Landlord & Tenants – a little history

Covid in many locations has hit the pause button on evictions and foreclosures but even before that the experience of enforcing a contract – you can stay in my property but in return you need to pay me rent – has not been straightforward. From an asset owner’s point of view foreclosures and evictions it seems that the legal system is completely stacked against landlords / owners of assets e.g. capital. We asked various attorneys in different states why this seemed to be the case and the general answer we received was something like “that is just how it is / this is how it always has been”. These answers didn’t satisfy us so we decided to dig a bit deeper.

This is a short-hand version of our findings. If any subject matter experts have corrections/additions, please email us.

Background

The framework of landlord tenant law arose in Europe (the US didn’t’ exist yet) in the context of an agrarian society. Tenants would rent a piece of land to farm and it made sense that there was no sense of mutual and simultaneous conditions (see below) – the landlord had practically speaking no influence on how the land would perform so the tenant had to pay rent no matter what. In the 13^th century when legal characteristics of leasing started to take shape the term commonly used as “a common part of the machinery whereby land was gaged for money lent”.[i] Leaseholds at that time had a merely formal resemblance to the freehold estates. As land was the economic basis for families it was considered to be personal property, not real property. With the rise of farming in the 14^th and 15^th century the legal position started to shift somewhat but never quite let go of the view that land was personal property. In Commentaries on the laws of England William Blackstone in 1765 classified “estates less than freeholds” with freeholds in real property rather than personal property.

Three Types of Promises

As time went on leases were starting to resemble less like a conveyance of land and more like a contract with sets of mutual promises.

In 1773, in Kingston v. Preston William Murray, 1^st Lord of Mansfield, posited that there are three types of promises:

• Mutual and independent promises
  • Neither party’s performance triggers the other’s duty to perform.
  • If either party fails to perform, it is a breach.
  • The other party still must perform in the event of a breach.
• Dependent condition
  • One’s performance triggers the other’s duty to perform.
  • If the first party, the condition, fails to perform, it is not a breach. If the condition occurs, it is a breach if the other party fails to perform.
  • If the first party, the condition, fails to perform, it is not a breach if the other party also does not perform.
• Mutual and simultaneous conditions
  • Either party’s performance triggers the other’s duty to perform.
  • If neither party performs, it may not be a breach, but if one performs it is a breach if the other does not.
  • If one party fails to perform, the other is not obligated to perform.

Fast forwarding to the US, in effect a lease of property was considered to be a non-freehold interest and not a contract. The result of this was that the tenant had the disadvantage and had all the obligations and liabilities of ownership. 

Under common law the duty to pay rent was independent of any obligations of the landlord (Hopkins v. Murphy, 233 Mass. 476, 124 N.E.252; Jacobs v. Morand, 59 Misc. 200, 110 N.Y.S 208) and this tilted the playing field clearly to the advantage of the landlord – even if the apartment burned down the tenants was required to keep making rent payments. The duty to maintain the premises was not imposed because the courts viewed the relationship that the tenant purchased only extended to the right to use the land. The only way for a tenant to legally stop making payments was to prove that s/he was “constructively evicted” from the premises.  To successfully assert the defense of constructive eviction, the tenant had to prove three elements:

 I) the landlord had acted or failed to act in a way which violated an obligation imposed upon him by law or covenant with the tenant;  

2) the nature of the landlord’s act or omission constituted an interference with the tenant’s quiet enjoyment of the premises or indicated an intent to evict the tenant; and

3) the tenant had abandoned the premises within a reasonable time.

As we started to move out of a 99% agrarian society some judicial exceptions were created – Furnished dwellings have an implied warranty of habitability and the concept of constructive eviction – a lease terminates if the premises are uninhabitable – was added.

Eventually legislative exceptions were also added – a patchwork of state and local ordinances were passed imposing an affirmative duty to repair and maintain housing quality.

Often though leases would not contain a pre-agreed upon end date – it would simply stipulate that the tenant paid x$ per week/month. On the other hand, income was less stable because there wasn’t much in terms of employment laws and rules.

In the 19^th century the property centric view was losing ground and the freedom of contract notion and laissez-faire were at it’s zenith. Three ideas met and intertwined – one from the property world and 2 from the contract world. The first notion was the idea the conception of the lease as a sale of possession for rent. The second idea was the idea that contracts were sacred: pacta sunt servanda. The last one was the idea that the courts would enforce any contract between private parties, even if they were onerous.

Governmental influence was very limited until the depression in the 1930’s when some very small steps were taken. It wasn’t until the late 1960’s when residential leases started to be treated differently from commercial leases.

The change in the rule is due in part to the conditions of the modern urban setting: tenants have little or no power to walk away from an available apartment in areas where housing is scarce. It is also due to modem construction and technology: few tenants can fix most types of defects. A US court of appeals in. Javins v. First National Realty Corp., 428 F.2d 1071, 1078-79 (D.C. Cir.), cert. denied, 400 U.S. 925 (1970) said the following:

“Today’s urban tenants, the vast majority of whom live in multiple dwelling houses, are interested not in the land, but solely in “a house suitable for occupation.” Furthermore, today’s city dweller usually has a single, specialized skill unrelated to maintenance work; he is unable to make repairs like the “jack-of-all-trades” farmer who was the common law’s model of the lessee. Further, unlike his agrarian predecessor who often remained on one piece of land for his entire life, urban tenants today are more mobile than ever before. A tenant’s tenure in a specific apartment will often not be sufficient to justify efforts at repairs. In addition, the increasing complexity of today’s dwellings renders them much more difficult to repair than the structures of earlier times. In a multiple dwelling, repairs may require access to equipment and areas in control of the landlord. Low and middle-income tenants, even if they were interested in making repairs, would be unable to obtain financing for major repairs since they have no long-term interest in the property.”

Modern Times

The big switch away from a common-law centric approach was in the 1970’s. The turning point was the annual conference of the American Bar association in August of ’72 when the Uniform Residential Landlord and Tenant Act (URLTA) was first drafted, to be amended and approved in ’74. The act sought to make a more level playing field between landlord and tenant. It added a number of fairly basic requirements such as that the tenant must have accurate contact information for the landlord and that it is illegal for the lease to contain a clause that says that no matter what, the landlord has no blame. It also prevents landlords from placing liens on the household goods of the renter. Several other provisions are in favor of the landlord – a tenant must pay rent if the apartment is in good repair and the landlord has the right to inspect the apartment occasionally.

Most states have adopted either URLTA or legislation which is substantially similar and the relationship between landlord and tenant has come a far way from where it was even a relatively short time ago. Unfortunately, a number of tenants sometimes spoil the balance by abusing the court system and it would not be surprising if the pendulum swings the other way at some point in the not so far future.

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[i] F. Pollock & Maitland, The History of English Law 36 111,113 (2^nd edition 1923)