WHO ARE THESE GUYS?  Part One

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What, exactly, is the legal status of the people in my rental unit?

            The answer to this question is important because their legal rights, and yours, arise out of their status.  This is not just a matter of pedantry.  How one deals with a cotenant is very different from how one deals with an assignee, for example.  You will not be able to understand how to deal with a problem unless you can accurately classify the occupants.  If you cannot do this, there is no way you will be able to tell which rule of law, advice column, or article from us applies to you.

            Cotenants are created when they rent the premises together at the same time, or one of them moves in later and there is agreement among the landlord, the original tenant, and the new occupant, that he be a cotenant.  A subtenant is one who makes an agreement with the original tenant for occupancy of the whole or a part of the premises, either exclusively or jointly with the original tenant.  The original tenant is then often referred to as the "master tenant."  An assignee is one who takes over all the lease obligations entered into by the original tenant.  An assignment takes place by agreement of the original tenant and the assignee.  An unauthorized occupant simply moves in in the absence of the original tenant without any defined agreement with the original tenant and without notice to the landlord.

THE COTENANT

            While it is common for all cotenants to enter into the same rental agreement at the same time, this is not always the case.  The key is that cotenants all have a rental agreement with landlord.  Unless it is explicitly agreed among all parties to the contrary, each cotenant has all the rights and duties and the same rights of occupancy that all the other cotenants have.  They are, in effect, partners in the tenancy.  This is true whether the agreement is in writing or oral, or not even explicit, but implied.

EXAMPLE:  Abercrombie owns a three-bedroom house in Sunnyvale that he rents to Bob and Carol, husband and wife, under a written lease for two years.  Abe (that's what his friends call Abercrombie), Bob, and Carol all sign a written lease to that effect, after which Bob and Carol move in.

ANALYSIS:  This one is easy, Bob and Carol have both entered into an express rental agreement with the owner, they share the same rights, and they are, therefore, cotenants.

EXAMPLE:  Don rents his four bedroom town home in Milpitas on a one year lease to Elizabeth and Frank, who have a 17 year old son, Gerald, who lives with them.  Upon reaching 18, Gerald gets a job and starts contributing to Elizabeth's and Frank's household expenses, but he never talks to the landlord and never pays any money to him.

ANALYSIS:  This one is also easy.  Remember that the key is the agreement.  Elizabeth and Frank are clearly cotenants, but Gerald is not because he has no agreement with Don.  He may have an agreement with his parents (see below on subtenants), but that does not make him a cotenant.  If problems arise, Don will have to be careful to treat Gerald according to his true legal status because once he became an adult, he acquired certain legal rights.

EXAMPLE:  Heloise rents her two-bedroom apartment in Stockton to Isaac and John.  They all agree to and sign a six-month lease, which automatically renews from month to month on expiration.  Isaac is transferred to Racine by his company and moves out without telling anyone.  John moves in another roommate, Kyle, to share the rent.  Next month, Kyle goes to the rental office, hands the rent to the resident manager, explains he is now living in the apartment with John, and is a tenant there.  No one gets around to having Kyle sign a new rental agreement.

ANALYSIS:  This is a common scenario.  Note that all parties have an agreement with the landlord.  Isaac and John were the original tenants but Isaac never got a release from his obligations under the rental agreement.  He continues to be liable to perform all obligations under the agreement, and has the undivided right with John to occupy it.  Kyle, on the other hand, never signed the original lease but nevertheless has an implied agreement with the landlord, because he paid rent while he was in possession of the unit, with the knowledge of the landlord's representative (the resident manager).  So Kyle is also a cotenant.  His obligations may not be the same as the others, however.  This last will be discussed more fully below.

            The key is the agreement with the landlord.  If the occupants all have an agreement with the landlord, they are cotenants.  In law, this is called "privity of contract."  If some do not, then they are something else, one of the categories that we will now discuss.

THE SUBTENANT

            The subtenant is a person who occupies, or has a right to occupy, the rental unit through an agreement with the tenant who, in turn, has an agreement with the landlord.  The key here is that the subtenant does not rely on an agreement with the owner, his agreement is with the owner's tenant.  While in many cases there is an agreement with the owner that the subtenant can do this (and sane property management requires such an arrangement be subject to the landlord’s agreement), still, all the duties regarding subtenancy are owed to the original tenant (or "master tenant" as the original tenant is often called).  If the subtenant stops paying rent, the landlord has nothing to say about it.  If the original tenant stops paying rent, the subtenant has no legal obligation to pay it in his place.  In the absence of a written or oral agreement between them to the contrary, the landlord and subtenant have no contractual obligations to each other.

EXAMPLE:  Zelda rents her house in Santa Rosa to Yolanda.  Yolanda, in turn, rents the in-law unit in the basement to Xavier, who pays Yolanda $300 a month rent for it.  Yolanda never mentions this to Zelda.  Yolanda stops paying rent and after three months, Zelda discovers Xavier there for the first time.  Zelda threatens to sue Xavier for the three months of rent Yolanda has failed to pay.  Xavier moves out.

ANALYSIS:  Even though Xavier has lived at Zelda's house for three months while Yolanda failed to pay rent, Xavier is under no obligation to pay Zelda anything, even if he knew Yolanda was not paying rent to Zelda.  The obligation to pay rent arises out of an express or implied contract between the parties.  Since there is no contract, there is no obligation to pay rent.  Xavier is Yolanda's subtenant, and all his obligations are owed to her.  In most jurisdictions the subtenant is presumed to know all the terms of the contract between the master tenant and the landlord.  So, if there was a no pet clause in the master agreement, Zelda could evict both Yolanda and Xavier if Xavier brings his Schnauzer on the premises.  This is only because Xavier’s tenancy can be no less restricted than Yolanda’s.  In other words, Yolanda cannot give Xavier the right to have his dog in the premises if Yolanda does not herself have this right.

EXAMPLE:  William rents a two-bedroom apartment in his complex to Victor.  Victor, in turn, sublets one of the bedrooms to Ulysses.  Ulysses and Victor pay a call on William's resident manager who runs a credit check on Ulysses, finds him acceptable, and approves the arrangement.  Ulysses signs an agreement that if Victor fails to pay his rent, Ulysses will guarantee any rent that goes unpaid.  Everyone lives happily ever after.

ANALYSIS:  The change in detail does not effect a change in status.  Ulysses is still a subtenant. His obligation is not to pay rent, but to reimburse William for any rent loss as a result of Victor's failure to pay.  If Ulysses does not make good his guarantee, he cannot be evicted for failure to pay rent (although there would be other good grounds to evict him), and any effort to collect on the guarantee would have to be by way of a separate action.  If the parties had agreed that the subrent to be paid by Ulysses to Victor should be paid directly to William on Victor's default and notice, this still would not change Ulysses’ status, but simply amount to an assignment of rent which would be paid on Victor's account.  If, on the other hand, there were an agreement that the subrent was to be paid directly to William all the time, this would probably convert Ulysses to a cotenant.

            The key to a subtenant situation is that there is no contractual relationship between the landlord (sometimes referred to as the "overlandlord" in this setting) and the subtenant.

THE ASSIGNEE

            At common law, without an agreement to the contrary, leases and rental agreements are freely alienable, that is, they can be bought, sold and transferred.  An assignment results when the tenant, the "assignor," transfers to the proposed new tenant, the "assignee," all his right, title and interest in the lease or rental agreement.  The assignee, in turn, assumes all the obligations which the old tenant undertook, whether he knows them or not, and is "subrogated," that is, stands in exactly the same position as the original tenant.  Absent an agreement to the contrary, the original tenant gives up all his right to occupy the premises, but he continues to owe all the duties of faithful performance of the contract to his landlord.  In other words, he may have transferred his contract, but unless the landlord agrees, he is not off the hook.  The new tenant owes no duty to the old tenant, except to perform all the terms and conditions of the assignment (not the rental agreement).  This situation usually arises in the case of commercial leases, and then in connection with the sale of a business.  In such cases the landlord is often locked into a long term lease with terms favorable to the tenant, which cannot be matched in negotiating a new lease.  It does occasionally arise in a residential setting, often being attempted in rent control situations.

EXAMPLE:  Ron leases his ranch near Mountain Home to Steve on a three year lease which prohibits assignment or subletting without Ron's prior consent.  After a year Steve decides he would rather move to Tahiti, and finds Thomas, a frustrated stockbroker who wants to chuck it all, buy Steve’s ostrich egg business, and take over the lease on the ranch.  They execute the sale papers, and go to Ron, who runs a credit check, finds Thomas acceptable, and agrees in writing to an assignment of the lease.  Escrow closes and Thomas takes over, successfully marketing his product as "an eight egg omelet in a shell."

ANALYSIS:  By Ron's agreement to the assignment, Thomas has become his tenant.  All terms and conditions of the original rental agreement, including any modifications, written or oral, are now Thomas's responsibility, whether he knows of them or not.  Steve, on the other hand, is now fully relieved of all obligations of the tenancy, and no longer has a right to go on to the ranch except as a guest.  Steve does, however, guarantee that all terms and conditions of the lease will be fully performed by Thomas, and would be liable to Ron if Thomas's omelet business bellies up and Thomas breaches the contract.

EXAMPLE:  Assume that in the previous example, Steve retains a right to re-enter the property if Thomas defaults on his lease (remember, by law he is still on the hook if Thomas defaults).  The right of re-entry is part of the assignment to which Ron agrees.  "Eight egg omelets in a shell" is not very successful and Thomas falls behind in the rent.  Steve gets wind of this and flies back from Tahiti, ejects Thomas and takes over the business, paying rent to Ron.

ANALYSIS:  Now the situation is different.  Thomas is clearly a tenant, because he has taken over the lease, but Steve, who has exercised his right to re-enter and pay rent, now being back in possession, is also a tenant, having assumed by this action all the rights and duties of a tenant of the ranch.  Ron may look to either or both for full performance of the lease.  They have become cotenants.

EXAMPLE:  The whole situation among Ron, Steve and Thomas is the same, but Steve and Thomas forget to obtain Ron's permission before they close the deal for the sale of the business.  Thomas takes over and is visited by a surprised Ron.

ANALYSIS:  An assignment does not depend on Ron's agreement.  The assignment is complete at the time that it is made between Steve and Thomas.  Because Ron's lease prohibits an assignment without his consent, he could, if he wishes, treat the assignment as a breach of the lease and take appropriate action to evict, but that has nothing to do with the efficacy of the assignment.

            The key to understanding the assignment is that it relieves the original tenant of all obligations under the original lease and terminates his right to occupancy.  He continues to guarantee faithful performance of the lease, but this is not the same as being in a lease situation.  The new tenant is not a subtenant, because he becomes a party to the original lease and has a contractual relationship directly with the landlord.

THE UNAUTHORIZED OCCUPANT

            When we discuss unauthorized occupants we do not mean occupants unauthorized by the landlord.  Remember, neither assignment nor subletting require agreement by the landlord.  Such an assignment or subletting may be wrongful, a breach of the rental agreement, but it is effective when agreed to between the tenant and subtenant or assignee.  By unauthorized occupant, we mean a person who is there without the agreement either of the tenant or the landlord.  This always arises in a situation when the occupancy of the premises is in flux.  The only circumstance we can think of in which this would not be the case would be if the occupant forces his way into the premises without the express or implied consent of the tenant (otherwise it would be a subtenancy).  Violence like this is a police matter and outside the scope of this article.  An unauthorized occupant in the true sense is a trespasser, but although he is a trespasser, neither the landlord nor the tenant can remove him if this might result in a breach of the peace.  The police can, but seldom will.

EXAMPLE:  Oscar has had Penelope as a tenant for years on a month to month rental agreement.  Penelope gives notice to Oscar that she is moving to take a new job.  Her notice expires while Oscar is taking a world cruise, and she moves out, securing the rental unit as best she can.  After she moves, Penelope's ne'er-do-well brother, Quincy, forces his way into the unit and resides there without utilities for two weeks until Oscar returns.  Oscar discovers Quincy when he inspects the unit, and Quincy lies that Penelope said he could crash there.  Quincy refuses to move out.

ANALYSIS:  This sort of thing happens occasionally, and often enough to merit some discussion.  Note that Quincy has received no permission from anyone to move in.  Penelope is innocently working at her new job.  Oscar had nothing to do with it and was ignorant of Quincy's occupancy until he inspected.  Quincy is an unauthorized occupant.

            They key to understanding Quincy's position is the absence of any agreement with any person to occupy the property, which is why he is called "unauthorized."  Quincy has no rights in the premises at all, but that does not mean that the landlord can simply send over a couple of thugs to kick him out.  This is so because the landlord still owes a duty to the law to proceed without a breach of the peace. 

            Discussion of how the principles we have just discussed affect the landlord in practice will be discussed in part two.

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