Landlord-Tenant Law

Overview

Landlord-tenant law governs the rental of commercial and residential property. It is composed primarily of state statutes and common law. A number of states have based their statutory law on either the Uniform Residential Landlord And Tenant Act (URLTA) or the Model Residential Landlord-Tenant Code. Further, federal statutory law may be relevant during times of national/regional emergencies and in preventing forms of discrimination.

The Four Basic Types of Landlord-Tenant Relationships

The basis of the legal relationship between a landlord and tenant is grounded in both contract and property law. The tenant has a property interest in the land (historically, a non-freehold estate) for a given period of time before the property interest transfers back to the landlord. See State Property Statues. While these four relationship types are generally true, they are subject to state statutes, as well as the actual lease agreed upon by the landlord and the tenant. 

The length of the tenancy is typically classified in 1 of 4 categories:

  1. Term of Years Tenancy
    1. The relationship lasts for a fixed period which is agreed upon in advance by both the landlord and tenant. When the period ends, so do the tenant's possessory rights/
    2. In this relationship, the tenant has the right to possess the land, to restrict others (including the landlord from entering the land, and to sublease or assign the property). 
  2. Periodic Tenancy
    1. The relationship is automatically renewed unless the landlord gives advance notice of termination
    2. In this relationship, the tenant has the right to possess the land, to restrict others (including the landlord from entering the land, and to sublease or assign the property). 
  3. Tenancy at Will
    1. There is no fixed ending period. The relationship continues for as long as the tenant and landlord desire.
  4. Tenancy at Sufferance
    1. The tenant continues to inhabit the property after the lease expires.

Quiet Enjoyment

The landlord-tenant relationship is founded on duties proscribed by either statutory law , the common law, or the individual lease. Basic to all leases is the implied covenant of quiet enjoyment. This covenant ensure the tenant that his possession will not be disturbed by someone with a superior legal title to the land including the landlord. 

Transferring the Tenant's Interest

Assignment & Sublease

Subject to limitations expressly stated in a lease, a tenant is typically able to transfer her property interest to a third party. This transfer takes the form of two different actions:

  1. Assignment - The tenant conveys her entire interest in the property to the third party. The third party effectively becomes the new tenant. 
  2. Sublease - The tenant conveys her interest to the third party, but the tenant maintains a revisionary interest. The tenant becomes the sublessor, and the third party becomes the sublessee.
    1. What the "revisionary interest" means is that, under certain agreed-upon conditions, the interest in the property will revert back to the sublessor. When this happens, the sublessee will no longer have an interest in the property.  

Privity

Whenever parties intend a transfer of interest, they should always consider privity of estate and privity of contract:

  1. Privity of estate - This refers to the parties actually responsible for the estate.
    1. In a sublease, the landlord, tenant, and sublessee are all under privity of estate. 
    2. In an assignment, only the landlord and sublessee are under privity of estate. 
  2. Privity of contract - This refers to the parties under contract for the estate. 
    1. In either a sublease or an assignment, this includes the landlord, the tenant, and the sublessee. 

Limitations on Transferring

As expressed, the ability to transfer interest is subject to certain limitations established by the lease between the landlord and the tenant. There are typically 3 such clauses which may be used in a lease:

  1. Sole discretion clause - The landlord may refuse a sub-lease for any reason or no reason, just not for a bad reason. 
  2. Reasonableness clause - The landlord may refuse a sub-lease on a commercially reasonable basis (elaborated on below).
  3. No standard in lease - The lease may requires the landlord's consent, but the lease may not express a standard to guide the consent. 

Commercial Reasonability

Regarding the "commercially reasonable" standard, courts will use a balancing test in which the court will balance commercial reasonable and unreasonable factors to determine whether the landlord has refused a sub-lease based on commercially reasonable or commercially unreasonable factors. If the refusal was commercially unreasonable, the court will order the landlord to allow the sub-lease. 

  1. Reasonable factors (non-exhaustive list):
    1. financial responsibility of the proposed assignee/sublessee; suitability of the assignee's/sublessee's proposed use for the particular property; legality of assignee's/sublessee's proposed use; the need for alteration of the premises due to assignee's/sublessee's proposed use; nature of the occupancy (i.e., office, factory, clinic, etc.)
  2. Unreasonable factors (non-exhaustive list): 
    1. denying solely on the basis of personal taste, convenience or sensibility; denying in order to charge a higher rent than originally contracted for; denying based on religious objection 

Eviction

Eviction refers to a landlord barring a tenant from using the property, usually due to the tenant materially violating the lease and/or not paying the agreed-upon rent. 

A landlord, however, may not evict a tenant in retaliation for the tenant reporting housing violations or other problems with the condition of the property. This is typically referred to as the doctrine of retaliatory eviction.

Typically, a landlord has 1 of 2 methods he can use to evict a tenant:

  1. Self-help eviction
    1.  The landlord physically enters the premises and causes the tenant to leave. The landlord, however, muse use only a reasonable amount of force. In the limited number of jurisdictions that still allow self-help evictions, a court would determine what a "reasonable" amount of force would be.
  2. Sue the tenant.
    1. The landlord can sue to evict the tenant. If the court rules to evict, then the landlord must allow a law enforcement officer to enforce the judgment.  

However, the majority of jurisdictions do not allow for self-help evictions. Therefore, in order for a landlord to evict a tenant, the landlord typically must sue the tenant in court and allow the court to enforce an eviction order.

Constructive Eviction

Constructive eviction is when a tenant leaves the leased property due to the landlord’s conduct that materially interferes with the tenant’s agreed-upon purpose and prevents the property from being in tenantable condition.

Constructive eviction is triggered by the landlord’s wrongful conduct. Wrongful conduct may be satisfied by a wrongful omission when the landlord does 1 of 5 things:

  1. fails to perform an obligation in the lease
  2. fails to adequately maintain and control the common area
  3. breaches a statutory duty owed to the tenant
  4. fails to perform promised repairs
  5. allows nuisance-like behavior

In addition to the landlord's material omission of 1 of these 5 elements, the tenant must also leave the property within a reasonable time frame. Otherwise, the tenant waives the right to a constructive eviction claim. Further, if the tenant leaves after a reasonable time frame, a court may find that the tenant has engaged in abandonment (discussed below).

Some jurisdictions allow for a partial constructive eviction. This happens when a particular portion of the leasehold has been made untenable by the landlord. As a result, a court will grant a constructive eviction for that part of the leasehold. Partial constructive eviction will typically require the same elements that a normal constructive eviction would require. 

A constructive eviction occurs when the landlord causes the premises to become uninhabitable.

Abandonment

Abandonment occurs when the tenant meets all 3 of the following factors:

  1. The tenant vacates the leased property without justification
  2. The tenant has no intent to return to the property
  3. The tenant defaults on rent payment

To recover for abandonment, the landlord can take 1 of 3 actions:

  1. Sue the tenant for all of the rent due
  2. Terminate the lease
  3. Mitigate damages by acquiring another tenant and then suing the past tenant for any lost rent
    1. To note, if someone offers to pay less than market value for the property, and the owner refuses, that is not a failure to mitigate damages 

The Implied Warranty of Habitability

Housing codes were established to ensure that residential rental units were habitable at the time of rental and during the tenancy. Most states have an implied warranty of habitability. This requires a landlord to substantially comply with building & housing code standards. If the lease contains a clause waiving the implied warranty of habitability, a court will typically refuse to enforce the clause. 

When the warranty of habitability is breached, courts will typically allow for 1 of 3 remedies:

  1. The tenant will be able to withhold rent until the landlord repairs the property
  2. The tenant will be able to withhold rent and can use the money to pay for repairs instead
  3. The tenant will be able to sue for damages

Under the third method (sue for damages), there are typically 3 methods for recovery:

  1. The court will deduct damaged property's value from the property's undamaged value
  2. The court will deduct the amount of damaged rent from the cost of rent when undamaged
  3. Percentage diminution 
    1. This refers to the percentage by which the tenant’s use and enjoyment of the premises has been reduced by the uninhabitable conditions. For this, a court will review the defects’ materiality and the length of time such defects have existed.

Discrimination

Federal law prohibits discrimination in housing and the rental market. See Civil Rights Act of 1866 & 42 U.S. Code, Chapter 45, Federal Fair Housing Act.

Neithamer v Brenneman Property Services Inc (1999) is a leading case regarding a landlord discriminating against a potential tenant. The court in that case created a test (shown below) for when a landlord engages in discrimination of a potential tenant.

If the plaintiff (potential tenant) offers no direct evidence of discrimination, then the plaintiff must prove the prima facie case, which has 4 components. The burden of proof is on the plaintiff to prove all four components; if he does, then the court will find that the landlord acted in violation of the Fair Housing Act via an inference of unlawful discrimination:

  1. The plaintiff is a member of a protected class and the landlord knew this or suspected this to be true
  2. The plaintiff applied for and was qualified to rent the property in question
  3. The defendant rejected the plaintiff's application
  4. The property remained available and unrented thereafter

The court in Fair Housing Council of San Francisco v. Roommate.com (2007), however, established a limit on the rule from Neithamer. The Fair Housing court found that the anti-discrimination provisions of the Fair Housing Act do not apply to the selection of roommates. 

Further, there are 2 more situations in which a landlord is exempt from the Fair Housing Act. When the individual is the landlord of a single-family dwelling or when the individual is the landlord of an owner-occupied dwelling with 4 or fewer units, then the landlord would also be exempt from the Fair Housing Act.