511: Listen and Learn -- Landlord/Tenant Law (Part 1)

Episode Transcript
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Lee Burgess (00:02):
Welcome back to the Law School Toolbox podcast.
Today, we have another episode ofour “Listen and Learn” series – this
one discussing leaseholds . YourLaw School Toolbox hosts are Alison
Monahan and Lee Burgess, that's me.
We are here to demystify the lawschool and early legal career
experience, so you'll be the bestlaw student and lawyer you can be.
We're the co-creators of the Law SchoolToolbox, the Bar Exam Toolbox and the

(00:24):
career-related website CareerDicta.
Alison also runs TheGirl's Guide to Law School.
If you enjoy the show, pleaseleave a review or rating on
your favorite listening app.
And if you have any questions,don't hesitate to reach out to us.
You can reach us via the contactform on LawSchoolToolbox.com,
and we'd love to hear from you.
And with that, let's get started.

(00:51):
Today we are going to be discussinglandlord/tenant law, commonly
known as leasehold estates.
The landlord/tenant relationship isgoverned by a lease agreement, which
is a contract that contains certaincovenants or promises made by the parties.
These promises are generally consideredto be independent of one another,

(01:11):
which means that each party typicallymust perform their obligations under
the lease, regardless of whether theother party is fulfilling theirs.
In general, a lease agreement isa transfer of property interest
for a limited period of time.
The landlord owns the property in feesimple absolute, and that interest is

(01:33):
then divided into a present and futureinterest with the execution of the lease.
The tenant holds a present possessoryinterest called a leasehold estate.
This gives them the right topossess and use the property
for the duration of the lease.
The landlord, in turn, retains areversionary interest, or the right

(01:55):
to future possession of the property.
At the end of the lease period,the property may or may not revert
back to the landlord, dependingon whether the landlord continues
to lease the property or not.
There are four types of leasehold estatesthat can be created with the execution

of a lease (02:14):
[1] term of years; [2] a periodic tenancy; [3] a tenancy at will;
and [4] a tenancy at sufferance.
We'll discuss each ofthese leaseholds in turn.
Let's start with a tenancy for years.
A tenancy for years is a type ofleasehold that continues for a

(02:36):
fixed period of time and terminatesautomatically at the end of the lease
period, without notice from either party.
A tenancy for years may be createdfor any length of time - one week,
six months, one year, 10 years.
The length of time does not matter.
The key is that the set termis fixed and ascertainable.

(02:59):
As we mentioned, the lease willautomatically terminate at the
end of the agreed upon period.
So if the parties wish to have arenewal option available, it will be
explicitly set forth in the lease.
Otherwise, the default isautomatic termination upon
expiration of the lease term.
It is also important to note herethat any tenancy for years that is

(03:22):
set to last longer than one year issubject to the statute of frauds.
This means that the lease agreementmust be in writing and signed
by the party to be charged.
That writing must also identify, [1]the parties; [2] the leased premises;
[3] the specific duration of thelease; and [4] the rent to be paid.

(03:46):
In most jurisdictions, any renewal optionincluded in the lease will not count
towards determining whether the leaseis subject to the statute of frauds.
So, what you want to look foris whether that initial fixed
term is longer than one year.
Okay, let's move on todiscuss periodic tenancies.

(04:07):
If you've ever rented anapartment, chances are you've
entered into a periodic tenancy.
This is the type of leaseholdwe generally think of when
we think of lease agreements.
Periodic tenancies continue fora successive amount of time, such
as month-to-month or year-to-year,until terminated by proper
notice from one of the parties.

(04:29):
Periodic tenancies automaticallyrenew at the end of each period
until that proper notice is given.
All the terms and conditions of the leasewill carry over to each renewal period,
unless the lease provides otherwise.
Notice can typically be given by eitherparty to terminate a periodic tenancy.

(04:49):
The lease will typically dictatehow much advanced notice is required
for termination, with the mostcommon being 30 to 60 days notice.
At common law, oral notice was sufficient,but under most modern statutes, notice
must be typically made in writing.
The third type of leasehold isa tenancy at will, and it is

(05:11):
generally the most straightforward.
A tenancy at will is exactlyas it sounds - the leasehold
does not have a specific term.
It continues for as long as thelandlord and tenant so desire.
A tenancy at will can be terminatedby either party at any time.
At common law, this could bedone without any advanced notice.

(05:31):
However, the modern approachtypically requires at least some
advanced notice for termination ofa tenancy at will, often 30 days.
Our final leasehold isa tenancy at sufferance.
This leasehold is also sometimes referredto as a holdover tenancy, because it
occurs when a tenant continues to occupythe property after their lease terminates.

(05:56):
A tenancy at sufferance is createdwhen a tenant holds over and
continues to exist for the period oftime that tenant wrongfully remains
in possession of the premises.
A tenancy at sufferance canbe terminated in three ways.
First, the tenant can chooseto vacate the premises.

(06:16):
If the tenant does not vacatethe property, the landlord
is left with two options.
The landlord may treat theholdover tenant as a trespasser
and evict them, or the landlordcan bind the tenant to a new lease.
If the tenant vacates the propertyor the landlord is forced to proceed
with eviction, the tenant will beobligated to pay a reasonable amount

(06:38):
for their use and occupancy of theproperty during the holdover period.
The tenant will also be liable for anyreasonably foreseeable damages that
occurred from the holdover, such asthe cost of the eviction proceedings.
Now that we've established the fourtypes of leasehold estates, let's look
at the types of obligations tenantsand landlords are bound to when

(07:02):
they enter into a lease agreement.
We'll start with the duties of the tenant.
A tenant has two primary obligations whenthey agree to rent a property - the duty
to pay rent and the duty to avoid waste.
While rent is not a requirementto create a leasehold estate, most

(07:24):
landlords are unlikely to be sogenerous as to allow their tenants
to occupy the premises for free.
So, the majority of tenants arerequired to pay rent in exchange for
the possession of the leased property.
This duty to pay rent generallycontinues for the duration of the lease,
but it's subject to two exceptions.

(07:44):
If the premises is destroyed andthe tenant is not at fault, such
as with a natural disaster, thelease terminates and the tenant is
excused from their rental obligation.
A tenant may also be exempt from payingrent if their landlord materially
breaches a covenant in the lease, whichwe will discuss later in the podcast.

(08:07):
So, we've established a tenanthas an obligation to pay rent.
But what if that tenant fails to do so?
What remedies are available to thelandlord in the event of such a breach?
If a tenant fails to pay rentbut remains in possession of the
premises, the landlord can sue fordamages resulting from the breach.
The landlord may also file toevict the tenant from the property.

(08:29):
In determining a landlord's damagesfor a tenant's failure to pay rent, the
majority rule is that the landlord willonly be entitled to rent that is past due.
The landlord is generally unable to sue tocollect future rents that would have come
due under the remainder of the lease term.
In addition to paying rent, tenants alsohave a duty to avoid committing waste.

(08:53):
This generally means that the tenantis required to return the property
to the landlord in the same conditionthey received the property in.
Unless the tenant and landlord agreeotherwise, however, normal wear and
tear is considered permissible and willnot violate the duty to avoid waste.
A landlord's ability to terminate or suefor breach of a covenant other than the

(09:15):
payment of rent, such as violating theduty to avoid waste, is largely dependent
on the specific terms of the lease.
So this will generally bedetermined on a case-by-case basis.
However, if the landlord is aware of thetenant's breach and continues to accept
rent from them, the landlord is consideredto have waived the breach and the right

(09:36):
to terminate the lease on that basis.
Okay, now that we've establishedwhat the tenant's obligations are
under a lease agreement, let's lookat what the landlord's duties are.
The first duty a landlord haswhen entering a lease agreement is
the duty to deliver possession ofthe leased premises to the tenant
at the start of the lease term.

(09:56):
Seems simple enough, right?
It is.
Unfortunately, the rest of the landlord'sduties are a little more complicated.
In the vast majority of states,the landlord has an implied duty
to make necessary repairs to theproperty in all residential leases.
This is true even when the expresslanguage of the lease places the

(10:18):
burden to repair on the tenant.
Failure to make necessary repairsto the premises may constitute
a violation of the warranty ofhabitability or constructive eviction.
We'll talk about bothof those in a minute.
Before we turn to those covenants,however, it is important to highlight that
this duty to repair is only implied inresidential leases, not commercial leases.

(10:41):
Commercial leases can lawfully placethe burden of repairs on the tenant.
This is largely due to the fact thatcommercial leases do not have an
implied warranty of habitability.
Now that we've teased it a few timesthrough this podcast, let's finally
look at the warranty of habitability.
Residential leases include animplied warranty of habitability,

(11:05):
which requires that the landlordkeep the property habitable
throughout the duration of the lease.
This generally means that the premisesmust comply with all housing codes and be
free of any condition that substantiallythreatens a tenant's health or safety.
If the premises becomes uninhabitableduring the lease period, the

(11:25):
tenant has two options available.
The tenant may refuse to pay rent untilthe condition is repaired, or the tenant
can pay to have the defect repairedthemselves and offset the cost of those
repairs against their next rental payment.
Before proceeding with either ofthese options, however, the tenant
must first notify the landlord of thecondition and give them a reasonable

(11:48):
opportunity to correct the problem.
Unlike with constructive eviction, whichwe'll discuss in a moment, the tenant
is not required to vacate the premises.
Every lease, both residential andcommercial, includes an implied
covenant of quiet enjoyment.
Under this covenant, the tenant has theright to possess and use the property in

(12:10):
the manner that was originally intendedat the time of the lease agreement,
and to be free of any nuisances thatwould interfere with those rights.
The covenant of quiet enjoyment canbe breached whenever a landlord's
actions result in either actual orconstructive eviction of the tenant.
Actual eviction occurs when thelandlord physically excludes

(12:32):
the tenant from the premises.
The most common example of actualeviction is when a landlord changes
the locks to completely bar thetenant from entering the property.
When this happens, the leaseterminates and the tenant is relieved
from their obligation to pay rent.
If the tenant is only excluded froma portion of the property, however,
they will not be free of theirrental obligation in its entirety.

(12:55):
Rather, their rent will be proportionallyreduced to offset the partial eviction.
A tenant may also be consideredevicted from the premises even when
the landlord does not physicallyousts them from the property.
This is called constructive eviction,which occurs whenever a landlord
breaches a duty to the tenant thatsubstantially interferes with the tenant's

(13:16):
use and enjoyment of the property.
This could be something like alandlord's failure to make a necessary
repair, a pest invasion, lack of heator water at the premises, etcetera.
To succeed on a claim ofconstructive eviction, a tenant
must meet three conditions.
First, the interference mustbe caused by the landlord.

(13:39):
Actions by neighbors or otherthird parties is not sufficient.
It must be the landlord's action,or failure to act, that is
causing the condition resultingin the tenant's eviction.
Second, the condition must be sosubstantial that a court could
reasonably conclude that the premisesis uninhabitable or unusable.

(14:00):
So, this is not going tobe a minor interference.
You want to look for a conditionthat is so disruptive that the tenant
could not possibly use the property.
The final requirement that must be met isthe tenant must move out of the property.
Unlike with the warranty of habitability,a tenant cannot remain at the property

(14:22):
and argue constructive eviction.
If the tenant does not vacate within areasonable time, they are waiving their
right to a constructive eviction claim.
Now it is time to put thatknowledge into action.
Let's dive in and tackle aleasehold law hypothetical.
This hypothetical is pulled from Question3 on the February 2023 California bar

(14:45):
exam, but we've trimmed it a bit tofocus on specific landlord/tenant issues:
" Tuan sells antique furniture.
He signed a 10-year lease for awarehouse owned by Leo at $1,000 a
month with a start date of January 1.
The warehouse would be usedto store Tuan's inventory.

(15:06):
When Tuan attempted to occupythe warehouse on January 1st, he
discovered Annika there pursuant toher validly executed lease, which was
not due to end until January 31st.
When Tuan returned to Leo's warehouseon February 1st, Annika told Tuan
she was not leaving until May 31st.

(15:29):
When Tuan visited the warehouse onJune 1st, he discovered that Leo had
stored equipment in the warehousethat made 25% of the space unusable.
Tuan refused to take possessionand informed Leo that he was
terminating his lease immediately.
Tuan never paid any rent to Leo.
Tuan decided to sue for damages basedon his rights under his lease with Leo.

(15:54):
What claims, if any, may Tuanreasonably assert against Leo?"
So, what do we think?
Does Tuan have anyclaims against Leo here?
Leo is the landlord, so let's gothrough our landlord duties to
see if Leo breached any of hisobligations under his lease with Tuan.

(16:14):
If you recall, landlords have a duty todeliver possession of the property to the
tenant at the start of the lease term.
Did that happen here?
Let's walk through it.
Tuan's lease began on January 1st, butwhen he arrived at the warehouse on
that day, Annika was still lawfullyoccupying the premises because her
lease did not expire until January 31st.

(16:37):
Since Annika had a validlyexecuted lease through January
31st, she had priority over Tuan.
Therefore, Leo violated his dutyto deliver possession of the
property to Tuan on January 1st.
We've established that Tuan has atleast one claim against Leo so far.

(16:58):
Do we think there are any others?
Let's continue to go through ourlist of landlord obligations.
Under this lease, Tuan is rentinga warehouse to store inventory,
so this is a commercial lease.
That means the duty to repairand the warranty of habitability
are not applicable here.
But what about the covenantof quiet enjoyment?

(17:19):
If you remember from our earlierdiscussion, the covenant of quiet
enjoyment is implied in bothresidential and commercial leases.
The covenant of quiet enjoymentcan be breached when the landlord's
actions result in either actualor constructive eviction.
Let's consider actual eviction first.

(17:40):
Actual eviction occurs when the tenantis denied possession of the premises.
When the tenant is deprivedof the entire property, they
are not obligated to pay rent.
However, when the landlord deprivesthe tenant of only a portion of
the premises, the tenant's rentalobligation is decreased proportionally.
There are two periods of time we canconsider for actual eviction here.

(18:04):
The first is from January 1st toMay 31st, while Annika was still
in possession of the premises.
Annika's lease gave her the right topossession from January 31st, and she then
remained on the premises through May 31st.
Tuan was therefore evicted fromthe entire premises through May
31st, and may have a defense topaying rent for that entire period.

(18:29):
We can also consider the period of June1st through July 1st, where Leo was
storing equipment in 25% of the warehouse.
In storing that equipment - his ownequipment - in the warehouse, Leo
rendered 25% of the property unusable.
Leo effectively took physical possessionover that 25%, thus actually evicting

(18:51):
Tuan from a portion of the property.
Since Leo only occupied 25% of thepremises, Tuan's rent obligation
would be proportionally reducedby 25% for that period of time.
But he would not be relieved ofit altogether, unless he could
prove constructive eviction.
So, let's considerconstructive eviction then.

(19:12):
Would Leo's possession of the 25%of the warehouse space constitute
constructive eviction and relieveTuan of his obligation to pay
rent entirely for that period?
Remember, constructive evictionrequires three conditions to be met.
The first is that it is the landlord'sactions interfering with the tenant's

(19:33):
use and enjoyment of the property.
Here, Leo is the landlord andhe is the one storing equipment
in 25% of the warehouse.
So that condition is clearly met.
The second requirement is that theinterference must be substantial.
Tuan leased the warehouseto store his own inventory.

(19:54):
Leo was using a fourth of thatspace for his own equipment storage.
That's a pretty large percentageof warehouse space that Leo
is withholding from Tuan.
So it's likely that this would beconsidered a substantial interference.
Lastly, the tenant must vacatethe property in order to
claim constructive eviction.
Here, Tuan never even moved into theproperty, so this condition is also met.

(20:17):
Since Tuan has satisfied all threeof the elements for a constructive
eviction claim, he could likely claim Leobreached the covenant of quiet enjoyment.
If you enjoyed this episode of theLaw School Toolbox podcast, please
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(20:38):
If you have any questions orcomments, please don't hesitate
to reach out to myself or Alisonat lee@lawschooltoolbox.com or
alison@lawschooltoolbox.com.
Or you can always contactus via our website contact
form at LawSchoolToolbox.com.
Thanks for listening, and we'll talk soon!

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}511: Listen and Learn -- Landlord/Tenant Law (Part 1)