28.4 Landlord & Tenant: Tenancies, Duties, Remedies & Transfers

28.4 Landlord & Tenant: Tenancies, Duties, Remedies & Transfers

NCBE's outline lists landlord-tenant law as part of ownership. It covers the types of tenancies and how they are created and ended, the rights and obligations of landlords and tenants, and habitability and suitability.

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The Four Leasehold Estates

                               ┌────────────────────────────────┐
                               │       Leasehold Estates        │
                               └───────────────┬────────────────┘
                                               │
            ┌──────────────────┬────────────────┴──────────────────┬──────────────────┐
            ▼                  ▼                                   ▼                  ▼
┌──────────────────────┐┌──────────────────────┐┌──────────────────────┐┌──────────────────────┐
│  Tenancy for Years   ││   Periodic Tenancy   ││   Tenancy at Will    ││Tenancy at Sufferance │
├──────────────────────┤├──────────────────────┤├──────────────────────┤├──────────────────────┤
│ • Fixed end date     ││ • Successive periods ││ • Indefinite duration││ • Holdover tenant    │
│ • Automatic end      ││ • Requires advance   ││ • Either party can   ││ • Landlord may evict │
│ • No notice required ││   written notice     ││   terminate at will  ││   or bind to new     │
│ • >1 yr needs writing││ • Created expressly  ││ • Modernly requires  ││   periodic lease     │
│   under SOF          ││   or by implication  ││   reasonable notice  ││                      │
└──────────────────────┘└──────────────────────┘└──────────────────────┘└──────────────────────┘

1. Tenancy for Years (Estate for Years)

• Definition: A leasehold interest running for a fixed, determined period of calendar time. Despite the name, it can endure for two days, six months, or ninety-nine years, so long as the agreement specifies an exact starting date and an exact termination date.
• Termination: Ends automatically upon the expiration of the stated terminal date. No notice of termination is required by either the landlord or the tenant.
• Statute of Frauds: Under the Statute of Frauds, any lease for a term exceeding one year (365 days) must be memorialized in a writing signed by the party to be charged to be legally enforceable.

2. Periodic Tenancy

• Definition: A lease that continues for successive, repeating intervals (e.g., month-to-month, year-to-year) until one party provides affirmative notice of termination.
• Creation:
  • Express: "Landlord leases to Tenant on a month-to-month basis starting June 1."
  • By Implication: The lease contains no fixed duration, but specifies rent payable at recurrent calendar intervals (e.g., "$1,500 payable on the first of each month").
  • Operation of Law (Holdover): A landlord accepts rent from a holdover tenant whose prior lease has expired.
• Termination & Notice Requirements:
  • Notice Period: Common law requires notice equal to the length of the period itself (e.g., one full month's advance notice for a month-to-month tenancy); modern statutes usually require the notice to be in writing. For a year-to-year tenancy, common law requires six months' advance notice (modern statutes frequently shorten this to 30 or 60 days).
  • Effective Date: Notice must specify termination at the end of a natural leasing period. For example, in a month-to-month lease starting on the 1st of each month, notice served on May 15 cannot terminate the lease on June 15; it is effective to terminate the lease on June 30.

3. Tenancy at Will

• Definition: A tenancy of indefinite duration that can be terminated at the will of either the landlord or the tenant at any time.
• Creation: Must be created by express agreement that either party may terminate at will. If an agreement gives only the landlord the unilateral power to terminate, courts imply a reciprocal power in the tenant. However, if only the tenant is given the right to terminate at will, modern courts construe the lease as a determinable life estate or leasehold, not a tenancy at will.
• Termination: At common law, terminable instantaneously without advance notice. Modern statutes require reasonable written notice (typically 30 days). A tenancy at will terminates automatically by operation of law upon the death of either party, waste committed by the tenant, assignment by the tenant, or sale of the property by the landlord.

4. Tenancy at Sufferance (Holdover Tenancy)

• Definition: Arises when a tenant who lawfully entered under a valid lease wrongfully remains in possession (holds over) after the leasehold term has expired.
• Landlord Options: The landlord has two mutually exclusive legal elections:
  1. Evict: Treat the holdover tenant as a trespasser and initiate a summary judicial eviction action; or
  2. Bind to New Periodic Tenancy: Elect to hold the tenant to a new periodic tenancy.
• Terms of the New Lease:
  • Residential: The new periodic tenancy is usually month-to-month, although some states base the period on how rent was paid under the old lease.
  • Commercial: If the original lease was for one year or more, the new tenancy is year-to-year; if less than one year, it mirrors the payment period.
  • Higher Rent: If the landlord notified the tenant of a rent increase before the lease expired, the holdover tenant is bound to pay the higher rent if they remain in possession.

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Tenant Duties & Landlord Remedies

1. The Duty to Pay Rent

The tenant's primary contractual and property obligation is the timely payment of agreed rent.

• Tenant Abandonment: If a tenant unjustifiably vacates the premises before the lease expires, the landlord at common law could leave the property vacant and sue for the entire rent as it accrued.
• Modern Rule — Duty to Mitigate: In the majority of jurisdictions, the landlord has an affirmative legal duty to make reasonable, good-faith efforts to mitigate damages by attempting to re-let the premises to a suitable replacement tenant. If the landlord re-lets, the tenant remains liable for the shortfall. If the landlord makes no reasonable effort to re-let, the defaulting tenant's liability is reduced by the amount the landlord would have received had they mitigated.

2. Duty Not to Commit Waste & The Fixtures Doctrine

Like life tenants, tenants have an obligation not to commit affirmative, permissive, or ameliorative waste.

• Fixtures: A fixture is a personal chattel so physically annexed or integrated into real property that an objective intent to make it a permanent accession to the freehold is presumed (e.g., custom built-in cabinetry, chandeliers, central air conditioning units). Once attached, fixtures generally become part of the realty and cannot be removed by the tenant unless the lease allows it or an exception applies (see Section 29.3).
• Trade Fixtures Exception: A commercial tenant may remove equipment, machinery, and trade fixtures installed for their business (e.g., restaurant pizza ovens, dental chairs, display shelving) prior to the expiration of the lease, provided removal does not cause substantial, permanent structural damage to the premises. The tenant must repair any superficial damage caused by removal.

3. Landlord Remedies: The Strict Ban on Self-Help

If a tenant breaches a lease covenant or fails to pay rent, what remedies may the landlord pursue?

• Summary Judicial Eviction: The landlord must file an unlawful detainer or summary dispossess action in court to obtain a legal judgment of possession and a writ of eviction executed by a sheriff.
• Prohibition on Self-Help: In most modern jurisdictions, self-help eviction is prohibited, at least for residential tenants (a few states still allow peaceable self-help against commercial tenants). A landlord may NOT change the locks, padlock the doors, shut off utilities (water, gas, electric), or physically remove the tenant's personal property from the premises, even if the tenant is months behind on rent or the lease expressly purports to authorize self-help. A landlord who uses unlawful self-help may be liable for statutory damages and for tort damages, such as for wrongful eviction, trespass, or conversion.

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Landlord Duties & Tenant Remedies

┌────────────────────────────────────────────────────────────────────────────┐
│                     LANDLORD DUTIES & TENANT REMEDIES                      │
├─────────────────────────────────────┬──────────────────────────────────────┤
│  Implied Covenant of Quiet          │  Implied Warranty of Habitability    │
│  Enjoyment (Quiet Enjoyment)        │  (Habitability)                      │
├─────────────────────────────────────┼──────────────────────────────────────┤
│ • Applies to Residential & Comm.    │ • Applies ONLY to Residential leases │
│ • Protects possession & quiet use   │ • Protects health, safety, & codes   │
│ • Breached by Actual or             │ • Strictly NON-WAIVABLE              │
│   Constructive Eviction (SING)      │ • Tenant MAY REMAIN in possession    │
│ • Tenant MUST VACATE to claim       │ • Remedies: Move, Repair, Reduce, Sue│
│   constructive eviction             │   (MR3 Framework)                    │
└─────────────────────────────────────┴──────────────────────────────────────┘

1. Duty to Deliver Possession

On the first day of the lease term, the landlord must provide the tenant with possession:

• English Rule (Majority): The landlord must deliver both legal right to possession AND actual physical possession. If a holdover tenant remains on the premises on day one, the landlord is in breach, and the new tenant may terminate the lease and recover damages.
• American Rule (Minority): The landlord is only obligated to deliver the legal right to possession. It is the new tenant's responsibility to evict any holdover tenant.

2. Implied Covenant of Quiet Enjoyment

Implied in every lease (both residential and commercial), this covenant guarantees that neither the landlord nor any party holding paramount title will disturb the tenant's lawful possession or beneficial use of the premises.

Constructive Eviction

When a landlord does not physically lock out the tenant, but allows premises conditions to become so intolerable that the tenant is effectively forced to abandon, the landlord has committed Constructive Eviction. To establish constructive eviction, the tenant must prove three elements (Mnemonic: SING — Substantial Interference, Notice, and Going, meaning vacating):

1. S — Substantial Interference: A chronic, severe disruption of the tenant's beneficial use and enjoyment of the property caused by the landlord's action or failure to act (e.g., permanent failure to provide heat in winter, severe persistent ceiling flooding).
2. N — Notice: The tenant must notify the landlord of the problem and give the landlord a reasonable opportunity to fix it.
3. G — Goodbye / Vacate: The tenant MUST VACATE the premises within a reasonable time after the landlord fails to remedy the problem. Critical MBE Rule: A tenant who remains in possession cannot assert constructive eviction and cannot withhold rent under this doctrine.

3. Implied Warranty of Habitability (IWH)

The Implied Warranty of Habitability is a modern doctrine that applies to residential leases. Commercial tenants generally must rely on their lease terms, although a few states recognize a narrower implied warranty that commercial premises are suitable for their intended use.

• Standard: The landlord warrants that the residential premises are fit for basic human habitation, meeting minimum local building, housing, and health codes (e.g., working plumbing, potable running water, adequate heating, functional electricity, weather-tight roof, locks, and freedom from severe vermin infestation).
• Non-Waivable: The warranty is mandatory as a matter of public policy. Any lease clause attempting to waive, disclaim, or shift the habitability duty to the tenant (e.g., "tenant accepts premises 'as is'") is void and unenforceable.
• No Requirement to Vacate: Unlike constructive eviction, the tenant is NOT required to move out to claim breach of the implied warranty of habitability.

Tenant Remedies for Breach of IWH (Mnemonic: MR3)

Upon giving the landlord notice and a reasonable time to cure, the tenant may pursue the following remedies. Their availability and procedures, especially for repair-and-deduct and rent withholding, depend on each state's statutes and case law:

1. M — Move Out: Vacate the premises, terminate the lease, and recover contract damages.
2. R — Repair and Deduct: Make reasonable repairs directly and deduct the actual costs from subsequent rent payments (subject to statutory limits).
3. R — Reduce / Withhold Rent: Withhold rent or deposit rent into an escrow account until the court determines fair rental value or repairs are completed.
4. R — Remain and Sue: Remain in possession, pay agreed rent, and file a lawsuit against the landlord for damages (calculated as the difference between the agreed rental value of the apartment as warranted versus the fair market rental value in its defective state).

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Assignments vs. Subleases

When a tenant transfers their leasehold interest to a third party, the legal consequences depend entirely on whether the transaction is an assignment or a sublease.

                      ASSIGNMENT: T transfers 100% of remaining term

                Landlord ◄────── Privity of Contract ──────► Tenant (Assignor)
                   ▲                                               │
                   │                                               │
              Privity of                                       Transfers
                Estate                                         All Term
                   │                                               │
                   ▼                                               ▼
                Assignee ◄─────────────────────────────────────────┘


                      SUBLEASE: T transfers less than entire term

                Landlord ◄────── Privity of Contract ──────► Tenant (Sublessor)
                   ▲             Privity of Estate                 ▲
                   │                                               │
                 NO Privity of Contract                      Privity of Contract
                 NO Privity of Estate                        Privity of Estate
                   │                                               │
                   ▼                                               ▼
                Sublessee ◄────────────────────────────────────────┘

1. Assignment

• Definition: A transfer of the tenant's entire remaining leasehold interest without retaining any reversionary interest.
• Privities Created:
  • Privity of Estate: Exists between the Landlord and the Assignee. The assignee is directly in possession of the landlord's land. Consequently, the assignee is personally liable to the landlord for all covenants that "run with the land," including the covenant to pay rent.
  • Privity of Contract: Remains intact between the Landlord and the Original Tenant (Assignor). The original lease contract is not extinguished by an assignment. Therefore, the original tenant remains secondarily liable to the landlord for unpaid rent if the assignee defaults, unless the landlord explicitly executes a written novation releasing the original tenant.

2. Sublease

• Definition: A transfer of less than the entire remaining leasehold term (the tenant retains a reversionary right to re-enter, even if only for the final week or day of the lease).
• Privities Created:
  • No Privity between Landlord and Sublessee: There is neither privity of estate nor privity of contract between the landlord and the sublessee. The sublessee is not in privity of estate because they do not hold the original tenant's entire estate, and they are not in privity of contract because they did not sign a contract with the landlord.
  • Sole Liability: The sublessee has no direct legal liability to the landlord for rent. The original tenant remains in both privity of contract and privity of estate with the landlord and is solely liable to the landlord. (The sublessee pays rent directly to the original tenant, who then pays the landlord).

3. Covenants Restricting Transfer

• Strict Construction: Non-assignment and non-sublease clauses in leases are strictly construed against the landlord. A covenant prohibiting "assignment" does not bar a "sublease," and vice versa.
• Waiver of Restriction: If the landlord knowingly accepts rent from an assignee without objecting, the landlord waives the consent requirement as to that assignment. Under the old Rule in Dumpor's Case, a landlord who consented to one assignment lost the right to object to later assignments unless it expressly reserved that right; many states have abolished that rule by statute or case law.
• Reasonableness of Consent: When a commercial lease requires the landlord's consent to a transfer but gives no standard, a growing number of courts require the landlord to have a commercially reasonable objection before refusing consent (Kendall v. Ernest Pestana, Inc., Cal. 1985). Other courts still allow a landlord to refuse consent for any reason.

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More Landlord-Tenant Rules

Liability After an Assignment or Sublease

• Assignee's liability: An assignee is liable in privity of estate for rent that accrues while it holds the leasehold. Moving out does not end that liability, but a reassignment to someone else generally does, unless the assignee expressly assumed the lease. An assignee who assumed the lease is also liable in contract for the rest of the term.
• Subtenant's position: A subtenant owes no rent directly to the landlord unless it assumed the lease obligations. However, its rights depend on the prime lease: if the tenant defaults and the landlord ends the prime lease, the sublease ends too.

Security Deposits

• Purpose: A deposit secures unpaid rent and damage beyond ordinary wear and tear.
• Statutory rules: Most states limit the amount of the deposit, often to one or two months' rent. Many require the landlord to return the deposit with an itemized list of deductions within a set time after the tenant leaves, and wrongful withholding can trigger statutory penalties.
• Sale of the building: Statutes commonly require the selling landlord either to transfer deposits to the buyer and notify tenants, or to refund them.

Retaliatory Eviction

A landlord may not end a residential tenancy, refuse to renew a lease, raise the rent, or reduce services to punish a tenant for reporting housing code violations, joining a tenants' organization, or exercising legal rights (Edwards v. Habib, D.C. Cir. 1968). Many statutes presume retaliation when the landlord acts within a set period after the tenant's protected activity. The landlord can overcome the presumption by showing a legitimate reason, such as nonpayment of rent.

Surrender and Abandonment

• Surrender: If the tenant offers to give up the lease and the landlord accepts, the lease ends and future rent stops. An express surrender of a lease with more than a year remaining generally must satisfy the Statute of Frauds.
• Surrender by operation of law: A landlord whose conduct is inconsistent with the tenant's continuing rights, such as retaking the premises for its own use, may be treated as accepting a surrender.
• Landlord's options when a tenant abandons:
  1. Accept the surrender and end the tenant's liability for future rent.
  2. Relet the premises on the tenant's behalf and hold the tenant liable for any shortfall.
  3. In the minority of states that do not require mitigation, leave the premises vacant and sue for rent as it comes due.

Transfers by the Landlord

• Sale of the reversion: A landlord may sell the property without the tenant's consent. The buyer takes subject to the lease, collects the rent, and is bound by covenants that run with the land. A tenant in possession gives buyers inquiry notice of the lease.
• Foreclosure: A lease made after a mortgage is generally ended by foreclosure of that mortgage. However, the federal Protecting Tenants at Foreclosure Act, made permanent in 2018, generally lets bona fide residential tenants finish their lease terms and entitles them to at least 90 days' notice. A buyer who will occupy the home as a primary residence may end the lease with 90 days' notice.

Destruction and Condemnation

• Destruction: At common law, a tenant who leased land and a building remained liable for rent even if the building was destroyed without the tenant's fault, unless the tenant leased only part of a building, such as an apartment. Modern statutes and cases generally allow the tenant to end the lease when the premises are destroyed or become unusable without the tenant's fault.
• Condemnation: A taking of the entire premises ends the lease and the duty to pay rent, and the tenant shares in the compensation award for the value of the remaining leasehold. After a partial taking, the traditional rule keeps the full rent obligation but gives the tenant part of the award.

Suitability and Illegal Uses

• Commercial suitability: A few states recognize an implied warranty that essential facilities of commercial premises are free of latent defects that make the premises unsuitable for their intended use (Davidow v. Inwood North Professional Group—Phase I, Tex. 1988).
• Illegality: A lease whose only purpose is an illegal use known to both parties is unenforceable. If a later change in the law bars the only use the lease allows, the tenant may be excused under frustration of purpose.