cannot use for credit or alienate at all. If W dies first, creditors get it all. If Husband dies first, W is in ownership of the property and the creditors get nothing.

  3. Statutes for equalization didn’t mention tenancy by entirety. Solutions to the problem above for rights of women:

  1. Group I: kept common law dilemma expressed in 2.


  2. Group II: made both parties husbands. Both can do what they want with the property in terms of creditors subject to the indestructible right of survivorship of the other.

  3. Group III: Attempted conveyance by either spouse is void. Estate is not subject to separate debts of the tenants.

  4. Group IV: Contingent right of survivorship is alienable by each spouse and attachable by the creditor.

  5. Many states have chosen solution whereby each tenant is treated as common law wives: no alienation allowed without consent of both parties.

f. How can creditor protect himself? Get both tenants to sign off on

the debt, and do research.

B. U.S. v. 1500 LINCOLN AVE: The Bernsteins owned a building in tenancy by

the entirety. Mr. Bernstein operated a pharmacy there. Mr. Bernstein was convicted of selling controlled substances without prescriptions. The Government (P) brought a forfeiture action. The district court dismissed, holding that forfeiture was unavailable due to the presence of Mrs. Bernstein’s interest, as she had been unaware of her husband’s activities (innocent owner defense). Court ruled that a fair compromise would be that wife can use and possess it (with rt. of survivorship if husband dies first) but if she dies before husband, then the state can take it.

C. Divorce: 3 big issues: property settlement, alimony (spousal maitenance) and child

support. Pleadings for divorce require full financial disclosure. It determining equitable

distribution, courts look at salaries at beggin. of marriage and now, duration of marriage and age and health of parties, need of custodial parents to have and operate the house, lost inheritance and pension rights, any maintenance, liquid and non-liquid property, probably future financial status of couple if were to remain married, tax consequences.

D. Marital Property - all property acquired during the marriage, but not before and excluding inheritance and gift is divisible between the parties  equitable division of the property. What about earning potential of the MBA: is it property…


  1. Re Marriage of Graham: An MBA is not property: WHY? Because there are too many problems with seeing it as such. If we see it as an investment, then what if he dies before it pays off, or he doesn’t use it in his profession later on. It has no value on the open market, cannot be willed and is not exchangeable. What happens when spouse dies? Also, amount of money put towards degree is not equal to what degree is worth.

  2. O'Brien v. O'Brien: the court awards Mrs. O’Brien a fixed payment over 10 years of what they value the medical degree to be worth (like alimony).

What was the value added during the marriage. The court looked at the

average income earned of someone with a BA ($30,000) – what he had

before he was married and then they looked at the average income of an

MD ($60,000). Schmudde seems to think that this is

ridiculous and is as good as throwing a dart at a board to get a number.

3) Theories of Property: 1. occupation – occupation of thing justifies possession

of that thing...so if person earns and holds degree, it is solely theirs.

2. labor – other spouse has a moral right to ownership and control of things

they have added by labor

3. contract – marriage is an economic contract with both parties contributing

to the whole and thus both parties should benefit from degree.

4. natural rights theory – does not apply here

5. social utility theory – law should promote fulfillment of aspirations and

social welfare

Labor and contract theories are underlying in degree issue. 2 ways court

deals with this: 1) as alimony (most states) 2) as property (equitable

distribution) – in NY: legisl. - "and to career or career potential"

4) ELKUS V. ELKUS: Opera diva contended that her artistic career was not

a marital asset. Husband was voice coach and gave up his career to do so

and to raise children. Court in NY ruled that celebrity status is property

subject to equitable division because of extent of contribution made by

husband. Thus, celebrity Status with the accompanying economic


opportunities may be a marital asset subject to equitable dissolution.

5) MARVIN V. MARVIN - IIn 1964, Michelle Triola (P) began cohabiting

with actor Lee Marvin (D). She gave up an entertainment career, undertook

homemaking duties, and took Marvin’s (D) surname as her own. Years

later, the relationship ended. Michelle (P) brought an action against Lee

(D), contending that they had expressly agreed to divide the household

income during their period of cohabitation. Implied contract: In some states,

a contract to share property or to support one partner can be implied from

the conduct of the parties. If an implied contract is found by a court, it is

enforceable. Here, though the court ruled that there was not enough

evidence of an implied contract..
a) Sam sex partners: can make contracts governing their property rights as

well but like in Marvin, there must be evidence of an implied contract

(Martina Navratilova case).


  1. LANDLORDS AND TENANTS


Background:

Parties Goals and Expectations –
Goals / expectations of society: affordable housing, habitable premises (heat, running water, etc), safe environment, deterrence of nuisances.
Goals / expectations of landlord: make a profit, reasonable return (IRR), no damage by tenant, for tenants to pay rent, eviction of non-payers, premise maintained in good condition.
Goals / expectations of tenant: reasonable rent, habitable premises, promised services, quiet enjoyment, repair, possession, no discrimination, ability to sub-lease.

Duties of parties: fulfill goals of other parties...

-Tenant must pay rent, not disturb others, no illegal use of property

-Landlord must upkeep property

Economic Issues: acceptable return, affordable housing, neighborhood stability
Uses of property:

- lease: contract which forms a conveyance in land (leasehold interest not a freehold)

- license: a right to go on a premises for a limited period of time (ticket to a baseball game, concert, etc).

- easement: a grant of interest in land that allows a person to use the land for the interests of another

** lease gives a right to possession but license and easements only give right to use property.

SOF – if lease for more than 1 year have to be in writing




  1. A summary of the leasehold estates:

  1. Tenancy for years:

  1. Lasts fixed period of time (To A for ten years...usually what you get when rent an apartment)

  2. Ends at the point stated without requirement of notice.

  3. Can also terminate with the happening of some event (O leases to A for duration of war).

  4. Must be formed in a written contract (statute of frauds)




  1. Periodic Tenancy:

  1. Tenancy for some fixed period which continues for succeeding periods until notice of termination (To A from month to month, or To A with rent payable on the first of every month).

  2. Terminates by notice from one party at least equal to the length of the full period, with a maximum of six months requirement allowed

  3. If no notice is given, the periodic tenancy perpetuates itself.
  1. Notice given terminates the lease after the next period. For instance, if your MTM lease begins on the 1st of each month, and you give notice on the 15th of April, then your have satisfied the month requirement for the first of May so it ends in the end of May.





  1. Tenancy at will:

  1. Tenancy of no stated duration that lasts as long as both parties desire

  2. To T for and during the pleasure of L. To T until T no longer desires.

  3. Ends after one party desires termination, or by operation of law

  1. death of a party

  2. attempt to transfer interest

  3. implication – the tenant just leaves




  1. Tenancy at Sufferance (holdover tenancy):

  1. Tenant wrongfully holds over after termination of one the above tenancies

  2. Terminated when landlord evicts the tenant or elects to hold him over another term.


A holdover tenant is subject to double rent, for no more than one year. But if the landlord cashes a rent check, then he is treating the tenant as month to month. Courts do this because they don’t like the holdover for more than month to month.

Under property law theories, we look at a fee simple holding which lasts forever, and we carve out of the fee simple, a period of time which is a leasehold and the leaseholder requires a right to possess for the period of time.


Fee Simple Leaseholdfee simple is continuous at end of lease
Landlord's interest in property during a leasehold is a reversion....a right to possession at expiration of lease...also has interest to whatever the contract states.


  1. The Lease: Contract or Conveyance (do summary of evidence as table later on):

  1. Both. A lease transfers possessory interest in the land, so it is a conveyance of property rights. But is also contains promises or covenants, so it is also a contract. Tendency today moving toward contractual conception…
  2. Statute of Frauds usually includes leases for more than one year need be writing





  1. Some cases on Landlord Tenant Categorization:

What if a lease has no certain duration but is terminable at will by one party? Courts are split if it is a tenancy at will or a determinable life estate.




  1. GARNER v. GERRISH: Donovan grants a lease of a house to Gerrish. The lease contained that Gerrish could terminate at the date of his choice but no such right was given to lessor. Upon Donovan's death, Garner tried to terminate it, claiming it was a tenancy at will because it was indefinite as to time. But a tenancy at will is terminable by either party. The problem with this lease is that it doesn’t fit into any box.

  1. The court declares it a life estate determinable subject to the death of Gerish or at Gerish's will. They looked at intent of Donovan. The landlord however can argue he is no longer bound by landlord tenant relations because this is not a leasehold.



  1. CRECHALE V SMITH: Defendant wanted extra time to stay in lease without paying. Landlord wanted to bind him to another 5 years. Court won’t do either. Even it is was a holdover, the most you could bind is a new term of one year. The court says landlord has two options:




  1. Hold him as a tenant at sufferance (holdover tenant)

  2. Hold him as a trespasser and eject him (which he did)

Courts are not crazy about the holdover doctrine. The best way to induce a tenant to get out is the threat of double rent, but the holdover doctrine seems rather extreme; it binds the tenant for a whole year. Here he treated him as a trespasser, so he forfeits the right to holdover double rent.



  1. HANNAH V. DUSCH: Lease is silent on delivery of possession. Tenant arises to take occupancy, but there is someone living there. Does the landlord have a responsibility to put him in possession and put out the holdover tenant. This case follows the American rule.


  1. American Rule (minority rule): landlord does not have duty to deliver actual possession. Rationale: 1) It is up to the tenant to take possession of his property if he wants it. 2) the tenant has the right to evict the holdover tenant by summary proceedings and needs no additional remedy against landlord 3) landlord should not be held liable for tortious act of holdover 4) since the landlord is not required to evict a trespasser after the tenant takes possession, he should not be required to do so before the tenant takes possession. Damages: sue to evict holdover tenant and recover damages from him or treat him as a tenant for another term.

  2. English Rule (majority rule): landlord does have duty(implied covenant) to deliver actual possession. Rationale: 1) carries out intention of both parties since the tenant bargains for use of the property, not a lawsuit against the prior tenant. 2) landlord is more likely to know if and when the previous owner will move out. 3) landlord is usually more familiar with eviction process and can evict at less cost than tenant. Damages: terminate the lease and receive damages which equal the difference in cost of renting a similar premises.

Note: if you don’t show up, you pass up your right to actual possession; if someone climbs in through the window days after the lease is to begin, the landlord is under no obligation to help you get into possession.


All of this can be solved before hand with an express agreement to exclusive possession or no exclusive possession at the signing of the lease.


  1. Unlawful Discrimination in Selection of Tenants:
  1. Fair Housing Act of 1968 (42 U.S.C. § 3601-3609): Prohibits discrimination in sale or rentals of dwellings because of race, color, or national origin,. Sex, familial status (children as factor only) and protects handicapped persons.





  1. Advertising: The Fair housing act also provided that any public statement cannot indicate discriminatory preference (no exceptoions).

  2. Exceptions: The act made an exception so as to allow a preference for private clubs, religious organizations, and most importantly, single family dwellings provided that:

  1. The owner does not own three such dwellings

  2. The owner does not use a broker

  3. The owner does not advertise the discrimination.


  1. Question 3 p. 438: Murphy advertises for a private white home. Black couple applies and is rejected. Under the Fair housing act however, the refusal to rent (under the single family dwelling exception) is not a violation, but it is a violation because she advertised it in a discriminatory fashion.

  1. Does having all white models in ads constitute discrimination?

  1. The fair housing act bans policies which have a discriminatory effect, so this would fall under it as a violation.

  2. The Civil Rights act only bans intentional discrimination, and is not a violation.

  1. Is it a violation to reserve space for white families in a home to keep the rental rates up:

  1. Under the fair housing act, the discriminatory effect is in violation.

.

  1. Is it a violation not to rent to an unmarried heterosexual couple: not really. The fair housing act provision for familial status intends to cover children or no children issues, not married or unmarried.
  2. Is it a violation to refuse to rent to a gay couple: not familial discrimination. Sexual orientation is not a protected class (though some local laws protect it)


  1. It may be considered a violation if the motivation for not rent to a gay couple is a fear of AIDS, under the no refusal based on handicaps provision. The handicapped provision includes both perceived handicaps and actual ones. Thus if you can squeeze AIDS in there, you have a case.

  1. Is it violation to discriminate based on income: maybe, if we can demonstrate it is based on a racially biased pretense. Landlord will need to show the conditions were not pre-textual to simply mask race discrimination.

  2. Once you are a protected class that’s it. It is not a defense to say that a landlord’s religious freedoms were violated by forcing him to rent to an unmarried gay couple.




  1. The shifting burden of proof in a discrimination case:

  1. The burden begins on the plaintiff to establish prima facie case (she is member of protected class, she applied and was qualified otherwise to rent, she was denied but the space remained open) also have to show discriminating effect, prove it through testers– no motive needed



  2. The burden then shifts to the defendant landlord to show that his refusal to rent was based on legitimate reasons other than the protected consideration.

  3. If b, then the burden shifts back to the plaintiff to show that these legitimate reasons are simply pre-textual. have to prove motive or defendant was not permissible

SOULES V. US DEP'T OF HOUSING & URBAN DEVELOPMENT: Discriminatory



effects was not shown here but this case set up the procedure for method above.

BRONK V. INEICHEN: The FHA sections protecting handicapped persons provide that it is discrimination for a landlord to refuse to make reasonable accommodations in rules or services when such accommodations may be necessary to afford a handicapped tenant equal opportunity to use and enjoy a dwelling. Although, it was not proven in this case, a landlord with a "no pets" policy might have to accommodate a deaf person by permitting a "hearing dg"



  1. Subleases vs. Assignments

  1. In the absence of prohibition against either sublease or assignment, a tenant can freely assign or sublet his premise.




  1. Assignments: a transaction in which a party conveys his entire interest in property to another. The assignee becomes in privity of estate with the landlord, meaning the landlord and the assignee are liable to each other under the covenants of the original (head) lease. Landlord can also assign the reversion, which places the assignee in privity of estate with the tenant.

  1. The assignee is liable for rent, but in an assignment the original tenant is still liable under privity of contract to the landlord. The landlord can expressly release the original tenant from this obligation. Also, there can be a novation: whereby the original tenant is taken completely out of the picture, and T1 becomes liable to Landlord in both privity of contract and estate.

  2. The assignee is only liable for rent and damages which accrue while he is in possession. He is not liable for liabilities of the assignor.



  1. Subleases: a transaction in which a tenant or lessee conveys an interest in the leased premises that is less than his own or retains a reversionary interest. A sublessee is not personally liable for rent to the landlord unless he assumes the covenants of the head lease. The sublessee is not in privity of estate with the landlord and if he has not made a contract with the landlord directly, he is also not in privity of contract.



  1. Sublessees can assume the covenants of the head lease. If they do so, the landlord can recover directly from them for their breach. Assuming is not the same as “subject to the covenants”. NOTE: This is only possible if they are in a jurisdiction which allows for recovery by third party beneficiaries.





  1. One big problem: L leases to T. T assigns to T1, and T1 assumes the covenants of the head lease. T1 then assigns to T2 . T2 then assigns to T3. Third party suits are allowed in this jurisdiction.

  1. Can L sue T for the default of anyone? Yes, under privity of contract.

  2. Can L sue T1, T2, or T3 for their own default on rent? Yes, under privity of estate.

  3. Can L sue T1 for the default of T3? Yes. T1 assumed the covenants of the head lease, which means he is liable.

  4. Can L sue T2 for default of T3? No. T2 is in privity of estate with L, which means he is only liable for the damages incurred during his possession. He did not assume the covenants of the head lease, which means he cannot be held liable.

  5. CAN T SUE PEOPLE BEHIND HIM WHEN L GOES AGAINST HIM?


So overall:

In an assignment the landlord comes into privity of estate and can bring action with the assignee. He remains in privity of contract and can bring action for damages incurred while the assignee was in possession with the original tenant, unless there has been a novation which releases the original tenant from this obligation and the landlord is then in privity of contract and estate with the assignee.
In a sublease, the landlord is neither in privity of estate or contract with the sublessee. However, the sublessee can assume the covenants of the original lease, and the jurisdiction allows for third party beneficiary suits, then the landlord can now go directly against the sublessee.
Such rules are valuable because they induce landlord be more likely to grant subleases and assignments thus furthering the alienability of property.

  1. Distinguishing sublease from assignment:


  1. Common law distinctions:

  1. Retaining a reversion: if the tenant transfers rights to a quantum lesser than his term, he has conveyed via a sublease. Thus sublease for 1 year of a term lease for 2 years.

  2. A right of entry makes an assignment where there is no reversion at common law.

  1. Modern law

  1. A right of entry creates a sublease in that it is seen as a contingent reversionary interest.

  2. Focus on intent: the courts are now looking toward the intent of the parties and focusing on language to determine the intent of the parties.




  1. Some cases on subleases and assignments:

  1. EARNST V. CONDITT: Frank leases from Earnst a property, and after negotiations to sell his business, he assigns (with permission of Earnst and providing Frank remain liable) the lease to Conditt. Defendant Conditt stopped paying rent but said he was not liable to the plaintiff landlord because it was a sublease, not an assignment. Conditt was actually liable to Earnst either way because if it was a sublease, he had assumed the covenants of the head lease. Under common law, this is an assignment because Rogers did not retain an interest in the lease and he also did not reserve a right of re-entry in the event of a breach of any of the conditions or covenants of the lease by Condit. Under language considerations, this is a sublease.



  1. KENDALL V. PESTANA: Provision in the lease stated that the lessee had to get permission for an assignment, and if not, then the landlord can void the lease. The lessee asked for permission, but was denied. The proposed assignee had a strong financial statement, Kendall argues the refusal was unreasonable amounting to an unreasonable restraint on alienation. There was no provision in the lease on the reasonableness of the consent: it is sometimes assumed that if you require consent it cannot be unreasonably withheld. The common law gave absolute discretion to the landlord but modern law says that Absent contractual language to the contrary, a lessor may not arbitrarily withhold consent to an assignment The court here decides in favor of alienability, and says the consent cannot be unreasonably withheld. Bixler should be able to assume the awards that arise from his 25 year lease.





  1. The courts favor alienability: if the lease had a provision for no subleases you can still assign, and vice versa. Note that as we move down the continuium of leaseholds, the common law becomes less concerned with restraints on alienability.

  2. The restatement takes the position that in commercial leases where both parties are likely represented by counsel, an express provision for discretion and consent is enforceable.

  3. The courts generally say that in order to withhold consent, the landlord needs to be reasonable and his interest must be in the protection of the value of the leasehold. . Thus, the landlord may look at factors such as the financial responsibility of the proposed new tenant and his suitability for the building but not the landlord's general economic advantage.


But what if the assignee was a competitor: courts have said this is ok to say no because while you are protecting a general economic interest, you are being asked to rent a tenant of different character than the original tenant.


  1. Residential leaseholds are generally considered more personal and less likely to not allow discretional consent on assignments and subleases.



  1. Cooperative apartments are an exception to the rule: they are given complete discretion (provided their rulings are not in violation of the Civil Rights or fair housing act) NY has enacted legislation to enforce reasonableness in their decisions. This exception allows for the reduction of externalities (people playing music etc)




  1. Tenants who default– the remedies available to Landlords:
  1. Under the common law, the landlord was entitled to possession via self help so long as he did no use excessive force. The re-entry had to be peaceable. A prohibition on self help is now a trend (See Berg v. Wiley below). Some jurisdictions only apply this ruling to residential leases (less equality in bargaining power).


  2. BERG V. WILEY: Berg locked out by Wiley landlord, for violations of a provision regarding making changes to the property etc. (under doctrine of waste incidentally) Defendant claims the plaintiff abandoned. Court says no. Under common law you need a right to re-enter (which the landlord here had) and you need to do it peaceably (which she did not). The modern rule is to force all disputes to judicial resolution. Here, Wiley is liable for damages.

  1. Summary proceedings are intended to allow for no more self help by providing a faster means of action. The proceedings are summary in that they only relate to the right of possession.

  2. There is an argument that landlords will simply raise rent across the board given their lack of option for self help remedy.

Landlord should have sent registered letter – that state tenant has not paid rent and has

abandoned.



  1. The tenant who abandons possession – Remedies available to the Landlord:

Basic Remedies:

  1. terminate the lease

  2. let the premises lay idle and sue for rent as it comes due

  3. rely on rent acceleration clause

  4. treat the abandonment as an implied offer of surrender and re-let the premises (see below) collect difference from the abandoning tenant




  1. Sit back and do nothing: Mitigation of damages…

  1. Common law view: The Landlord is generally under no obligation to mitigate damages if the tenant abandons the property. The tenant cannot by his own will impose a duty on the landlord.

  2. 2nd restatement: Adandonment of property is an invitation to vandalism, the law should not encourage such conduct by putting a duty on the landlord.
  3. Modern Trend: In majority of states landlord has duty to mitigate damages (see Sommer v. Kridel below) because complexities of city life and problems of modern society.


  4. In NY there is no duty to mitigate. Recent court of appeals case held simply that this is a rule of property and we are not going to change it. Where there is no mitigation and rent acceleration clauses, the court has said you cannot get double rent (which gives the landlord incentive to leave the apartment vacant unless the market goes up)

  5. Landlord can sit back and do nothing: collect the rent as it accrues…unless there is a provision that the rent is due as one lump sum for the year and as a privilege it is collected monthly  then the landlord has a right to collect the whole thing (rent acceleration clause)

  6. The issue of renting other apartments first: SOMMER V. KRIDEL: Landlord has a building and tenant says he surrenders…landlord says ok, but I need to rent my other apartments first. Court says you need to show it as if it were in the stock of your other apartments. The is an example of an unreasonable discretion based on general economic protection of the landlord. But to the landlord, this actually imposes a loss, similar to refusing consent where tenant wishes to assign to someone who would normally rent another unit somewhere else. This case says that the landlord has a duty to mitigate damages when he seeks to recover rents due from a defaulting tenant (he needs to make a reasonable effort to re-let the apartment). It follows the modern rule which says that land-lord issues are more like contracts than real property law.

How can landlord’s protect against these type of thing – security deposit, usually 2 months and can check credit reports, bank statements, etc.


Some states provide a statutory lean which applied to the tenant’s personal property. If tenant did not pay, the landlord could take his property. Landlords also have the right to evict if tenant does not pay.

  1. Offers of Surrender: implied and explicit:


Abandonment of the premises is considered an implied offer of surrender. If the landlord opts to, he can enter and re-let the premises: this is considered an acceptance of the offer of surrender.


  1. the landlord may terminate the lease on the tenant’s abandonment, this effects a surrender. The tenant here is liable only for rent accrued prior to the abandonment and damages suffered as a result.

  2. At common law: there were no damages allowed for anticipatory repudiation. The landlord could not recover the full rent due when it is clear that the tenant would not pay this month. In some states now this is allowed.

  3. The landlord need not accept the offer to surrender. He can simply re-let on the tenants account. If he does this, the tenant is still on the hook for rent. Theoretically, if the landlord gets less rent from new tenant, the abandoning tenant is still liable for the difference.

  1. Note: in theory, if the landlord gets more rent than the abandoning tenant was paying, the tenant is due the difference.




  1. Tenants Remedies against the Landlord:

  1. The Covenant of Quiet Enjoyment and Constructive Eviction:

  1. The CQE is implied in every lease: the tenant has a right of quiet enjoyment of the premises, without interference by the landlord. The tenant's covenant to pay rent was always dependent on landlord's performance of the CQE.

  2. Constructive eviction: an action whereby the landlord renders the property unsuitable for occupancy, either in the whole or in part, so that the tenant is forced to leave the premises.
  3. At common law, the attitude was Caveat Lessee (bear in mind we were dealing with farms and tenants who could fix things themselves): the CQE only was there to get you into possession and to provide against:


  1. Latent defect

  2. Short term and generally furnished (the idea was that you don’t have time to make repairs).

  3. Maintenance of common areas (freerider problem if you leave it to the tenants)

  4. Actual promised repairs

  5. Nuisances (prostitution next door)

  6. Can’t misrepresent the condition of the premises (similar to latent defect)

  7. Repairs must be done in a non-negligent manner.

Note: the tenant has to have left within a reasonable amount of time and the problem must have been substantial. The tenant must also leave the premises (except according to the restatement  he can stay and not pay rent)


Note: The tenant can not exercise constructive eviction and simply claim damages and remain in possession. This is a distinction between breach of CQE and the remedy of CE. To show a breach of quiet enjoyment, you must show constructive eviction or actual eviction.
CE – Substantial interference with use and enjoyment of premises, interference is the fault of landlord.
Actual E. – physical expulsion from premises.


  1. If you can fit the problem into one of the prongs of the CQE, then you can claim constructive eviction.

  1. When there is substantial interference with the tenant’s use and enjoyment, the tenant may terminate the lease, vacate the premises, and be excused from rent liability.



  1. RESTE REALTY V. COOPER (nj) : landlord promised to fix flooding problem in driveway of building which was leaking into office. The tenant abandoned when he did not fix it claiming constructive eviction. The flooding was a latent defect (one which was not obvious upon inspection but that the landlord knows about). This would have been fine for CE, but the plaintiff actually resigned a new lease when she knew of the defect  but the landlord had already made a promise to fix it  still covered under CQE. They tried to repair it, but it didn’t work. Claim negligence, still under CQE. The court actually doesn’t rely on these, they simply say that when a landlord causes a substantial interference with the enjoyment and use of the leased premises, the tenant may claim constructive eviction

Note: If the tenant here gets out under CE and has to pay higher rent somewhere else for the same thing, you can sue for contract damages. In most cases, you need to notify the landlord to allow him to make repairs before you leave.




  1. The Roots of Constructive Eviction: At common law, the duty to pay rent was independent of the duty to maintain the premises, so if problem could sue for damages but not withhold rent (conveyance view vs. contract view). But the CQE and CE was an exception: here if the landlord interfered with quiet enjoyment, then the tenant had cause for constructive eviction which allowed no rent payment.




  1. Note: Partial Evictions:




  1. if the tenant is evicted from part of the premises, there is no duty to pay rent on the whole premise.

  2. But if the tenant claims partial constructive eviction on part of the premise, then there is still a duty to pay rent but can reduce rent.




  1. In most residential leases, the implied warranty of habitability (a warranty implied by a landlord that the premises are suitable and will remain so) has replaced the CQE. It allows you to stay in your residence and not pay rent. Note that in commercial leases, CQE still very important.

  1. The Implied Warranty of Habitability is a non-waivable covenant but has not been adopted in every state:

  1. Allows the tenant to stay and pay less or no rent

  2. Jurisdictions and their enforcement of IWH in relation to housing codes as a guide are divided as follows:

  1. Substantial violation of housing code is breach of IWH – meets prima facie case

  2. Substantial compliance with the code is ok
  3. House code provisions are compelling but the standard is reasonable person


  4. Standard for breach of IWH is independent of housing code.

  1. remedies available: standard contract remedies of recission, restitution, and damages, also withhold rent.

  2. Many courts hold that the IWH only applies to latent defects at start of lease

  3. Tenant must notify the landlord of the problems

  4. Punitive damages are available if the problem is so outrageous




  1. Rationale for the IWH:

  1. the urban resident today has not the time or resources to check into premises for all defects before he moves in

  2. the landlord knows more about the defects

  3. housing code enforcement is poor

  4. constructive eviction is not a viable remedy where housing is scarce

  5. because of #4, tenants have less bargaining power than landlords

  1. Criticisms:

  1. leads to higher rents

  2. the poor will lose housing opportunities

  1. HILDER V. ST. PETER: Plaintiff occupied apartment owned by defendant. All payments were made, but the conditions were later found to be unlivable. The tenant did not abandon the premises, claiming IWH. The court rules that in any rent of residential property whether lease is oral or written, there exists a covenant that the landlord will deliver and maintain premises that are safe, clean and fit for human habitation. It covers all latent and patent defects in the essential facilities as well.

The new rule of implied warranty of habitability in all residential leases is established in this case. The courts will not allow you to waive this right – for example, can’t accept apartment with broken toilet if the rent is lowered. Substantial violation of housing regs. would be considered breach of implied warranty of habitability – this is something that is clearly defined. Also, the tenant needs to notify the landlord of the problem and give him adequate time to fix the problem. Also, tenant if after landlord does not fix problems, can fix them themselves and they seek payment for those.

Need working plumbing, electricity, safe, clean and fit for human habitation
In NY – Multiple dwelling laws that at some point, the courts can come in and take over a building if there are very serious housing code violations and it is not fixed within 6 months and the inspector has given the landlord notice.


  1. A note on retaliatory eviction: At common law, the landlord had unlimited freedom to evict, even without good reason. This would today undermine the IWH. Today most jurisdictions prohibit retaliatory eviction (I say there’s a problem so you evict me).




  1. How do you prove retaliatory eviction: assume there is such a purpose if the landlord seeks eviction shortly after a complaint (also includes refusal to renew a lease).




  1. Tenant’s duties to repair: Under the IWH the tenant has no duty to repair. However, the landlord can enforce prohibitions on activities under the doctrine of waste. In all likelihood, the changes by the tenant have to decrease the value of the property in order to allow recovery.



  1. Landlord's tort liability – at common law, landlord was not responsible for personal injuries but now the standard is changing. Ex. – landlord is responsible for injuries resulting from Latent defects and public use exception (subjects the landlord to strict liability to the public if it is unreasonably dangerous on the premises).

h. Public use exception requirements: applies if landlord keeps it open to public, defect in question was existent at the outset of the lease, the landlord knew or should have known of defect, landlord knew or should have known that the tenant could not reasonably be expected to remedy the defect or guard against injury.

Department stores deal with this by using a a triple net lease – the tenant pays rent but is also responsible for 1) real estate taxes 2) insurance 3) maintenance 4) liability



  1. Rent control: it’s good, it’s bad, it’s ugly: The tenants are receiving an implied warranty of habitability: in the absence of some restrictions, the landlords will simply raise rents a lot to compensate for the imposition of IWH.

  1. But Rent control can be counter productive:

  1. it forces out the poorer tenants and creates more middle class housing.

  2. It reduces the supply of housing: limits the rental value and drives up the price of available housing

  1. Rent controls need to allow the landlord to have a fair return on the property in response to changing market conditions. It essentially forces the landlord to bear the burden of social policy.

  2. Condo and Co-op people can agree to have their building free from rent control.




  1. TRANSFERS OF LAND: THIS LAND IS YOUR LAND…THIS LAND IS MY LAND

A. Contract of Sale: most important document in the process. It sets forth all the rules and agreements between the parties and how you protect yourself.

Steps to purchase and sale of a home in the U.S.


  1. Consult a real estate agent

  2. Buyer will consult an attorney to draft a proper contract and advise throughout the process

  3. After agreement is reached on the purchase price, the buyer is expected to pay a down payment (a certain percentage of the purchase price) and to obtain the remainder of the purchase price by giving a mortgage. After the contract is signed, the buyer will require credit and assurance that the seller has good title to convey
  4. Prior to this time, the real estate agent will have to obtained some sort of informal commitment for the necessary loan (their ability to secure the loan is crucial to their success, they often have close ties with lending institutions).


  5. Title assurance investigation to assure good title (3 exclusive types are used)

a. abstract – shows the state of the title (liens and mortgages shown)

b. certificate of title assurance

c. local title assurance

6) Closing – brings all the interested parties together to permit them to execute and deliver the

necessary documents simultaneously with the payment of the purchase price and the

settlement of the costs of the transaction (held at a convenient location, execute the deed,

execute the bond and mortgage, give check).

7) Following closing - the mortgagee's attorney will send the deed and mortgage to the

courthouse for the attachment of revenue stamps and recording and pay the necessary fees.

Doctrine of merger: once a person accepts the deed, all the provisions of the contract merges with the deed which means that any remedies or issues you have must be settled before the deed is accepted.

.

Add in parts of HW assignment and steps on mortgages
B. The Statute of Frauds: similar to the requirements for gifts, it avoids fraud, provides evidence of intent,

and it is a cautionary measure (do I really want to do this transaction)



  1. An interest in land cannot be created by a party unless it is in writing.


  1   2   3
:)


The database is protected by copyright ©hestories.info 2017
send message

    Main page

:)