Leases
What the exam tests
Leases tests leasehold estates, lease formation, assignment and sublease, and the landlord’s and tenant’s rights. Expect questions about term, rent, security deposits, and transfer of the leasehold.
Core rules
- Leasehold estates include tenancy for years, periodic tenancy, tenancy at will, and tenancy at sufferance.
- A lease for more than one year must be in writing under the statute of frauds; residential leases often have an implied warranty of habitability and statutory notice rules.
- An assignment transfers the tenant’s entire remaining interest; a sublease transfers less than the entire interest and retains a reversion in the original tenant.
- Security deposits are trust funds in Pennsylvania; the landlord must follow the Security Deposit Act for escrow, notice, and return.
- Rent covenants and other lease obligations may run with the land, but the original tenant may remain liable after assignment unless released.
Worked example
Tenant T has 18 months left on a lease. T transfers the entire remaining 18 months to R and moves out. This is an assignment, not a sublease. R pays rent directly to the landlord, and T may remain secondarily liable unless the landlord releases T in writing. If T had transferred only 12 months and kept the last 6, it would be a sublease.
Traps that cost marks
Do not call every transfer a sublease; look at whether the tenant retains any reversion. Do not ignore the statute of frauds for long leases. Do not treat a security deposit as the landlord’s operating cash. Do not assume an assignment releases the original tenant.