Leaseholds

Second Circuit upholds rent control against a takings challenge post-Cedar Point

In one of the first important cases to gauge the consequences of the Supreme Court's physical takings decision in Cedar Point Nursery, the Court of Appeals Second Circuit, in two linked cases has upheld recent amendments to New York City's rent stabilization law against a claim that is a facially invalid violation of the takings clause applicable to the states through the fourteenth amendment....

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Commercial rent acceleration clause invalid if it is a "penalty"

The Massachusetts courts say that there is no duty to mitigate damages in commercial leases but they sure look like they recognize such a duty when a lease has an acceleration clause (requiring the full remaining rent for the rest of the lease to be paid if rent payments are missed). In the case of Cummings Props., LLC v. Hines, 2022 WL 17409280 (Mass. App. Ct. 2022), a commercial tenant...

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Short-term rentals do not violate “residential use only” covenant

The Mississippi Supreme Court has held that short term rental of property is not a commercial use that would violate a covenant limiting land to residential purposes. Lake Serene Prop. Owners Ass’n v. Esplin, 334 So.3d 1139 (Miss. 2022). There has been some disagreement among state courts on this question because the use of property as an Airbnb or other short term...

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Tenants have mostly lost “frustration of purpose” claims when they could not pay rent during Covid-19 lockdowns

In accord with most courts, the Connecticut Supreme Court held that a restaurant lease was not void for “frustration of purpose” when the restaurant tenant could not make rent payments because of a gubernatorial order for restaurants to shut down during the early stages of the Covid-19 disaster. AGW Sono Partners, LLC v. Downtown Soho, LLC, 273 A....

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Covenants that prohibit all leasing restrictions include short-term rentals

The Texas Supreme Court has held that covenants that prohibit all restrictions on leasing cannot prohibit short term rentals, finding that a lease is still a lease if it only lasts for one day. JBrice Holdings, LLC v. Wilcrest Walk Townhomes Ass’n, Inc., 2022 WL 1194364 (Tex. 2022). In addition, short-term rentals were held not to be “commercial” or “non-residential uses.” The court noted that the covenants provided that they could be retroactively amended through a 75% vote of the owners.

Probation on discriminating against Section 8 recipients does not violate due process

The Minnesota Supreme Court has held that a state statute that prohibits landlords from refusing to rent to housing voucher (Section 8) recipients does not violate the due process or equal protection clauses of the Minnesota Constitution. Fletcher Properties, Inc. v. City of Minneapolis, 947 N.W.2d 1 (Minn. 2020). While federal law does not require landlords to rent to...

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Banks are both owners and landlords when they buy tenant-occupied property at a foreclosure sale

Banks seem to have a hard time understanding that when they obtain title to property through a foreclosure sale that they not only own the property but have taken on themselves all the obligations that an owner has. If the property is occupied by tenants, the bank-owner is automatically the new landlord and the law imposes duties on landlords. The law also requires owners not to let their property become a nuisance. But this simple legal truth is repeatedly resisted by some banks. This rule extends to any entity that is the legal owner of the property and that includes the trustee of...

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Eviction moratorium does not violate contract clause

The Ninth Circuit upheld a city eviction moratorium against a contracts clause challenge. Apartment Ass'n of Los Angeles County, Inc. v. City of Los Angeles, 2021 WL 3745777 (9th Cir. 2021). While the law did affect contract rights, it was reasonable and appropriate and did not constitute retroactive deprivation of vested rights as required for the clause to apply. The court cited Home Building...

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