Property I Professor Donald J. Kochan

1. Property IProfessor Donald J. Kochan Class 23

2. Today’s Readings • Leasehold Estates • Pages 419-430 • Term of Years • Periodic Tenancy • Tenancy at Will • Tenancy at Sufferance: Holdovers • Form Lease Issues/Bargaining Power • Relationship with Contract Law

3. Introduction to Leasehold Estates • Term of Years • Periodic Tenancy • Tenancy at Will • Tenancy at Sufferance There will be many ambiguity issues that require interpretation, and will involve matters of interpretation depending on the language in the instrument of conveyance.

4. More Introductory Thoughts on Leaseholds • Consider leaseholds as a separate market for the limited disposition of property – personal and real • Makes available property for people who cannot buy FULL ownership rights • Creates Landlord/Tenant Issues • Capital Gains Tax Story – Grantor preferences • Why might someone lease rather than sell?

5. Term of Years • “A term of years is an estate that lasts for some fixed period of time or for a period computable by a formula that results in finding calendar dates for beginning and ending, once the term is created or becomes possessory.” D&K • Fixed Period is key • Capable of being a fixed term, but also terminable upon an event • Commercial v. Residential Issues • Termination Issues: No Notice Necessary by Either Party • Consider Continuation Issues (month-to-month, term-to-term, etc.) • Consider also holdover issues and the legal consequences for the lessor, the lessee, and the subsequent lessee – including explicit or implicit provisions to allow holdover

6. Periodic Tenancy • Primarily used in residential leases • Month-to-Month or Year-to-Year – look at wording of original instrument • Often changes to Periodic Tenancy at the conclusion of a term of years • Terminable by landlord or tenant but requires NOTICE with temporal advance requirements based on the nature of the term

7. Tenancy at Will • Free termination with no notice requirement by either the landlord or tenant • Largely disfavored, due to a disfavor for indeterminacy and uncertainty in estates that dilutes investments and improvements, thus when ambiguous instruments exist the presumption will be toward another estate, like a periodic tenancy • Why might some have a preference for such an arrangement? -- Uncertainty? Commutability?

8. Garner v. Garrish • Termination Issues • Livery of Seisin • Notice again that intent is key • Consider reservation of rights and powers of termination, including non-reciprocal rights and powers

9. Tenancy at or by Sufferance • Term of years ends, but tenant remains in possession beyond the fixed date • The “holdover tenant” • Notice issues • Implied and Express Acceptance of Holdover Status • Re-up Options • Drafting for and against Holdovers • Economic consequences of Holdovers – when and why is it efficient/inefficient for landords or tentants? • How does this benefit the lesssor, lessee, or both? • Legislative Responses and Comparison – Notes on Pages 427-428

10. Form Leases/Bargaining Power • Residential Leases v. Commercial Leases • Sophistication of the Parties • Interpretive Presumptions • Efficiences in Form • What is your bargaining power as a lessee; does the market work efficiently to provide choice? Does the law eliminate choice through the creation of per se landlord liabilities?

11. Relationship with Contract Law • Realize that leases are a hybrid between property law and contract law • Thus, inject your teachings in contract law to this part of the property course • Statute of Frauds Issue

12. Concluding Thoughts • Consider the utility of different estates, for both grantors and grantees in the market • Consider the supply and demand preferences that lead to the legal rules re estates