Business Law Chapter 48 Homework Outcome Explain The Primary Rights And Obligations

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Chapter 48

INTERESTS IN REAL PROPERTY

A. Freehold Estates

1. Fee Estates

a. Fee Simple Estate

b. Qualified or Base Fee Estate

2. Life Estates

3. Future Interests

a. Reversions

b. Remainders

B. Leasehold Estates

1. Creation and Duration

a. Definite Term

b. Periodic Tenancy

c. Tenancy at Will

d. Tenancy at Sufferance

2. Transfer of Interests

a. Transfers by Landlord

b. Transfer by Tenant

3. Tenant’s Obligations

a. Destruction of the Premises

b. Eviction

c. Abandonment

4. Landlord’s Obligations

a. Quiet Enjoyment

b. Fitness for Use

c. Repair

c. Landlord’s Liability for Injury Caused

by Third Parties

C. Concurrent Ownership

1. Tenancy in Common

2. Joint Tenancy

3. Tenancy by the Entireties

4. Community Property

5. Condominiums

6. Cooperatives

D. Nonpossessory Interests

1. Definition of Easements

2. Type of Easements

3. Creation of Easements

a. Express Grant or Reservation

b. Implied Grant or Reservation

c. Necessity

d. Dedication

e. Prescription

4. Profits `a Prendre

5. Licenses

Cases in This Chapter

Home Rentals Corp. v. Curtis

Tucker v. Hayford

Kettler v. Security National Bank of Sioux City

Borton v. Forest Hills Country Club

Chapter Outcomes

After reading and studying this chapter, the student should be able to:

Identify and explain the freehold interests: (1) fee simple, (2) qualified

fee, (3) life estate, (4) remainder interest, and (5) reversionary

interest.

Distinguish between a vested and contingent remainder.

Explain the primary rights and obligations of landlords and tenants.

Identify and explain the various forms of concurrent ownership of real

property.

Identify and describe the various ways in which an easement may be

created.

TEACHING NOTES

Interests in real property may be divided into possessory and nonpossessory

interests.

• Possessory interests, or estates, may also be characterized in two

di*erent ways: (1) as freehold estates (those that exist for an

indefinite time or for the life of a person) and (2) less-than-freehold

estates, also known as leasehold estates (which exist for a

predetermined time).

• Nonpossessory interests in property include easements, profits `a

prendre, and licenses.

Interests in property may be owned by one person or concurrently by two or

more persons, each of whom is entitled to an undivided interest in the entire

property.

*** Chapter Outcome ***

Identify and explain the following freehold interests: (1) fee simple, (2) qualified fee,

(3) life estate, (4) remainder interest, and (4) reversionary interest.

A. FREEHOLD ESTATES

A freehold estate is a right of ownership of real property for an indefinite

time (fee estate) or for the life of a person (life estate). The most valuable

estates in real property are usually present estates that combine immediate

possession with ownership at least for life.

Fee Estates

Fee estates include the right to immediate possession for an indefinite time

and the right to transfer the interest by deed or will. Fee estates include both

fee simple and qualified fee estates.

Fee Simple Estate— Fee simple means the property is owned absolutely.

The absolute rights to transfer ownership and to transmit ownership by

inheritance are basic characteristics of a fee simple estate. Fee simple is the

largest estate in land; all other estates derive from it.

Life Estates

A life estate is an ownership right in property for the life of a person.

A remainder is the ownership estate that takes effect when the prior life

estate terminates. The property may either revert to the grantor and his

heirs, or to another party: for example, “to Alex for life and then to Mario

and his heirs.” Alex is the life tenant, and Mario is the remainderman.

A life tenant may make reasonable use of the property as long as he does

not commit “waste,” (any act or omission that permanently injures the realty

or unreasonably changes its characteristics or value).

Future Interests

Not all interests in property carry the right to immediate possession, even

though the right and title to the interest are absolute. For example, when

property is devised by will “to Andrew during his life and then to Barbara and

her heirs,” Barbara has a definite, existing interest in the property, but she is

not entitled to immediate possession. Future interests are two types:

*** Chapter Outcome ***

Distinguish between a vested and contingent remainder.

A vested remainder is one in which the only contingency to possession by

the remainderman is the termination of all preceding estates created by the

transferor.

A contingent remainder is one in which the right to possession depends on

the happening of some event in addition to the termination of the preceding

estates.

NOTE: See Figure 48-1: Freehold Estates.

B. LEASEHOLD ESTATES

• A lease is both a contract and a grant of land.

• Contract: The owner of the land, the landlord, grants to another, the

tenant, an exclusive right to use and possess the land for a definite or

ascertainable period.

• Grant: The possessory term granted by the landlord is an estate in

land called a leasehold estate. The landlord retains a reversion in the

property.

The Uniform Residential Landlord and Tenant Act, which was promulgated by

the Uniform Law Commission, provides a comprehensive system for

regulating the relationship between landlords and a tenants and governs

most persons who reside in rental housing.

Creation and Duration

The usual requirements for a contract apply. In most jurisdictions, leases for

a term longer than a specified period — generally either one year or three

years — must be in writing. (A few states require that all leases be in

writing.)

De nite Term — Automatically expires at the end of the term. No notice to

terminate is required.

Periodic Tenancy — A lease of indefinite duration that continues for

successive periods unless terminated by notice. A periodic tenancy may

arise by implication, when no term is stated in the lease. This creates a

tenancy at will.

Tenancy at Will — A lease which allows either party to terminate at any

time or which does not specify a duration. No notice is required to terminate.

Tenancy at Su(erance — A tenancy at su*erance arises when a tenant

fails to vacate the premises at the expiration of the lease. A tenancy at

su*erance exists until the landlord either dispossesses the tenant or holds

her for another term.

Transfer of Interests

Both the tenant’s possessory interest and the landlord’s reversionary interest

in the property may be freely transferred in the absence of contractual or

statutory prohibition — the one major exception: the tenancy at will.

Transfers by Tenant — A tenant may dispose of his interest either by (1)

assignment or (2) sublease. Most standard leases expressly require the

landlord’s consent to an assignment or subletting of the premises.

In a sublease, the tenant transfers less than all of her rights in the lease and

thereby retains a reversion in the leasehold. The sublessee has no obligation

to the landlord but only to the original tenant.

*** Chapter Outcome ***

Explain the primary rights and obligations of landlords and tenants.

Tenant’s Obligations

The leasehold estate carries only an implied obligation of the tenant to pay

rent, but the lease contract almost always contains an express promise or

covenant by the tenant to pay a specified amount of rent at specified times.

Most leases provide that if the tenant breaches any of the covenants in the

lease, the landlord may declare the lease at an end and regain possession of

the premises. Under common law, the tenant’s failure to pay rent when due

gives the landlord only the right to recover a judgment for the amount of the

rent but does not give him the right to oust the tenant from the premises. In

most jurisdictions, however, the common law rule has been changed by

statute to allow the landlord to dispossess the tenant for nonpayment of

rent, even if the lease provides no such right.

Unless the lease makes specific provisions to the contrary, the tenant is

under no duty to make repairs to the leased premises. Nevertheless, the

tenant is obliged — by law, so it need not be stated in the lease — not to

cause substantial injury to the premises.

Destruction of the Premises — If the tenant leases land and a building

Landlord’s Obligations

Under common law, the landlord has few obligations to her tenant.

Quiet Enjoyment — The tenant’s right to physical possession, use, and

enjoyment of the premises free of the landlord’s interference. The landlord

CASE 48-1

HOME RENTALS CORP. v. CURTIS

Appellate Court of Illinois, Fifth District, 1992

236 Ill.App.3d 994, 602 N.E.2d 859, 176 Ill. Dec 913

http://scholar.google.com/scholar_case?

case=12032393052396288209&hl=en&as_sdt=2&as_vis=1&oi=scholarr

Harrison, J.

[In February 1989, Home Rentals agreed to rent a single-family residence

to Chris Curtis, Ed Domaracki, Mike Fraser, and Carson Flugstad

(tenants), all of whom were students at Southern Illinois University. The

terms of the written lease stated that the lease was to commence on

August 17, 1989, and to expire on August 13, 1990. The tenants were to

receive the premises in “good order and repair,” rent was to be $740 per

month, and a $500 deposit was required. The tenants initially paid $1,980

to cover the deposit and advance rent for the last two months of the

lease.

clean the house, but the roach problem continued even after professional

extermination, and Home Rentals did nothing about the plumbing. The

tenants were never able to stay in the house. On August 21, the tenants

finally sought housing elsewhere. They advised Home Rentals that they

would not be living in the house, returned the keys, and reported the

condition of the house to the city of Carbondale’s Code Enforcement

Division. The city notified Home Rentals on August 25, 1989, that it had

found numerous city code violations and warned the corporation that the

house would be posted “occupancy prohibited” unless all violations were

corrected within 72 hours. By August 28, 1989, eleven days after the

A constructive eviction occurs where a landlord has done “something of a grave and

permanent character with the intention of depriving the tenant of enjoyment of the

premises.” [Citation.] Because persons are presumed to intend the natural and probable

consequences of their acts, constructive eviction does not require a finding that the landlord

had the express intention to compel a tenant to leave the demised premises or to deprive him

of their beneficial enjoyment. All that is necessary is that the landlord committed acts or

omissions which rendered the leased premises useless to the tenant or deprived the tenant of

the possession and enjoyment of the premises, in whole or part, making it necessary for the

tenant to move. * * *

Home Rentals correctly points out that a tenant may not abandon premises under the

theory of constructive eviction without first affording the lessor a reasonable opportunity to

correct the defects in the property [citation], but such an opportunity existed here. Home

Rentals’ president, Henry Fisher, admitted that he actually inspected the premises as early as

August 13. * * *

* * *

For the foregoing reasons, the judgment of the circuit court of Jackson County is

affirmed.

Affirmed.

Fitness for Use — Under common law, the landlord is under no obligation

to maintain the premises in livable condition or to make them fit for any

purpose. Most courts, however, now impose an implied warranty of

habitability that requires leased premises to be habitable including adequate

weatherproofing; heat, water and electricity, as well as clean, sanitary, and