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

2. 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

3. 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

4. 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

5. 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”

6. 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

7. 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

8. 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

9. 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 1959 - Resident manager promised to remedy flooding - Made repairs but improvement short-lived Resident manager died in March 1961 - 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

10. Reste Realty Corp. v. Cooper (N.J. 1969) Procedural Posture: Who is the Π? Reste Realty bought building in Jan 1962 - 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?

11. 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?

12. 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

13. 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

14. 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

15. 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

16. 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

17. Looking Ahead Two remaining classes: Tuesday 11/21: - Implied warranty of habitability -- Hilder v. St. Peter (1984) pp. 431-37 -- Notes 1-3 pp. 437-39 -- Retaliatory Eviction pp. 439-40 *** - Tenants Duties and Landlords’ Remedies pp. 441-44 *** Thursday 11/30 - Instructional Survey - Critique of pro-tenant laws -- Chicago Bd of Realtors v. City pp. 444-47 -- Note on reforms pp.447-49

18. 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

19. Sample Property Exams http://library.lls.edu/pastexams.html Search for exams by course name “property” “Bar Code” is your student ID number - needed to see everything after exam page 1

20. Questions?