Spring Semester 2013
Tenant Breach/Landlord's Remedies
Reading Assignment: Pages 484-506
1. Under Uniform Commercial Code Article 9, a bank that holds a security interest in your car can repossess the car out of your driveway (even by having a "repo man" break into it, hotwire it and drive it away), or off of the street, even without your knowledge, so long as this is done without a "breach of the peace." By contrast, court decisions and/or statutes in most American states forbid a residential landlord from using self-help to repossess land (such as by changing the locks). Instead, the landlord must go to court and get an order authorizing the sheriff to take possession (unless the tenant voluntarily leaves on his/her own). Why should the law make it more difficult for landlords to repossess land than for secured parties to repossess cars? How can/should landlords adjust to the economic risks that are imposed on them by having to resort to a judicial remedy (summary eviction) rather than a nonjudicial remedy (self-help)?
Should the law allow L to use self-help if the tenant agrees, in the lease agreement, that L can use self-help to repossess the land? Do you think the lease in Gorman authorized the action taken by the landlord Ratliff?
2. Suppose that T has a one-year lease obligating T to pay $500/month, starting January 1. T goes into possession, pays the first month's rent, but doesn't pay thereafter. On February 8, L sends T a letter saying, "You are in default due to nonpayment of rent. I hereby demand that you pay the full $5,500 due for the rest of the lease term. If you don't pay within 20 days, your lease will be terminated and I will immediately institute a summary eviction proceeding."
a. Is L acting within his rights? Why or why not? What additional information, if any, would you want to know?
b. Suppose that T doesn't pay and L institutes an eviction proceeding on March 1. T does not respond to the eviction complaint, L gets a default judgment, and the sheriff evicts T on March 31. For what amount of money may the court enter a judgment in favor of L (for purposes of this question, ignore any possible attorney fees that L might have incurred and whether T would be liable for them under the terms of the lease) on account of unpaid rent?
3. Assume that L leased Blackacre to T for 3 years at a stated monthly rental of $1,000/month. Six months into the lease, T abandoned the property and surrendered the keys to the premises to L. L is aware of another potential tenant, T1, who is prepared to lease Blackacre for 5 years at a stated monthly rental of $1,200/month. Based on the assigned materials, what options does L have in terms of how it could proceed with respect to T? Which option would you recommend that L should take?
4. Same facts as the problem in question 3, except now the potential tenant, T1, is prepared to lease Blackacre only for 3 years and only at $800/month rental. Would this change how you would recommend that L should proceed? Why or why not?
5. The Lemstone case takes the so-called "modern" or "contract-based" approach to the tenant abandonment problem. Often, it is said that under this approach, Landlord has a "duty" to mitigate (i.e., to find a substitute tenant) when Tenant abandons the premises. Is this a sensible approach? What counterarguments might you make on behalf of the Landlord (Frenchtown) in the Lemstone case? If the law imposes a duty to mitigate, should the parties to a lease be free to contract out of that result (i.e., to agree that the Landlord would have no duty to mitigate if Tenant abandons)?
6. Look at the provision contained in Lawyering Exercise on page 502. If you were counsel to the landlord, what changes would you suggest that the landlord make in its lease form, and why?
7. Consider the hypothetical in the Lawyering Exercise on page 503. Suppose that early on in their negotiations, Lawrence learns that Turner is practically insolvent. What impact should this have upon Lawrence's negotiating strategy? [What might be Lawrence's likely return from litigation here, and why?] If Lawrence decides to settle based upon Turner's financial condition, how would you recommend that Lawrence document the settlement agreement (i.e., what provisions might you suggest that he include, and why)?