property law: march 18 2010 class notes.

privity.
duty will arise out of property law (estate) or contract.

assignment with novation.

sublease... a "daisy chain"...

the landlord remains in privity of contract, and the tenant comes into privity of contract with the subleasee, with no agreement to the landlord unless the subleasee agrees to take on the responsibilities to the landlord

versus an assignment...
the property relationship between the parties has changed, and the assignee is taking all of the property interests of the original party and thereby taking the relationship of privity of estate from the assignor, such that the landlord and tenant no longer have a property interest left, instead the assignee takes the interest. but as to the contract, the original tenant is still in privity with the landlord and will also be in privity with the assignee. unless the assignee agrees to be bound, there is no privity of contract between the assignee and the landlord.

novation = the landlord is specifically agreeing to release the first tenant and take on the new tenant

these relationships are only relevant so long as there is a breach of contract. if there's a breach (such as not paying rent) you can only recover if there is a privity relationship.

ernst v. conditt: was the transferee a sublease (no remedy against the subleasee) or assignment (remedy available). let's say that this had been an assignment, and ernst then had an argument against rogers. what could rogers do?

yeah, if you contract for it, you can have a XXX but in CA the landlord's right to reject leases is subject to a reasonableness clause. there is a duty of good faith, and not allowing the sublease for arbitrary reasons is not acting in good faith.

in NY, commercial leases are silent: if you bargain for it, a commercial landlord can withhold un/reasonably. but for residential, consent to assignment can't be unreasonably withheld and consent to sublease cannot be unreasonably withheld. AND if it is unreasonably held (risk of adverse determination is on the tenant, however).

limits to occupancy in sublease/ roommate

what happens if a tenant breaches under a lease? such as failure to pay rent, or what if the tenant has abandoned the property?


berg v. wiley
berg is claiming loss of property
intentional infliction of emotional distress
damage to chattel (personal property that was taken/damaged)
wrongful eviction

what is the court addressing?
1. was the finding on abandonment/ surrender correct?
2. was wiley's retaking possession held correctly as a matter of law?

abandonment surrender is a factual one, not a legal one: the court would have needed to consider if the tenant's frame of mind was that she wanted to abandon the property. and if there was evidence in the record for the reasonable fact finder to know then there is abandonment? in this case there was enough evidence to know that the tenant did not surrender.

now do we know whether or not the eviction was wrongful.
the test:
1. landlord must operate under legal entitlement (must have the right to it)
2. the landlord must enter "peaceably"

this test comes from the common law of landlord tenant.

does the landlord have right of entry for repossession here? yes -- forfeiture of possession clause
wiley contends that a non-peaceable entry would have had a confrontation. since he retook when she wasn't there, obviously it was peaceable (considering the events that had already transpired between the parties).

the court doesn't buy this: just because she wasn't there, there was still tension between the parties and that the landlord was taking the law into his own hands, which makes the retaking non-peaceable. the only peaceable way is to go through the courts.

why?

because the tenant who finds him/herself in breach, the tenant can act unpeaceably.
see the article about mr. bryce
going through the courts takes time and cost tax-payer money, but it does involve an additional element of reason will help to temper the emotions that flare under real property

summary proceedings to recover possession can take a year (often does, in new york)... is this right or wrong?


sommer v. kridel, 74 NJ 446 
when the tenant does abandon, are the landlord's rights different?

duty to mitigate. does sommer have one? this court says yes: because taken the facts of

next class:
holy properties v. kenneth cole
rios v. carrillo

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