Tenant’s Duties - Module 4 of 5

Module 4: Tenant’s Duties

The Duty of Rent

When two parties agree to a lease, the landlord who conveys the property and the tenant who rents the property both assume obligations towards each other. The landlord promises to convey quiet enjoyment of the premises, and- when it is a residential lease- a habitable living property. In return, the tenant assumes the obligations to pay rent, not to commit waste, to undertake certain repairs and to act in accord with a standard of reasonable behavior.

The primary obligation assumed by the tenant is the obligation to pay rent to the landlord. The amount of the rent, as well as the schedule of rent payments are fixed in the lease. If the lease does not specify a rental amount, the law presumes a rent obligation, nonetheless. The financial obligation of the tenant in such situations is the reasonable rental value of the of the property in question.[1]

Similarly, if the lease fails to specify a date on which the rent is due, the law fixes the date of the rent obligation as the last day of the lease term. This is true whether the agreement is a tenancy for years, fixed for a pre-determined period of time or is a periodic tenancy.[2]

The failure to pay rent is a breach of the lease and allows the landlord to terminate the lease and initiate eviction proceedings.[3]

Note, though, that some circumstances permit the tenant to cease paying rent if the landlord fails in her duties to the tenant. In this sense, lease agreements are considered dependent covenants, so that a breach by one party may excuse the other from fulfilling the lease obligations.

Waste and Repair

The tenant has a duty not to commit waste.  This means that a tenant may not damage or destroy the premises he or she is renting. Questions of waste often arise when the tenant makes structural changes to the property.

A tenant is entitled to make changes in the physical condition of the leased property which are reasonably necessary for the tenant to use the leased property in a reasonable manner. However, if the tenant makes changes in the physical condition of the leased property so that it cannot be restored to its former condition, the tenant has breached his obligation not to commit waste. [4]

Note that the changes must be structural changes, which affect a vital and substantial portion of the premises.[5] Modern courts have often held that physical changes in the premises that do not diminish the economic value of the property are not considered waste even if it cannot be restored.[6] Still, such changes are often prohibited in lease agreements.

If the tenant breaches the duty not to commit waste, the landlord may terminate the lease and collect damages. Alternatively, the landlord may choose to continue the lease, and accept damages for the harm caused.[7]

In the same vein, the tenant also has a duty to repair and maintain a rental property to keep it in substantially the same condition as it was when the lease commenced. While the landlord is generally required to make major repairs under the implied warranty of habitability, as well as per the lease and state law, unless the tenant specifically contracts with the landlord stipulating that the landlord or a third party will be responsible, the tenant is expected to make ordinary repairs and engage in ordinary maintenance.[8]

Standard elements of this duty to repair and maintain include: keeping the premises as clean and safe as the condition of the premises permit; disposing of garbage, rubbish, and other waste in a clean and safe manner; keeping all plumbing fixtures as clear as their condition permits; using all electrical, plumbing, sanitary, heating, ventilating, air-conditioning and other facilities and appliances in a reasonable manner.[9]

Note that ordinary wear and tear is considered an expected consequence of occupying and inhabiting a residential property, and so a tenant is not responsible for preventing or repairing damage due to ordinary wear and tear.[10]

Landlords general require that the tenant leave a security deposit as part of the lease agreement. The landlord may keep some or all of the security deposit to pay for repairs needed due to the tenant’s failure to repair, to clean any excessive waste or trash or if the tenant fails to pay rent.[11]

Duty of Reasonable Behavior

Tenants generally may use and occupy rental property as they wish. However, certain forms of behavior are prohibited for a tenant even within the confines of the leased premises and are considered breaches of the lease agreement.

Tenants may not commit or permit a nuisance on the property. A nuisance is any conduct that interferes substantially with the comfort or safety of other tenants or occupants of the same or adjacent buildings or structures.[12]

Most residential leases specify that certain conduct by the tenant will be prohibited over the course of the tenancy. Common examples of such prohibitions are excessive noise due to music or partying, foul odors due to pets or smoking, excessive waste or trash and the harassment of others. Tenants are also prohibited from using the leased property to carry out illegal behavior. This also includes third parties whom the tenant knowingly allows to conduct illegal acts in the rented property.[13]

However, if the landlord participates in the illegal conduct or fails to take remedial action against the tenant upon learning of the illegal conduct, the landlord may forfeit her remedy for the tenant’s breach of the lease. For example, if a landlord knows that one of her tenants uses the apartment to illegally manufacture and sell intoxicating liquors without a license and does nothing to prevent it, the landlord may lose the opportunity to seek damages against the tenant and may be civilly liable for the nuisance created by the tenant.[14]

Note, however, that isolated instances of illegal acts may not be sufficient to be considered a violation of the lease. The rationale for considering illegal behavior to be a breach is to prevent rental properties from being used for illegal purposes. As such, only conduct which takes place regularly, over a period of time, will be deemed a violation of a tenant’s duties.[15]

Fixtures

At common law, if a tenant attached something to leased property in such a way that the attachment or installation was permanent, this was known as a fixture. Fixtures, such as new structures or improvements on plot of lands, were deemed to be permanent enhancements of the property. As such, the landlord would assume ownership of the fixtures at the end of the lease.

Today, the law has narrowed the concept of fixtures of which the landlord assumes ownership. Generally, if the tenant did not intend for the attachment to be permanent and can remove the attachment without causing substantial damage, the tenant may remove the attachment.[16] For example, if a tenant leases office space and installs air conditioning units, such units are probably not deemed permanent fixtures and may be removed by the tenant at the end of the lease. It is clear that the tenant attached the units for his personal use and could remove them in a timely manner and restore the property to the condition it was in at the outset of the lease.[17] If instead of units, the tenant installed a central unit with comprehensive duct work that would required breaking the walls to remove it, that would be much more likely to be considered a fixture.

If the tenant installed a chain link fence around the property, such an attachment may be deemed a permanent enhancement of the property, and hence an unremovable fixture.[18] Still, under current law, the determining factor in most cases will be whether the attachment can be removed by the end of the lease, consistent with restoring the property to its original condition.[19] So, even something as seemingly permanent as a fence may not be considered a fixture if it can be removed without damaging the land.

Note that rules regarding fixtures and permissible removals may be agreed in advance between landlord and tenant, and such agreement would take precedence over general landlord-tenant legal principles.

Subleases and Assignments

A lease conveys to the tenant the right to occupy and possess the property of the landlord for a specified time. Unless specified otherwise, this comes with the ability to transfer the right to posses and occupy the property to a third party. This transference of rights is known as a sublease or an assignment.

The historical distinction was that if the tenant transfers the property to a third party for the entire remainder of her own lease term, then the arrangement is considered an assignment. If the transfer is only for a portion of the lease, after which the tenant will resume occupancy, then a sublease has been created.[20]

The modern trend, however, is to look to the intent of the parties. If the tenant seemed to make an agreement with the intention of retaining an interest in the property, such as by reserving a right of entry or a date at which point the property reverts to him, this will likely be deemed a sublease. If the agreement transfers the property to the third party without signs of retaining a property interest, this will be considered an assignment, even if the agreement refers to the arrangement as a sublease.[21]

Note that the terms of the rental, including all the agreed upon obligations and terms, remain the same during the period that the third party occupies and possesses the property. The third party has the same obligation to pay rent, not to commit waste, not to permit nuisances and all the other duties that the original tenant assumed.

The general rule is that a tenant may sublease or assign property to a third party unless there is a clause in the lease which requires the landlord’s consent for a third party to take possession. Even when such a prohibition clause exists, though, a growing trend mandates that a landlord must have a reasonable reason to reject an assignment or a sublease.[22] Courts determining whether a withholding of consent is proper will ask whether the landlord looked to reasonable factors, such as the financial state of the new tenant or her suitability to take possession of the property, as the basis for the denial of consent.[23]

Note that a landlord may implicitly wave the consent requirement if she knowingly accepts rent from a third party in possession of the property.

The difference between an assignment and a sublease concerns the relationship between the landlord and the third party. In both sublease and assignment, the contractual relationship established by the lease remains between the landlord and the original tenant.  The third party who now occupies the property has no contractual relationship with the landlord. This means that any obligations stemming from negotiations between the landlord and the original tenant can only be enforced against the parties to the agreement. Contract rights cannot ordinarily be enforced by or against a third party, such as a sublessee or an assignee.

For example, suppose a tenant agrees with a landlord regarding the conditions under which the tenant would be responsible to repair damages for a leased property. The tenant then assigns the property to a third party, who subsequently damages the property, and fails to repair it. The landlord only has a remedy against the original tenant for failing to repair on the basis of the contractual relationship agreed upon at the outset of the lease. The landlord and the assignee have no contractual relationship, leaving the landlord unable to enforce the terms of the lease against the assignee.[24]

The original tenant, the assignor, will usually establish a contractual agreement with the assignee. In this way, the original tenant can seek to recover any costs paid to the landlord as a result of the assignee’s actions.

However, in an assignment, the transference of the property does create a different legal relationship between the landlord and the new possessor of the property, in this case, the third-party assignee. This relationship is known as privity of estate, and it exists when two parties have consecutive interests in the same property.   

When in privity of estate, the two parties are liable to each other for covenants which run with the land, which are obligations that stem from possession of property rather than contractual obligations. Although the tenant’s payment of rent and the landlord’s duty to provide quiet enjoyment are generally provided for in the lease, they are also considered covenants enforceable by parties in privity of estate. [25] This means that in case of assignment, even a third party who has never entered into any contract with the landlord may be directly liable to the landlord for payment of rent. Conversely, the landlord may be liable to the third party for breach of covenants associated with the property.

Note that while the third party is in privity of estate with the landlord, the original tenant remains in privity of contract with the landlord. This means that the landlord can pursue remedies against both the original tenant and the assignee if the obligation, such as the obligation to pay rent, is both a covenant attached to the land, as well as an obligation assumed by contract.[26]

In the case of a sublease (when the subtenant will relinquish possession back to the tenant rather than back to the landlord), the third party is permitted to remain on the premises but can’t enforce obligations against the landlord. Under such circumstances, the landlord and the original tenant retain both privity of estate and privity of contract. The landlord may only seek remedies for breach against the original tenant, and only the original tenant may enforce the covenants against the landlord.[27]

            In our last module, we’ll turn to the rights and remedies of a landlord when the tenant breaches its duties.