Fair Housing Council of San Fernando Valley Case Study

IRAC the 2 short cases, the cases to read are in the file below. double space, 2-3 page total. Please also answer the 4 questions in the second file.

Fair Housing Council of San Fernando Valley v. Roommate.com, LLC 666 F.3d 1216 (9th Cir. 2012) – (pg 13)

Sommer v. Kridel 378 A.2d 767 (N.J. 1977) – (pg 24)

Chapter 8: Leasing Real Property
The law of concurrent ownership, discussed in the previous chapter, generally regulates
relationships between intimates. Arrangements like the joint tenancy generally arise between
individuals who know each other and remain locked in ongoing relationships. As a result,
there’s not much arms-length bargaining and relatively few disputes work their way into the
court system.
The law of landlord-tenant is very different. It is the law of strangers—strangers who often
have little in common and may never interact after the lease terminates. How the law responds
to this difference is one of the central theoretical questions you will wrestle with in this chapter.
More practically, in this section of the course you will learn about the types of leaseholds,
tenant selection, transferring leases, ending leases, and the various rights and responsibilities
of tenants and landlords during the course of the lease.
A.
The Dual Nature of the Lease
In its simplest form, the lease is a transfer in which the owner of real property conveys
exclusive possession to a tenant (generally in exchange for rent). Most law students know
through personal experience that the process of renting generally entails signing a lease
contract. Like other contracts, a lease’s terms can be negotiated and they explicitly govern
many of the rights and responsibilities of the parties involved. So why then are leases discussed
in the property course rather than contracts?
The short response is that a lease is a property-contract hybrid. While it is surely a contract,
it’s a contract for a very particular kind of property interest. The fuller answer, like so much
in property, lies in the history of feudal land law. Under the traditional common law, a
leasehold was understood primarily as a property interest, similar in nature to the estates
covered in our chapter on Estates and Future Interests. A lord (often a baron) conveyed a
possessory right to a tenant (usually a peasant) and retained for himself a future interest
(typically a reversion). Importantly, once the landlord transferred the right to possession, he
had few other obligations to the tenant.
This basic model survived until the 1960s, when many jurisdictions began to introduce general
contract law principles (e.g. the implied duty of good faith and fair dealing) into the law of
landlord-tenant. Importing contract theories into the lease has had two practical effects. First,
parties to a lease now have the option to terminate in the case of any material breach; in the
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past tenants could only terminate if the landlord interfered with their possession. Second,
modern tenants have far more protections from indifferent and unscrupulous landlords than
their counterparts 50 years ago. Courts and legislatures have proven particularly eager to help
residential tenants—whom they view as vulnerable—from predations of the free market.
B.
Creating the Leasehold
1.
A Lease or Something Else?
A lease is a transfer of the right of possession of specific property for a limited period of time.
It’s important to see that not all legal relationships that grant the use of an owner’s property
qualify as leaseholds. Take, for example, the case of Snow White and Seven Dwarfs. If the
Dwarfs give Snow White sole possession of their cottage for 12 months in exchange for a
monthly payment, they have almost certainly created a lease. If, however, the Dwarfs invite
Snow White to sleep on their couch for a few nights while she evades the Queen, they probably
have created something called a license (a revocable permission to use the property of another,
which we’ll study in greater detail later in the book) rather than a leasehold. This determination
matters (as we’ll soon see) because the law extends a number of protections to grantees who
qualify as tenants. It affects, among other things, whether the grantee can exclude the owner
from certain spaces, how the parties can terminate the interest, whether the grantee can invite
outsiders onto the property, who has the obligation to perform maintenance, who is liable if
the grantee suffers an injury on the property, and what remedies the parties have if a
disagreement arises.
To determine whether parties have created a leasehold or some other legal interest, courts
have traditionally focused on whether a grantor has turned over exclusive possession or a more
limited set of use rights. Possession, however, remains a slippery concept, difficult to define.
Consider the following post from an internet message board:
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Does the nanny have a lease? Do we need any other information? Should courts look beyond
mere facts of possession and consider the policy considerations of extending landlord-tenant
protections to the parties in the case? What might those policy considerations entail? As you
read through the materials, you may want to revisit this question.
2.
Types of Leasehold
As we have seen throughout this course, property interests come in a limited number of forms,
many of which we have inherited directly from feudal England. This theme holds in landlordtenant. The common law developed three types of leaseholds that our modern property
system still recognizes: the term of years, the periodic tenancy, and the tenancy at will.
The Term of Years
The term of years is a leasehold measured by any fixed period of time. The most familiar term
of years lease is the residential one-year lease. The actual term, however, may vary greatly. In
2001, the U.S. government signed a 99-year lease for an embassy in Singapore. Leases of
hundreds or even thousands of years are not unheard of, either. See Monbar v. Monaghan, 18
Del. Ch. 395 (1932) (two thousand year lease). At the other end of the spectrum, vacation
properties like beach condos and lake houses commonly rent for one-week periods.
Whatever the duration, a term of years automatically ends when the stated term expires. For
example, imagine L leases Blackacre to T “from September 1, 2015 to August 31, 2016.”
Neither party is required to give the other notice of termination. The tenant must simply
surrender possession to the landlord by midnight on August 31. The death of either
contracting party does not affect a term of years lease, unless the landlord and tenant have
agreed otherwise. If the tenant dies, the law requires her estate to carry out the lease.
The Periodic Tenancy
The periodic tenancy is a lease for some fixed duration that automatically renews for succeeding
periods until either the landlord or tenant gives notice of termination. This automatic renewal
is the chief practical difference between the periodic tenancy and the term of years. The most
common type of periodic tenancy is the month-to-month lease. As the name suggests, a
month-to-month lease lasts for a month and then continues for subsequent months, until
either the landlord or tenant ends the lease. Periodic tenancies have no certain end date; some
residential tenants with month-to-month leases stay in their apartments for decades.
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Termination requires one party to give advance notice to the other. These notice requirements
are now heavily regulated by statute in most jurisdictions. Under the common law (which is
still the basis for many state regulations), for year-to-year periodic leases (or any periodic lease
with a longer initial duration), parties must give notice at least six months before the period
ends. For leases less than a year, the minimum notice equals the length of the lease period.
Additionally, unless the parties make an agreement to the contrary, the lease must terminate
on the final day of a period. Assume, for example, that T signs a month-to-month lease that
begins May 1. On August 20, T gives notice of termination to her landlord. When will the
lease end? T must give the landlord a minimum of one month notice. That pushes T’s
obligations under the lease to September 19. A periodic tenancy, however, must end on the
last day of a period. Thus, T’s lease will terminate on September 30 at midnight.
The death of either the landlord or tenant does not end a periodic tenancy. If, for example,
the tenant dies before the lease terminates, the law vests the tenant’s estate with the
responsibility to fulfill the remaining obligations under the lease.
The Tenancy at Will
The tenancy at will has no fixed duration and endures so long as both of the parties desire. For
example, if the landlord and tenant sign a document that reads, “Tenant will pay the Landlord
$500 on the first of the month and the lease will endure as long as both of us wish” they have
created a tenancy at will. Under the common law, either party could end such a lease at any
moment. Today, most states have enacted statutes that establish minimum notice periods—
30 days is common. Tenancies at will also terminate if the landlord sells the property, the
tenant abandons the unit, or either party dies. 1
Tenancies at will can arise as a result of the clear intention of the parties—the ease of
termination is a valued feature in some negotiations. But note, the tenancy at will is also the
catchall lease category. If a leasehold doesn’t qualify as either a term of years or periodic
tenancy, the law crams it into the tenancy at will box—even if that clearly violates the goals of
the parties. This occasionally creates real hardship for individuals with sloppily drafted leases.
***
In jurisdictions that require 30-day notice periods before the termination of a tenancy at will, this is one of the key
remaining differences between the month-to-month periodic lease and the tenancy at will.
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Lease Hypotheticals
A professionally drafted lease will almost always make clear what type of leasehold the parties
have elected. When problems arise it’s often because lessors and lessees have drafted legal
documents without the help of a qualified lawyer. In the following examples try to figure out
what kind of leasehold the parties have created. If it’s a term of years, how long is the term?
If it’s a periodic tenancy, what is the period?
1. L and T sign an agreement that reads, “The term is one year, beginning September 1.”
2. L and T sign a lease that reads, “This agreement lasts as long as the parties consent.”
3. L and T sign an agreement that reads, “The lease will run from September 1 until the
following August 31. One thousand dollars payable on the first of every month.”
4. L and T enter a lease that reads in relevant part, “the rent is $48,000 per year, payable
$4,000 on the first of each month.”
5. L and T enter a lease that reads, “the rent is $1,000 per month.”
6. L and T enter a lease that reads, “the rent is $1,000 per month and lasts until the tenant
completes medical school.”
7. L and T are negotiating on the phone over an apartment lease. At the end of the
conversation L says, “Have we got a deal? Five years lease with rent at $10,000 a year?”
T replies, “Great. I accept. It’s a deal.”
3.
The Problem of Holdovers
The Tenancy at Sufferance
Imagine that you own a small apartment building in a college town. At the end of the
school year, one of your tenants refuses to move out. The law refers to such tenants as
holdovers. As a landlord, what are your options in this situation? How does the legal system
treat individuals who stay past the end of their leases? Can you kick them out? Are they
obligated to pay you rent?
When a tenant stays in possession after the lease has expired, the law allows the landlord to
make a one-time election. The landlord has the option to treat the holdover as a trespasser,
bring an eviction proceeding, and sue for damages. Alternatively, the landlord may renew the
holdover’s lease for another term. This second option is typically referred to as a tenancy at
sufferance. Some hornbooks list the tenancy at sufferance as a fourth type of common law
leasehold. The tenancy at sufferance, however, is not based on any affirmative agreement
between parties and is probably better understood as a remedy for wrongful occupancy. Also
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note that disputes sometimes pop-up over what election the landlord has made. For example,
what if the landlord does nothing for two months but then initiates eviction?
In most jurisdictions, when a landlord chooses to hold the tenant to a new lease, it creates a
periodic tenancy. States differ, however, on how to compute the length of the period and,
thus, the amount of the damages. Some simply copy over the length of the original lease (with
a maximum of one year). Others divine the repeating period by looking at how the rent was
paid. Imagine, for example, your tenant had originally signed a lease reading, “This lease will
run from January 1, 2014 to December 31, 2014. Rent is due on the first of each month.”
The tenancy created by the holdover would either be a year-to-year lease or a month-to-month
lease depending on the jurisdiction.
Still other states take other approaches. Some, for example, specify that a holdover must pay
double (or triple) rent for the holdover period.
Notes and Questions
1. The landlord’s options. Under what circumstances should a landlord move to evict
a tenant who holds over? Are there any scenarios where a landlord might want to keep
a tenant who has already proven themselves untrustworthy by staying past the agreedupon term?
2. Drafting. How can landlords draft leases to better protect themselves from the threat
of holdovers?
3. A holdover problem. Seven years ago, Tommy Hillclimber leased a commercial
building on a busy street from Lisa. The lease was for a five-year term with annual rent
of $100,000. At the end of the term, Tommy retained possession of the building but
continued to make rent payments. Lisa has cashed all of Tommy’s rent checks. Last
week, Sprawl-Mart contacted Lisa and offered to rent the building for $200,000 a year.
Lisa quickly sent notice to Tommy stating that the lease will terminate in 30 days. Does
Tommy have to vacate?
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Delivering Possession
Holdovers can also cause problems for other renters. Suppose that before the start of law
school you agree to a one-year lease that begins on August 1. Although you’ve signed a binding
lease agreement and have received a set of keys, when your van pulls into the driveway on
move-in day, you find that the previous tenant hasn’t left “your” apartment. If the lease
doesn’t include a contingency for such an event, what are your rights?
***
4.
Tenant Selection
As we saw earlier in the textbook, the right to exclude remains a cornerstone of property
ownership. Owners have expansive power to keep others off of their land and out of their
homes. Generally speaking, this right extends to landlords, who have broad discretion to
select tenants as they see fit. Landlords, for example, remain free to exclude smokers from
their properties. They can also refuse to rent to a tenant who acts erratically, possesses a
criminal record, or has a low credit score. Landlords, however, cannot violate state or federal
anti-discrimination laws when they go through the leasing process.
The Civil Rights Act of 1866
One of the oldest laws that protects tenants against discrimination in the housing market is
the Civil Rights Act of 1866. Passed in the aftermath of the Civil War, the Civil Rights Act of
1866 prohibits all discrimination based on race in the purchase or rental of real or personal
property. See Jones v. Alfred H. Mayer Co., 392 U.S. 409 (1968). Thus, landlords cannot deny
an apartment unit to a potential tenant based on tenant’s heritage or the color of their skin.
There are no exceptions.
The Fair Housing Act of 1968
The Fair Housing Act of 1968 (and its many amendments) greatly expanded the number of
individuals covered by anti-discrimination law. Broadly speaking, the Fair Housing Act (FHA)
prohibits discrimination in the renting, selling, advertising, or financing of real estate on the
basis of race, color, national origin, religion, sex, familial status, and disability.
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***
State Anti-Discrimination Efforts
Some state legislatures have passed laws that afford far more protection from discrimination
than the federal statutes provide. Minnesota, for example, protects against housing
discrimination on the basis of sexual orientation, gender identity, marital status, and source of
income. Other states in the Northeast and West Coast provide similar coverage, but these
positions are in no way a majority. As the map below indicates, in most states nothing prevents
a landlord from denying an apartment to an engaged heterosexual couple, based on the belief
that cohabitation before marriage is sinful.
Proving Discrimination
Two broad categories of cases may be brought under the FHA: disparate treatment claims and
disparate impact claims.
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A sign erected by white homeowners trying to prevent black tenants from
moving into their Detroit neighborhood (1942).
Disparate treatment claims target intentional forms of discrimination, including the refusal to
rent based on one of the protected categories. A plaintiff can show intent to discriminate with
“smoking gun” style evidence, such as statements by the landlord that he “would never rent
to an Irishman.” Of course, modern landlords rarely make such forthright admissions. As a
result, courts in the United States have established a burden-shifting approach that allows
plaintiffs to prove intentional discrimination with indirect circumstantial evidence. The initial
burden is on the plaintiff to make a prima facie case of discrimination. In a refusal to rent case,
the plaintiff must show that (1) that she is a member of a class protected by the FHA; (2) that
she applied for and was qualified to rent the unit; (3) that she was rejected; and (4) the unit
remained unrented. Once the plaintiff has established sufficient evidence to state a prima facie
case, the burden shifts to the defendant landlord to proffer a legitimate nondiscriminatory
reason for the refusal to rent. If the defendant meets this requirement, the burden then shifts
back to the tenant to prove that the reason offered is a pretext.
Discrimination is often ferreted out through the use of “testers.” Advocacy groups, many of
which are funded by the federal government, will send comparable white and black individuals
to inquire about renting a vacant unit. If the landlord treats the testers differently (e.g.,
provides different levels of assistance, shows different units, provides different information
about unit availability) this provides persuasive evidence of illegal discrimination.
Disparate impact claims allege that some seemingly neutral policy has a disproportionately
harmful effect on members of a group protected by the FHA. These cases rely heavily on
statistical evidence and employ a very similar burden-shifting methodology as the disparate
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treatment claims. Using statistics, plaintiffs need to show that a defendant’s policy has actually
caused some disparity. The defendant then has the opportunity to escape liability if it can
show show that its actions are necessary to achieve a valid goal. See Texas Department of
Housing & Community Affairs v. Inclusive Communities Project, Inc., 135 S. Ct. 2507 (2015).
Problems
1. William Neithamer, who is gay and HIV positive attempted to rent an apartment from
Brenneman Properties. Neithamer did not reveal his HIV status, but admitted to the
property manager that he had dismal credit because he had recently devoted all of his
resources to taking care of a lover who had died of AIDS. Neithamer, however, offered
to pre-pay one year’s rent. Brenneman Properties rejected Neithamer’s application
and, in turn, Neithamer sued under the FHA. Does he have a case? See Neithamer v.
Brenneman Property Services, Inc., 81 F. Supp 2d 1 (D.D.C. 1999).
2. Over the phone, Landlord said to Plaintiff, “Do you have children? I don’t want any
little boys because they’ll mess up the house and nobody would be here to watch them.
Really, this house isn’t good for kids because it’s right next to a main road.” Plaintiff
sues. Landlord argues that her statements only show that she is concerned about the
welfare of children. Is that a legitimate non-discriminatory reason to refuse to rent?
3. A local government has decided to knock down two high-rise public housing projects
within its borders. The high-rises primarily house recent immigrants from Guatemala.
A local advocacy group brings a lawsuit on their behalf, claiming that the government
action has a disparate impact on a protected group. Is this a disparate treatment or
disparate impact case? Can you think of a non-discriminatory reason why the
government may have taken such an action?
4. The FHA requires landlords to make “reasonable accommodations” for individuals
with handicaps. Which of the following requests by a tenant would qualify as a
reasonable accommodation? (a) Asking a landlord with a first-come/first-served
parking policy to create a reserved parking space for a tenant who has difficulty walking;
(b) Requesting that a landlord waive parking fees for a disabled tenant’s home health
care aide; (c) Asking the landlord to make an exception to the building’s “no pets” rule
for a tenant with a service animal; (d) Requesting landlord to pay for a sign language
interpreter for a deaf individual during the application process; (e) Asking the landlord
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to provide oral reminders to pay the rent for a tenant with documented short-term
memory loss.
An Exercise in Advertising
Imagine that you are a lawyer for a newspaper in a large metropolitan area. The local chapter
of the ACLU has raised concerns that some advertisements in the classifieds section of your
paper violate the Fair Housing Act. 2 Your boss has asked you to review the ads for any
offending language. Which of the following would you feel comfortable printing? 3
Would any of these ads violate the Civil Rights Act of 1866?
The government does provide some guidance to landlords worried about triggering FHA liability through their
advertisements. There are, for example, published lists of “words to avoid” and “acceptable language.” Although context
is important, landlords can generally use these phrases: good neighborhood, secluded setting, single family home, quality
construction, near public transportation, near places of worship, and assistance animals only.
2
3
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What about this ad for a roommate on Craigslist? Is it objectionable to you? Does it violate
the FHA? Does it matter that the poster is looking for a roommate? Would your answers change
if the advertisement read, “Have a room available for an able-bodied white man with no
children?”
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Fair Housing Council of San Fernando Valley v. Roommate.com, LLC
666 F.3d 1216 (9th Cir. 2012)
KOZINSKI, Chief Judge:
There’s no place like home. In the privacy of your own home, you can take off your coat, kick
off your shoes, let your guard down and be completely yourself. While we usually share our
homes only with friends and family, sometimes we need to take in a stranger to help pay the
rent. When that happens, can the government limit whom we choose? Specifically, do the antidiscrimination provisions of the Fair Housing Act (“FHA”) extend to the selection of
roommates?
Roommate.com, LLC (“Roommate”) operates an internet-based business that helps
roommates find each other. Roommate’s website receives over 40,000 visits a day and roughly
a million new postings for roommates are created each year. When users sign up, they must
create a profile by answering a series of questions about their sex, sexual orientation and
whether children will be living with them. An open-ended “Additional Comments” section
lets users include information not prompted by the questionnaire. Users are asked to list their
preferences for roommate characteristics, including sex, sexual orientation and familial status.
Based on the profiles and preferences, Roommate matches users and provides them a list of
housing-seekers or available rooms meeting their criteria. Users can also search available
listings based on roommate characteristics, including sex, sexual orientation and familial status.
The Fair Housing Councils of San Fernando Valley and San Diego (“FHCs”) sued Roommate
in federal court, alleging that the website’s questions requiring disclosure of sex, sexual
orientation and familial status, and its sorting, steering and matching of users based on those
characteristics, violate the Fair Housing Act (“FHA”), 42 U.S.C. § 3601 et seq. . . .
ANALYSIS
If the FHA extends to shared living situations, it’s quite clear that what Roommate does
amounts to a violation. The pivotal question is whether the FHA applies to roommates.
I
The FHA prohibits discrimination on the basis of “race, color, religion, sex, familial status, or
national origin” in the “sale or rental of a dwelling.” 42 U.S.C. § 3604(b) (emphasis added). The
FHA also makes it illegal to:
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make, print, or publish, or cause to be made, printed, or published any notice,
statement, or advertisement, with respect to the sale or rental of a dwelling that indicates
any preference, limitation, or discrimination based on race, color, religion, sex,
handicap, familial status, or national origin, or an intention to make any such
preference, limitation, or discrimination.
Id. § 3604(c) (emphasis added). The reach of the statute turns on the meaning of “dwelling.”
The FHA defines “dwelling” as “any building, structure, or portion thereof which is occupied
as, or designed or intended for occupancy as, a residence by one or more families.” Id. §
3602(b). A dwelling is thus a living unit designed or intended for occupancy by a family,
meaning that it ordinarily has the elements generally associated with a family residence:
sleeping spaces, bathroom and kitchen facilities, and common areas, such as living rooms,
dens and hallways.
It would be difficult, though not impossible, to divide a single-family house or apartment into
separate “dwellings” for purposes of the statute. Is a “dwelling” a bedroom plus a right to
access common areas? What if roommates share a bedroom? Could a “dwelling” be a bottom
bunk and half an armoire? It makes practical sense to interpret “dwelling” as an independent
living unit and stop the FHA at the front door.
There’s no indication that Congress intended to interfere with personal relationships inside
the home. Congress wanted to address the problem of landlords discriminating in the sale and
rental of housing, which deprived protected classes of housing opportunities. But a business
transaction between a tenant and landlord is quite different from an arrangement between two
people sharing the same living space. We seriously doubt Congress meant the FHA to apply
to the latter. Consider, for example, the FHA’s prohibition against sex discrimination. Could
Congress, in the 1960s, really have meant that women must accept men as roommates? Telling
women they may not lawfully exclude men from the list of acceptable roommates would be
controversial today; it would have been scandalous in the 1960s.
While it’s possible to read dwelling to mean sub-parts of a home or an apartment, doing so
leads to awkward results. . . . Nonetheless, this interpretation is not wholly implausible and we
would normally consider adopting it, given that the FHA is a remedial statute that we construe
broadly. Therefore, we turn to constitutional concerns, which provide strong countervailing
considerations.
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II
The Supreme Court has recognized that “the freedom to enter into and carry on certain
intimate or private relationships is a fundamental element of liberty protected by the Bill of
Rights.” Bd. of Dirs. of Rotary Int’l v. Rotary Club of Duarte, 481 U.S. 537 (1987). “[C]hoices to
enter into and maintain certain intimate human relationships must be secured against undue
intrusion by the State because of the role of such relationships in safeguarding the individual
freedom that is central to our constitutional scheme.” Roberts v. U.S. Jaycees, 468 U.S. 609, 61718 (1984). Courts have extended the right of intimate association to marriage, child bearing,
child rearing and cohabitation with relatives. Id. While the right protects only “highly personal
relationships,” IDK, Inc. v. Clark Cnty., 836 F.2d 1185, 1193 (9th Cir. 1988) (quoting Roberts,
468 U.S. at 618), the right isn’t restricted exclusively to family, Bd. of Dirs. of Rotary Int’l, 481
U.S. at 545. The right to association also implies a right not to associate. Roberts, 468 U.S. at
623.
To determine whether a particular relationship is protected by the right to intimate association
we look to “size, purpose, selectivity, and whether others are excluded from critical aspects of
the relationship.” Bd. of Dirs. of Rotary Int’l, 481 U.S. at 546. The roommate relationship easily
qualifies: People generally have very few roommates; they are selective in choosing
roommates; and non-roommates are excluded from the critical aspects of the relationship,
such as using the living spaces. Aside from immediate family or a romantic partner, it’s hard
to imagine a relationship more intimate than that between roommates, who share living rooms,
dining rooms, kitchens, bathrooms, even bedrooms.
Because of a roommate’s unfettered access to the home, choosing a roommate implicates
significant privacy and safety considerations. The home is the center of our private lives.
Roommates note our comings and goings, observe whom we bring back at night, hear what
songs we sing in the shower, see us in various stages of undress and learn intimate details most
of us prefer to keep private. . . .
Equally important, we are fully exposed to a roommate’s belongings, activities, habits,
proclivities and way of life. This could include matter we find offensive (pornography, religious
materials, political propaganda); dangerous (tobacco, drugs, firearms); annoying (jazz,
perfume, frequent overnight visitors, furry pets); habits that are incompatible with our lifestyle
(early risers, messy cooks, bathroom hogs, clothing borrowers). When you invite others to
share your living quarters, you risk becoming a suspect in whatever illegal activities they engage
in.
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Government regulation of an individual’s ability to pick a roommate thus intrudes into the
home, which “is entitled to special protection as the center of the private lives of our people.”
Minnesota v. Carter, 525 U.S. 83, 99 (1998) (Kennedy, J., concurring). . . . Holding that the
FHA applies inside a home or apartment would allow the government to restrict our ability to
choose roommates compatible with our lifestyles. This would be a serious invasion of privacy,
autonomy and security.
For example, women will often look for female roommates because of modesty or security
concerns. As roommates often share bathrooms and common areas, a girl may not want to
walk around in her towel in front of a boy. She might also worry about unwanted sexual
advances or becoming romantically involved with someone she must count on to pay the rent.
An orthodox Jew may want a roommate with similar beliefs and dietary restrictions, so he
won’t have to worry about finding honey-baked ham in the refrigerator next to the potato
latkes. Non-Jewish roommates may not understand or faithfully follow all of the culinary rules,
like the use of different silverware for dairy and meat products, or the prohibition against
warming non-kosher food in a kosher microwave. . . .
It’s a “well-established principle that statutes will be interpreted to avoid constitutional
difficulties.” Frisby v. Schultz, 487 U.S. 474, 483 (1988). “[W]here an otherwise acceptable
construction of a statute would raise serious constitutional problems, the Court will construe
the statute to avoid such problems unless such construction is plainly contrary to the intent of
Congress.” Pub. Citizen v. U.S. Dep’t of Justice, 491 U.S. 440, 466 (1989). Because the FHA can
reasonably be read either to include or exclude shared living arrangements, we can and must
choose the construction that avoids raising constitutional concerns. . . . Reading “dwelling” to
mean an independent housing unit is a fair interpretation of the text and consistent with
congressional intent. Because the construction of “dwelling” to include shared living units
raises substantial constitutional concerns, we adopt the narrower construction that excludes
roommate selection from the reach of the FHA. . . .
As the underlying conduct is not unlawful, Roommate’s facilitation of discriminatory
roommate searches does not violate the FHA.
Notes and Questions
1. What’s a dwelling? The FHA defines “dwelling” as “any building, structure, or
portion thereof which is occupied as, or designed or intended for occupancy as, a
residence by one or more families.” Id. § 3602(b). Do you think the FHA applies to
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college dormitories? Is it illegal to reserve some dormitories for women or to have
ethnic-themed dorms?
2. A broader Craigslist problem. It’s not unusual to stumble across advertisements for
apartments (as opposed to just roommate ads) on Craigslist that violate the FHA. If a
local newspaper published similar ads they would be liable under the FHA for
publishing discriminatory material. Why doesn’t anyone sue Craigslist? The answer is
that section 230(c) of the Communications Decency Act provides internet service
providers and website owners with broad immunity from liability for content posted
by third parties. Craigslist and other similar sites may voluntarily remove offending
posts, but they are not required to do so.
C.
Exiting a Lease
Most leases expire either at the end of the agreed-upon term or when one party serves the
other with notice that they’ve decided not to renew for another period. Sometimes, however,
either a tenant or landlord seeks to get out of the lease before the negotiated term concludes.
For example, a new job in a faraway state, a family emergency, or a business failure can all
change a tenant’s needs or ability to pay the rent. We turn now to the legal consequences of
exiting a lease.
1.
Landlord Exit: Transfer
Landlords may sell their properties to third parties at any time. The law categorizes a landlord’s
interest in rented property as a reversion and, like most other property interests, the landlord’s
reversion is fully alienable. But what happens to a lease if a property is transferred? As a
default rule, when a landlord sells his interest, the purchaser takes subject to any leases. If there
are tenants with unexpired term-of-years leases, for example, the new landlord cannot evict
them. Conversely, the tenants must continue to pay the agreed upon rent to the new owner.
If the lease is a periodic tenancy (or tenancy at will), the new landlord may end the leasehold
by providing the tenant with the required notice. Until then, the leases continue unabated.
Remember that these are default rules, alterable by contract. In fact, landlords often insert
provisions into leases that give them the option to terminate rental agreements upon sale of
the property.
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2.
Tenant Exit: Transfer
Tenants have exit options, too. The default rule is that a tenant’s interest in a term of years
lease or periodic tenancy is also freely transferable. (Note, however, that a tenant cannot
transfer a tenancy at will to another party.) The law recognizes two types of transfer: the
assignment and the sublease. The vast majority of jurisdictions use an objective test to distinguish
the two. In an assignment, the original tenant transfers all of the remaining interest under the
lease to a new tenant. In a sublease, on the other hand, the original tenant transfers less than
all of her remaining rights in the unexpired period—the original tenant either gets the unit
back at the end of the sublease or reserves a right to cut the sublease short.
An example should illuminate the concepts. Imagine that the Witch leases her Gingerbread
Cottage to Hansel for a period of one year—January 1 to December 31—in exchange for $100
a month. Four months into the lease, Hansel then transfers all of his remaining interest in the
property to Gretel so that she now has exclusive possessory rights until the end of the term.
This transfer is an assignment because Hansel has no further rights in the property. If Hansel
had retained for himself the final two months of the lease or if he’d rented the cottage to
Gretel for only the summer months, we would then categorize the agreement as a sublease.
A minority of jurisdictions takes a less formalistic approach to the assignment/sublease
division. In these states, the subjective intent of the parties, rather than the structure of the
transaction, controls. Arkansas, for example, allows parties to designate their leases as
subleases or assignment (and receive all the attendant rights and obligations under the chosen
category) regardless of whether the new tenant takes the unit for the entire remaining term.
The distinction between subleases and assignments has a few significant legal consequences.
Primarily, it affects who can benefit from the promises in the original lease and who is on the
18
hook for the obligations. Think again about the Hansel and Gretel example described above.
If Gretel, who took over the lease, stops making rent payments, whom can the landlord sue?
The original tenant, Hansel? Gretel? Both? What if the original one-year lease contained a
provision allowing the tenant to renew for a second year with the same terms? Can Gretel
take advantage of that clause?
To enforce any promise, the law requires a certain type of legal relationship between the
parties, known as privity. Donald Trump, for example, cannot successfully sue you if one of
his Trump Tower tenants suddenly fails to pay rent—there’s simply no connection between
Trump and you. Trump could only sue you if a privity relationship exists: either privity of contract
or privity of estate. Privity of contract is easy enough to understand. Parties are in privity of
contract if they have entered into a valid contract with each other. In our example, the Witch
and Hansel are in privity of contract because they signed the original lease agreement. The
Witch gave Hansel the right to exclusive possession for one year and Hansel promised to pay
rent every month. As a result of this legal relationship, the Witch has the option to sue Hansel
if she doesn’t receive rent. That remains true even if Hansel transfers his lease to someone
else. That bears repeating: the original tenant’s promise to pay the landlord stands until the
original lease expires (or until the landlord releases the tenant from this obligation).
When Hansel and the Witch first sign the lease, they also stand in privity of estate with each
other. This concept is yet another holdover from feudal times. Privity of estate makes
concrete the medieval belief that an individual takes on a series of rights and obligations when
they occupy land owned by another. 4 For our purposes, privity of estate arises when two
parties have successive ownership claims in the same property. Hansel and the Witch have
privity of estate because once Hansel’s possessory interest concludes, his property rights flow
immediately back to the Witch. Despite its archaic origin, the idea remains important in
modern property law because individuals in privity of estate can sue each other directly for
(some) violations of a rental agreement. 5
Consider, again, what happens when Hansel transfers his rights in the gingerbread cottage to
Gretel. Can the Witch successfully haul Gretel into court if she stops making payments? It
should be obvious that Gretel has not made any direct agreement with the Witch (or made
any promise to benefit her) so they are not in privity of contract. But what about privity of
The medieval mind thought of rent as something that came from the land itself: the tenant paid the land-lord out of the
fruits of the land, sometimes metaphorically but sometimes literally, with crops harvested from the land being leased.
5 We’ll learn more about which promises “run with the land” in a later chapter about covenants. For now, it’s enough to
know that transferees can only enforce promises that concern the property or land.
4
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estate? This is where the distinction between assignments and subleases matters. If Hansel
assigns his interest to Gretel, then Gretel and the Witch would be in privity of estate (and the
Witch could sue Gretel for the missing rent). We know they have privity of estate because
when Gretel’s rights end under the assignment, the Witch would immediately be entitled to
exclusive possession of the cottage—they have successive interests in the same piece of real
estate. Conversely, if Hansel subleases his apartment to Gretel for the summer, a privity
relationship would not arise between Gretel and the Witch. Instead, Gretel would have privity
of estate with Hansel because at the conclusion of Gretel’s interest, Hansel would have the
right to exclusive possession. Thus, under the sublease, the Witch could not sue Gretel for
rent.
Figuring out which parties stand in privity of estate can initially cause a lot of confusion.
However, asking two quick questions can help define these relationships. The first step is to
ask, “Have any tenants made an assignment of their rights?” If a tenant has assigned their
rights they have no chance of possessing the property again and, thus, cannot stand in privity
of estate with anyone (although they may still be in privity of contract with various parties).
For all the remaining tenants ask, “Who receives the property when this tenant’s possessory
rights finally end?” Remember, parties with successive interests have privity of estate.
Although it may be redundant, a few diagrams may help clarify these relationships. Assume
that L leases an apartment to T. Whenever a landlord initially leases to a tenant the two parties
are in both privity of contract and privity of estate:
Lease
establishes
privity of
contract
When T’s rights
end,
L
gets
property
back,
establishing privity
of estate
L and T are in privity of contract because they agreed on a lease contract. To figure out the
privity of estate relationships, we first ask if anyone has assigned their interest. The answer
here is “no.” For all remaining tenants, we inquire “who gets control over the property when
this tenant’s possessory rights end?” In this hypothetical, who gets the leased premise when
20
T’s term concludes? The answer, of course, is the landlord. T and L are in privity of estate
because the landlord gets the property back from the tenant at the end of the lease.
The relationships change if T assigns his rights to a new party, T2. The diagram of an
assignment is below:
privity
privity
privity
The contractual relationships are easy enough to map. As discussed earlier, when T assigns
his interest, he remains in privity of contract with L—they signed a rental agreement that has
not expired. T and T2 are also in privity of contract as a result of the assignment contract.
But what about privity of estate? L and T are no longer in privity of estate because T has
relinquished all of his property interests. Remember that parties who assign their rights stand
in privity of estate with no one. For all other tenants we ask, “Who receives the property
when this tenant’s possessory rights finally end?” When T2’s possessory rights conclude, who
takes control of the property? The answer is the landlord. L and T2 now have a privity of
estate relationship.
How do things change with a sublease?
21
privity
privity
privity
privity
As before, T remains in privity of contract with L for the duration of the original lease. In
this example, there are no assignments, so we begin by asking which parties have successive
property interests. When the possessory rights of T2 end, T will then have control over the
property. Thus T2 and T have a privity of estate relationship. Then, when T’s rights over the
property conclude, the possessory rights will flow back to the landlord, meaning that T and L
also have privity of estate.
Before moving on, one final wrinkle merits attention. As discussed earlier, when the original
tenant subleases or assigns his leasehold, the default rule is that the landlord and the new
tenant are not in privity of contract. It is possible, however, to create a privity of contract
relationship between the L and T2. Most often this is accomplished by including a clause in
the takeover agreement between the original tenant and the new tenant that reads, “New
Tenant assumes the obligation to perform all of the original tenant’s duties under the original
lease.” If the new tenant takes on this responsibility, the landlord becomes a third-party
beneficiary to the agreement and comes into privity of contract with the new tenant.
Problems
1. Landlord leases property to T1 from January 1, 2015 to December 31, 2015. On March
1, T1 sold T2 her remaining interest in the property. On October 1, T2 rented the
property to T3 for two months. Describe the privity relationships between all of the
parties. If T3 stops sending rent payments to Landlord, whom can the Landlord sue
to recover the money?
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2. Alger, a landlord, rents a commercial building to Brown for 5 years. Six months into
the lease, Brown subleases his interest to Clancy for 3 years. Clancy then turns around
and assigns his interest to Dahl. Describe the privity relationships between all of the
parties. If Dahl stops sending rent checks to Alger, whom can Alger sue to recover the
money.
3. Picasso, a landlord, rents an apartment to Renoir for one year. The lease contains a
provision allowing the tenant to renew the leasehold for a second year on the same
terms. Renoir assigns his interest in the lease to Seurat. Seurat then assigns his interest
to Turner. What are the privity relationships between the parties? Can Turner exercise
the renewal clause in the original lease? See Castle v. Double Time, Inc., 737 P.2d 900
(Okla. 1987) (discussing renewal clauses).
4. Landlord leases a unit to T1 for ten years beginning in 2010. In 2012, T1 transfers all
of his right to T2 “for a period of five” years. In 2013, T2 subleases to T3 for one year.
What are the privity relationships and whom can the landlord sue if T3 stops paying
rent?
5. L leases a commercial property to T1 for ten years beginning in 2010. In 2012, T1
assigns all of her interest to T2. A year later, T2 assigns all of her interest to T3. In
2014, T3 subleases to T4 for a term of four years. In the sublease contract, T4 agrees
to assume “all of the covenants and promises” in the original lease between L and T1.
In 2015, T4’s business fails and she ceases making paying rent. What are the privity
relationships? Whom can L sue to recover the unpaid rent money?
3.
Tenant Exit: Limiting the Right to Transfer
Under the traditional common law, leaseholds were freely transferable property interests.
Modern courts continue to recognize the alienability of tenancies as a default position, but
allow parties to contract around the basic rule. As a result, most leases (including yours,
probably) now contain some restriction on a tenant’s ability to assign or sublease her property
interests. For example, one oft-used lease agreement, which can be downloaded for free from
the Internet, includes the following provision: “The tenant will not assign this Lease, or sublet
or grant any concession or license to use the Property or any part of the Property. Any
assignment or subletting will be void and will, at the Landlord’s option, terminate the Lease.”
In most states, courts uphold such bars on transfer as reasonable restraints on alienation. More
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controversial are clauses that allow sublease or assignment but only “with the consent of the
landlord.”
***
4.
Tenant Exit: Abandonment and the Duty to Mitigate
A tenant who needs to exit a lease early and cannot find another party to sublet must seek out
other alternatives. For example, a tenant can always ask her landlord to terminate the lease
before the term ends. The tenant generally agrees to turn over the property and pay a small
fee and, in return, the landlord releases the tenant from all further obligations. This is called a
surrender.
Alternatively, a tenant may simply pack her things, abandon the premise, and stop making rent
payments. This often happens if a tenant cannot work out a surrender agreement or finds
herself in desperate financial circumstances. What are the rights and obligations of the parties
in this scenario? What happens if a tenant breaks a lease and leaves?
The Pierre Apartments today
Sommer v. Kridel
378 A.2d 767 (N.J. 1977)
PASHMAN, J.
We granted certification in these cases to consider whether a landlord seeking damages from
a defaulting tenant is under a duty to mitigate damages by making reasonable efforts to re-let
24
an apartment wrongfully vacated by the tenant. Separate parts of the Appellate Division held
that, in accordance with their respective leases, the landlords in both cases could recover rents
due under the leases regardless of whether they had attempted to re-let the vacated apartments.
Although they were of different minds as to the fairness of this result, both parts agreed that
it was dictated by Joyce v. Bauman, 174 A. 693 (1934) . . . . We now reverse and hold that a
landlord does have an obligation to make a reasonable effort to mitigate damages in such a
situation. We therefore overrule Joyce v. Bauman to the extent that it is inconsistent with our
decision today.
I.
This case was tried on stipulated facts. On March 10, 1972 the defendant, James Kridel,
entered into a lease with the plaintiff, Abraham Sommer, owner of the “Pierre Apartments”
in Hackensack, to rent apartment 6-L in that building. The term of the lease was from May 1,
1972 until April 30, 1974, with a rent concession for the first six weeks, so that the first month’s
rent was not due until June 15, 1972.
One week after signing the agreement, Kridel paid Sommer $690. Half of that sum was used
to satisfy the first month’s rent. The remainder was paid under the lease provision requiring a
security deposit of $345. Although defendant had expected to begin occupancy around May
1, his plans were changed. He wrote to Sommer on May 19, 1972, explaining:
I was to be married on June 3, 1972. Unhappily the engagement was broken and the
wedding plans cancelled. Both parents were to assume responsibility for the rent after
our marriage. I was discharged from the U.S. Army in October 1971 and am now a
student. I have no funds of my own, and am supported by my stepfather.
In view of the above, I cannot take possession of the apartment and am surrendering
all rights to it. Never having received a key, I cannot return same to you.
I beg your understanding and compassion in releasing me from the lease, and will of
course, in consideration thereof, forfeit the 2 month’s rent already paid.
Please notify me at your earliest convenience.
Plaintiff did not answer the letter.
Subsequently, a third party went to the apartment house and inquired about renting apartment
6-L. Although the parties agreed that she was ready, willing and able to rent the apartment,
the person in charge told her that the apartment was not being shown since it was already
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rented to Kridel. In fact, the landlord did not re-enter the apartment or exhibit it to anyone
until August 1, 1973. At that time it was rented to a new tenant for a term beginning on
September 1, 1973. The new rental was for $345 per month with a six week concession similar
to that granted Kridel.
Prior to re-letting the new premises, plaintiff sued Kridel in August 1972, demanding $7,590,
the total amount due for the full two-year term of the lease. Following a mistrial, plaintiff filed
an amended complaint asking for $5,865, the amount due between May 1, 1972 and September
1, 1973. The amended complaint included no reduction in the claim to reflect the six week
concession provided for in the lease or the $690 payment made to plaintiff after signing the
agreement. Defendant filed an amended answer to the complaint, alleging that plaintiff
breached the contract, failed to mitigate damages and accepted defendant’s surrender of the
premises. He also counterclaimed to demand repayment of the $345 paid as a security deposit.
The trial judge ruled in favor of defendant. Despite his conclusion that the lease had been
drawn to reflect “the ‘settled law’ of this state,” he found that “justice and fair dealing”
imposed upon the landlord the duty to attempt to re-let the premises and thereby mitigate
damages. He also held that plaintiff’s failure to make any response to defendant’s unequivocal
offer of surrender was tantamount to an acceptance, thereby terminating the tenancy and any
obligation to pay rent. As a result, he dismissed both the complaint and the counterclaim. The
Appellate Division reversed in a per curiam opinion, 153 N.J.Super. 1 (1976), and we granted
certification. . . .
II
As the lower courts in both appeals found, the weight of authority in this State supports the
rule that a landlord is under no duty to mitigate damages caused by a defaulting tenant. See
Joyce v. Bauman, supra . . . . This rule has been followed in a majority of states . . . and has been
tentatively adopted in the American Law Institute’s Restatement of Property. . . .
Nevertheless, while there is still a split of authority over this question, the trend among recent
cases appears to be in favor of a mitigation requirement. . . .
The majority rule is based on principles of property law which equate a lease with a transfer
of a property interest in the owner’s estate. Under this rationale the lease conveys to a tenant
an interest in the property which forecloses any control by the landlord; thus, it would be
anomalous to require the landlord to concern himself with the tenant’s abandonment of his
own property. Wright v. Baumann, 398 P.2d 119, 120-21 (Or. 1965).
26
For instance, in Muller v. Beck, supra, where essentially the same issue was posed, the court
clearly treated the lease as governed by property, as opposed to contract, precepts. The court
there observed that the “tenant had an estate for years, but it was an estate qualified by this
right of the landlord to prevent its transfer,” 110 A. at 832, and that “the tenant has an estate
with which the landlord may not interfere.” Id. at 832. Similarly, in Heckel v. Griese, supra, the
court noted the absolute nature of the tenant’s interest in the property while the lease was in
effect, stating that “when the tenant vacated, . . . no one, in the circumstances, had any right
to interfere with the defendant’s possession of the premises.” 171 A. 148, 149. Other cases
simply cite the rule announced in Muller v. Beck, supra, without discussing the underlying
rationale. See Joyce v. Bauman, supra, 174 A. 693 . . . .
Yet the distinction between a lease for ordinary residential purposes and an ordinary contract
can no longer be considered viable. As Professor Powell observed, evolving “social factors
have exerted increasing influence on the law of estates for years.” 2 Powell on Real Property (1977
ed.), § 221(1) at 180-81. The result has been that:
[t]he complexities of city life, and the proliferated problems of modern society in
general, have created new problems for lessors and lessees and these have been
commonly handled by specific clauses in leases. This growth in the number and detail
of specific lease covenants has reintroduced into the law of estates for years a
predominantly contractual ingredient.
(Id. at 181). . . .
This Court has taken the lead in requiring that landlords provide housing services to tenants
in accordance with implied duties which are hardly consistent with the property notions
expressed in Muller v. Beck, supra, and Heckel v. Griese, supra. See Braitman v. Overlook Terrace Corp.,
346 A.2d 76 (1975) (liability for failure to repair defective apartment door lock); Berzito v.
Gambino, 308 A.2d 17 (1973) (construing implied warranty of habitability and covenant to pay
rent as mutually dependent); Marini v. Ireland, 265 A.2d 526 (1970) (implied covenant to repair);
Reste Realty Corp. v. Cooper, 251 A.2d 268 (1969) (implied warranty of fitness of premises for
leased purpose). In fact, in Reste Realty Corp. v. Cooper, supra, we specifically noted that the rule
which we announced there did not comport with the historical notion of a lease as an estate
for years. 251 A.2d 268. And in Marini v. Ireland, supra, we found that the “guidelines employed
to construe contracts have been modernly applied to the construction of leases.” 265 A.2d at
532.
27
Application of the contract rule requiring mitigation of damages to a residential lease may be
justified as a matter of basic fairness. Professor McCormick first commented upon the
inequity under the majority rule when he predicted in 1925 that eventually:
4
the logic, inescapable according to the standards of a ‘jurisprudence of conceptions’
which permits the landlord to stand idly by the vacant, abandoned premises and treat
them as the property of the tenant and recover full rent, [will] yield to the more realistic
notions of social advantage which in other fields of the law have forbidden a recovery
for damages which the plaintiff by reasonable efforts could have avoided. (McCormick,
The Rights of the Landlord Upon Abandonment of the Premises by the Tenant, 23 Mich. L. Rev.
211, 221-22 (1925)).
Various courts have adopted this position.
The pre-existing rule cannot be predicated upon the possibility that a landlord may lose the
opportunity to rent another empty apartment because he must first rent the apartment vacated
by the defaulting tenant. Even where the breach occurs in a multi-dwelling building, each
apartment may have unique qualities which make it attractive to certain individuals.
Significantly, in Sommer v. Kridel, there was a specific request to rent the apartment vacated by
the defendant; there is no reason to believe that absent this vacancy the landlord could have
succeeded in renting a different apartment to this individual.
We therefore hold that antiquated real property concepts which served as the basis for the
pre-existing rule, shall no longer be controlling where there is a claim for damages under a
residential lease. Such claims must be governed by more modern notions of fairness and
equity. A landlord has a duty to mitigate damages where he seeks to recover rents due from a
defaulting tenant.
If the landlord has other vacant apartments besides the one which the tenant has abandoned,
the landlord’s duty to mitigate consists of making reasonable efforts to re-let the apartment.
In such cases he must treat the apartment in question as if it was one of his vacant stock.
As part of his cause of action, the landlord shall be required to carry the burden of proving
that he used reasonable diligence in attempting to re-let the premises. We note that there has
been a divergence of opinion concerning the allocation of the burden of proof on this issue.
See Annot., supra, s 12 at 577. While generally in contract actions the breaching party has the
burden of proving that damages are capable of mitigation . . . here the landlord will be in a
28
better position to demonstrate whether he exercised reasonable diligence in attempting to relet the premises. . . .
III
The Sommer v. Kridel case presents a classic example of the unfairness which occurs when a
landlord has no responsibility to minimize damages. Sommer waited 15 months and allowed
$4658.50 in damages to accrue before attempting to re-let the apartment. Despite the
availability of a tenant who was ready, willing and able to rent the apartment, the landlord
needlessly increased the damages by turning her away. While a tenant will not necessarily be
excused from his obligations under a lease simply by finding another person who is willing to
rent the vacated premises, see, e. g., Reget v. Dempsey-Tegler & Co., 216 N.E.2d 500 (Ill.
App.1966) (new tenant insisted on leasing the premises under different terms); Edmands v. Rust
& Richardson Drug Co., 77 N.E. 713 (Mass. 1906) (landlord need not accept insolvent tenant),
here there has been no showing that the new tenant would not have been suitable. We
therefore find that plaintiff could have avoided the damages which eventually accrued, and
that the defendant was relieved of his duty to continue paying rent. Ordinarily we would
require the tenant to bear the cost of any reasonable expenses incurred by a landlord in
attempting to re-let the premises . . . but no such expenses were incurred in this case. . . .
In assessing whether the landlord has satisfactorily carried his burden, the trial court shall
consider, among other factors, whether the landlord, either personally or through an agency,
offered or showed the apartment to any prospective tenants, or advertised it in local
newspapers. Additionally, the tenant may attempt to rebut such evidence by showing that he
proffered suitable tenants who were rejected. However, there is no standard formula for
measuring whether the landlord has utilized satisfactory efforts in attempting to mitigate
damages, and each case must be judged upon its own facts.
Compare . . . Carpenter v. Wisniewski, 215 N.E.2d 882 (Ind. App.1966) (duty satisfied where
landlord advertised the premises through a newspaper, placed a sign in the window, and
employed a realtor); Re Garment Center Capitol, Inc., 93 F.2d 667, 115 A.L.R. 202 (2 Cir. 1938)
(landlord’s duty not breached where higher rental was asked since it was known that this was
merely a basis for negotiations); Foggia v. Dix, 509 P.2d 412, 414 (Or. 1973) (in mitigating
damages, landlord need not accept less than fair market value or “substantially alter his
obligations as established in the pre-existing lease”); with Anderson v. Andy Darling Pontiac, Inc.,
43 N.W.2d 362 (Wis. 1950) (reasonable diligence not established where newspaper
advertisement placed in one issue of local paper by a broker); . . . Consolidated Sun Ray, Inc. v.
Oppenstein, 335 F.2d 801, 811 (8 Cir. 1964) (dictum) (demand for rent which is “far greater than
29
the provisions of the lease called for” negates landlord’s assertion that he acted in good faith
in seeking a new tenant).
IV
The judgment in Sommer v. Kridel is reversed.
Notes and Questions
1. The basic law. Today almost all states impose a duty to mitigate on residential
landlords. The rule also applies to commercial tenancies in many states. The
Restatement (Second) of Property § 12.1(3), however, continues to cling to the
common law notion that a landlord can wait until the end of the term and then sue the
tenant for all of the unpaid rent. The authors of the Restatement believe the traditional
rule discourages abandonment, limits vandalism, and better protects the expectations
of landlords. The New York courts have similarly continued to uphold the traditional
common law rule in both residential and commercial contexts, primarily to avoid
unsettling the expectations of landlords and tenants as to their legal rights and
obligations. See Holy Properties, Ltd. v. Kenneth Cole Productions, Inc., 87 N.Y.2d
130, 134 (1995) (commercial leases); Rios v. Carrillo, 861 N.Y.S.2d 129 (N.Y App. Div.
2d 2008) (residential leases). But see Jeremy N. Sheff, A Tale of Two Cities: The Residential
Landlord’s Duty to Mitigate in New York, 25 J. CIV. RTS. & ECON. DEV. 673 (2011)
(discussing earlier lower court rulings in New York that had applied a duty to mitigate
in the residential context).
2. Tenants still on the hook. Importantly, the duty to mitigate does not relieve an
abandoning tenant of all liability. Even if a new tenant rents the unit, the landlord can
still recover damages for all of the costs of finding the replacement tenant and for any
time that the unit remained empty. The landlord can also recoup any unpaid rent that
accrued before the abandonment. Finally, if the rental market in the area has softened
and landlord is forced to rent the unit at lower price, the tenant is responsible for the
difference between the new rent and the original rent.
3. Property v. Contract. The lingering controversy over the duty to mitigate stems largely
from the property/contract tension inherent in the nature of the lease. If a leasehold
is primarily a property interest, then the landlord has few responsibilities to the tenant
after ceding possession and control—the tenant is free to use the property or let it lay
fallow. If, on the other hand, the lease is viewed through the lens of contract law, the
30
parties clearly have a responsibility to mitigate damages. But see Edward Chase & E.
Hunter Taylor, Jr., Landlord and Tenant: A Study in Prooperty and Contract, 30 VILL. L. REV.
571 (1985) (arguing the distinction is overstated).
4. What’s a good faith effort? Ken rents an apartment to Sarah for one year. Three
months into the lease, Sarah gets a new job in a different state and turns the apartment
back over to Ken. Ken puts an 8×11 “for rent” sign in the window of the unit. Has
he made a good faith effort to mitigate damages? Does it matter how he advertises the
other units? What if Tim offers to rent Sarah’s unit but Tim has bad credit: does Ken
have to accept Tim?
5. The Legend of Jim Kridel. The woman Jim Kridel intended to marry came from a
family with significant assets. When the engagement fell through, Kridel—who had no
income of his own—could not afford the rent at the Pierre Apartments. The opinion
mentions that Kridel notified Sommer of his predicament in writing, but does not
reflect that Kridel and Sommer also had a heated discussion on the phone. During the
telephone conversation, Kridel offered Sommer $750 of the pre-paid rent as
compensation for breaking the lease (adjusted for inflation, that’s roughly equivalent
to $3000 today). Sommer, however, knew that Kridel’s stepfather was a prominent
(and presumably well-off) physician and demanded an additional $750. Kridel refused,
and told Sommer, “If you don’t like it, you can sue me, baby!” Sommer did just that.
When the litigation began, Kridel was a first year law student at Rutgers. He initially
represented himself but gradually picked up pro bono help from lawyers he met at
summer jobs and partners in the firm where he worked after graduating. Kridel
estimates that Sommer—a very wealthy landlord—spent over $500,000 on legal fees.
Kridel also recalls that the law of New Jersey was firmly against his position that the
lease should be governed by contract principles. On appeal, he relied primarily on a
case from the state of Oregon, which opposing counsel disparaged as a place full of
bumpkin fishermen and loggers. When Kridel won, he wrapped the opinion around
an Oregon salmon and sent to Sommer’s lawyers. Asked why he pursued the case with
such vigor, he replied, “Sommer was wrong. The rule was unfair. And I was probably
the only tenant in New Jersey who could afford to pour that much time and attention
into a case like that.” In the intervening years, Kridel has had a long and successful
legal career in New Jersey and New York. He’s currently best known for representing
Real Housewives of New Jersey star Teresa Giudice in her bankruptcy proceeding.
31
1. What’s a dwelling? The FHA defines “dwelling” as “any building,
structure, or portion thereof which is occupied as, or designed or intended
for occupancy as, a residence by one or more families.”Id. § 3602(b). Do you
think the FHA applies to college dormitories? Is it illegal to reserve some
dormitories for women or to have ethnic-themed dorms?
2. Over the phone, Landlord said to Plaintiff, “Do you have children? I don’t want
any little boys because they’ll mess up the house and nobody would be here to
watch them. Really, this house isn’t good for kids because it’s right next to a main
road.” Plaintiff sues. Landlord argues that her statements only show that she is
concerned about the welfare of children. Is that a legitimate non-discriminatory
reason to refuse to rent?
3. A local government has decided to knock down two high-rise public housing
projects within its borders. The high-rises primarily house recent immigrants from
Guatemala. A local advocacy group brings a lawsuit on their behalf, claiming
that the government action has a disparate impact on a protected group. Is this a
disparate treatment or disparate impact case? Can you think of a
non-discriminatory reason why the government may have taken such an action?
4. Ken rents an apartment to Sarah for one year. Three months into the
lease, Sarah gets a new job in a different state and turns the apartment back
over to Ken. Ken puts an 8×11 “for rent” sign in the window of the unit. Has he
made a good faith effort to mitigate damages? Does it matter how he advertises
the other units? What if Tim offers to rent Sarah’s unit but Tim has bad credit:
does Ken have to accept Tim?
How to Brief or IRAC a case:
Issue:
A good issue statement includes the party names, the name of the rule
of law the brief is analyzing, and a key fact. What is the issue before the court?
What Problem is the court trying to solve? The issue should be one or two
sentences, state the party names and the relevant legal terms.
Rule:
The rule is the law that governs the outcome of the case. It should be
stated as a general principle and not include any party names or facts. The
rule should be stated as a list or an outline- not in paragraph form.
Application:
The application is a discussion of how the rule applies to the facts of a case.
The application shows how you can analyze arguments on both sides and
is the most important skill you will learn. The application is normally paragraphs long.
It should be a written debate – not simply a statement of the conclusion. Whenever possible,
present both sides of any issue.
Conclusion:
What was the result of the case? Did the appellate or supreme court affirm,
reverse or reverse and remand the lower court’s decision? The case gives you a background
of the facts along with the judge’s reasoning and conclusion. When you brief cases,
you are summarizing the judge’s opinion.
How to Brief or IRAC a case:
Issue:
A good issue statement includes the party names, the name of the rule
of law the brief is analyzing, and a key fact. What is the issue before the court?
What Problem is the court trying to solve? The issue should be one or two
sentences, state the party names and the relevant legal terms.
Rule:
The rule is the law that governs the outcome of the case. It should be
stated as a general principle and not include any party names or facts. The
rule should be stated as a list or an outline- not in paragraph form.
Application:
The application is a discussion of how the rule applies to the facts of a case.
The application shows how you can analyze arguments on both sides and
is the most important skill you will learn. The application is normally paragraphs long.
It should be a written debate – not simply a statement of the conclusion. Whenever possible,
present both sides of any issue.
Conclusion:
What was the result of the case? Did the appellate or supreme court affirm,
reverse or reverse and remand the lower court’s decision? The case gives you a background
of the facts along with the judge’s reasoning and conclusion. When you brief cases,
you are summarizing the judge’s opinion.