property law: march 16 2010 class notes.

recap.
holdover
american rule v. english rule
NYS has adopted the english rule over the american rule
tenancy at sufferance

sublease and assignment
various remedies for holdover tenants
1. accept rent for a new term. however, it's clear that this acceptance is not for a new lease on same original terms, but instead for a periodic tenancy (for example, if the payment of rent is one month's, a month-to-month may be created OR a term of years may be created... there is statutory authority but in terms of its application, there's no clear test on this because not really a current issue)

ernst v. conditt.
we saw what happens when a tenant purports to transfer some of his interest in a property to a third party. we have to determine what we will call this transference.

1. does the transferee retain any interest after giving over to 3d party? such as some interest in the remaining term of the lease? the traditional common law test would find a sublease
2. does the transferee give all interest over to 3d party? under common law, this is an assignment.

n.b. -- the title doesn't matter in assignment

not clear that these test really gives different results!!

in ernst v. conditt the appellant said it was a sublease however, the court said that all the interest was conveyed... what do we call this? it's an assignment, because the original tenant did not have any interest left over in the property, though it was called a sublease. what does this idea of "intent" do, in this case? does it actually serve any purpose? what would their actions do that may have some inconsistency with their words or with their writing?

who cares whether its a sublease or an assignment?
privity of contract versus privity of estate!
privity creates legal duties that parties can enforce against each other. 
privity of contract is created by the voluntary agreements and relationships between people.

landlord and t1: estate and contract
t1 and t2: estate and contract.
landlord and t2: no privity!!

third party beneficiary: contract law will acknowledge a contract between 3d party if one party is explicitly agreeing to take on obligations that are of benefit to the 3d party.
most juris recognize 3d party beneficiaries. that would create

so to review:
in a sublease
L privity of estate and contract T1 privity of estate and contract T2
and between L and T2 any covenant explicitly assumed will convey a 3d party beneficiary contract

so what happens in default? what happens if there's waste?

in an assignment where the tenant has transferred all of his interest to the second tenant, are the landlord and T1 in privity of estate? no -- because the tenant had assigned all of the rights away
are they in privity of contract? yes -- because absent the landlord's consent, the tenant can't destroy the relationship

in an assignment where the tenant has transferred all of his interest to the second tenant, is there a privity of estate between them? no -- because T1 does not have property interest beyond the lease. T1 assigned the leasehold to T2. the other property interest is the landlord's in reversion.

assignment with novation!

n.b. -- see the powerpoint slides: the arrows indicate who can sue who ^__^

so back to ernst...
L contracted to T1 contracted to T2 which created an assignment of the estate interest between L and T2.
but rogers said, "i will stay responsible for the execution of the lease." is that consistent with an assignment? yes -- why? because rogers can still remain liable in privity of estate with ernst.

now, is there a privity of contract between ernst and conditt? no -- there is question of whether or not conditt explicitly assumed the obligations of rogers

there's an assignment between ernst and conditt. but it is questionable if there is a contract of 3d party beneficiary between them! therefore, the difference between assignment and sublease...

landlord's right to control tenant's disposition of leasehold interest:
ny RPL 235-f (the roommate law) -- the landlord has no right to restrict 1 roommate + his/her dependants per tenant on the lease, and any attempt to do so is unreasonable and unenforceable. must give the landlord 30 days notice.

kendall v. ernest pestana, inc
ny RPL 226-b (the sublet law)

issue of extortion...
the landlord
restraint on alienation (white v. lied, mountain lodge v. toscano) -- common and stat laws do not support restraint on alienation

what would be a problem with allowing the landlord to withhold consent? the landlord can extort more than he would have gotten from the original agreement

what about the reasonableness argument? isn't it reasonable that kendall is saying, if you want to make the assignment, the land is worth more? the court says that reasonableness here is that it's reasonable that the land is kept in use rather than held unused until there's a better offer

what about the clause in the lease contract saying that the landlord has full right to arbitrarily deny assignment?
the landlord should have the opportunity to vett any assignment that comes because of his right to protect his interest in reversion and his interest in economic efficiency. why should he still be held to a reasonableness scrutiny? because if the interest that the landlord has in denying assignment or sublease, it has to be based in these two interests and any other interests would be assumed to be exterior to the commercially and contractually valid interests

where you have leases that extend over a period of time, it's possible that the value of the property could

parties interested in creating rules to contract over time will probably want those agreements and interests to be retained. why? bargaining power

if you bargain for it, the landlord's restrictions under a residential lease

bird v. wiley
summer v. ridell
reyos

p. 421-449 and NY PRL 235-b, 223-b