TITLE: LARRY - TANYA

SUBJECT: REAL PROPERTY

FILE: REAL07J.QUE



Larry leased in writing to Tanya a four-room office suite at a rent of $500 payable monthly in advance. The lease commenced on July 1, 2006. The lease required Larry to provide essential services to Tanya’s suite. The suite was located on the 12th floor of a new 20-story office building.


In November Larry failed to provide essential services to Tanya’s suite on several occasions. Elevator service and running water were interrupted once; heating was interrupted twice; and electrical service was interrupted on three occasions. These services were interrupted for periods of time lasting from one day to one week. On December 5, the heat, electrical and running water services were interrupted and not restored until December 12. In each instance Tanya immediately complained to Larry, who told Tanya that he was aware of the problems and was doing all he could to repair them.


On December 12, Tanya orally told Larry that she was terminating her lease on February 28, 2007 because the constant interruptions of services made it impossible for her to conduct her business. She picked the February 28 termination date to give herself ample opportunity to locate alternative office space.


Tanya vacated the suite on February 28 even though between December 12 and February 28 there were no longer any problems with the leased premises.


Larry did not attempt to relet Tanya’s vacant suite until April 15. He found a tenant to lease the suite commencing on May 1 at a rent of $500 payable monthly in advance. On May 1, Larry brought suit against Tanya to recover rent for the months of March and April.


On what theory could Larry reasonably assert a claim to recover rent from Tanya for March and April and what defenses could Tanya reasonably assert against Larry’s claim for rent? Discuss.


TITLE: LARRY - TANYA

SUBJECT: REAL PROPERTY

FILE: REAL07J.ANS



Overview


Larry may seek to recover rent from Tanya on several theories. His use of each theory is discussed below, along with the defenses Tanya could reasonably assert.


The lease was still effective during March and April, 2007. According to the facts, Tanya's five year leasehold estate commenced on July 1, 2006. There is no claim that there is a defect in the creation of the estate. The statute of frauds was satisfied because, according to the facts, the lease was written.


However, on December 12, 2006, Tanya attempted to orally terminate the estate and reconvey the remaining 4½ years to Larry. The statute of frauds requires that conveyance of an interest in land to last for more than one year be in writing, or the attempted conveyance is void.


If the attempted re-conveyance was void, Tanya was still a tenant during March and April, 2007. A tenant has a duty to pay rent Therefore, according to Larry, Tanya owes rent for March and April, 2007.


Larry will contend that Tanya's leasehold terminated when Larry accepted her abandonment. When a landlord accepts a tenant's abandonment of the leased premises, a surrender has occurred and the leasehold estate is terminated.


The surrender, Larry will argue, occurred on May 1, 2007. Therefore Tanya owes rent for March and April, 2007.


The conclusion is that if the leasehold estate was created and terminated in the manner described above, Tanya owes rent for March and April, 2007. However, Tanya will claim that the estate was terminated earlier and by other means, discussed below, and that she does not owe rent for March or April, 2007.


Constructive Eviction


Larry claimed that Tanya was a tenant during March and April 2007; tenants have a duty to pay rent; therefore Tanya owes rent to Larry.


As a defense, Tanya should claim she was constructively evicted on February 28, 2007 and therefore was not a tenant and does not owe rent for March or April, 2007.


Constructive eviction occurs where the tenant can show that through the fault of the landlord, there was substantial interference with the enjoyment of the premises. Some courts say that premises must be rendered virtually uninhabitable. Additionally, the tenant must vacate within a reasonable time thereafter.


Copyright © 2007 Emerson Stafford


The duty to pay rent ceases upon eviction, constructive or otherwise.


Thus, if constructive eviction occurred on February 28, 2007, Tanya does not owe rent for March or April, 2007.


Did the events from November through December 12 constitute constructive eviction?


In other words, were the premises rendered virtually uninhabitable, and did Tanya move out within a reasonable time?


Were the premises uninhabitable?


Courts use a number of factors to decide this question. Factors include:


  1. How substantial is the interference

  2. The type or nature of the interference

  3. Purpose of the leased premises

  4. Foreseeability of this type of interference

  5. Potential duration of the interference

  6. Difficulty of abating the interference

Here, according to the facts, a substantial interference with quiet enjoyment of the premises occurred for at least 13 working days of the 42 calendar days from Nov. 1 through Dec. 12. There are 30 working days in the 45 calendar days. Therefore on 13 or 30 working days, Tanya could not enjoy the leased premises. She could not use them at all.


The interference was quite substantial, not minor. For example, heating was interrupted (in the winter), for two or more full days. No elevator service for one day or more (the office is on the 12th floor), no running water for several days (for toilets), no electricity (for lighting) on some days, and finally the heat, electrical and water were collectively interrupted for one full week. Several of the other interruptions also lasted for one week, although some lasted for only one full day.


The interruptions were so substantial that Tanya could not operate a four room office. A four room office implies that several people work there. The nature and duration of these disruptions make the premises uninhabitable for the purpose contemplated by the parties.


Larry, in defense, will point out that plumbing and electrical problems are foreseeable, and that these problems occurred during only six weeks of her seven months of occupancy. The interference did not occur again after Dec. 12. Clearly there was significant difficulty in correcting the problem. Larry said he was “doing all he could do to fix the problem.” Finally, Larry does not expect the interference to occur again.


Did Tanya vacate within a reasonable time?


She did vacate within a reasonable time. When she gave notice on Dec. 12, 2006, her office had been closed for 7 days.


She chose a date of termination, the end of February, which was convenient for her. This is permissible so long as she vacates within a reasonable time. Here, six weeks is a reasonable time to move a 12th floor office.


In conclusion, Tanya's four room, 12th floor office was uninhabitable as office space. She vacated within a reasonable time. The constructive eviction doctrine applies.


The lease was terminated on Feb. 28 because the requirements for constructive eviction were satisfied on that date. As a consequence, Tanya has no duty to pay rent for March or April, 2007. In fact, she may be entitled to counterclaim for damages but this was not asked. Counterclaim is not a defense.


Breach of implied warranty of habitability


Contrary to the common law, all states have statutes which provide a warranty of habitability for residential housing. A few states have applied this warranty to commercial leases, such as Tanya's office space.


The warranty of habitability has many wordings, one for each statute. they generally provide that the premises must be fit for human habitation. This means, at least, working toilets, running water, heat in the winter.


Here there were many days on which toilets would not flush, Tanya was without heat and lights, etc. This type of office space is not fit for humans. Tanya is not merely claiming that she cannot use it for office space, as she did in her constructive eviction defense. Instead, she now claims the space without toilets, water, heat, is not fit for humans to occupy.


Tanya has the burden of proof. The burden is preponderance of the evidence. She should prevail in the states where the warranty applies to commercial leases.


If the warranty of habitability was breached, Tanya's remedies include vacating and terminating the lease. She is not required to vacate in order to terminate the lease.


She terminated the lease on Feb. 28th. She had the right to terminate it sooner.


In some jurisdictions, under the defense of breach of warranty of habitability, she would not owe rent for March or April, 2007, even though this was a commercial lease.


Note that Tanya can counterclaim against Larry for a reduction in rent when the space was not fit for human occupation. But this would be a counterclaim, not a defense.


Illegality


This is a defense which pre-dates the implied warranty of habitability. Under this theory, Tanya would contend the lease is unenforceable because it is illegal to rent the space.


This claim is incorporated into the implied warranty of habitability, and is no longer made as a separate claim.


Duty to Mitigate Damages


As an additional defense to Larry's claim for rent for March and April, Tanya will claim that Larry breached his duty to mitigate damages.


Under this rule, Larry is not entitled to damages which he could have avoided by reasonable efforts.


Here, Larry was notified on December 12, 2006 that Tanya would vacate the premises on Feb. 28, 2007.


Here, Larry did not attempt to re-let the premises until April 15, 2007. he then found a tenant within 15 days.


Tanya will claim that since Larry had 6 weeks notice of her intent to vacate, all damages could have been avoided. Larry should receive no rent for March and April, 2007.


It is not relevant that Tanya's oral notice was not sufficient for some other property purpose. Larry knew about the breach by repudiation on Dec. 12, 2006, and did not attempt to relet until April 15, 2007. This is a breach of his duty to mitigate damages.


Larry may argue that he had a right to wait until Feb. 28, 2007 to see if Tanya carried out her oral threat to breach. But even in this case, he could have relet the premises within 15 days of Feb. 28. Thus Larry is entitled to 15 days rent, at most.


Larry's Breach of Contract


Tanya may defend against Larry's suit for rent on the grounds that the lease was terminated by Larry's breach of his covenant to provide essential services. This covenant is in the lease agreement.


Essential services include running water (for toilets), heat especially in winter, light, and elevator services to the 12th floor.


Tanya will claim that these essential services were not provided to her for at least 13 out of 20 work days from November to December 12, 2006. Her office was closed for a week on one or more occasions, and again closed for seven days from Dec. 5 to Dec. 12, 2006 because essential services were not provided. She will contend this is a breach of a covenant in the lease, and that one of her remedies is to terminate the lease.


She then terminated the lease on Feb. 28, 2007 and therefore does not owe rent for March or April.


Larry will argue that he substantially performed, and that in any case, the covenants in the lease are independent.


Covenants in a leases may not be independent


At common law, covenants in a lease were independent. As a consequence, if Larry breached his covenant to provide essential services, Tanya could sue for damages but nothing more.


Modernly, some of the terms of a lease are treated as dependent. Those terms which are at the core of the bargain, such as money for the right to occupy, are often treated as dependent.


Here, essential services to Tanya are at the core of the bargain. Many courts will treat them as dependent. In such a case, a material breach of the covenant to provide essential services is sufficient grounds for Tanya to terminate the lease.


Larry will contend that his breach is non-material. He will claim he has substantially performed. In this case, there is no material breach, Tania is entitled to damages, but can not terminate the lease.


Larry's breach is material if it deprives Tanya of the substantial benefit of her bargain. Here, she cannot use her office space for substantial periods. Moreover, money damages will not correct her loss of use of office space.


On the other hand, the breach is not willful, and Larry is willing and apparently able to complete the remaining 4 ½ years on the lease.


The court would probably find Larry has not substantially performed. Larry has materially breached the covenant.


A material breach of a dependent covenant gives Tanya a right to terminate the lease and sue for damages.


She is not liable for rent for March or April, 2007.



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