Different Ways A Renter Can Possess Property — Non Freehold Estates — Real Estate Tenant Law

A Non Free­hold Estate (lease­hold) is a type of estate where­by the hold­er of the estate has pos­ses­so­ry rights and inter­est to a prop­er­ty, albeit will ter­mi­nate at some point in favor of the FREEHOLD Estate owner(s). A lease­hold pro­vides the ten­ant with a present pos­ses­so­ry inter­est in real prop­er­ty that will revert to the free­hold estate own­er at the end of the pos­ses­sion.

In oth­er words, the per­son has the right to the prop­er­ty NOW, albeit will give it up at the end of the estate, which is often the end of the lease.
So if A (renter) wants to rent an apart­ment from B (land­lord), the fol­low­ing is gen­er­al­ly the start­ing point.
B has a free­hold (we’ll touch on sub­leas­ing below) estate, which could be one of sev­er­al types of free­hold (fee sim­ple) estates, includ­ing a life estate (when the pos­ses­sor has pos­ses­so­ry inter­est dur­ing their life­time (or based on anoth­er’s life, which is called “a life estate pur autre vie” — French for “the life of anoth­er”), or fee sim­ple estate defea­si­ble, albeit regard­less, B has a cur­rent pos­ses­so­ry inter­est.

When the land­lord leas­es the prop­er­ty to the renter, what the land­lord is doing is trans­fer­ring his right of pos­ses­sion to the prop­er­ty to the ten­ant. The document/instrument that typ­i­cal­ly con­veys the right of the land­lord to the renter is called a lease, which is nor­mal­ly used for the sim­plic­i­ty. Oth­er­wise, what also could hap­pen, is the par­ties could record the trans­fer and it would have a sim­i­lar or same result. In fact, some­times a par­ty to a lease agree­ment, espe­cial­ly the renter will want to record the lease to remove/reduce the pos­si­bil­i­ty that the it’s not pub­licly known they have an inter­est in the prop­er­ty (gen­er­al­ly used in com­mer­cial busi­ness lease agree­ments).

The types of non free­hold estates are as fol­lows:

Ten­an­cy in Years (some­times called a Ten­an­cy of years) — While the title states years, what throws many off is that it does­n’t have to be for years. A six month lease is a ten­an­cy in years as much as an 18 month lease is. What is unique about a Ten­an­cy in Years is it is a lease­hold estate that lasts for a set amount of time and auto­mat­i­cal­ly expires at the end of the lease. It does NOT auto­mat­i­cal­ly renew. While the lease can be longer or short­er than “in years” it’s impor­tant to note that leas­es over one year need to be in writ­ing to be enforce­able. That’s a con­tract rule regard­ing the Statute of Frauds and not exact­ly a real prop­er­ty issue, albeit obvi­ous­ly close­ly relat­ed.

Peri­od­ic Ten­an­cy — Sim­i­lar to a Ten­an­cy in Years, This is a lease­hold agree­ment that lasts for a set amount of time, albeit auto­mat­i­cal­ly renews unless prop­er notice is giv­en. The gen­er­al rule is notice must be giv­en before the start of the last lease peri­od (ie if the term of the lease is one year, before the start of the new year, notice must be giv­en to the oth­er par­ty. The net effect is that the min­i­mum amount of notice will be one year, and very like­ly much longer, up to almost two years is pos­si­ble). An excep­tion to the notice require­ment is if no notice require­ments are stat­ed in the lease agree­ment, and a lease is year-to-year, than a six-month notice is required. Peri­od­ic Ten­an­cy can be cre­at­ed by express agree­ment, or by the acts of the par­ties (ie pay­ing of rent each peri­od) or by law

Ten­an­cy at Will — Often called “month to month” is a ten­an­cy that con­tin­ues until either par­ty ter­mi­nates. Requires notice of lease ter­mi­na­tion and a rea­son­able time to quit the premis­es. Usu­al­ly the amount of time is sim­i­lar to a peri­od­ic ten­an­cy in that the amount of notice time is a month (often regard­ed as 31 or more days regard­less of the num­ber of days in the com­ing month). This is the nor­mal default for small busi­ness and res­i­den­tial leas­es (non free­hold estates) when no writ­ten lease agree­ment is used (ver­bal con­tract).

Ten­an­cy at Suf­fer­ance — After the ten­an­t’s lease has expired and the ten­ant wrong­ly main­tains pos­ses­sion of the prop­er­ty. This type of ten­an­cy will last until evic­tion or the land­lord agrees to pro­vide a new ten­an­cy estate to the ten­ant.

Sub­leas­es — A sub­lease is the trans­fer of less than the full amount of the lease term to anoth­er par­ty. Exam­ples include a col­lege stu­dent rent­ing a house with some friends and after a cou­ple of months decides to quit school and go back home. Instead of main­tain­ing the room, along with the month­ly rental expense (which like­ly includes rent, heat, elec­tric, etc.…) the renter finds anoth­er to take the room and pay him rent. What’s inter­est­ing here is the stu­dent could charge less, the same, or more than they’re pay­ing and the amount of rent does­n’t influ­ence the rights and respon­si­bil­i­ties of the ten­ant (or the sub­lessor). The con­tract between the ten­ant and the sub­lessor is only between them, and does­n’t nec­es­sar­i­ly direct­ly involve the orig­i­nal land­lord. In con­tract law, there is a legal doc­trine called “priv­i­ty” — which means the par­ty have con­tract­ed with each oth­er. The new sub lessor and orig­i­nal land­lord are NOT in priv­i­ty as they did­n’t con­tract with each oth­er (not direct­ly any­way). The net impact is if the sub­lessor has an issue they want resolved, it’s the orig­i­nal ten­an­t’s issue to take care of. The same is true for the land­lord. If the land­lord has an issue they want resolved regard­ing the sub­lessor, the land­lord “should” con­tact the orig­i­nal ten­ant to get it resolved. In real world prac­tice though, it does­n’t take much thought to see how the new sub­lessor and land­lord might sim­ple bypass the ten­ant and resolve any issue on their own.

Oth­er impor­tant con­sid­er­a­tions with res­i­den­tial (and often com­mer­cial depend­ing) lease­holds is there is an Implied War­ran­ty of Hab­it­abil­i­ty — That means the land­lord is imply­ing by law, even if they don’t state so in a lease, and often even if they attempt to dis­claim it in a lease, that requires the land­lord to pro­vide and main­tain the apartment/home in such a con­di­tion that is rea­son­ably suit­able for typ­i­cal human needs. This includes all the basics, such as heat, run­ning water and drains (either city sew­er or pri­vate), elec­tric ser­vice. The walls and roof must be rea­son­ably free of leaks, and the doors/windows must rea­son­ably keep out water, wind, etc.

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