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CHAPTER 29: REAL PROPERTY AND LANDLORD-TENANT LAW 21
whole or in part.
was more than ten days before he paid the overdue amount. The next month, Rockstad went to DeWitt’s
office to pay the rent on September 10, a Friday, at approximately 5:10 P.M. Over the weekend, Rockstad left
a message for DeWitt, explaining that he had tried to pay the rent. On Monday, DeWitt told Rockstad that
Global refused the late payment and sent him a notice to vacate.
He refused. Global filed a suit in an Alaska state court against Rockstad to evict him and to collect the
unpaid rent. The court concluded that Rockstad was in default under the lease but that the breach was not
material, and declined to evict him if he paid the back rent, with interest and costs. Rockstad appealed to the
Alaska Supreme Court.
The state supreme court, in a majority opinion, said, “[T]he lease’s rent provision—subsection 4.1—
makes rent payable ‘without notice or demand.’ But the lease provision governing default for overdue rent—
subsection 15.2—makes failure to pay timely rent a default only upon written notice and only if the tenant
thereafter fails to cure the deficiency within ten days. By tying a default’s existence to the issuance of prior
written notice, subsection 15.2 arguably treats written notice as an essential attribute of default. * * * When
read in this way, then, subsection 15.2 would provide that a default arises upon notice but remains open to
cure for ten days thereafter.
“In contrast to subsection 15.2, the renewed-default provision of subsection 15.4 treats a second failure of
payment somewhat more harshly. In describing a renewed default as the commission of ‘any default
described above a second time’ without mentioning a second opportunity for cure, subsection15.4 seems to
announce an intent not to leave the second default open to cure after it has arisen. Thus, the renewed-default
provision can plausibly be read as empowering the landlord to declare a default without having to afford the
tenant the luxury of a subsequent right to cure.
“Far less clear, however, is whether subsection 15.4’s language also means to dispense with subsection
15.2’s requirement that the landlord serve written notice on the tenant. Subsection 15.4 expressly requires
commission of a ‘default described above.’ In the context of Rockstad’s case, this would require a default
described in subsection 15.2. * * * [W]ritten notice is an explicit element of a default as described in that
section—indeed, notice arguably is the very element that gives rise to a default under subsection 15.2.
Literally speaking, then, subsection 15.4’s reference to a ‘default described above’ encompasses subsection
15.2’s notice provision. And it is not illogical to construe subsection 15.4’s definition of renewed default to
incorporate subsection 15.2’s requirement of written notice. The central purpose of subsection 15.4’s
renewed-default provision is to cut off the tenant’s right to a ten-day grace period after a second default.
Requiring the landlord to give written notice of the second default has no obvious effect on that purpose.
“In summary, interpreting subsection 15.4 to require that a second default be preceded by written notice
is textually plausible; it arguably effectuates the reasonable expectations of the contracting parties; and it
renders none of the disputed lease provisions superfluous. This interpretation also resolves subsection 15.4’s
ambiguity in a way that favors continuing the lease and that disfavors the lessor and drafting party, Global.
Accordingly, we conclude that this interpretation of subsection 15.4 should apply to Rockstad’s situation. See
Wessells v. State of Alaska, Department of Highways, 562 P.2d 1042 (Alaska 1977).
“So construed, subsection 15.4 gave Global the right to declare a second default at any time after
Rockstad’s September rent became due without being paid; to declare the default, Global had only to issue
written notice of the deficiency; and upon issuance of the notice, Rockstad would have had no right to cure
the default by tendering late payment. But as long as Global did not serve Rockstad with written notice, he
was not in default * * * .
whole or in part.
whole or in part.
26 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
whole or in part.
that a landlord’s primary purpose in evicting or attempting to evict the tenant is retaliation for reporting violations
8. When may a tenant withhold the payment of rent? The withholding of rental payments is a remedy that is
generally associated with the landlord’s breach of the warranty of habitability. When rent withholding is authorized
under a statute (known as a “rent-strike” statute), the tenant must usually put the amount withheld into an escrow
account. This account is held in the name of the tenant and an escrow agent and the funds are returnable to the
initiate court proceedings to exercise the lien. The court will typically authorize a sheriff to seize the tenant’s property.
Other states allow the landlord to seize specific items of the tenant’s property and hold them as security for unpaid
rent (that is, as protection or assurance that the landlord will recoup something on the tenant’s obligation), but the
landlord must obtain a court order to sell the property.
1. Ask students to call local banks and find out all the costs that are involved in closing a residential real estate
transaction as well as those costs necessary for obtaining a home loan. How much money in excess of the amount
of the loan and down payment is actually required to buy a home?
EXPLANATIONS OF SELECTED FOOTNOTES IN THE TEXT
Footnote 6: Matthew Humphrey paid $44,000 for a home in Louisiana and partially renovated it. He
replaced rotten wood beneath a window, leveled the porch, painted the interior, replaced sheetrock, tore out a wall,
replaced a window, dug up eighty feet of field line for the septic system, and pumped out the septic tank. Terry and
were a small fraction of the sale price.” The court pointed out that “prior to the sale, the vendor and vendee were
whole or in part.
was more than ten days before he paid the overdue amount. The next month, Rockstad went to DeWitt’s
office to pay the rent on September 10, a Friday, at approximately 5:10 P.M. Over the weekend, Rockstad left
a message for DeWitt, explaining that he had tried to pay the rent. On Monday, DeWitt told Rockstad that
Global refused the late payment and sent him a notice to vacate.
He refused. Global filed a suit in an Alaska state court against Rockstad to evict him and to collect the
unpaid rent. The court concluded that Rockstad was in default under the lease but that the breach was not
material, and declined to evict him if he paid the back rent, with interest and costs. Rockstad appealed to the
Alaska Supreme Court.
The state supreme court, in a majority opinion, said, “[T]he lease’s rent provision—subsection 4.1—
makes rent payable ‘without notice or demand.’ But the lease provision governing default for overdue rent—
subsection 15.2—makes failure to pay timely rent a default only upon written notice and only if the tenant
thereafter fails to cure the deficiency within ten days. By tying a default’s existence to the issuance of prior
written notice, subsection 15.2 arguably treats written notice as an essential attribute of default. * * * When
read in this way, then, subsection 15.2 would provide that a default arises upon notice but remains open to
cure for ten days thereafter.
“In contrast to subsection 15.2, the renewed-default provision of subsection 15.4 treats a second failure of
payment somewhat more harshly. In describing a renewed default as the commission of ‘any default
described above a second time’ without mentioning a second opportunity for cure, subsection15.4 seems to
announce an intent not to leave the second default open to cure after it has arisen. Thus, the renewed-default
provision can plausibly be read as empowering the landlord to declare a default without having to afford the
tenant the luxury of a subsequent right to cure.
“Far less clear, however, is whether subsection 15.4’s language also means to dispense with subsection
15.2’s requirement that the landlord serve written notice on the tenant. Subsection 15.4 expressly requires
commission of a ‘default described above.’ In the context of Rockstad’s case, this would require a default
described in subsection 15.2. * * * [W]ritten notice is an explicit element of a default as described in that
section—indeed, notice arguably is the very element that gives rise to a default under subsection 15.2.
Literally speaking, then, subsection 15.4’s reference to a ‘default described above’ encompasses subsection
15.2’s notice provision. And it is not illogical to construe subsection 15.4’s definition of renewed default to
incorporate subsection 15.2’s requirement of written notice. The central purpose of subsection 15.4’s
renewed-default provision is to cut off the tenant’s right to a ten-day grace period after a second default.
Requiring the landlord to give written notice of the second default has no obvious effect on that purpose.
“In summary, interpreting subsection 15.4 to require that a second default be preceded by written notice
is textually plausible; it arguably effectuates the reasonable expectations of the contracting parties; and it
renders none of the disputed lease provisions superfluous. This interpretation also resolves subsection 15.4’s
ambiguity in a way that favors continuing the lease and that disfavors the lessor and drafting party, Global.
Accordingly, we conclude that this interpretation of subsection 15.4 should apply to Rockstad’s situation. See
Wessells v. State of Alaska, Department of Highways, 562 P.2d 1042 (Alaska 1977).
“So construed, subsection 15.4 gave Global the right to declare a second default at any time after
Rockstad’s September rent became due without being paid; to declare the default, Global had only to issue
written notice of the deficiency; and upon issuance of the notice, Rockstad would have had no right to cure
the default by tendering late payment. But as long as Global did not serve Rockstad with written notice, he
was not in default * * * .
whole or in part.
whole or in part.
26 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
whole or in part.
that a landlord’s primary purpose in evicting or attempting to evict the tenant is retaliation for reporting violations
8. When may a tenant withhold the payment of rent? The withholding of rental payments is a remedy that is
generally associated with the landlord’s breach of the warranty of habitability. When rent withholding is authorized
under a statute (known as a “rent-strike” statute), the tenant must usually put the amount withheld into an escrow
account. This account is held in the name of the tenant and an escrow agent and the funds are returnable to the
initiate court proceedings to exercise the lien. The court will typically authorize a sheriff to seize the tenant’s property.
Other states allow the landlord to seize specific items of the tenant’s property and hold them as security for unpaid
rent (that is, as protection or assurance that the landlord will recoup something on the tenant’s obligation), but the
landlord must obtain a court order to sell the property.
1. Ask students to call local banks and find out all the costs that are involved in closing a residential real estate
transaction as well as those costs necessary for obtaining a home loan. How much money in excess of the amount
of the loan and down payment is actually required to buy a home?
EXPLANATIONS OF SELECTED FOOTNOTES IN THE TEXT
Footnote 6: Matthew Humphrey paid $44,000 for a home in Louisiana and partially renovated it. He
replaced rotten wood beneath a window, leveled the porch, painted the interior, replaced sheetrock, tore out a wall,
replaced a window, dug up eighty feet of field line for the septic system, and pumped out the septic tank. Terry and
were a small fraction of the sale price.” The court pointed out that “prior to the sale, the vendor and vendee were
