Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning Chapter 51 Leases Twomey Jennings Anderson’s Business Law and the Legal Environment, Comprehensive 20e Anderson’s Business Law and the Legal Environment, Standard 20e Business Law: Principles for Today’s Commercial Environment 2e

Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 2 Creation & Termination The agreement between a lessor and a lessee by which the latter holds possession of real property owned by the former is a lease. State statutes prohibit discrimination and require that the lease not be unconscionable.

Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 3 Creation & Termination Tenancies are classified according to duration as tenancies for years, from year to year, at will, and at sufferance. The agreement between a lessor and a lessee by which the latter holds possession of real property owned by the former is a lease.

Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 4 Creation & Termination State statutes prohibit discrimination and require that the lease not be unconscionable. A lease is generally not terminated by the death, insanity, or bankruptcy of either party except for a tenancy at will.

Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 5 Creation & Termination Leases are usually terminated by the expiration of the term, giving of notice, surrender, forfeiture, or destruction of the property or because of fraud. A lease may require written notice of termination to prevent automatic renewal of the lease, or it may require written notice of intent to renew the lease.

Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 6 1. Tenancy for years: Fixed Term. 2.Periodic tenancy: Indefinite length; runs period to period. 3.Tenancy at will: Indefinite length terminable by either party at any time. 4.Tenancy at sufferance: hold over tenant, can remain only if landlord permits. Classification of Tenancies

Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 7 Rights and Duties of Parties A tenant has the right to acquire possession of the property, enjoy use of it without interference, and retain possession until the lease is ended. Evictions may be either actual or constructive, and may violate the tenant’s rights unless tenant has not fulfilled his duties. The tenant is under a duty to pay rent as compensation to the landlord.

Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 8 Repairs and Condition of Premises Repairs and Conditions of Premises. –Landlord has the right to enter. –Tenant has no duty to repair (unless agreed). –Landlord has duty to repair with reasonable care. –Compliance with ADA.

Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 9 Repairs and Condition of Premises Warranty Of Habitability. –Running water, heat in winter, free from structural defects. No duty for improvements. Remedies of Landlord. –Landlord’s Lien. –Forcible Entry and Detainer. –Landlord’s duty to Mitigate Damages.

Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 10 Liability for Injury on Premises Landlord’s liability to Tenant. –At common law, landlord was not liable for injuries to tenant. –But Modern Trend holds Landlord liable. Crimes by Third Persons. –Ordinarily landlord is NOT liable, –UNLESS reasonably foreseeable.

Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 11 Liability For Injury on Premises Landlord’s Liability. –Generally NOT liable to third persons injured on property under tenant’s control. –Landlord IS liable for injuries in common areas (stairs, elevator). Tenant’s Liability. –Liable to Licensees. –Liable to Invitees.

Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 12 Transfer of Rights An assignment of a lease by the tenant is a transfer of the tenant’s entire interest in the property to a third person. A sublease is a transfer of less than an entire interest—in either space or time. A lease may prohibit both an assignment and a sublease.

Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 13 Assignment or Sublease If the lease is assigned, the assignee is liable to the landlord for the rent. –Such an assignment, however, does not discharge the tenant from the duty to pay rent. In a sublease, the sublessee is not liable to the original lessor for rent unless that liability has been assumed or is imposed by statute.