WEBINAR ESSAY SERIES REAL PROPERTY ESSAY #6 MODEL ANSWER   Lisa owns a five-story commercial building. On January 1, 1980, she leased the top floor to Tom for a five-year term at a rent of $500 a month. The lease was in writing and signed by both parties. It contained a restric­tion that the premises could be used only "as a dance studio and for no other purpose." It also provided: "Landlord shall not lease space in the building to any competitor of Tenant." The lease did not contain any express war­ranties or disclaimers. Tom promptly moved in and began to operate a dance studio. In June 1980, he sold his dance studio business to Alice, one of his instructors, and assigned the lease to her. The assignment did not contain any express assumption or assignment of contract rights clauses. In January 1981, a dance student fell through a floor board. When the board was replaced, it was discovered that, although the building met build­ing code requirements, the floor was not strong enough for a dance studio. In February, Lisa rented the basement to Charles who used it for aerobic exercise classes. Alice wrote to Lisa demanding that Lisa have the floor strengthened and cancel the lease with Charles. Alice claimed that Charles was in competition with her. Lisa refused both requests. On July 1, 1981, Alice mailed the studio key back to Lisa and moved out of the building. She has paid no rent since moving. Lisa has made all reasonable attempts to mitigate the loss. Lisa has now sued both Tom and Alice for the rent due. How should the court rule? Discuss.

  MODEL ANSWER LISA V. TOM AND ALICE FOR RENT. LANDLORD – TENANT. Lisa leased to Tom in 1980. Restriction for using the premises as a dance studio and for no other purpose. Landlord covenant not to lease space in building to a competitor. Tom assigned lease to Alice. In 1981 Lisa rented a basement apartment to Charles for use as an aerobic studio. Alice wants floor boards fixed, and Charles to be thrown out because of competition with Lisa. STATUE OF FRAUDS. Written Lease. ESTATE FOR YEARS. Five Years, Rent Payable in Monthly Installments. INDEPENDENCE / DEPENDENCE OF COVENANTS. ASSIGNMENT OF RIGHTS. Tom assigned to Alice. RIGHTS AND DUTIES. POSSESSION. Tom Took Possession. QUIET ENJOYMENT. Breach of this Covenant May Allow Tenant Not to Pay Rent. CONSTRUCTIVE EVICTION. But Alice Did Not Leave Due to Broken Floor Boards. The broken boards did not constitute a physical barrier to use, and Alice waived her right to assert a breach of the covenant of quiet enjoyment because she did not vacate the premises in a timely manner. HABITABILITY. Only to Residential Leases. If Covenant Breached, Tom May Remain and Withhold Rent, or Abandon and Be Excused From Rent. REPAIRS. Residential Leases in Some States. Tenant May Make Repairs and Deduct Rent. Since Commercial, Responsibility to Make Repairs on Tom or Alice. RENT. Alice is in Privity of Estate with Lisa, and Tom is Liable as He is in Privity of Contract with Lisa. TOM REMAINS LIABLE FOR REMAINDER OF TERM FOR RENT. LISA ABANDONED. No Longer Liable for Rent. TOM. Estate for Years with Lisa, So is Liable for Remainder of Rent. ABANDOMENT. Landlord May Accept Surrender, Do Nothing and Sue Tenant, Rent Premises, Mitigate and Sue. Damages for Rent Not Paid.

  REAL COVENANT. USE PREMISES ONLY AS DANCE STUDIO. Alice Did Not Breach. NOT TO LEASE TO A COMPETITOR. INTENT. Evidenced by Lack of Restriction Against Assignment, and Express Covenant of Using as a Dance Studio. TOUCH AND CONCERN. Related to Alice’s Business. Value of Land Increased. NOTICE. PRIVITY. HORIZONTAL. VERTICAL. Alice is Assignee, so Vertical Privity with Tom. REMEDY. Money Damages. EQUITABLE SERVITUDE. No privity required. Equitable remedy.