PowerPoint Slides to Accompany
CONTEMPORARY BUSINESS AND
ONLINE COMMERCE LAW
5th Edition
by Henry R. Cheeseman
Chapter 37
Real Property and LandlordTenant Relationship
Slides developed by
Les Wiletzky
Wiletzky and Associates
Copyright © 2006 by Pearson Prentice-Hall. All rights reserved.
Real Property
 The land itself as well as buildings, trees,
soil, minerals, timber, plants, and other
things permanently affixed to the land:
Land
 Buildings
 Subsurface Rights
 Plant Life and Vegetation
 Fixtures
 Air Rights

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37 - 2
Estates in Land
 Ownership rights in real property
 The bundle of legal rights that the owner
has to possess, use, and enjoy the
property
 The type of estate that an owner
possesses is determined from the deed,
will, lease, or other document that
transferred the ownership rights to him or
her
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37 - 3
Freehold Estate
 An estate where the owner has a present
possessory interest in the real property
 Estates in Fee
 Fee simple absolute
 Fee simple defeasible
 Life Estates
 Estate pour autre vie
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37 - 4
Estates in Fee
Fee Simple Absolute
 Highest form of
owner-ship of real
property
 Ownership:



Is infinite in duration
Has no limitation on
inheritability
Does not end upon
the occurrence or nonoccurrence of an
event
Fee Simple Defeasible
 Grants owner all of
the incidents of a fee
simple absolute
except that it may be
taken away if a
specified condition
occurs or does not
occur
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37 - 5
Life Estate
 Interest in property that lasts for the life of
a specified person
 A life estate terminates upon the death of
a named person and reverts back to the
grantor or his or her estate or other
designated person
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Concurrent or Co-ownership
 When two or more persons own a piece of
real property
 Forms of concurrent ownership:
 Joint tenancy
 Tenancy in common
 Tenancy by the entirety
 Community property
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37 - 7
Summary: Concurrent Ownership
(1 of 2)
Form of
Ownership
Right of Survivorship
Tenant May Unilaterally
Transfer His or Her Interest
Joint Tenancy
Yes. Deceased tenant’s
interest automatically
passes to co-tenants.
Yes. Tenant may transfer his or
her interest without the consent
of co-tenants. Transfer severs
joint tenancy.
Tenancy in
Common
No. Deceased tenant’s
interest passes to his or
her estate.
Yes. Tenant may transfer his or
her interest without the consent
of co-tenants. Transfer does not
sever tenancy in common.
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37 - 8
Summary: Concurrent Ownership
(2 of 2)
Form of
Ownership
Right of Survivorship
Tenant May Unilaterally
Transfer His or Her Interest
Tenancy by the
Entirety
Yes. Deceased tenant’s
interest automatically
passes to his or her
spouse.
No. Neither spouse may transfer
his or her interest without the
other spouse’s consent.
Community
Property
Yes. When a spouse dies No. Neither spouse may transfer
the surviving spouse
his or her interest without the
automatically receives
other spouse’s consent.
one-half of the community
property. The other half
passes to the heirs of the
deceased spouse as
directed by a valid will.
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37 - 9
Condominium
 Common form of ownership in a multiple-
dwelling building
 Purchasers of a condominium:
Have title to their individual units
 Own the common areas as a tenant in
common with the other condominium owners

 Owners may sell or mortgage their units
without the permission of the other owners
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37 - 10
Cooperative
 Form of co-ownership of a multiple-
dwelling building
A corporation owns the building
 The residents own shares in the corporation

 Each cooperative owner then leases a
unit in the building from the corporation
under a renewable, long-term, proprietary
lease
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37 - 11
Future Interest
 The right to possess property in the future
 The interest that the grantor retains for
him- or herself or a third party
 Reversion – a right of possession that
returns to the grantor after the expiration
of a limited or contingent estate
 Remainder – a right of possession that
goes to a third party upon the expiration of
a limited or contingent estate
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37 - 12
Transfer of Ownership of Real
Property: Sale of Real Estate
 The passing of title from a seller to a
buyer for a price
 Also called a conveyance
 Closing – the finalization of a real estate
sales transaction that passes title to the
property from the seller to the buyer
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37 - 13
Transfer of Ownership of Real
Property: Deed
 A writing that describes a person’s
ownership interest in a piece of real
property
Warranty Deed
 Quitclaim Deed

 Grantor – the party who transfers an
ownership interest in real property
 Grantee – the party to whom an interest in
real property is transferred
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37 - 14
Transfer of Ownership of Real
Property: Recording Statute
 A state statute that requires the mortgage
or deed of trust to be recorded in the
county recorder’s office of the county in
which the real property is located
 Quiet title action – a party concerned
about ownership rights in a parcel of real
property can have a court determine the
extent of those rights
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37 - 15
Transfer of Ownership of Real
Property: Marketable Title (Good Title)
 Title that is free from any encumbrances
or other defects that are not disclosed but
would affect the value of the property
 The three most common ways of assuring
marketable title:
Attorney’s Opinion
 Torrens System
 Title Insurance

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37 - 16
Transfer of Ownership of Real
Property: Tax Sale
 A method of transferring property
ownership that involves a lien on property
for unpaid property taxes
 If the lien remains unpaid after a certain
amount of time, a tax sale is held to
satisfy the lien
 Any excess proceeds are paid to the
taxpayer
 The buyer receives title to the property
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37 - 17
Transfer of Ownership of Real
Property: Gift, Will, or Inheritance
 Gift
 A transfer of property from one person to another
without exchange of money
 Will or Inheritance
 If a person dies with a will, his or her property is
distributed to the beneficiaries as designated in the will
 If a person dies without a will, his or her property is
distributed to the heirs as stipulated in the state’s
intestate statute
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37 - 18
Transfer of Ownership of Real
Property: Adverse Possession (1 of 2)
 Occurs when a person who wrongfully
possesses someone else’s real property
obtains title to that property if certain
statutory requirements are met
 Property owned by federal and state
governments are not subject to adverse
possession
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37 - 19
Transfer of Ownership of Real
Property: Adverse Possession (2 of 2)
 To obtain title under adverse possession,
the wrongful possession must be:
1. For a statutorily prescribed period of time
2. Open, visible, and notorious
3. Actual and exclusive
4. Continuous and peaceful
5. Hostile and adverse
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37 - 20
Nonpossessory Interests: Easements
 A given or required right to make limited
use of someone else’s land without
owning or leasing it
Easement Appurtenant – created when the
owner of one piece of land is given an
easement over an adjacent piece of land
 Easement in Gross – authorizes a person
who does not own adjacent land the right to
use another’s land

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37 - 21
Nonpossessory Interests: License
 Grants a person the right to enter upon
another’s property for a specified and
usually short period of time
 A license does not transfer any interest in
the property
 A license is a personal privilege that may
be revoked by the licensor at any time
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37 - 22
Nonpossessory Interests: Profit
 Grants a person the right to remove
something from another’s real property
e.g., gravel, minerals, grain, or timber
 Profit Appurtenant – grants the owner of one
piece of land the right to go onto another’s
adjacent land and remove things from it
 Profit in Gross – authorizes someone who
does not own adjacent land the right to go
onto another’s property and remove things
from it

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37 - 23
Landlord-Tenant Relationship (1 of 2)
 A relationship created when the owner of
a freehold estate (landlord) transfers a
right to exclusively and temporarily
possess the owner’s property to another
(tenant)
 Nonfreehold Estate – an estate in which
the tenant has a right of possession of the
property but not title to the property
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37 - 24
Landlord-Tenant Relationship (2 of 2)
 Leasehold – a tenant’s interest in the
property
 Landlord – the owner who transfers the
leasehold
 Tenant – the party to who the leasehold is
transferred
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37 - 25
The Lease
 A transfer of the right to the possession
and use of the real property for a set term
in return for certain consideration

i.e., the rental agreement between a landlord
and a tenant
 Leases can be either oral or written
 Most Statutes of Frauds require written
leases for periods of time longer than one
year
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37 - 26
Types of Tenancy (1 of 2)
Type of Tenancy
Description
Tenancy for Years
Continues for the duration of the lease and then
terminates automatically without notice.
It does not terminate by the death of either party.
Periodic Tenancy
Continues from payment interval to payment
interval.
It may be terminated by either party with adequate
notice.
It does not terminate upon the death of either
party.
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37 - 27
Types of Tenancy (2 of 2)
Type of Tenancy
Description
Tenancy at Will
Continues at the will of the parties.
It may be terminated by either party at any time
with adequate notice.
It terminates upon the death of either party.
Tenancy at
Sufferance
Arises when a tenant wrongfully occupies real
property after the expiration of another tenancy or
life estate.
It continues until the owner either evicts the tenant
or holds the tenant over for another term.
It terminates upon the death of the tenant.
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37 - 28
Landlord’s Duties: Possession
 A lease grants the tenant exclusive
possession of the leased premises: (1) for
the term of the lease or (2) until the tenant
defaults on the obligations under the lease
 A landlord may not enter leased premises
unless the right is specifically reserved in
the lease
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37 - 29
Landlord’s Duties: Covenant of Quiet
Enjoyment
 The law implies a covenant of quiet
enjoyment in all leases
 The landlord may not interfere with the
tenant’s quiet and peaceful possession,
use, and enjoyment of the leased
premises
 Wrongful Eviction – a violation of the
covenant of quiet enjoyment
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37 - 30
Landlord’s Duties: Duty to Maintain
Leased Premises
Building Codes
 State and local
statutes that impose
specific standards on
property owners to
maintain and repair
leased premises
Implied Warranty of
Habitability
 A warranty that
provides that the
leased premises must
be fit, safe, and
suitable for ordinary
residential use
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37 - 31
Tenant’s Duties
1. Duty to pay rent
2. Duty not to use leased premises for
illegal or nonstipulated purposes
3. Duty not to commit waste
4. Duty not to disturb other tenants
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37 - 32
Transferring Rights to Leased
Property
 Landlords may sell, gift, devise, or
otherwise transfer their interests in the
leased property

If complete title is transferred, the property is
subject to the existing lease
 The tenant’s right to transfer possession
of the leased premises to another
depends on the terms of the lease
Assignment of the lease
 Sublease

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37 - 33
Assignment of the Lease
 A transfer by a tenant of his or her rights
under a lease to another
 Assignor – the party who transfers the
rights (original tenant)
 Assignee – the party to whom rights have
been transferred (new tenant)
 The assignor remains responsible for his
or her obligations under the lease.
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37 - 34
Sublease
 Occurs when a tenant transfers only some
of his or her rights under the lease
 Sublessor – the original tenant in a
sublease situation
 Sublessee – the new tenant in a sublease
situation
 No legal relationship is formed between
the landlord and the sublessee
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37 - 35
Land Use Regulation
 Generally, the ownership of property
entitles the owner to use that property as
the owner wishes
 Such use is subject to limitations imposed
by government regulation
 Land Use Regulation – the collective term
for the laws that regulate the possession,
ownership, and use of real property
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37 - 36
Zoning Ordinances (1 of 3)
 Local laws that are adopted by
municipalities and local governments to
regulate land use within their boundaries
 Adopted and enforced to protect the
health, safety, morals, and general welfare
of the community
 Zoning is the primary form of land use
regulation in the United States
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37 - 37
Zoning Ordinances (2 of 3)
Zoning ordinances generally:
1. Establish use districts within the
municipality
(e.g., residential, commercial, or industrial)
2. Restrict the height, size, and location of
buildings on a building site
3. Establish aesthetic requirements or
limitations for the exterior of buildings
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37 - 38
Zoning Ordinances (3 of 3)
Variance
 An exception that
permits a type of
building or use in an
area that would not
otherwise be allowed
by a zoning
ordinance
Nonconforming Uses
 Uses and buildings
that already exist in
the zoned area that
are permitted to
continue even though
they do not fit within
new zoning
ordinances
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37 - 39
Civil Rights Act
 A federal statute that prohibits racial
discrimination in the transfer of real
property
 The Act prohibits private and public
discrimination
 It permits lawsuits to recover damages
and obtain injunctions against offending
conduct
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37 - 40
Fair Housing Act
 Federal statute that makes it unlawful for
a party to refuse to rent or sell a dwelling
to any person on the basis of race, color,
national origin, sex, or religion
 Prohibits discrimination by real estate
brokers, mortgage lenders, and
advertisers concerning the sale or rental
of real property
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37 - 41
Title III of the Americans with
Disabilities Act (ADA)
ADA
 A federal statute that
prohibits discrimination
against disables
individuals in employment,
public services, public
accommodations and
services, and
telecommunications
Title III of the ADA
 A title of the ADA that
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prohibits discrimination on
the basis of disability in
places of public
accommodation operated
by private entities
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Compensable Taking of Real Property
Eminent Domain
 The power and process by
which the government
acquires private property
for public use
Just Compensation Clause
 A clause of the U.S.
Constitution that mandates
that the government
compensate the property
owner (and possibly
others) just compensation
when the government
exercises its power of
eminent domain
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37 - 43