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48. May the landlord terminate the lease?
A landlord leased an apartment to three students near a college campus. The students were model tenants for the first six months of the year-long lease. After the first six months, two of the students started operating an illegal gambling ring out of the apartment, betting on college football games. The third student did not participate in any gambling, but he had knowledge of the other tenants' activities and often remained in the apartment while the gambling was taking place. After two months of operation, campus police officers caught the students, who then notified the school and the students' landlord.
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If a tenant's illegal use of a property is continuous, the landlord may:
(i) terminate the lease (courts will often treat the lease as void);
(ii) recover damages (if a public authority first stopped the illegal conduct); AND/OR
(iii) pursue injunctive or monetary relief.
A security deposit may be retained for:
(i) failure to pay rent, AND/OR
(ii) damage to the premise beyond normal wear and tear.
C is correct. When two of the student-tenants started operating an illegal gambling ring out of the apartment, the landlord had the option to either terminate the lease with the three students or keep the lease intact and petition the court for injunctive relief.
A is incorrect. The landlord may terminate the lease on the grounds that they were engaging in ongoing illegal conduct. A court will treat the lease as void. Moreover, the landlord may also seek injunctive relief and damages from the students for using the premises for an illegal purpose.
B is incorrect. As stated above, the landlord may terminate the lease. The landlord may terminate the lease and recover damages, or the landlord may keep the lease in force and seek injunctive relief.
D is incorrect. Even though the students were engaged in illegal conduct on the premises, this alone does not allow the landlord to retain the security deposit. The students must have failed to pay rent or caused some abnormal amount of damage in order for the landlord to be justified in keeping the security deposit.