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Principles Of Business Law - CHAPTER III























































Sec. 39. Relation created by lease. The relationship of land-
lord and tenant is created as a consequence of a lease, either express
or implied, oral or written, and arises only when the tenant takes
possession of the premises leased. No particular form of words is
necessary to create the lease or the relation of landlord and tenant.
The language used must be sufficient to indicate an intent to di-
vest the landlord of possession and to vest possession in the tenant.
The person giving up possession under the lease is called the land-
lord, or lessor, and the one coming into possession by virtue of the
conveyance is called the tenant, or lessee. The instrument which
creates the relation is called a lease. It need not be in writing un-
less the period of time is such that it comes under the Statute of
Frauds. The landlord, or lessor, grants possession of land or tene-
ments in return for rent or other income on the part of the tenant,
or lessee.

The particular classes of tenancy are terms for years, tenancy at
will, tenancy from year to year, tenancy at sufferance, and tenancy
for life.

Types of Tenancy

Sec. 40. Tenancy for years. A lease for years is a conveyance
between the lessor and the lessee by which the lessor grants the pos-
session and enjoyment of property for a definite period of time and
by which the lessee agrees to pay rent in money or other considera-
tion, at the end of stated periods, during the term of the lease. The
period of time must be certain and definite, or no estate for years is
created. A lease for a period of time, depending upon a contin-
gency which is not certain to happen, is not definite. Except when
regulated by statute, a lease may be made for any period of time
the parties may agree upon: it may be made for 99 years, for 999
years, or for one day.

Sec. 41. Termination of lease. A lease for years terminates at
the expiration of the period. Such lease does not terminate at the
death of the lessee before the expiration of the term. A leasehold
estate is personal property and passes to the personal representa-r
tive of the lessee upon his death, and his estate is liable, fts in any
other contract, on the covenants in the lease for the payment of
rent. If the property leased consists of rooms or apartments in a



building, the destruction of the building by fire or otherwise ter-
minates the lease and the liability of the tenant to pay rent. This
is an exception to the general rule that a tenant remains liable for
the rent on the premises, irrespective of injury or destruction by fire
or other casualties. Where the tenant leases the land as well as the
building, destruction of the building does not destroy all the prem-
ises ; whereas, in a lease of rooms or of an apartment, the whole of
the premises leased is destroyed and the enjoyment of the premises
contracted for becomes impossible, because nothing remains upon
which the lease can operate. It is customary in the ordinary lease
of property to insert a clause which effects a termination of the
lease in case an important building is destroyed or materially dam-

Sec. 42. Rights of tenant after term. In the case of a tenancy
for a term of years, the interest of the lessee ceases at the end of the
period, the landlord being under no duty to give him notice. Dur-
ing the term, the tenant has a right to remove those movable fix-
tures which he has installed, and, if they are not moved before the
expiration of the term, such fixtures become a part of the realty and
the property of the landlord. If, during the term, the tenant has
sown crops which mature after the term, the right to such crops
passes to the landlord with the reversion.

Sec. 43. Tenancy at will. Where the lease is for no definite
period, but at the will of the lessor, it is said to be a tenancy at will. 1
A tenancy at will may be either express or implied, and, if the land-
owner permits a person to occupy his premises an indefinite period
of time, without demanding rent, a tenancy at will is said to be cre-
ated by implication. Such a tenancy may be terminated at any
time by either the lessor or the lessee, and the death of either termi-
nates such tenancy. Under some jurisdictions, it is necessary to
give reasonable notice of such termination; whereas, under others,
the landlord may terminate the tenancy at any time. Where the
landlord terminates a tenancy at will, the tenant is entitled to the
unmatured crops and may enter upon the property for the purpose
of harvesting them at maturity.

Sec. 44. Tenancy from period to period. When a tenant holds
over after the termination of a lease for a definite period and re-
mains in possession, and the landlord accepts rent, a tenancy from
period to period is created. Also, if a lease is invalid for failure to
comply with the Statute of Frauds and if entry has been made and
rent paid, a tenancy from period to period arises if annual rental
has been paid. If the original lease calls for a monthly rental,
rather than an annual rental, or if the period of the original lease

1 Thompson v. Baxter, 1909, 107 Minn. 122, 119 N.W. 797; p. 818.


was for one month, a holding over creates only a month-to-month
tenancy. If the original lease called for an annual rental, the ten-
ancy becomes one from year to year. The two leases differ in re-
gard to the notice that is required to terminate them. At common
law, a lease from year to year could be terminated by either party
only if notice of the desire to terminate was given at least six
months before the year expired. Failure on the part of the land-
lord to give such notice made it possible for the tenant to remain
another year. A month-to-month tenancy was terminable by giv-
ing at least thirty days' notice before the close of the particular
month in which it was to be terminated. The customary written
notice now provided for in state statutes is sixty days for a year-to-
year tenancy and thirty days for a period-to-period lease of less
than a year.

A tenant of farm land who holds it under a lease from year to
year has the right to return and harvest those crops which have
been planted prior to the time that notice of termination is re-
ceived. Leases from period to period, like leases for years, are not
terminated by the death of the tenant or landlord.

A lease from period to period may also result from an agreement
at the time of letting. If the contract provides for a periodical
payment of rental without any fixed duration, a tenancy from pe-
riod to period arises.

Sec. 45. Tenancy at sufferance. Where a tenant holds over
after the expiration of a definite period, the landlord may treat him
as a tenant at sufferance. Likewise, a tenant at sufferance is cre-
ated if the original entry by the tenant was otherwise than by lease,
and such person continues in possession at the option of the land-
lord. If the owner accepts the payment of rent due after the ex-
piration of a term, the acceptance is evidence of his intention to
treat the party in possession as a tenant, and such act creates a new
tenancy from month to month or for a period for which the rent
was received. A tenancy at sufferance may be terminated at any
time by the landlord.

Sec. 46. Tenancy for life. An estate for life is usually created
by deed. However, a lease may be made to hold for the term of
the grantee's life or for the life of another, with an agreement to pay
rent or other consideration. In the absence of a definite agreement
with respect to rents and services to bind the grantee to the grantor,
a conveyance will be made, in which an estate for life is created.
Under such circumstances, the grantor is not a landlord and the
grantee is not a tenant.

Sec. 47. Difference between a lease and a license. A license
is a mere privilege granted by one person to another to use his land


for some particular purpose, without the licensor's passing to the
licensee any interest or estate in the land. A license merely gives
one the privilege of coming on another's land, without committing
a trespass. A license is personal and can only be enjoyed by the
party to whom the privilege is given, and may be revoked at any
time by the person granting the license. A license is not assign-
able, and, even though given for consideration, it cannot be exer-
cised by any person other than such licensee. A demise or lease,
however, is more than a license, in that it carries a present interest
or estate in the land for a definite period, and gives the right to the
possession of the land and the exclusive occupation and enjoyment
of it for all purposes set out in the lease. The granting of permis-
sion to place advertising signs and billboards upon land or build-
ings is an illustration of a license.

Rights and Duties of the Landlord

Sec. 48, Right of landlord to enter upon premises. The es-
tate of the landlord during the term of the lease is called a reversion.
The lessee is the absolute owner of the premises for the purposes for
which the lease is created. The tenant is in possession of the prem-
ises and the landlord has no right to interfere with the lessee's en-
joyment and use of the land, except as provided by the lease. In
the absence of an agreement, the lessee has the sole and exclusive
right to the occupancy and control of the premises and may prevent
the landlord from entering upon the premises or interfering in any
way with the lessee's possession.

Most leases provide, however, that the landlord may enter on the
premises and place "to let" and "for rent" signs thereon. The land-
lord has the right to enter the premises to levy for distress or to de-
mand payment for rent. If the tenant abandons the premises, the
landlord may enter for the purpose of taking care of them, without
incurring any liability to the tenant as a trespasser. Care must be
exercised in such cases to make it plain that the landlord is not con-
senting to the abandonment of the premises by the tenant. If the
landlord accepts the surrender of the premises without protest, the
lease is terminated by the mutual agreement of the parties, and
the tenant is relieved of responsibility for loss in case the landlord
is unable to find a new tenant.

Sec. 49. Right to recover for injuries to the premises. The
landlord may recover for any injuries to his reversionary interest,
that is, such injuries as would affect the premises after the expira-
tion of the lease for example, the destruction of the premises or
uses likely to ripen into easements, such as the laying of water pipes
across the premises, removal of part of the property, construction


of party walls, and so forth. The landlord has no right to recover
for injuries to growing crops, as such an injury is an injury to the
possession rather than to the reversion. However, an injury to
trees or to standing timber, or the removal of line fences, would be
an injury to the reversion, for which the landlord may recover.

Sec. 50. Warranty of landlord as to condition of premises.
In general, there is no implied warranty that the premises are suit-
able for the use for which they are leased by the tenant. The duty
of the lessee is to examine the premises for defects, and, if he neg-
lects to do so, or if he fails to provide against such conditions in his
lease, he takes the premises at his peril. 2 The landlord is under a
duty to notify the lessee of unhealthful conditions of the premises,
which may arise from latent defects ; failure of the landlord to do so
constitutes fraud and gives a right to the tenant to abandon the

Sec. 51. Duties and liabilities of landlord as to repairs of
premises. In the absence of an agreement, the landlord is under
no obligation to repair the lease premises. 3 Nor is there any im-
plied covenant to rebuild or to repair property damaged by fire or
other causes. The lessee takes the premises as they are and can-
not bind the landlord for repairs without the latter's consent. A
promise to repair on the part of the landlord after the lease has
been executed is without consideration and cannot be enforced.
However, in some states, if the premises are defective, a promise to
repair is binding if the tenant notifies the landlord that unless such
repairs are made, he will vacate the premises. In a few states it is
provided, by statute, that the landlord, in renting houses for habi-
tation, shall keep them in repair fit for occupancy by human beings.
Otherwise, the tenant may vacate after notice, without incurring
liability for future rent. If a building is rented to two or more ten-
ants, the landlord is obligated to keep in repair the portion of the
building used in common by the various tenants. 4 The roof, com-
mon hallways, and the foundation must be cared for by him.

Sec. 52. Recovery of owner for injuries occasipned by defects.
In general, it may be said that the landlord is not liable to the
tenant, his family, or guests for defects existing in the rented prop-
erty. Since the landlord makes no warranty as to its condition, the
tenant and his guests use the property at their peril. Even in those
cases where the landlord is obligated by contract to repair, or where
common property is involved, the landlord's liability is generally

2 Walsh v. Schmidt, 1910, 206 Mass. 405, 92 N.E. 496; p. 819.
3 Petz v. Voigt Brewing Co., 1898, 16 Mich. 418, 74 N.W. 651; p. 819.
4 Whellkin Coat Co. v. Long Branch Trust Co, 1938, 121 N.J.L. 106, 1 A. (2) 394;
p. 820.


based on carelessness. Unless he has been notified of the defect or
has been negligent in failing to discover it, his failure to correct it
will ordinarily result in no liability.

The owner of business property, knowing that business invitees
will be constantly entering it to transact business, has an increased
responsibility. He is liable for injuries sustained by business guests
as a result of defects existing at the time the lease was created or of
defects arising from the ordinary use of the property. To this ex-
tent, the owner of business property is obligated to keep it in good
repair in order to avoid liability for injuries sustained.

A similar duty attaching to all owners of property concerns
passers-by. An injury occasioned to a person merely passing by
the property, and which results from either original or use defects,
must be compensated for by the landlord.

Remedies for Recovery of Rent

Sec. 53. Landlord's lien. At common law a landlord has no
lien for rent upon the property of a tenant. 5 However, if the land-
lord is receiving his rent as part of the crop or produce of a farm, by
usage in some states he is given a lien on the crops for rent. The
landlord and the tenant may, by express provision in any lease, pro-
vide that the landlord be given a lien upon personal property of the
tenant, which is present upon the leased premises. In many juris-
dictions statutes have been enacted expressly giving a landlord a
lien for rent. Such statutes specify the property subject to the lien.
The statutes of the various states should be examined to determine
the nature and extent of the lien. In some cases a lease which gives
the landlord a lien on the personal property of the tenant, for rent,
is in the nature of a chattel mortgage, and, to be effective, the lease
must be recorded, in order to protect bona fide purchasers and cred-

Sec. 54. Suit on the lease. The landlord may recover for rent
in an action at law, where the lease contains an express covenant to
pay rent. The usual procedure for the recovery of rent is called
distress for rent.

Sec. 55. Distress for rent. This is a common-law remedy by
which the landlord may, by obtaining a distress warrant, seize the
personal property of the tenant to force payment of rent. In some
states, it has been abolished by statute, and in other states, it has
been adopted or changed by statute. Where a tenancy from year to
year is ended by the landlord's giving notice to quit and the tenant
holds over, no action for distress will lie the only remedy being
damages for the holding over. In order for the landlord to distrain
for rent, the tenant must owe him a certain definite sum of rent,

'Hadden v. Knickerbocker, 1873, 70 111. 677, 22 Am. Rep. 80; p. 821.


payable in money or produce or other services, which is in arrears.
The tenant has all the day on which the rent falls due in which to
make payment, and suit cannot be brought until the morning after
the day the rent is due. All the personal chattels of the defendant,
which are not perishable, are subject to be distrained for rent.
Usually book accounts of merchants and implements of trades or
professions cannot be taken on distress ; they are also exempt under
the statutes. If the rent is paid prior to an authorized sale, it is the
duty of the landlord to return the property in the same condition as
it was when it was distrained.

Sec. 56. Place of distraining. Only property which is on the
premises can be distrained or taken for rent. If, however, the ten-
ant fraudulently removes his property from the premises, either be-
fore or after the rent becomes due, the landlord may follow and
seize such property, provided it was removed by the tenant after
the landlord had actually come to distrain. By statute, the land-
lord is permitted to follow property removed from the premises,
and to levy distress after the termination of the tenancy; and in
some jurisdictions he has the right to distrain the tenant's property,
even though it has not been on the demised premises.

Sec. 57. Procedure for distress. Under the statutes of some
of the states, the landlord must make an affidavit setting forth his
right to distrain and to secure a warrant to be levied by the proper
court officers. The statutes provide for the time when notice' of
sale must be given both to the tenant and to the public, and, if the
distress has been wrongfully made, a purchaser at such sale will ac-
quire no title. The purchaser will be liable for damages for tres-

Rights and Liabilities of the Tenant

Sec. 58. Estoppel to deny landlord's title. A tenant, by vir-
tue of his possession, is estopped from denying his landlord's title.
The actual possession of the premises gives an advantage to the
lessee, and, by reason of this advantage, he has no right to question
the title of the lessor. The lessee must surrender his possession
before he may assert whatever title he has. He is then at liberty to
recover the land if he can prove his right. Neither can the lessee
claim title to the premises by reason of defects in the lease or by ad-
missions on the part of the lessor.

Sec. 59. Duty of lessee to redeHver at expiration of term.
There is an implied covenant in every lease that the lessee will re-
deliver the premises to the lessor at the end of the term, and, if the
lessee wrongfully withholds possession, the lessor may sue and re-
cover damages. The lessee is also under duty, at the expiration of
the lease, to remove his personal property and to return the prem-


ises in the same condition as they were when he received them at
the beginning of the term. This provision does not bind the lessee,
however, to make payment for ordinary wear and tear from reason-
able use of the premises or for actual destruction beyond his con-

Sec. 60. Duty of tenant as to care and repair of premises. In
the absence of any agreement, the tenant is under duty to keep the
premises in repair, such as replacing doors and broken windows, re-
pairing fences, and making ordinary repairs which are not perma-
nent in nature but which are necessary to keep the premises from
deteriorating and unduly depreciating. The tenant usually is un-
der no obligation to make substantial and lasting repairs, such as
putting on new roofs, rebuilding walls, and other permanent im-
provements. The landlord and tenant may make agreements as to
the nature and character of repairs during the term; but, in the ab-
sence of such agreement, there is no implied liability on the part of
the tenant to make such lasting repairs or to make repairs that were
needed at the time he entered.

Sec. 61. Improvements by lessee in the absence of an agree-
ment. There is no implied covenant on the part of the lessor to
pay the lessee for improvements placed on the premises during the
term of the lease, although such improvements become part of the
real estate and, upon the expiration of the term, revert to the lessor.
If, however, the lessee makes improvements upon the land and
wrongfully is denied the use and benefit of them by the landlord,
he is entitled to recover for the reasonable value of such improve-
ments. In general, such improvements are usually for the benefit
of the lessee, and under such circumstances, he is not entitled to re-
cover from the lessor for improvements made by him during the
term. Neither can the lessee, upon the expiration of the term, re-
move permanent improvements, placed by him upon the premises,
which have become a part of the realty.

Sec. 62. Duty to pay rent. Where one party has the use, en-
joyment, and possession of another's land, the law will imply an
agreement on the part of such person to pay a reasonable rent for
the premises, in the absence of an agreement to the contrary. In
order to raise an implied promise to pay rent, it is necessary to show
that the relation of landlord and tenant exists. Rent may be pay-
able either in money, or any other consideration agreed upon be-
tween the parties. The right to collect rent is a chose in action and
may be assigned by the landlord, separate and distinct from his re-
versionary interest in the premises. In the absence of an agree-
ment, the duty to pay rent arises at the end of a period, rather than
at the beginning.


Sec. 63. Defenses to liability for rent. A tenant may have a
right to set up counterclaims against any action on the part of the
landlord to recover rent, if the landlord has violated any of the cov-
enants in the lease. That is, if the lessor has interfered with the
possession of the lessee to the damage of the latter, the tenant may
set off such damage against rent due. If the landlord has evicted
the tenant of the whole of the premises, the tenant will be relieved
of his duty of paying further rents. Eviction may be actual or con-
structive. If the landlord, through failure to perform substantially
the terms of his lease, causes .the premises to become untenable, so
that the tenant is forced to give up possession, the latter is said to
be constructively evicted. If the tenant remains in possession of
the premises, however, he waives his defense of constructive evic-
tion and is bound for the payment of the rent. Where the landlord
is under duty to furnish heat and fails to do so, and the premises
become uninhabitable, the tenant may surrender possession and es-
cape liability for future rents.

Subletting and Assigning

Sec. 64. Nature. A subletting is a leasing by a tenant of the
whole or a portion of the leased premises for a term less than the
original lease. An assignment of a lease is not a subletting, because
it is a transfer of the lessee's entire right in the premises. In gen-
eral, the lessee may sublet the premises for a term of years less than
his lease, unless there is a covenant against subletting or a statute
prohibiting such subleases. A subletting does not relieve the origi-
nal lessee of his duty to his lessor for the payment of rent or for the
performance of any of the covenants in the lease. Similarly, a ten-
ant may assign his lease unless there is some stipulation against it,
and the assignment will not release the assignor of responsibility for
the terms of the lease. Unless the assignee expressly assumes re-
sponsibility for the terms of the lease, he is bound only so long as
he cares to remain in possession. Any lessee who assigns a lease
should extract a promise from the assignee to assume all the bur-
dens and promises contained in it. Even though the assignee as-
sumes the lease and the landlord consents to the assignment, the
tenant is not released unless a novation takes place.

Sec. 65. Consent of lessor to subletting. If the lease provides
that the lessee cannot sublet without the consent of the lessor, the
lessor may refuse to give his consent. The lessee should obtain
such consent before the subleasing of the premises, although it may
be given at any time, either at the time of subletting or after. The
relation of the sublessor and the sublessee is that of landlord and


tenant, and failure on the part of the sublessee to pay rent does not
release the original lessee of his duty to the landlord.

Sec. 66. Rights and liabilities of sublessee. The sublessee ac-
quires no greater rights against the original lessor in the use and en-
joyment of the premises than was held by the original lessee, and
such sublessee has no right to enforce any of the covenants which
may exist in the original lease between the lessor and the lessee.
The lessor may maintain an action for damages against the said
sublessee for any breach of express provisions contained in the orig-
inal lease, or may enjoin the sublessee from using the premises for
any purpose other than that expressly provided for in the original

Review Questions and Problems

1. How is the relation of landlord and tenant created? Are any for-
malities required?

2. A, who holds a 99-year lease upon a certain building, dies. Does
the lease descend to A's personal representative or to his heirs?

3. A is a tenant at will on B's farm. B terminates the tenancy after
A has planted certain crops. May A return and harvest the crops?
Suppose the lease had been for a definite period? Suppose it had been a
tenancy at sufferance?

4. The lessor desires to enter upon the premises and place a "for sale"
sign. Has he a right to do so?

5. A leased certain property for ten years. The property is destroyed
by fire. Must A continue to pay the rent?

6. A leased to B certain premises for dwelling purposes. Unknown
to B, there was a buried cesspool under the basement. The pool was not
properly covered and the house became uninhabitable. Had B a right
to terminate the lease?

7. A has rented a house from B. The roof is badly in need of repairs.
Is B under a duty to repair?

8. A rents from B a farm at $10 an acre. Has B any lien upon crops
grown by -4?

9. A leases certain land from B. He later denies the title of B and
refuses to pay the rent. Assuming that B has no title to the premises,
may A deny B's title?

10. leased certain business property to T for ten years at an annual
rental of $18,000, payable in monthly installments of $1,500. At the end
of three years T assigned the lease to A, who remained in possession for
only two of the remaining seven years. Is A liable in damages to either
or T 7 ? Is T liable to 0, assuming assented to the assignment?

11. leased property to T for one year at $1,500 a year, payable in
monthly installments of $125 a month. After the termination of the
lease, T remained in possession for twenty-three months and paid $125
a month to 0. On the closing day of the twenty-third month, gave T
notice to vacate the property. What are the rights, if any, of T?

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