1.Landlord’s Duties; Tenant’s Rights and Remedies
a.Moral Hazard is an example of the inherent conflict of interests in leases
i.“The purchaser of insurance has a tendency not to protect against the insured risk because insurance company is writing the checks if damage occurs.” – Posner’s definition of the concept applied to insurance.
ii.Applied to landlord-tenant law:
1.Landlord lacks incentive to insure habitability – he does not live there
2.Tenant lacks incentive to maintain repair b/c he can vacate at end of lease
b.Quiet Enjoyment and Constructive Eviction
i.Quiet Enjoyment is the reasonable use of the land inherent in the lease.
1.Common Law Rule
a.Landlord has not duty to provide “quiet enjoyment” of leased premises.
b.Tenant essentially agrees to take apartment “as is.”
2.Modern Rule
a.All leases have implied covenant for landlord to provide “quiet enjoyment”
ii.Constructive Eviction is the right of the tenant to suspend rent payments if the landlord breached the terms of the lease
1.Common Law Rule was that promises of tenant and landlord under the lease were independent.  Therefore, if landlord breached the lease, tenant could sue but could not withhold rent or terminate the tenancy.
2.Modern Rule is that promises of tenant and landlord are dependent and therefore tenant may terminate tenancy and suspend payment without liability provided:
a.The shortcoming in the leased premises must be an unlawful disturbance by the landlord, i.e. a breach of the implied covenant of quiet enjoyment.
b.The disturbance is so substantial as to amount to eviction (i.e. rendering the premises unusable)
c.Tenant promptly abandons the premises.
d.Constructive eviction serves as a substitute for dependency of covenants.
c.The Implied Warranty of Habitability says that a landlord makes a covenant to the tenant that the leased premises will be suitable for habitation, even if the lease does not expressly provide the warranty.
i.Common Law Rule was that there were no implied warranties of habitability
ii.Modern View is that the landlord that rents dwellings for purposes of habitation has a duty to provide a habitable dwelling and warrant that the dwelling is habitable.
1.The implied warranty of habitability arises under contract principles
2.Can’t be waived by parties
3.Factors for breach determination
a.Impact on the safety or health of the tenant
b.Substantial violation of the building code is prima facie evidence
4.Necessity for modern rule
a.Relative bargaining positions of the tenant and landlord
b.Modern tenant not qualified to make complex repairs
c.Landlord better suited to make complex repairs
5.Requirements for tenant to recover after landlord breach
a.Tenant must give notice of defect and landlord must not complete repairs
b.Defect must exist at time rent withheld
6.Types of recovery available to tenant
a.Withholding rent from landlord
b.May deduct cost of repairs made by tenant from rent
7.Problems with modern view
a.Govt. should not be able to mandate terms of residential contracts
b.Landlords pass on the costs of implied warranties