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.

Three years later, Schumann sold his store business to Cobbler, assigning the lease to the premises.
Another 14 months went by and Cobbler abandoned possession and quit paying rent.

(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 - True or false— Venable can still recover rent from Schumann based on privity on estate even though Schumann has not had possession of the premises or anything to do with them for more than a year.

Answer and Explanation - False. The “privity of estate” basis for owing rent is based on the idea that the tenant, by virtue of possession, receives value (“rent”) rising up out of the land.

In this particular case, $5000 per month of that value has been reserved by the landlord. Since the assignor no longer has possession and therefore no longer receives such value, the assignor is not liable to pay the reserved rent

Note: Even though the assignee, Cobbler, has abandoned possession and quit paying rent, he still has a legal right to possession. The fact that he’s squandering the value (“rent”) that he’s entitled to have out of the land does not mean that he’s not, in the eyes of the law, receiving that value.

In other words, the out-of-possession assignee who has prematurely abandoned is deemed to be still receiving the value (“rent”) rising up and reserved by the landlord, and therefore the abandoning assignee remains liable for reserved rent.

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