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Landlord-Tenant Relationships

Business Law

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Landlord-Tenant Relationship• A relationship created when the

owner of a freehold estate (landlord) transfers a right to exclusive and temporary possession of his/her property to another (tenant).

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Landlord-Tenant Relationship(continued)

• Nonfreehold Estate – an estate in which the tenant has a right of possession of the property but not title to the property.

• Leasehold – a tenant’s interest in the property

• Landlord – the owner who transfers the leasehold

• Tenant – the party to who the leasehold is transferred

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The Lease• A transfer of the right to the

possession and use of the real property for a set term in return for certain consideration ($).– Rental agreement between a

landlord and a tenant

• Types of tenancy– Tenancy for years– Periodic tenancy– Tenancy at will– Tenancy at sufferance

50 - 5© 2007 Prentice Hall, Business Law, sixth edition, Henry R.

Cheeseman

Types of TenancyType of Tenancy

Description

Tenancy for Years

Continues for the duration of the lease and then terminates automatically without notice.It does not terminate by the death of either party.

Periodic Tenancy

Continues from payment interval to payment interval.It may be terminated by either party with adequate notice.It does not terminate upon the death of either party.

50 - 6© 2007 Prentice Hall, Business Law, sixth edition, Henry R.

Cheeseman

Types of Tenancy (continued)

Type of Tenancy

Description

Tenancy at Will

Continues at the will of the parties.It may be terminated by either party at any time with adequate notice.It terminates upon the death of either party.

Tenancy at Sufferance

Arises when a tenant wrongfully occupies real property after the expiration of another tenancy or life estate.It continues until the owner either evicts the tenant or holds the tenant over for another term.It terminates upon the death of the tenant.

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Landlord’s Duty to Deliver Possession of the Leased

Premises• Duty to Deliver Possession

– A lease grants the tenant exclusive possession of the leased premises (1) for the term of the lease or (2) until the tenant defaults on the obligations under the lease.

– A landlord may not enter leased premises unless the right is specifically reserved in the lease.

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Landlord’s Duties• The landlord owes the

tenant a duty to:– Deliver possession– Not to interfere with the

tenant’s right to quiet enjoyment

– Maintain the leased premises

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Duty Not to Interfere with the Tenant’s Right to Quiet

Enjoyment• The law implies a covenant of

quiet enjoyment in all leases.• The landlord may not interfere

with the tenant’s quiet and peaceful possession, use, and enjoyment of the leased premises.– Wrongful eviction if landlord actually

evicts tenant.– Constructive eviction if landlord

allows premises to become unfit.

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Landlord’s Duty to Maintain the Leased Premises

• State and local municipalities have enacted building codes– Statutes that impose specific

standards to maintain and repair premises

– Provide minimum standards for heat, light, water

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Tenant’s Duties

• The tenant owes the landlord a duty:– Not to use leased premises for

illegal or non-stipulated purposes

– Not to commit waste (damage)

– Not to disturb other tenants

– To pay rent

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Tenant’s Duty to Pay Rent• A commercial or residential

tenant owes duty to pay the agree-upon amount of rent for the leased premises to the landlord at the agree-upon time and terms.

• Unlawful detainer action.

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Implied Warranty of Habitability• A warranty that provides that the

leased premises must be fit, safe, and suitable for ordinary residential use.

• If landlord’s breach affect’s tenant’s use or enjoyment of premises, tenant may:– Withhold amount from rent reflecting this

loss of value.– Repair defect and deduct expenses from

rent.– Cancel lease if it constitutes a

constructive eviction.– Sue for damages for amount leasehold

value reduced.

50 - 14© 2007 Prentice Hall, Business Law, sixth edition, Henry R.

Cheeseman

Premises Liability

The liability of landlords and tenants

to persons injured on their

premises.

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Tenant’s Duty of Reasonable Care

• A tenant owes a duty of reasonable care to persons who enter upon the leased premises.– If a tenant’s negligence

causes injury to a third person, the tenant is liable in tort for any damages.

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Landlord’s Duty of Reasonable Care

• Landlords owe a duty of reasonable care to tenants and third parties not to negligently cause them injury.– This duty is based on the

foreseeability standard of ordinary negligence actions.

– Landlord who breaches duty is liable for tort damages.

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Transfer of Rights to Leased Property

• Landlords may sell, gift, devise, or otherwise transfer their interests in the leased property.– If complete title is transferred,

the property is subject to the existing lease.

• The tenant’s right to transfer possession of the leased premises to another depends on the terms of the lease.– Assignment – Sublease

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Assignment of a Lease• A transfer by a tenant of his

or her rights and duties under a lease to another.

• The party who transfers the rights is the assignor.

• The party to whom rights have been transferred is the assignee.

• The assignor remains responsible for his or her obligations under the lease.

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Sublease• Occurs when a tenant

transfers only some of his or her rights under the lease.

• The sublessor transfers those rights to the sublessee.

• No legal relationship is formed between the landlord and the sublessee.

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Rent Control• Rent control ordinances stipulate

the amount of rent a landlord can charge for residential housing.

• Rent is fixed a a specific amount.• Minor annual increases are

provided for.• Upheld by the U.S. Supreme

Court.– Yee v. City of Escondido,

California, 112 S.Ct. 1522 (1992)

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Land Use Control• Generally, the ownership of

property entitles the owner to use that property as the owner wishes.

• Land use control is the collective term for the laws that regulate the possession, ownership, and use of real property.– Private regulation of land use– Public regulation of land use

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Zoning

• Local laws that are adopted by municipalities and local governments to regulate land use within their boundaries.

• Adopted and enforced to protect the health, safety, morals, and general welfare of the community.

• Zoning is the primary form of land use regulation in the United States.

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Zoning (continued)

Zoning ordinances generally:1. Establish use districts within

the municipality(e.g., residential, commercial, or industrial)

2. Restrict the height, size, and location of buildings on a building site

3. Establish aesthetic requirements or limitations for the exterior of buildings

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Zoning (continued)

Variance

• An exception that permits a type of building or use in an area that would not otherwise be allowed by a zoning ordinance.

Nonconforming Uses

• Uses and buildings that already exist in the zoned area that are permitted to continue even though they do not fit within new zoning ordinances.

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Civil Rights Act• A federal statute that prohibits

racial discrimination in the transfer of real property.

• These laws usually prohibit discrimination based on race, color, national origin, sex, or religion.– Age– Sexual preference– Persons receiving government

assistance

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The Fair Housing Act

• Federal statute that makes it unlawful for a party to refuse to rent or sell a dwelling to any person on the basis of race, color, national origin, sex, or religion.

• Prohibits discrimination by real estate brokers, mortgage lenders, and advertisers concerning the sale or rental of real property.

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Title III of the Americans with Disabilities Act

• A federal statute that prohibits discrimination on the basis of disability in places of public accommodation by private entities.

• Does not generally apply to residential facilities.

• New construction and alterations must be made so as to be readily accessible to and usable by disabled persons.

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Compensable Taking of Real Property

• Eminent Domain- The taking of private property by the government for public use, provided just compensation is paid to the private property holder.

• Just Compensation Clause- Requires the government to compensate the property owner, and possibly others, when the government take property under its power of eminent domain.