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Business Law and the Legal Environment for a New Century
Alternate Edition
Quote of the Day
“A house she hath, ‘tis made of such good fashion,
The tenant shall ne’er pay for reparation,
Nor the landlord ever raise her rent,
Or turn her out of doors for nonpayment;
From chimney tax, this cell is free,
To such a house who would not a tenant be?”
Epitaph for Rebecca Bogess,
Folkestone, England, 1688
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Business Law and the Legal Environment for a New Century
Alternate Edition
Landlord-Tenant
Relationship
 When an owner of a freehold estate
allows another person temporary,
exclusive possession of the property,
the parties have created a landlordtenant relationship.
 Three legal areas are combined
• An interest in real property is conveyed.
• A lease is a contract.
• Negligence law may be involved also.
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Business Law and the Legal Environment for a New Century
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Lease
 The statute of frauds generally requires
that a lease be in writing.
 Some short-term oral contracts may be
enforceable, but a written contract is
clearer and safer.
 A written contract usually includes
covenants (promises) from the landlord
and the tenant; these details are
determined by the parties.
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Business Law and the Legal Environment for a New Century
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Types of Tenancy




Any lease for a stated, fixed period is a tenancy
for years.
A periodic tenancy is created for a fixed period
and then automatically continues for additional
periods until either party notifies the other of
termination.
A tenancy at will has no fixed duration and may
be terminated by either party.
A tenancy at sufferance occurs when a tenant
remains on the premises, against the wishes of
the landlord, after the expiration of a true
tenancy.
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Business Law and the Legal Environment for a New Century
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Landlord’s Duties
 The landlord’s first important duty is to
deliver possession.
• The “English rule” obligates the landlord to
remove a previous tenant if he does not
leave willingly.
• The “American rule” allows the new tenant
to either evict the old tenant, or collect rent
from her.
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Business Law and the Legal Environment for a New Century
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Quiet Enjoyment
 All tenants are entitled to the right to
use the property without the
interference of the landlord.
 Actual Eviction
• If a landlord prevents the tenant from
possessing the premises, he has actually
evicted her.
 Constructive Eviction
• If a landlord substantially interferes with the
tenant’s use and enjoyment of the
premises, he has constructively evicted her.
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Business Law and the Legal Environment for a New Century
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Duty to Maintain Premises
 A landlord has a duty to deliver the
premises in a habitable condition and to
maintain a habitable condition.
 Building codes may require stricter than
normal standards for rental property.
 Implied Warranty of Habitability
• The implied warranty of habitability requires
that a landlord meet all standards set by the
local building code, or that the premises be
fit for human habitation.
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Business Law and the Legal Environment for a New Century
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Tenant Remedies for
Defective Conditions




Rent abatement – a court ordered reduction in
rent owed.
Rent Withholding – the tenant refuses to pay
part or all of the rent, in proportion to the
defective conditions.
Repair and Deduct – the tenant may, in some
cases, have the repair made and deduct the
cost from the rent.
Suit for Damages – in some cases, the tenant
may file suit against the landlord.
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Business Law and the Legal Environment for a New Century
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Duty to Return Security
Deposit
 The landlord must return a security
deposit within 30 days after a tenant
vacates.
 If any of the deposit is withheld to pay
for damage, a written accounting of the
damage is required.
 If the landlord fails to comply, the tenant
is entitled to double the deposit amount.
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Business Law and the Legal Environment for a New Century
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Duties and Remedies
 Duty to Pay Rent – this is the tenant’s
foremost obligation.
 Landlord’s Remedies for Nonpayment
of Rent:
• Apply security deposit to rent.
• Sue tenant for non-payment.
• Evict tenant.
 Duty to Mitigate – in most cases, the
landlord must try to minimize losses by
finding a new tenant quickly.
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Business Law and the Legal Environment for a New Century
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More Duties and Remedies
 Duty to Use Premises for Proper
Purposes
 Duty Not to Damage Premises
• A tenant is liable to the landlord for any
significant damage he causes to the
property.
 Duty Not to Disturb Other Tenants
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Business Law and the Legal Environment for a New Century
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Change in the Parties
 Sale of the Property
• Generally, the sale of leased property does
not affect a lease but substitutes one
landlord, (purchaser), for another, (seller).
 Assignment and Sublease
• In an assignment, the tenant transfers all
his legal rights and duties to a third party.
• In a sublease, the original tenant remains
responsible for the lease, and the
subleasee is responsible to the subleasor
(original tenant), not to the landlord.
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Business Law and the Legal Environment for a New Century
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Injuries
 Tenant’s Liability
• A tenant is generally liable for injuries
occurring within the leased premises.
 Landlord’s Liability
• The landlord is generally liable for injuries
occurring in common areas (such as a
sidewalk) where the tenant has no control.
• Common law holds the landlord liable for
latent defects and negligent repairs.
• A landlord can sometimes be held liable for
a crime committed on the property.
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Business Law and the Legal Environment for a New Century
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“Landlord-tenant law
combines property, contract
and negligence principles into
one important and fastchanging field.”
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Business Law and the Legal Environment for a New Century
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