11.4 Landlord-Tenant & Closings

The final stretch of real estate on the exam joins tenant protections with the mechanics of closing a sale. Paralegals live in this material — much of residential closing practice is paralegal-driven.

Leasehold Estates

A lease is both a contract and a conveyance of a possessory estate (a nonfreehold). The four types:

• Tenancy for years — any lease with a fixed ending date (despite the name, it can be for one week). It ends automatically on that date; no notice is required.
• Periodic tenancy — renews automatically for successive periods (month-to-month, year-to-year) until proper notice is given. Termination typically requires notice of one full period in advance (one month for a month-to-month; under the common law, six months for a year-to-year).
• Tenancy at will — no fixed term; either party may terminate at any time. Death of either party ends it.
• Tenancy at sufferance — the bare situation of a holdover tenant who stays after the lease expires. The landlord may treat the holdover as a trespasser and evict, or accept rent and convert the situation into a periodic tenancy.

An assignment transfers the tenant's entire remaining term (the assignee is in privity of estate with the landlord and liable on covenants that run with the land, while the original tenant remains in privity of contract); a sublease transfers only part of the term, leaving the sublandlord between the landlord and subtenant.

Tenant Protections

• Covenant of quiet enjoyment — implied in every lease. The landlord may not wrongfully interfere with the tenant's possession. Constructive eviction occurs when the landlord's acts or omissions (shutting off heat in January) make the premises unusable; the tenant must vacate within a reasonable time, and may then treat the lease as terminated and stop paying rent.
• Implied warranty of habitability — implied in residential leases in nearly all states. The landlord must keep the premises fit for human habitation, generally measured by housing-code standards. It is non-waivable, and remedies include repair-and-deduct, rent withholding or escrow, and lease termination.
• Eviction — self-help eviction (changing locks, removing doors, shutting off utilities) is illegal in the overwhelming majority of states. The landlord must serve a statutory notice to quit or notice to pay rent or quit, then file an unlawful detainer action, obtain a judgment, and have the sheriff execute the writ of possession. Only law enforcement may physically remove the tenant.
• Security deposits — state statutes typically cap the amount (often one to two months' rent), require the deposit to be held properly, and impose a deadline (commonly 14-30 days) to return it with an itemized statement of any deductions for damage beyond normal wear and tear. A landlord who misses the deadline or acts in bad faith may owe statutory penalties, sometimes double or treble the deposit.

The Closing Process

1. Purchase agreement (sales contract) — the signed contract setting price, earnest money deposit, contingencies (financing, inspection, appraisal, title), and the closing date. Under the Statute of Frauds it must be in writing and signed.
2. Escrow — a neutral escrow agent (title company, escrow company, or closing attorney, depending on the state) holds the earnest money, documents, and funds, and disburses them only when all conditions are met.
3. Title work and due diligence — title search and commitment, inspections, survey, loan underwriting.
4. Closing Disclosure (CD) — under the TILA-RESPA Integrated Disclosure (TRID) rules, the lender must deliver the CD to the borrower at least three business days before consummation (signing the note). The earlier Loan Estimate is due within three business days of loan application.
5. Closing day — parties sign the deed, note, and mortgage; funds move through escrow; the deed and mortgage go to the county recorder. Recording protects the buyer's priority.

RESPA (the Real Estate Settlement Procedures Act) is the federal statute behind the disclosure regime: it bans kickbacks, referral fees, and unearned fees among settlement-service providers, limits required escrow-account cushion deposits, and applies to most federally related residential mortgage loans.

Paralegal Role in Closings

The paralegal typically orders the title search and payoff statements, prepares the deed, affidavit of title, settlement statements, and transfer-tax forms, coordinates signatures and notarization, balances the disbursement ledger, and sends the deed and mortgage for recording. The boundary that matters: the paralegal prepares documents and manages logistics but may not give legal advice or conduct the closing where state law treats that as the practice of law — explaining the legal effect of a document to the buyer is the supervising attorney's job. Missteps like drafting a deed for an unrelated third party outside attorney supervision can cross into the unauthorized practice of law.