How It's Tested: Holdover Tenants

It's not common, but occasionally you'll be asked on the MBE to distinguish between the "English Rule" and the "American Rule" as these rules relate to holdover tenants.

Specifically, assume landlord leases to tenant 1, and then leases to tenant 2 when tenant 1's lease is up. Tenant 1 refuses to vacate the premises (he is a holdover tenant), and when tenant 2 arrives on the day that he is entitled to take possession and finds tenant 1 still possessing the property, tenant 2 attempts to sue the landlord. Who wins?

The answer depends upon the jurisdiction. Most American courts follow the "English rule" under which the landlord has a duty to deliver actual possession to the tenant. Under this rule, the landlord in the above hypothetical would lose, because when tenant 2 arrived and found tenant 1 holding over, tenant 2 was unable to obtain actual possession of the property, and the landlord had therefore not fulfilled his obligation.

But a minority of jurisdictions follow the "American Rule," under which the landlord is only required to give the tenant legal possession. In other words, provided the landlord has not given anyone other than the tenant a conflicting legal right to possess the property, the tenant has no right to sue the landlord. In the above hypothetical, the only person who had the legal right to possess was tenant 2 (tenant 1 was holding over but did not have the legal right to do so), and therefore under the American rule the landlord had fulfilled his obligation, and would be immune from suit by tenant 2.

Note this important distinction, because although rare, it does appear.