Chapter § 32.4 BASIC LEASING PRINCIPLES

• Jurisdiction: Oregon

§ 32.4 BASIC LEASING PRINCIPLES

§ 32.4-1 Contract versus Conveyance

A commercial lease is both a contract and a conveyance of an interest in real property. Most leases are considered to be an estate for years, "the duration of which is fixed in units of a year or multiples or divisions thereof." Restatement (First) of Property § 19 (1936). The dual nature of leases can allow for their construction and enforcement under both contract law and property law. See Pac. First Bank v. New Morgan Park Corp., 319 Or 342, 363 n 8, 876 P2d 761 (1994). This duality and its implications for the enforcement of commercial leases is discussed in Patrick A. Randolph, Jr., ed., 1 Friedman on Leases, § 1:2.2 (5th ed 2005) (updated periodically).

Under conveyance law, covenants in leases are independent of one another. Under contract law, such covenants are mutually dependent. For example, if the landlord breaks its lease covenants, the tenant nevertheless remains liable on the tenant's covenants, principally the covenant to pay rent. This duality has been changed by statute under Oregon's Residential Landlord and Tenant Act (ORS chapter 90). Although Oregon courts have acknowledged this dual nature of leases, Pac. First Bank, 319 Or at 363 n 8, they seem to treat a modern business lease predominantly as a contract. See Wright v. Baumann, 239 Or 410, 413-14, 398 P2d 119 (1965) (imposing a duty of contractual mitigation on the part of the landlord when the tenant vacates the premises); see also Harold Schnitzer Properties v. Tradewell Grp., Inc., 104 Or App 19, 23, 799 P2d 180 (1990), rev den, 311 Or 150 (1991).

§ 32.4-2 Parties

It is important to determine the correct (legal) names of the parties, their capacities, and the nature of the entities. Too often the parties do not use their proper legal name; instead they may use a fictitious name (such as a dba) or simply fail to provide the correct name. If a party is an entity, a check with the appropriate Secretary of State's office (online) is a must. Also, a property search report from a local title company can confirm whether the name given for the landlord actually holds title in that name. The lawyer should ask for a copy of the vesting deed. The use of "Landlord" and "Tenant" instead of "Lessor" and "Lessee" is a matter of style, but it is easier to transpose "Lessor" and "Lessee" than "Landlord" and "Tenant."

If the person signing the lease is doing so in representative capacity, it is necessary to confirm that the...