This is “Summary and Exercises”, section 32.6 from the book Business and the Legal Environment (v. 1.0). For details on it (including licensing), click here.

For more information on the source of this book, or why it is available for free, please see the project's home page. You can browse or download additional books there. You may also download a PDF copy of this book (12 MB) or just this chapter (176 KB), suitable for printing or most e-readers, or a .zip file containing this book's HTML files (for use in a web browser offline).

Has this book helped you? Consider passing it on:
Creative Commons supports free culture from music to education. Their licenses helped make this book available to you.
DonorsChoose.org helps people like you help teachers fund their classroom projects, from art supplies to books to calculators.

32.6 Summary and Exercises

Summary

A leasehold is an interest in real property that terminates on a certain date. The leasehold itself is personal property and has three major forms: (1) the estate for years, (2) the periodic tenancy, and (3) the tenancy at will. The estate for years has a definite beginning and end; it need not be measured in years. A periodic tenancy—sometimes known as an estate from year to year or month to month—is renewed automatically until either landlord or tenant notifies the other that it will end. A tenancy at will lasts only as long as both landlord and tenant desire. Oral leases are subject to the Statute of Frauds. In most states, leases to last longer than a year must be in writing, and the lease must identify the parties and the premises, specify the duration, state the rent, and be signed by the party to be charged.

The law imposes on the landlord certain duties toward the tenant and gives the tenant corresponding rights, including the right of possession, habitable condition, and noninterference with use. The right of possession is breached if a third party has paramount title at the time the tenant is due to take possession. In most states, a landlord is obligated to provide the tenant with habitable premises not only when the tenant moves in but also during the entire period of the lease. The landlord must also refrain from interfering with a tenant’s permissible use of the premises.

If the landlord breaches an obligation, the tenant has several remedies. He may terminate the lease, recover damages, or (in several states) use a rent-related remedy (by withholding rent, by applying it to remedy the defect, or by abatement).

The tenant has duties also. The tenant must pay the rent. If she abandons the property and fails to pay, most states do not require the landlord to mitigate damages, but several states are moving away from this general rule. The tenant may physically change the property to use it to her best advantage, but she may not make structural alterations or commit waste. The tenant must restore the property to its original condition when the lease ends. This rule does not include normal wear and tear.

Should the tenant breach any of her duties, the landlord may terminate the lease and seek damages. In the case of a holdover tenant, the landlord may elect to hold the tenant to another rental term.

The interest of either landlord or tenant may be transferred freely unless the tenancy is at will, the lease requires either party to perform significant personal services that would be substantially less likely to be performed, or the parties agree that the interest may not be transferred.

Despite the general rule that the tenant is responsible for injuries caused on the premises to outsiders, the landlord may have significant tort liability if (1) there are hidden dangers he knows about, (2) defects that existed at the time the lease was signed injure people off the premises, (3) the premises are rented for public purposes, (4) the landlord retains control of the premises, or (5) the landlord repairs the premises in a faulty manner.

Exercises

  1. Lanny orally agrees to rent his house to Tenny for fifteen months, at a monthly rent of $1,000. Tenny moves in and pays the first month’s rent. Lanny now wants to cancel the lease. May he? Why?
  2. Suppose in Exercise 1 that Tenny had an option to cancel after one year. Could Lanny cancel before the end of the year? Why?
  3. Suppose in Exercise 1 that Lanny himself is a tenant and has leased the house for six months. He subleases the house to Tenny for one year. The day before Tenny is to move into the house, he learns of Lanny’s six-month lease and attempts to terminate his one-year lease. May he? Why?
  4. Suppose in Exercise 3 that Tenny learned of Lanny’s lease the day after he moved into the house. May he terminate? Why?
  5. Simon owns a four-story building and rents the top floor to a college student. Simon is in the habit of burning refuse in the backyard, and the smoke from the refuse is so noxious that it causes the student’s eyes to water and his throat to become raw. Has Simon breached a duty to the student? Explain.
  6. In Exercise 5, if other tenants (but not Simon) were burning refuse in the backyard, would Simon be in breach? Why?
  7. Assume in Exercise 5 that Simon was in breach. Could the student move out of the apartment and terminate the lease? What effect would this have on the student’s duty to pay rent? Explain.

Self-Test Questions

  1. An estate for years

    1. has a definite beginning and end
    2. is a leasehold estate
    3. usually terminates automatically at midnight of the last day specified in the lease
    4. includes all of the above
  2. Not included among the rights given to a tenant is

    1. paramount title
    2. possession
    3. habitable condition
    4. noninterference with use
  3. The interest of either landlord or tenant may be transferred freely

    1. unless the tenancy is at will
    2. unless the lease requires significant personal services unlikely to be performed by someone else
    3. unless either of the above apply
    4. under no circumstances
  4. When injuries are caused on the premises to outsiders,

    1. the tenant is always liable
    2. the landlord is always liable
    3. the landlord may be liable if there are hidden dangers the landlord knows about
    4. they have no cause of action against the landlord or tenant since they have no direct contractual relationship with either party
  5. Legally a tenant may

    1. commit waste
    2. make some structural alterations to the property
    3. abandon the property at any time
    4. physically change the property to suit it to her best advantage, as long as no structural alterations are made

Self-Test Answers

  1. d
  2. a
  3. c
  4. c
  5. d