Property I Professor Donald J. Kochan Class 26

Today’s Readings Landlord/Tenant – Duties, Rights and Remedies Landlord/Tenant – Duties, Rights and Remedies Pages Pages

Introduction Remember that this is a matter of property interests and estates, so be sure to identify the rights of all parties – even though so much of it sounds in contract, and some sounds in tort Remember that this is a matter of property interests and estates, so be sure to identify the rights of all parties – even though so much of it sounds in contract, and some sounds in tort Consider the level of property conveyed and the matters of possession, retention, and use, etc. Consider the level of property conveyed and the matters of possession, retention, and use, etc. Understand the “moral hazard” problem and how the law attempts to control it – useful analogies are insurance, rental cars, emergency rooms, etc. Understand the “moral hazard” problem and how the law attempts to control it – useful analogies are insurance, rental cars, emergency rooms, etc. Consider the “incentive to neglect” on the part of tenants and why that shapes rules Consider the “incentive to neglect” on the part of tenants and why that shapes rules Consider the Landlord/Tenant relationship as having corresponding commitments and obligations to certain duties, rights, and remedies regarding the premises Consider the Landlord/Tenant relationship as having corresponding commitments and obligations to certain duties, rights, and remedies regarding the premises Ask yourself, what sticks were leased? This is a property transfer. Ask yourself, what sticks were leased? This is a property transfer. Understand “Best Position” Analysis Understand “Best Position” Analysis

Eviction Note first that a landlord can evict a tenant who defaults, but you need to: (1) be able to define default according to the original agreement; and (2) identify the procedures that must be followed. Return to the last class sides for more. See also Orange County Sheriff’s Eviction Information Page: vice/eviction.htm vice/eviction.htm

Quiet Enjoyment and Constructive Eviction No wrongful interference with the tenant’s use and enjoyment – imagine the landlord that drops by every night No wrongful interference with the tenant’s use and enjoyment – imagine the landlord that drops by every night In general a landlord surrenders his right to possession and has an obligation to quiet enjoyment of the premises to the tenant so long as the tenant is operating under the terms of the original agreement In general a landlord surrenders his right to possession and has an obligation to quiet enjoyment of the premises to the tenant so long as the tenant is operating under the terms of the original agreement There is an implied guarantee/warranty of quiet enjoyment in most leases – think about ways of drafting to either strengthen or weaken this protection There is an implied guarantee/warranty of quiet enjoyment in most leases – think about ways of drafting to either strengthen or weaken this protection Think about what constitutes a landlord breach; also what constitutes a constructive eviction versus an actual one Think about what constitutes a landlord breach; also what constitutes a constructive eviction versus an actual one Think about what constitutes a tenant surrender Think about what constitutes a tenant surrender

Reste Realty Corp. v. Cooper Driveway/Basement/Flooding case Driveway/Basement/Flooding case Suit for recovery of rent Suit for recovery of rent Abandonment before termination Abandonment before termination Focus on timing/knowledge at time of lease/change in circumstances Focus on timing/knowledge at time of lease/change in circumstances Was there a wrongful act or omission on the part of lessor that relieved lessee of lease obligation – i.e. was there constructive eviction? And, if so, when and how might the lessor waive his rights? Did the lessee waive his rights? Was there a wrongful act or omission on the part of lessor that relieved lessee of lease obligation – i.e. was there constructive eviction? And, if so, when and how might the lessor waive his rights? Did the lessee waive his rights? See definitions of constructive eviction, including “suitability for the purpose for which [the premise] are leased” See definitions of constructive eviction, including “suitability for the purpose for which [the premise] are leased” Notice the discussion of express covenants versus implied Notice the discussion of express covenants versus implied Duty to vacate? Duty to vacate?

Illegality and Frustration of Purpose Tenant defense for nonpayment of rent or against eviction Tenant defense for nonpayment of rent or against eviction Illegal condition, in violation of statute or code, generally voids the enforceability of a lease Illegal condition, in violation of statute or code, generally voids the enforceability of a lease Violations that arise ex post – after the lease – do not fall under the doctrine Violations that arise ex post – after the lease – do not fall under the doctrine Violations must be substantial Violations must be substantial Landlord must have actual or constructive knowledge at the time of the lease to be subject to the defense Landlord must have actual or constructive knowledge at the time of the lease to be subject to the defense A tenant under an illegal lease is treated as a tenant at sufferance A tenant under an illegal lease is treated as a tenant at sufferance What happens when the law changes and frustrates the particular purpose? What happens when the law changes and frustrates the particular purpose? Less profits do not relieve tenant obligations Less profits do not relieve tenant obligations

Warranty of Fitness or Suitability for a Particular Purpose Traditionally not implied at common law Traditionally not implied at common law May be bargained for explicitly May be bargained for explicitly Some modern movement to recognize it Some modern movement to recognize it Generally at common law no landlord duty to repair Generally at common law no landlord duty to repair

Tenant’s Duty to Repair or Maintain the Premises Tenant usually responsible for permissive or voluntary waste Tenant usually responsible for permissive or voluntary waste Obligation then to make repairs Obligation then to make repairs Terms of the lease matter Terms of the lease matter Leased property can have as a default reasonable wear, but generally the property must be returned in the same condition received Leased property can have as a default reasonable wear, but generally the property must be returned in the same condition received See slide on Security Deposits from last class See slide on Security Deposits from last class

Implied Warranty of Habitability The Shack Unsafe, Unsanitary or Unfit Standard Unsafe, Unsanitary or Unfit Standard Defense for Tenants Defense for Tenants Notice issues re time of lease alter the equities Notice issues re time of lease alter the equities Exculpatory clauses and the varying enforceability of the same Exculpatory clauses and the varying enforceability of the same Vacating premises not always necessary to assert the defense Vacating premises not always necessary to assert the defense Remedies and Responsibilities of each party Remedies and Responsibilities of each party Public policies behind the rules are influence by a preference for residents who presumptively have less power Public policies behind the rules are influence by a preference for residents who presumptively have less power

Hilder v. St. Peter Implied Warranty of Habitability Implied Warranty of Habitability “State of disrepair” “State of disrepair” Discounting rental value Discounting rental value Separation of obligation to pay rent from delivery of possession Separation of obligation to pay rent from delivery of possession Caveat lessee Caveat lessee Legal “Evolution” in treatment of the L/T relationship Legal “Evolution” in treatment of the L/T relationship Importance of code violations; BUT they are a FLOOR Importance of code violations; BUT they are a FLOOR Remedies: Rescission, Reformation, and/or Damages – what are these and how are they different? Remedies: Rescission, Reformation, and/or Damages – what are these and how are they different? Withholding rent Withholding rent How do you value discomfort and annoyance? How do you value discomfort and annoyance? Tenant options when premises are uninhabitable? Tenant options when premises are uninhabitable? Primarily a remedies case, but does well to explain habitability issues Primarily a remedies case, but does well to explain habitability issues The case and notes following again underscore the commingling of contract law with property law The case and notes following again underscore the commingling of contract law with property law

Retaliatory Eviction Landlord’s Power to Terminate is primary issue Landlord’s Power to Terminate is primary issue Proper Notice was enough at common law, but modern doctrine in most jurisdictions prohibits retaliatory eviction (i.e. allows an investigation into motives) Proper Notice was enough at common law, but modern doctrine in most jurisdictions prohibits retaliatory eviction (i.e. allows an investigation into motives) Rules developed in part because of disparity in power Rules developed in part because of disparity in power Tenant usually bears the burden of proof and statute of limitations apply (as does laches) Tenant usually bears the burden of proof and statute of limitations apply (as does laches) Good cause/Reasonableness issues dominate in the factual inquiry as to whether the eviction or non-renewal are legal Good cause/Reasonableness issues dominate in the factual inquiry as to whether the eviction or non-renewal are legal

Landlord’s Tort Liability Tenant Injuries Tenant Injuries Third Party Injuries Third Party Injuries Generally a negligence theory at common law and still but “professional” landlords held to higher standards given the power differential Generally a negligence theory at common law and still but “professional” landlords held to higher standards given the power differential Human values tip the scales Human values tip the scales Consider exculpatory agreements and their enforceability Consider exculpatory agreements and their enforceability

Tales from DC Assignments, Subleases, Vacancy, Abandonment and Continued Individual Responsibilities Under a Lease as a formal legal obligation even past occupancy if the legal term still runs

Tales from The Cottage Mice Mice Habitation Responsibility Habitation Responsibility Abandonment? Abandonment? Read your lease Read your lease

Tales from Houston (Part 1) While renting this house, feral cats were everywhere. While renting this house, feral cats were everywhere. What were my responsibilities as a tenant? What were my responsibilities as a tenant? What were the landlord’s responsibilities? What were the landlord’s responsibilities? What were the owner’s responsibilities (I was subleasing)? What were the owner’s responsibilities (I was subleasing)?

Of Mice and Cats: Just for Fun from Houston (Part 2) A blog post from a former student: “Kochan Isn’t Crazy. At least not about the cats in Houston. As our visiting Kochan Isn’t CrazyKochan Isn’t Crazy Property Prof. Donald Kochan Property Prof. Donald Kochan has noted several times in class, cats have overrun certain neighborhoods and thumb their furry noses at our right to exclude. This grey one is a frequent trespasser. I really don’t care if he adversely possesses the alley, but I draw the line at the car.” Property Prof. Donald Kochan (maybe the cats would have served some utility at The Cottage) For further reading on Feral Cats in Houston, see this November 6, 2008 news story:

Looking After the Commons Tales from California Gated Communities and Gated Communities and Homeowners Associations – they create a type of concurrent Ownership/rights/liabilities Landlord & Tenant in such Landlord & Tenant in such communities -- Who has the rights? Commons Issues Revisited Commons Issues Revisited

Concluding Thoughts Landlord/Tenant relationships help to facilitate much of the possessory components of the market for property. Always consider what sticks are given away and what are retained