1. 25-1 Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

2. 25-2 5 Personal Property and Bailments Real Property Landlord and Tenant Estates and Trusts Insurance Law Property P A R T

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

4. 25-4 Learning Objectives Recognize various legal principles applicable to landlord–tenant relationships Describe nature of leases and tenancies Discuss rights, duties, and liabilities or both landlord and tenant Explain lease termination

5. 25-5 Typical lease today is for commercial or residential purposes –Primarily a contractual relationship –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 Leases Today

6. 25-6 Characteristics of Lease Types

7. 25-7 Landlord’s Rights Landlord entitled to receive agreed rent for the term of the lease and upon termination, landlord has the right to the return of property in as good a condition as it was when leased, except for normal wear and tear Landlord may demand security or other deposits

8. 25-8 Landlord’s Duties -- Warranties Implied warranty of possession guarantees tenant’s right to possess the property for the term of the lease Implied warranty of quiet enjoyment guarantees that a landlord’s act or omission will not interfere with tenant’s possession –Landlord may not enter leased property during the lease term except for purposes of inspection or repair as stated in the lease agreement

9. 25-9 Implied warranty of habitability: like the one implied for sale of real property, landlord-grantor must deliver a habitable dwelling at the beginning of lease For a lease, landlord-grantor also must maintain premises in a habitable condition –State law may obligate the landlord to comply with any applicable housing codes In Brooks v. Lewin Realty III, Inc., landlord failed to comply with code and child was injuredBrooks v. Lewin Realty III, Inc. Landlord’s Duties -- Warranties

10. 25-10 Breach of Landlord’s Duties State law remedies for breach of the implied warranty of habitability differ, but include: –Action for damages. Measured by diminished value of the leasehold –Termination of lease. Landlord’s breach must have been extreme enough to be material breach –Rent abatement. Tenant may withhold part of rent for period during which landlord was in breach –Repair-and-deduct. Tenant may repair defects and deduct costs from rent after notice to landlord and opportunity to cure

11. 25-11 Constructive Eviction Doctrine of constructive eviction aids a tenant when property becomes unsuitable for the rental purposes –Applies to residential and commercial property Tenant may terminate the lease because s/he has effectively been evicted –No further rent obligation if tenant vacates promptly after giving the landlord reasonable notice and opportunity to correct problem

12. 25-12 Landlord’s Duties – Federal Law 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 that is a place of public access (i.e., a commercial property) to make reasonable accommodations and physical modifications, to allow access to disabled persons

13. 25-13 Landlord’s Tort Liability General rule: landlord has no tort liability Current trend: landlords will be held liable for injuries for breach of the following duties: –Duty to maintain common areas –Duty to disclose hidden defects –Duty to use reasonable care in performing repairs –Duty to maintain property leased for public admission –Duty to maintain furnished dwellings

14. 25-14 Primary duty of tenant is to pay rent Tenant also has duty not to commit waste on the property (i.e., duty not to destroy premises) and to return the property to the landlord at lease termination Tenant has rights to exclusive possession and quiet enjoyment of the property during the lease term Tenant’s Duties and Rights

15. 25-15 Tenant normally liable to persons who suffer harm while on the portion of the property over which tenant has control, if injuries resulted from tenant’s negligence If a tenant breaches the lease, landlord may take action to evict the tenant –State law generally allows for speedy eviction procedure Tenant’s Liabilities

16. 25-16 Like other contracts, rights and duties may be assigned unless otherwise prohibited in the lease contract Assignment: landlord or tenant transfers all rights under the lease to another person Subleasing: tenant transfers some (not all) rights to possess the property to another –Relationship of tenant to sublessee becomes one of landlord and tenant Lease Assignment

17. 25-17 Significance of distinction is that an assignee acquires rights and duties under the lease between landlord and original tenant, but a sublessee does not –Assignee steps into shoes of original tenant and acquires any rights original tenant had by lease Under assignment or sublease, original tenant remains liable to landlord for commitments made in the lease Assignment v. Sublease

18. 25-18 Thought Questions Have you ever had a problem with a lease? Do you think the court ruled correctly in Matthews v. Amberwood Associates Limited Partnership, Inc.? How should the landlord have handled the situation?