Class XXIV – Covenant of Quiet Enjoyment Prof. David Glazier Nov 16, 2006 PropertyProperty

Today’s Class Wrap-up Landlord’s Remedies Quick Introduction to Covenants *** Tenant’s Remedies: Quiet Enjoyment and Constructive Eviction - Reste Realty Corp. v. Cooper Exam Preps/Review

L Options if T in Possession Defaults (1) Eviction via legal process - All states have summary eviction procedure (2) Self-help if still allowed by state law (a) L must have lawful right of possesion, and (b) action must be “peaceable” States permitting self-help differ on “peaceable” criteria - Reasonable force (several states retain historic standard) - No actual violence (ex post judgment) - Physical measures only against property - Effective prohibition (without saying so) -- No cut-off of utilities/changing locks De facto majority rule against self help

L’s Options if T Abandons Leasehold (1) Do nothing (where still allowed) -Sue for rent as it becomes due (2) Re-let on tenant’s account - Lease treated as remaining in force - L mitigates by seeking new tenant -- T responsible for costs/losses -- T entitled to any rent surplus surrender (3) Treat abandonment as surrender - T released from lease - L gets any rent surplus

Covenant Basics *** Definition of a covenant: A promise in a conveyance of real property To be binding on successors in interest must: - have privity between parties, and - covenant must “run with the land” -- often expressed as “touch and concern”

L Do Covenants Apply to a Sublease? *** Privity of Estate Privity of Contract T “L To T for 1 Year” T1T1 T “T To T 1 for 11 Months” T gives T 1 less than his full right of possession - retains reversion or right of reentry NO privity between L and T 1 Covenants between L and T don’t bind T 1

L Do Covenants apply to Assignments? *** Privity of Contract T “L To T for 1 Year” T gives T 1 her full right of possession Privity of contract between L and T Privity of estate between L and T 1 Covenants between L and T can bind T 1 “T To T 1 for 1 Year” T1T1 T Privity of Estate Privity of Contract

Landlord’s Duties – Common Law Landlord need only deliver right of possession - property taken “as is” Each part of agreement a separate “covenant” - T to pay rent - L to deliver right of possession, etc. -- Only remedy for violation is suit for damages Implied covenant of “quiet enjoyment” - narrowly interpreted as interference with possession - only eviction ended T’s obligation to pay rent

Reste Realty Corp. v. Cooper (N.J. 1969) The Facts: Δ T signed 5-year lease for basement offices in 1958 Water ran into basement every time it rained - Resident manager removed water for T each time T signed new 5-year lease for larger area in Resident manager promised to remedy flooding - Made repairs but improvement short-lived Resident manager died in March L subsequently unresponsive to flooding complaints - T suffered periodic inability to use premises Atty advised T to vacate after 12/20/61 incident T gave L notice and moved out 12/30/61

Reste Realty Corp. v. Cooper (N.J. 1969) Procedural Posture: Who is the Π? Reste Realty bought building in Jan Month after Δ moved out! - Sale does not alter existing leases Sued for full-term rent in Nov 1964 after lease expired Trial court found for Δ Appellate Division reversed - Why did case take 5 years?

Reste Realty Corp. v. Cooper (N.J. 1969) Positions of the parties: Why did Reste believe Cooper should be held accountable for payments? Why did Cooper think they were not liable?

Reste Realty Corp. v. Cooper (N.J. 1969) Covenant of Quiet Enjoyment: Originally just protection against superior title > L Expanded to include substantial interference by L w/T’s enjoyment of leased premises Common law remedy for violation? - Damage suit only Judicial solution? - Constructive eviction doctrine - Allows T to get out of paying rent

Reste Realty Corp. v. Cooper (N.J. 1969) Doctrine of Constructive Eviction: Courts hold substantial interference by L to be a “constructive eviction” T can abandon lease and cease paying rent Examples cited: - failure to supply heat - clogged sewage line causing odors/health risk - permitting “lewd” activities on premises

Reste Realty Corp. v. Cooper (N.J. 1969) Doctrine of Constructive Eviction: Condition traditionally had to be “permanent” - Reste court holds recurring condition qualifies T must move out within reasonable time - Can generally stay if “partial” eviction - Restatement (2d) calls for letting T stay and invoke -- Cost/difficulty of moving -- T bears risk if court finds no eviction Courts differ over L’s responsibility for other Ts

Reste Realty Corp. v. Cooper (N.J. 1969) Duty to disclose: Court says (without citation): - L has duty to disclose latent defects to T - Can’t expect T to discover during inspection - Unfair to apply “caveat emptor” to conditions L can’t reasonably discover

Lease as conveyance Lease as contract Reste Realty Corp. v. Cooper (N.J. 1969) Is this a late lease as conveyance or an early lease as contract case? 1969

Looking Ahead Two remaining classes: Tuesday 11/21: - Implied warranty of habitability -- Hilder v. St. Peter (1984) pp Notes 1-3 pp Retaliatory Eviction pp *** - Tenants Duties and Landlords’ Remedies pp *** Thursday 11/30 - Instructional Survey - Critique of pro-tenant laws -- Chicago Bd of Realtors v. City pp Note on reforms pp

Looking Ahead: Exam 11/30 Last Property Class 12/01-05Reading Period 12/11Contracts Mid-term 12/14Property Mid-term 12/18Crim Law Final 12/20Torts Final No office hours after 12/1 Review Session: Live or TWEN (or both)? When? Provide inputs by 11/21

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