1. Copyright © 2004 by Prentice-Hall. All rights reserved. PowerPoint Slides to Accompany BUSINESS LAW E-Commerce and Digital Law International Law and Ethics 5 th Edition by Henry R. Cheeseman Slides developed by Les Wiletzky Wiletzky and Associates, Puyallup, WA Chapter 50 Landlord-Tenant Relationships Chapter 50 Landlord-Tenant Relationships

2. 50 - 2Copyright © 2004 by Prentice-Hall. All rights reserved. Landlord-Tenant Relationship  A relationship created when the owner of a freehold estate (landlord) transfers a right to exclusively and temporarily possess the owner’s property to another (tenant).

3. 50 - 3Copyright © 2004 by Prentice-Hall. All rights reserved. Landlord-Tenant Relationship (continued)  Nonfreehold Estate – an estate in which the tenant has a right of possession of the property but not title to the property.  Leasehold – a tenant’s interest in the property  Landlord – the owner who transfers the leasehold  Tenant – the party to who the leasehold is transferred

4. 50 - 4Copyright © 2004 by Prentice-Hall. All rights reserved. The Lease  A transfer of the right to the possession and use of the real property for a set term in return for certain consideration. i.e., the rental agreement between a landlord and a tenant i.e., the rental agreement between a landlord and a tenant

5. 50 - 5Copyright © 2004 by Prentice-Hall. All rights reserved. Types of Tenancy (1 of 2) Type of Tenancy Description Tenancy for Years Continues for the duration of the lease and then terminates automatically without notice. It does not terminate by the death of either party. Periodic Tenancy Continues from payment interval to payment interval. It may be terminated by either party with adequate notice. It does not terminate upon the death of either party.

6. 50 - 6Copyright © 2004 by Prentice-Hall. All rights reserved. Types of Tenancy (2 of 2) Type of Tenancy Description Tenancy at Will Continues at the will of the parties. It may be terminated by either party at any time with adequate notice. It terminates upon the death of either party. Tenancy at Sufferance Arises when a tenant wrongfully occupies real property after the expiration of another tenancy or life estate. It continues until the owner either evicts the tenant or holds the tenant over for another term. It terminates upon the death of the tenant.

7. 50 - 7Copyright © 2004 by Prentice-Hall. All rights reserved. Landmark Law: The Fair Housing Act  Federal statute that makes it unlawful for a party to refuse to rent or sell a dwelling to any person on the basis of race, color, national origin, sex, or religion.  Prohibits discrimination by real estate brokers, mortgage lenders, and advertisers concerning the sale or rental of real property.

8. 50 - 8Copyright © 2004 by Prentice-Hall. All rights reserved. Landlord’s Duty to Deliver Possession of the Leased Premises  Duty to Deliver Possession A lease grants the tenant exclusive possession of the leased premises (1) for the term of the lease or (2) until the tenant defaults on the obligations under the lease. A lease grants the tenant exclusive possession of the leased premises (1) for the term of the lease or (2) until the tenant defaults on the obligations under the lease. A landlord may not enter leased premises unless the right is specifically reserved in the lease. A landlord may not enter leased premises unless the right is specifically reserved in the lease.

9. 50 - 9Copyright © 2004 by Prentice-Hall. All rights reserved. Landlord’s Duty to Deliver Possession of the Leased Premises (continued)  Duty Not to Interfere with the Tenant’s Right to Quiet Enjoyment The law implies a covenant of quiet enjoyment in all leases. The law implies a covenant of quiet enjoyment in all leases. The landlord may not interfere with the tenant’s quiet and peaceful possession, use, and enjoyment of the leased premises. The landlord may not interfere with the tenant’s quiet and peaceful possession, use, and enjoyment of the leased premises. Wrongful Eviction – a violation of the covenant of quiet enjoyment. Wrongful Eviction – a violation of the covenant of quiet enjoyment.

10. 50 - 10Copyright © 2004 by Prentice-Hall. All rights reserved. Landlord’s Duty to Maintain the Leased Premises Building Codes  State and local statutes that impose specific standards on property owners to maintain and repair leased premises. Building Codes  State and local statutes that impose specific standards on property owners to maintain and repair leased premises. Implied Warranty of Habitability  A warranty that provides that the leased premises must be fit, safe, and suitable for ordinary residential use. Implied Warranty of Habitability  A warranty that provides that the leased premises must be fit, safe, and suitable for ordinary residential use.

11. 50 - 11Copyright © 2004 by Prentice-Hall. All rights reserved. Tenant’s Duties  Duty not to use leased premises for illegal or nonstipulated purposes  Duty not to commit waste  Duty not to disturb other tenants  Duty to pay rent

12. 50 - 12Copyright © 2004 by Prentice-Hall. All rights reserved. Tort Liability of Landlords and Tenants  Landlords owe a duty of reasonable care to tenants and third parties not to negligently cause them injury. This duty is based on the foreseeability standard of ordinary negligence actions. This duty is based on the foreseeability standard of ordinary negligence actions.

13. 50 - 13Copyright © 2004 by Prentice-Hall. All rights reserved. Tort Liability of Landlords and Tenants (continued)  A tenant owes a duty of reasonable care to persons who enter upon the leased premises. If a tenant’s negligence causes injury to a third person, the tenant is liable in tort for any damages sustained by the injured person. If a tenant’s negligence causes injury to a third person, the tenant is liable in tort for any damages sustained by the injured person.

14. 50 - 14Copyright © 2004 by Prentice-Hall. All rights reserved. Premises Liability The liability of landlords and tenants to persons injured on their premises.

15. 50 - 15Copyright © 2004 by Prentice-Hall. All rights reserved. Transferring Rights to Leased Property  Landlords may sell, gift, devise, or otherwise transfer their interests in the leased property. If complete title is transferred, the property is subject to the existing lease. If complete title is transferred, the property is subject to the existing lease.  The tenant’s right to transfer possession of the leased premises to another depends on the terms of the lease. Assignment of the lease Assignment of the lease Sublease Sublease

16. 50 - 16Copyright © 2004 by Prentice-Hall. All rights reserved. Assignment of the Lease  A transfer by a tenant of his or her rights under a lease to another.  Assignor – the party who transfers the rights (original tenant).  Assignee – the party to whom rights have been transferred (new tenant).  The assignor remains responsible for his or her obligations under the lease.

17. 50 - 17Copyright © 2004 by Prentice-Hall. All rights reserved. Sublease  Occurs when a tenant transfers only some of his or her rights under the lease.  Sublessor – the original tenant in a sublease situation.  Sublessee – the new tenant in a sublease situation.  No legal relationship is formed between the landlord and the sublessee.

18. 50 - 18Copyright © 2004 by Prentice-Hall. All rights reserved. Rent Control  Rent control ordinances – stipulate the amount of rent a landlord can charge for residential housing.  Rent is fixed a a specific amount.  Minor annual increases are provided for.  Upheld by the U.S. Supreme Court. Yee v. City of Escondido, California, 112 S.Ct. 1522 (1992) Yee v. City of Escondido, California, 112 S.Ct. 1522 (1992)

19. 50 - 19Copyright © 2004 by Prentice-Hall. All rights reserved. Land Use Control  Generally, the ownership of property entitles the owner to use that property as the owner wishes.  Land Use Control – the collective term for the laws that regulate the possession, ownership, and use of real property. Private regulation of land use Private regulation of land use Public regulation of land use Public regulation of land use

20. 50 - 20Copyright © 2004 by Prentice-Hall. All rights reserved. Private Regulation of Land Use  Private control of the land is based on two major principles: Private Nuisance – a nuisance that affects or disturbs one or a few people. Private Nuisance – a nuisance that affects or disturbs one or a few people. Restrictive Covenant – a private agreement between landowners that restricts the use of their land. Restrictive Covenant – a private agreement between landowners that restricts the use of their land.

21. 50 - 21Copyright © 2004 by Prentice-Hall. All rights reserved. Public Regulation of Land Use: Public Nuisance  Public Nuisance – occurs when one’s use of his or her real property harms members of the public (landowners, tenants, or others).  Tend to affect a broader class of persons than do private nuisances.  The government may bring an action to seek: the assessment of fines the assessment of fines criminal penalties criminal penalties an injunction to stop the offending use an injunction to stop the offending use

22. 50 - 22Copyright © 2004 by Prentice-Hall. All rights reserved. Public Regulation of Land Use: Zoning Ordinances  Local laws that are adopted by municipalities and local governments to regulate land use within their boundaries.  Adopted and enforced to protect the health, safety, morals, and general welfare of the community.  Zoning is the primary form of land use regulation in the United States.

23. 50 - 23Copyright © 2004 by Prentice-Hall. All rights reserved. Zoning (continued) Zoning ordinances generally: 1.Establish use districts within the municipality (e.g., residential, commercial, or industrial) 2.Restrict the height, size, and location of buildings on a building site 3.Establish aesthetic requirements or limitations for the exterior of buildings

24. 50 - 24Copyright © 2004 by Prentice-Hall. All rights reserved. Zoning (continued) Variance  An exception that permits a type of building or use in an area that would not otherwise be allowed by a zoning ordinance. Variance Nonconforming Uses  Uses and buildings that already exist in the zoned area that are permitted to continue even though they do not fit within new zoning ordinances. Nonconforming Uses  Uses and buildings that already exist in the zoned area that are permitted to continue even though they do not fit within new zoning ordinances.