17.5 Landlord-Tenant, Rentals, Leases & Closings

The PCCE tests leases and closings as a calendar-and-checklist skill. Domain 2 asks which tenancy the parties created, what a residential landlord must still provide, how a tenant assigns versus subleases, and what actually happens at a modern closing. State statutes vary on security deposits, eviction procedure, and habitability details. Federal consumer mortgage closings use the Closing Disclosure under TRID, not the historical HUD-1.

Lease types

A term of years (estate for years) has a fixed start and a fixed end. It ends automatically. No notice is required to terminate at the stated end, unless a statute or the lease says otherwise.

A periodic tenancy renews automatically for like periods (month-to-month, year-to-year) until proper notice. The common-law notice period often matched the period; modern residential statutes often prescribe a set number of days. Read the stem. Do not invent a nationwide notice count.

A tenancy at will lasts only so long as both parties will it. Either side may end it. Many statutes still require a short notice. It often arises when someone occupies with permission but without a periodic rent term.

A tenancy at sufferance is a holdover after a lawful tenancy ends. The landlord may evict the holdover or, in many jurisdictions, elect to treat the holdover as a periodic tenant. The holdover is not a stranger who never had possession, but the holdover has no new lease until the landlord elects.

Residential versus commercial

Residential leases are heavily statutory. Most states imply a warranty of habitability: heat, water, sanitation, and structural safety that make the dwelling livable. The warranty is often nonwaivable. Breach can justify repair-and-deduct, rent withholding, or constructive eviction — state variation on the tenant's self-help path. Retaliatory eviction after a habitability complaint is widely restricted.

Commercial leases are more contract-driven. There is generally no implied warranty of habitability. The tenant often takes the space as is, pays triple-net (taxes, insurance, maintenance) or CAM (common-area maintenance), and bargains for exclusive use, assignment rights, and build-out. Read the lease; do not import residential protections into a warehouse stem.

Security deposits and eviction

Security deposits secure unpaid rent and damage beyond ordinary wear. Caps, interest, separate accounts, and deadlines to return the balance with an itemized statement are state-specific. Do not invent a national dollar cap or a national number of days. Flag the statute on the file.

Eviction of a residential tenant is usually a summary court proceeding — unlawful detainer, forcible entry and detainer, or a similarly named action. Typical path: proper notice (pay or quit, cure or quit, or unconditional quit, as the statute allows), filing, service, hearing, judgment, and a writ of possession executed by an officer. Self-help (changing locks, shutting off utilities, dumping property) is widely forbidden in residential tenancies. Commercial self-help is more often allowed if the lease and statute permit it — do not assume.

The landlord's claim for unpaid rent and the tenant's habitability counterclaim can travel with the eviction or in a separate action, depending on local procedure.

Assignment versus sublease

An assignment transfers the tenant's entire remaining term. The assignee comes into privity of estate with the landlord and is liable for covenants that run, including rent. The original tenant usually remains liable on the lease contract (privity of contract) unless the landlord grants a novation.

A sublease transfers less than the entire remaining term (or otherwise keeps a reversion in the original tenant). The subtenant is in privity with the original tenant, not ordinarily with the landlord. The original tenant remains the landlord's tenant.

Many leases require consent to either. A no-assignment clause is often read not to bar a sublease, and vice versa, unless the lease is clear. Consent not to be unreasonably withheld is a contract term, not a nationwide implied rule.

The closing: escrow, TRID forms, proration, walk-through

A closing (settlement) is the meeting or escrow process at which the deed, funds, and required papers are exchanged and then recorded.

Escrow uses a neutral stakeholder (title company, underwriter, or escrow agent) who holds the deed, money, and instructions and disburses only when every condition is met. In a table closing, the parties sign together; in a mail-away or hybrid closing, documents circulate. The job is the same: match the contract, the commitment, and the lender's closing instructions.

For most closed-end consumer mortgages, federal law now uses the Closing Disclosure under TRID. Give it to the consumer generally at least three business days before consummation. The HUD-1 Settlement Statement is the historical RESPA form for those loans. Do not tell a 2026 consumer-mortgage file that HUD-1 is the current required federal form. Cash sales, many commercial loans, and some exempt transactions may still use a settlement statement that is not a TRID Closing Disclosure.

Proration splits ongoing items as of the closing date: property taxes, HOA dues, rents if the property is occupied by a tenant, and sometimes utilities or fuel. Local custom decides who owns the day of closing. Show the arithmetic on the settlement statement and tie it to the contract.

A walk-through shortly before closing confirms the agreed condition, vacancy or occupancy, personal-property list, and completed repairs. A failed walk-through is a contract issue (credit, escrow holdback, or delay), not a title-insurance issue.

Funding is the lender's wire or the buyer's cash becoming available. Recording then puts the deed and the new mortgage or deed of trust in the public record, often in a set order: release of the seller's loan, deed to the buyer, new security instrument. Possession usually follows the contract (often on funding and recording).

Paralegal closing checklist

Work backward from the closing date:

• Current title commitment and cleared requirements (payoffs, releases, entity authority, marital joinder, HOA resale packet).
• Survey or survey affidavit as the lender and contract require.
• Hazard and, if relevant, flood insurance binders naming the lender.
• Payoff letters with per-diem interest; subordinate-lien releases or short-sale approvals.
• Entity documents (resolution, good standing) and photo ID for individuals.
• FIRPTA affidavit if a seller may be a foreign person; 1099-S reporting data.
• TRID Closing Disclosure timing for a covered consumer loan; do not use HUD-1 as the current consumer form.
• Funds: wire instructions verified by a known number (not an emailed change), cashier's checks if allowed, and a balanced disbursement worksheet.
• After closing: confirm recording, issue the final policy, send recorded documents to the parties, and calendar any post-closing holdback.

A paralegal prepares, calendars, and flags. The supervising attorney decides whether an exception is acceptable.

Path. A month-to-month residential tenant stops paying. The landlord cannot change the locks. Serve the statutory notice, file the unlawful-detainer action, and obtain a writ. Separately, a buyer of the building is closing a consumer purchase-money loan: calendar the Closing Disclosure, prorate taxes, walk the unit, fund, and record the deed and new deed of trust.

Term-swap. Term of years has a fixed end. Periodic renews until notice. At will is permission without a period. Sufferance is a holdover. Assignment is the whole remaining term. Sublease keeps a reversion. Closing Disclosure is the current TRID consumer form. HUD-1 is historical for those loans.