PROPERTY
Practice Problems

Leaseholds​

1.  Malory leases to Lana at a rent of $3,000 payable monthly in advance.

 

• Term of years or periodic tenancy?

• What is the term, monthly or yearly?

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Answer: 1.Periodic tenancy

2.Month to month

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Note: if the lease reserved as an annual rent, payable monthly ($36,000.00 per annum, payable $3,000 on the first day of every month commencing January 1, the majority view is that this creates a periodic tenancy from year to year.

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2.  A homeless shelter opens in Miami, Florida. The homeless shelter only allows men who are the victims of domestic violence.

 

• Has the homeless shelter violated the FHA?

 

Answer: Ninth Circuit case ruling that the single-sex policy of a men-only shelter violated the FHA. See Community House, Inc. v. City of Boise, 490 F.3d 1041 (9th Cir. 2007).

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3.  Malory owns an apartment building with 100 first come first served parking spaces. There is no handicap parking.

 

 

• CRA violation?

• FHA violation?

 

Answer: 

4. (a) Ms. Smith has an apartment to rent in her home. She puts the following advertisement in a local newspaper:

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For rent: Furnished basement apartment in

private White home. Call 376-7410.

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An African American couple applies and is rejected by Ms. Smith because of race.

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a)Are there any violations of 42 U.S.C.A § 1982 or § 3604?

b)Suppose the advertisement had not contained the word “white.” What result?

c)Suppose the advertisement had not said “in private White home,” but had said “rented only to persons speaking Polish, German, or Swedish.”

Answer: (a)The Problem states that a black couple applies and is rejected because of race. This would violate the 1866 legislation. It would not violate the FHA, by virtue of the exemption in §3603(b)(2). But the advertisement would violate §3604(c). The exemptions of §3603(b) do not apply to §3604(c). The Hunter case held that an advertisement like that in the question violates §3604(c) because it indicates a racial preference or an intention to make such a preference.

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(b)This presents an advertisement worded such that it would not violate the FHA; the 1866 act does not have a provision regarding ads. Our hypothetical states that the discrimination by Ms. Smith was based on race; hence there would be a violation of the 1866 act but not of the FHA (because of the exemption in the latter)

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(c)This presents a wording that probably violates the FHA. The Holmgren case held that such language shows a preference for certain national origins and thus is unlawful. Would rejection of the couple be unlawful? Not under the FHA, for again the exemption applies.

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4. (b) Suppose Ms. Smith discriminates against, say, German people in renting the apartment in her home.

 

 

a)This would not violate the Fair Housing Act. Why?

b)Would it violate the Civil Rights Act of 1866, 42 U.S.C.A § 1982?

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Answer: Ms. Smith could discriminate against German people because of the exemption, even though she couldn't use discriminatory ads. Would such discrimination violate the 1866 act's prohibition against racial discrimination? It appears that the answer is yes. In the Shaare Tefila case (and in a companion case reported at 481 U.S. 604) the Supreme Court held that for purposes of the 1866 act "race" means what "race" meant at the time the legislation became law, and the Court noted that a century ago people commonly talked of, for example, the "German race."

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4. (c) Suppose that L places the following advertisement in a campus newspaper:

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“Wanted: Female to share 2-bdrm. 2-bath apt. near campus. $500/mo. plus p. half utilities. Call Pat at 917-4513.”

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a)Does this language violate the federal Fair Housing Act (should it matter whether Pat is a single woman looking for a roommate)?

b)The advertisement aside, may Pat discriminate in selecting someone with whom to share the apartment and the rent?

c)Does the answer turn on whether the “2-bdrm. 2-bath apt.” is in a large multi-unit complex or, instead, is one of two apartments in an owner-occupied duplex?

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Answer: There are several questions to be considered: First, does Pat’s ad violate the FHA prohibition on discriminatory advertising? Second, the ad aside, is Pat free to discriminate, under the Mrs. Murphy exception? As we discuss these, bear in mind that we assume — the name hardly makes it clear — that Pat is a woman. At first blush Pat’s ad would seem to violate the FHA prohibition on discriminatory advertising. The courts have made it clear time and again that the Mrs. Murphy exemption does not apply to the prohibition on discriminatory advertising.

 

The court reached this conclusion by discussing how forbidding discrimination in choosing roommates might violate constitutional values of privacy and associational freedom. While it did not find such a violation, the court used the principle that where an otherwise acceptable construction of a statute avoids serious constitutional problems it will adopt that construction as long as it is not plainly contrary to the intent of Congress. In doing so, the court held that the FHA does not apply to the sharing of housing units. Therefore, neither the ad nor the decision by Pat to select a female roommate would seem to violate the FHA.

 

But here is a twist. While the FHA prohibits discriminatory ads, the federal Communications Decency Act (CDA) immunizes Internet service providers from liability in publishing discriminatory ads. The Klein & Doskow article discusses the interplay between these two pieces of legislation, which end up in different places. The courts are split on whether the CDA provision loosens the FHA prohibition. Klein & Doskow think it should not, because this would help implement the goal of fair housing.

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4. (d) Suppose the owner of a large apartment complex reserves a certain number of units exclusively for white applicants, the objective being to guard against “white flight” and thus maintain integrated housing conditions.

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a)Does the practice violate the Fair Housing Act?

Answer:The purpose was to maintain an integrated racial mix so as to prevent white flight that would transform Starrett City into a minority development. (Experts testified about a "tipping point," a point of minority concentration at which white flight would likely start to occur.) In a suit brought against Starrett by the U.S. government, the district court found a violation of the FHA because tenant selection was based solely on race, enhanced housing opportunities for whites, and limited them for minority applicants through the use of "ceiling quotas." Holding that Starrett had to treat minority applicants on the same basis as whites, the court granted summary judgment in favor of the government. The court of appeals affirms.

 

Congress had two sometimes conflicting goals in mind in enacting the FHA: integration and antidiscrimination. Ceiling quotas promote the first policy but violate the second, and there is no legislative history on how to resolve the conflict. Looking to other federal civil rights legislation for guidance on the permissible limits of race-conscious affirmative action programs, the court concludes that Starrett's practices are unlawful.

5. Malory owns an apartment building with 100 first come first served parking spaces. There is no handicap parking.

 

 

a)CRA violation?

b)FHA violation?

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Answer: FHA Violation

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Subleases and Assignments

1. Tywin leases property to Gregor for a 10 year term. One month later, Gregor transfers his interest to his brother, Sandor, with Tywin’s consent.

 

 

Does this create an assignment or a sublease?

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Answer: Assignment

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2. (a) L leases to T for a term of three years at a monthly rent of $1,000. One year later T “subleases, transfers, and assigns” to T1 for “a period of one year from date.” Thereafter neither T nor T1 pays rent to L.

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• What rights has L against T? Against T1?

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Answer: Because this is a sublease. Landlord can only go after the original tenant. There is no privity of estate between the landlord and the subtenant

2. (b) L leases to T for a term of three years at a monthly rent of $1,000; the lease provides that “T hereby covenants to pay said rent in advance on the first of each month.” The lease also provides that “T shall not sublet or assign without the permission of L.” Six months later T, with the permission of L, transfers to T1 for the balance of the term. Thereafter T1 pays the rent directly to L for several months, then defaults.

 

 

• L sues T for the rent due. What result, and why?

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Answer: 1.L may sue T for rent due, because in the event of a sublease the landlord and the original tenant are still in privity of estate and T is liable for the rent obligation arising from the landlord-tenant relationship. Under the common law rules, though, L could not proceed against T1 where, as here, T1 is a sublessee. L and T1 are not in privity of estate; rather T1 is in privity of estate with T. Nor are L and T1 in privity of contract, for T1 has not assumed any covenants in the lease. L could evict T1 for nonpayment of rent, however.

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2.Main lessor cannot sue subleassor.

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2. (c) 

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Answer: A reading of the sections of the American Law of Property cited in the Problem suggests the following solution. (ALP §§9.4 and 9.5 concern when covenants touch and concern the land and run to assignees; this is a subject we take up in detail in Chapter 10, but we can note here that both a covenant to pay rent and a covenant to keep in repair run with the lease.)  

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T is liable to L for T3's defaults, on privity of contract; there was no novation of the original lease and its covenants.

 

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T1 is liable to L for T3's defaults on privity of contract, by virtue of T1’s assumption of the covenants in the lease. See ALP §3.61: "If . . . the assignee in taking an assignment from the lessee assumes the covenants of the lease, he becomes liable to the lessor in contract wherever third-party beneficiary contracts are recognized, and his liability then survives a further assignment. But the assumption generally must be expressed in the assignment; no assumption is implied merely from the taking of an assignment, nor from the fact that the assignment states that it is subject to the covenants of the lease."

 

 

T2 is not liable. There were no breaches on his part while he was in privity of estate with L (T2's privity of estate with L ended when T2 assigned to T3), and T2 was never in privity of contract with L because he did not assume the covenants of the lease.

 

 

T3 is liable to L for his breaches, on privity of estate arising from the assignment. One in privity of estate with the landlord is liable for his breaches of all covenants in the lease that run with the land, and the covenants in the Problem are of the sort uniformly held to run, because they touch and concern the land.

 

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Understand that if L proceeds against T, T can then proceed against T1 on privity of contract (because T1 assumed the covenants in the lease; T2 and T3 did not) or against T1 and/or T3 on a subrogation theory — T stands in the position of a surety who, having had to pay L by the virtue of the breaches of another or others, stands in L's place. Similarly, if T proceeds against T1, T1 may proceed against T3 on the same (subrogation) basis.

3. Suppose the following situations arise in a jurisdiction following the rule in Kendall, or in any jurisdiction under a lease providing that “there shall be no sublease or assignment without landlord’s consent, and such consent shall not be unreasonably withheld.” What result?

 

(a) L leases to T for a term of five years. After two years, T wishes to transfer the lease to T1. L refuses consent because T1 is a tenant in another of L’s buildings under a lease that is about to expire; L and T1 have been actively negotiating a new lease, and L wants to avoid losing T1 as a tenant in the other building.

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Answer: L is being unreasonable.

Must L mitigate by renting the abandoned premises to one of his own tenants? Krieger implies that the answer is yes, but we think that result is wrong. Behind the mitigation requirement is the idea that ordinarily the tenant's breach enables a gain by the landlord, who can now rent the vacated premises to someone else. But the landlord realizes no net gain when that someone else is already a tenant of his in another unit. Hence the duty to mitigate should not ordinarily entail an obligation on the landlord's part to rent a vacated unit to another of his tenants. By the same token, a landlord should not ordinarily be regarded as acting unreasonably in withholding consent to a transfer, when the proposed transferee is again another of his tenants.

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Suppose instead that T1 is not already a tenant of L, but rather is a prospective tenant who wants to use the leased property for a business that will compete with L’s business in the same area.

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Answer: The decision says that a legitimate reason for a landlord to prevent subletting of the premises is 'to protect the lessor's interest in the preservation of the property and the performance of the lease covenants.' It is reasonable to argue that protection from competition which diminishes the landlord's business is not general economic protection but is specific protection in his ownership of the particular property. That is particularly true here where the subleased property is in the same shopping center where the landlord has his business and the landlord might have validly included a restricted use clause in the lease for the very purpose of protecting the business interests of other tenants in the shopping center."

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(b) L, a Christian evangelical organization, owns a building that it uses as its headquarters. No religious services are held in the building. L leases space in the building to T for a term of three years. After one year, T wishes to transfer the lease to T1, an organization that proposes to use the leased space as a counseling center providing information on birth control and abortion. L refuses consent on the sole ground that it is fundamentally opposed to the aims and activities of T1.

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Answer: L is being unreasonable. T1 was acceptable by objective criteria — financial considerations, intended use of space, legality of business. What made T1 objectionable was a subjective consideration arising out of the identity of L, "who urges that immiscible doctrinal differences render peaceful coexistence in the same building impossible, or at least uncomfortable." To let L refuse would be to give into arbitrary matters of personal taste, sensibility, and convenience.

 

So said the judge, who held "that when a religious or religiously affiliated or educational institution operates a commercial enterprise or owns commercial

property, it is to be held to the established standards of commercial responsibility, its acts and conduct being vested with no greater and no lesser sanctity than those of any other owner."

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(c) What if in any given situation L demands a fee in exchange for consenting to a transfer of the lease?

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Answer: If no fee provision in lease, unreasonable.

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3.  L leases to T for a term of five years at a monthly rent of $900; in the lease, T covenants to pay the rent and further covenants not to sublet or assign without L’s permission. Thereafter T, with L’s permission, assigns to T1 (T1 does not expressly assume the obligations of the lease); then T1 assigns to T2 without first obtaining L’s permission. T2 defaults in rent payments, and L sues T1 for the amount due.

 

 

What result?

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Answer: The rule in Dumpor's Case terminates the prohibition against assignment when the landlord consents unless the landlord specifically reserves the right to prohibit future assignments.

 

Although it is disapproved by the Restatement, Dumpor's Case still survives in some jurisdictions.

 

If Dumpor's Case applies here, T1 wins:

 

T1's assignment is good even without L's permission.

 

T1 did not assume the covenants of lease, so he is no longer liable once he transfers.

 

If Dumpor's Case does not apply, L wins, because L and T1 still are in privity of estate.

 

Dumpor's Case does not apply to subleases.

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