Hypothetical - This hypothetical assumes that Venable leased a storefront to Schumann for 10 years, reserving a rent of $5,000 per month, which Schumann promised to pay.

(Note: As is the case with most of our hypotheticals regarding Property, the use of visuals greatly enhances the ability to understand the facts and the rules. Please refer to our free Property Advisor course for examples.)

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Question - If Schumann wanted to quit his business and turn over the storefront to somebody else:

(1) He could assign (transfer) his right to possession of the premises as well as his contract duty to pay rent.

(2) He could assign (transfer) his right to possession of the premises and there’s no reason why he couldn’t also dispense with his obligation to pay the future reserved rent.

(3) He could assign (transfer) his right possession of the premises but not his obligations under the reservation of rent.

Answer and Explanation - The correct answer is (2).

As we have seen, the reserved rent obligation arises on the theory that the tenant receives value (rising up out of the land) that has been “reserved” by the landlord.

However, once Schumann transfers possession of the premises to somebody else, then Schumann would no longer receive the “rent” value out of the land. The transferee would be receiving it.

Logically, therefore, it is only the transferee who should be liable to pay the reserved rent.
So even though the tenant’s contract duties to pay rent cannot be assigned away, the “privity of estate” duty to pay reserved rent is, in effect, “transferred” away to the assignee along with the transfer of the right to possession.

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