2. P A R T P A R T Property Personal Property and Bailments Real Property Landlord and Tenant Estates and Trusts Insurance Law 5 McGraw-Hill/Irwin Business Law, 13/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

3. Landlord and Tenant PA E TR HC 25 “Justice, though she’s painted blind, is to the weaker side inclined.” Samuel Butler

4. Learning Objectives  Nature of leases and tenancies  Landlord’s rights, duties, and liabilities  Tenant’s rights, duties, and liabilities  Termination of the leasehold 25 - 4

5.  Typical real property lease is a contract for commercial or residential purposes  Bargaining position generally favors landlord  Duration of tenant’s possessory right depends upon type of tenancy: tenancy for a term, periodic tenancy, tenancy at will, or tenancy at sufferance Overview 25 - 5

6. Landlord’s Rights & Duties 25 - 6  Landlord entitled to receive agreed rent for the lease term and the return of property at lease end in as good a condition as when leased, except for normal wear and tear  Implied warranty of possession grants tenant’s right to possess property for lease term  Implied warranty of quiet enjoyment guarantees that landlord (by act or omission) will not interfere with tenant’s possession

7. Landlord’s Duties 25 - 7  Implied warranty of habitability : landlord must deliver a habitable dwelling at lease beginning and maintain premises in habitable condition  State law remedies for breach of the implied warranty include: action for damages, lease termination, withhold rent, repair-and-deduct  Constructive eviction occurs when property becomes unsuitable for rental purposes  Tenant may terminate lease

8. Landlord’s Duties 25 - 8  Fair Housing Act prohibits discriminatory practices in transactions affecting housing, including the rental of dwellings  Title III of the Americans with Disabilities Act requires owners and possessors of real property with public access to reasonably accommodate and make necessary physical modifications to allow access to disabled persons

9. Landlord’s Tort Liability 25 - 9  General rule: landlord has no tort liability  Current trend: landlords will be held liable for injuries for breach of the following duties:  Maintain common areas, disclose hidden defects, use reasonable care in performing repairs, maintain property leased for public admission, maintain furnished dwellings  See Matthews v. Amberwood Associates Limited Partnership, Inc.

10.  Primary duty of tenant is to pay rent  Other duties: to not commit waste on the property (i.e., do not destroy premises) and return property to landlord at lease end  Rights to exclusive possession and quiet enjoyment of property during lease term  Tenant liable to persons harmed while on tenant’s leased premises if tenant negligent Tenant’s Duties and Rights 25 - 10

11.  Assignment : landlord or tenant transfers all rights under the lease to another person  Assignee steps into shoes of original tenant  Subleasing : tenant transfers some (not all) rights to possess the property to another  Tenant becomes landlord to sublessee  For assignment or sublease, original tenant ultimately remains liable to landlord Lease Assignment or Sublease 25 - 11

12. Test Your Knowledge  True=A, False = B  A landlord has no liability for injuries a tenant’s guests suffer in or on the real property  Primary duty of tenant is to pay rent  Constructive eviction means that tenant may terminate the lease because s/he has effectively been evicted due to landlord’s breach of the warranty of habitability 25 - 12

13. Test Your Knowledge  True=A, False = B  The general rule is that landlords may not require a security deposit for greater than 10% of the lease amount  The term “repair-and-deduct” means that landlord may repair defects and deduct costs from the security deposit  The Civil Rights Act prohibits discriminatory practices in housing transactions 25 - 13

14. Test Your Knowledge  Multiple Choice  Barb rented a house from Steven. When she tried to move in, she found the prior tenant’s furniture and trash. Barb:  (a) may terminate the lease since the landlord breached the warranty of possession  (b) must move in and pay rent, but may deduct the cost of removing the prior tenant’s furniture and trash from her rent  (c) must file a complaint with county authorities before terminating the lease  (d) none of the above 25 - 14

15. Test Your Knowledge  Multiple Choice  Jack leased a space in a shopping center from owner ABC Properties. Jack’s customer was injured when she tripped on a very large pothole in the parking lot. Who is liable for the customer’s injury?  (a) Jack since the customer was his customer  (b) The customer since she didn’t look where she was walking  (c) ABC Properties since they are liable for maintaining common areas and failed to do so 25 - 15

16. Thought Questions  Have you ever had a problem with a lease?  Do you think the court ruled correctly in the Matthews v. Amberwood Associates Limited Partnership, Inc. ? How should the landlord have handled the situation? 25 - 16