Ownership-a system of laws governing the relationship among people with respect to resources. A social construct



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Assignment--grant of all rights

Sublease--"something less"

Under a sublease, sublesor retains a reversion; the right to possession revets to him at the end of the sublease period

Modern rule (followed by a minority of jurisdictions; see 475, Ernst v. Conditt 1964 at 469)--Court only looks to the intent of the parties; actual "words" used are not conclusive; a document purporting to be a sublease will not be considered as such if the subleasor does not maintain a right of entry (Ernst)

It is also possible to find a partial assignment instead of a sublease (475)



Privity of contract

The relationship between contracting parties

Allows suit for breach of contractual provisions

Privity of estate

The relationship between mutual or successive owners of property

Allows suit upon promises which "touch and conern" the land

Improvements, waste, etc.

Promise to pay rent does touch and concern the land

Other promises that have nothing to do with the land itself, but benefit the landlord personally, are not actionable

Examples

L leases to T, who assigns to A

[L | T] -> [L | A]

L & T, T & A have privity of contract

L & A have privity of estate

L leases to T, who sublets to S

[L | T] -> [L | T | S]

L & T, T & S have privity of contract

L & T, T & S have privity of estate

L has no way of getting to S



Assumption agreement--agreement between landlord and assignee/sublessee which creates privity of contract

Third party beneficiary doctrine--two parties who contract to confer a benefit on a third party, in effect, grant the third party the ability to sue upon the contract for deliverance of the benefits.



Kendall v. Ernest Pestaña (1985 at 477)--Commercial lease provided that written consent of the lessor was required before the lessee could assign his interest

Pestaña refused to consent to the assignment and maintained that he had an absolute right to arbitrarily refuse any such request

Contractual provision to sublease would have no effect if the landlord can arbitrarily withhold approval.

Kendall follows the minority rule-- Consent may be withheld only where the lessor has a commercially reasonable objection to the assignment (479)

Conceptualization of lease as conveyance of a leasehold interest

Common law's hostility toward restaints on alienation has caused such restraints on leasehold interests to be strictly construed against the lessor (479)

The clause is for the protection of the landlord in its ownership and operation of the particular property; not for its general economic protection (like landlord's desire to recoup higher rent for himself) (482)

Conceptualization of lease as a contract

Implied obligation of good faith and fair dealing (481)

Restatement of Property--which also follows the minority rule--

would allow unreasonable withholding of consent where the right was "freely negotiated." (481)

Court takes no possition on the proper construction of such a provision with respect to residential leases

Tenant obligations and landlord remedies

Tenant's obligations, generally:

May not permit waste (damage the property so as to reduce the value of the landlord's reversion) (540-541)

Tenant must make repairs to the property so as to prevent waste (but not "structural" repairs)--modern trend limits this obligation (541)

Implied obligation not to engage in nuisances

Obligation to pay rent, even where the landlord breaches, so long as landlord does not impinge on tenant's ability to use land/

possession of estate

Covenants--promises

Dependant--breach of one part of the covenant excuses the other party from performance

Independant--breach of one part of covenant does not impact on remaining parts' vitality

Common law conceptualized a rental agreement as a conveyance and an independant covenant; Modern trend is to treat both as a single contract



Greenfield v. Kolea (1976 at 542)--Fire destroyed a building

Common law presumption: a tenant is not relieved from the obligation to pay rent despite the total destruction of the leased premises (543). Exceptions:

Where only a portion of a building is leased--clear in such a case that no estate in land is granted (543)


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