Chapter 18 - § 18.2 • LEASES GENERALLY
| Jurisdiction | Colorado |
§ 18.2.1—Character and Nature of Leasehold Interests
A lease is a contract for the possession and profits of lands and tenements on the one side and a recompense of rent or other income on the other.27 "Rental" is compensation for the use of land.28 The essentials of a lease are (1) a definite agreement as to the extent and bounds of the property leased, (2) a definite and agreed term, and (3) a definite and agreed price of rental and the time and manner of payment.29 A further requirement of a valid lease, it would seem, is a lawful purpose.30
Description
A reference to "The Old Pine Theatre building" has been held sufficient as a description.31 And, in a contract to lease, a reference to "the properties of the Justice Mining Company, consisting of the Justice, Marlin, Monte Cristo, and Western Union, situated in Tourtelotte park, and consisting of 26.8 acres" has been held sufficient.32 A lease for an entire structure carries with it the land upon which it is located.33 An "amendment" or "modification" of a lease whereby no portion of the original leased premises remains subject to the lease is in fact a new lease.34
Term
A lease may be for a term of years (which is not necessarily a number of years, and may even be for less than a year35 ), or for a periodic term.36 (The words "term" and "terms," when used in a lease, are not synonymous.37 ) If parties enter into a lease of no stated duration, a periodic tenancy is presumed for a period equivalent to that for which rent is paid.38
A lease with a skilled nursing facility or an intermediate care facility, and a lease with an assisted living residence, must provide for a month-to-month tenancy.39 The lease must set out on the front page in no less than twelve-point bold-faced type the following:
This agreement is for a month-to-month tenancy. The lessor shall not require the forfeiture of rent beyond a thirty-day period if the lessee moves due to a medical condition or dies during the term of the lease.40
Consideration
A lease, like every other contract, must be supported by a sufficient consideration. The consideration need not be a periodic rent, but may be paid in whole at the inception of the term.41 A modification extending the time during which the performance of a condition is to occur does not require additional consideration in order to be binding.42
Lawful Purposes
A lease of premises for an unlawful purpose is unenforceable. Thus, a lease of premises for the purpose of using it as a bawdy house,43 or to grow marijuana,44 is unenforceable. A lease which has for its object the practice of deception of a party having an ownership interest in the property is void.45 In Armstrong v. Gresham,46 husband (H) leased certain property to X, giving X the option to extend the lease for 23 years. H then conveyed the property to wife (W). W and X then entered into a replacement lease for a term of a little over one year. X relied upon H's representation that the replacement lease was merely a means of effecting a reconciliation between H and W, and that upon reconciliation the lease would be reinstated. In an action by W to evict X at the end of the replacement lease, it appeared that H and W had acted together to deceive X as to the reason for the second lease. The court held that W could not invoke the aid of the court to enforce the replacement lease.
§ 18.2.2—Statute of Frauds
In General
A contract for the leasing of an interest in land for a period longer than one year is void unless the contract or some note or memorandum thereof expressing the consideration is in writing47 and subscribed by the party by whom the lease is to be made.48 The one-year period may commence in futuro.49 If less than a year remains on the term of the lease, a modification by parol is not within the Statute of Frauds.50 The failure of a tenant to sign a lease does not invalidate it; taking possession of the leased property and occupying it under the lease is an acceptance of the lease and is equivalent to the execution of the instrument itself.51
The writing must show on its face or by reference to other writings: first, the names of the parties; second, the terms and conditions of the contract; third, the interest or property affected; and fourth, the consideration to be paid.52 Parol evidence may not be used to contradict the terms of a written lease.53
However, part performance of the terms of an oral agreement may take the contract from under the statute.54 The performance must be at least substantial part performance.55 The performance must be required by, and fairly referable to, no theory other than that of the alleged agreement.56 Part performance must be known to the other party in interest at the time of its occurrence.57 Part performance consists of performing something required by the contract, such as the payment of rent, together with the taking of possession by the tenant and the installation of trade fixtures or other similar equipment of a type that is indicative of a long-term tenancy.58 A party relying on part performance to defeat a defense based on the Statute of Frauds must show that the part performance is more consistent with the terms of the contract than with some other arrangement, such as a month-to-month tenancy or a tenancy at will;59 mere possession of property is not substantial part performance if possession may be attributed to some arrangement other than the one under the alleged oral agreement.60 If the terms of a lease required to be in writing by the Statute of Frauds are modified by parol, and as so modified have been fully carried out, the obligation is discharged.61 No modification can be made by the unilateral action of the tenant.62
Ancillary Agreements
The application of the Statute of Frauds to ancillary agreements was discussed in Creek v. Lebo Investment Co.63 as follows:
Some subjects are expressly dealt with in a lease, and some are of such a character that if there was any agreement with reference thereto it certainly would be expressed in the lease. In such cases evidence of prior or contemporaneous negotiations with reference thereto would be inadmissible, it being conclusively presumed that the parties intended to express in writing their final agreement. There are other subjects that the parties may, and frequently do, deal with by oral agreement, or may, and sometimes do, cover by provisions in a written lease. The things that ordinarily are required to be done by a lessor and a lessee after the tenancy has commenced are naturally, and usually, provided for in the written lease. But there are other matters that may be, and that not infrequently are, provided by oral agreement rather than in a written lease; such, for example, as those that relate to placing the premises in condition fit for leasing, in preparation for leasing, and as an inducement to a prospective tenant to take a lease of the premises. Such matters need not be provided for in the written lease, even though the oral agreement has not been performed, or fully performed, at the time the lease is executed. Such an oral agreement does not contradict, add to, or vary the terms of the written lease, but is an independent agreement, capable of enforcement.64
§ 18.2.3—Implied Covenants in Leases
Every lease includes an implied covenant of good faith and fair dealing. A provision precluding implied covenants does not affect the covenant of good faith and fair dealing.65
Under the common-law rule, which evolved from an agrarian society in medieval England, all leases were subject to the doctrine of caveat emptor. A landlord by merely leasing did not covenant or warrant that the premises were tenantable or fit for the tenant's intended use. Thus, in the absence of an express warranty or fraud or misrepresentation, the tenant took the premises in the condition he found them, with all existing defects of which he knew or could have ascertained upon reasonable inspection.66 The Colorado Supreme Court has basically adhered to the common-law rule with respect to leases both of a business and of a residential nature, and thus an implied warranty of habitability or fitness of leased premises does not exist in Colorado.67 This rule, however, is subject to exceptions. One of the exceptions is that if a defective condition is not ascertainable by the tenant upon an ordinary or reasonable inspection of the premises, the landlord has a duty to make the condition known to the tenant and is liable for failure to do so.68 Another exception exists where the landlord has undertaken a covenant to repair and fails to exercise reasonable care to perform his or her contract and the disrepair creates an unreasonable risk to persons on the land which the performance of the agreement would have prevented.69
Effective September 1, 2008, a statutory warranty of habitability exists for residential leases. See § 18.3.1.
C.R.S. § 13-40-107.5(2) provides that it is an implied term of every lease of real property in Colorado that the tenant shall not commit a substantial violation while in possession of the premises. The term "substantial violation" refers to acts which endanger property, or which are drug-related offenses or other criminal acts.70 This term, as applied to a sand and gravel lease, does not include lack of accounting, refusal to weigh gravel, or encroachment on landlord's other land.71
For implied covenants in oil and gas leases, see § 18.5.2. For implied covenants in mining leases, see § 18.6.2.
§ 18.2.4—Interpretation of Leases
The construction of an unambiguous lease is an issue of law. The court must construe a lease according to the general rules applicable to written instruments.72 Where the words of a lease are free from ambiguity in themselves and no doubt or difficulty arises as to their meaning or application, they must be construed and applied in their plain and general acceptation. Parol evidence is admissible to explain and apply the...
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