Hold-Over Tenancies and Extinct Conditions Precedent:
What Kessler v. City of Key West Teaches About Property Interests under the Takings Clause

Introduction

Stuart and Pamela Kessler, longtime residents of a floating home community in Key West, occupied a City-owned boat slip under a written 12-month lease beginning in 2007. After the lease expired, the couple remained as month-to-month tenants, continuing to pay rent while the City accepted payment. In 2018—following Hurricane Irma, a code-enforcement dispute, and the physical sinking of the Kesslers’ home—the City issued notice that it would not renew the tenancy. The Kesslers alleged that (i) the lease entitled them to a pre-non-renewal hearing before the now-defunct Port Advisory Board and (ii) the City’s failure to provide that specific hearing constituted an unconstitutional taking of their leasehold. The Southern District of Florida granted summary judgment to the City, and the Eleventh Circuit affirmed.

The principal question before the Court of Appeals was narrow yet significant: Does a lease provision requiring review by an abolished municipal board survive into a hold-over tenancy, such that the City’s failure to comply effects a compensable “taking” of property? In answering “no,” the Eleventh Circuit clarifies how Ward v. Downtown Development Authority and similar cases apply when contractual “conditions precedent” have become impossible to satisfy.

Summary of the Judgment

1. A month-to-month tenancy is a compensable property interest in Florida. 2. Ordinarily, timely notice to vacate ends that interest. 3. While statutory or contractual conditions can extend the tenancy beyond the notice period (Ward), such conditions must still be “applicable” when the hold-over tenancy exists. 4. Because the Port Advisory Board ceased to exist in 2009, the lease’s hearing requirement was inapplicable in 2018. 5. Even if a hearing were still required, the City satisfied it by providing an alternate hearing before the City Manager. 6. Consequently, no property interest was taken and no compensation is due; summary judgment for the City is affirmed.

Analysis

Precedents Cited

• Ward v. Downtown Development Authority, 786 F.2d 1526 (11th Cir. 1986)
  Recognized that tenants maintain a compensable property interest when a public landlord’s eviction power is limited by statute. The Kesslers relied heavily on Ward to argue that the City’s ability to refuse renewal was conditioned on a Port Advisory Board hearing.
• Jeffries v. Georgia Residential Finance Authority, 678 F.2d 919 (11th Cir. 1982)
  Held that statutory “for-cause” limits on eviction preserve tenants’ property interests. Serves as the doctrinal companion to Ward.
• Perry v. Sindermann, 408 U.S. 593 (1972)
  Property interests arise from “rules or mutually explicit understandings,” not solely formal contracts.
• Knick v. Township of Scott, 588 U.S. 180 (2019)
  Eliminated the state-exhaustion requirement for §1983 takings claims; explains why the Kesslers returned to federal court.
• Givens v. Alabama Department of Corrections, 381 F.3d 1064 (11th Cir. 2004)
  “The Takings Clause protects property; it does not create it.” Quoted to emphasize that an entitlement must exist first.
• Key West Harbour Development Corp. v. City of Key West, 987 F.2d 723 (11th Cir. 1993)
  A government contract, standing alone, does not automatically create a constitutional property interest.
• Wingert v. Prince, 123 So. 2d 277 (Fla. 1st DCA 1960)
  Under Florida law, hold-over tenancies presumptively continue on the same terms “so far as they are applicable.” Critical to the Court’s conclusion that an inapplicable condition drops away.

Legal Reasoning

1. Existence of a Property Interest
   • Florida treats any tenancy as property (see Ward). • The Kesslers therefore possessed a cognizable leasehold.
2. Termination by Notice—General Rule
   • A landlord’s timely notice ordinarily ends the interest. • The City gave >30 days’ notice; thus the default rule would terminate the tenancy on March 1, 2018.
3. Potential Extension by Condition Precedent
   • Ward carves out an exception where statutory or contractual limits remain enforceable. • The lease’s Port Advisory Board clause could have constituted such a limit.
4. Applicability of the Condition
   • Under Wingert, only lease terms “applicable to the new tenancy” survive. • Because the Board had been dissolved in 2009, the term was impossible to fulfill and therefore inapplicable.
5. Alternative Hearing
   • Even assuming a hearing remained required, the City provided one before the City Manager. • No authority suggested the hearing had to be before an independent citizen board or that “cause” was required.
6. Absence of “Cause” Requirement
   • Unlike the statutes in Ward and Jeffries, the lease contained no express “for-cause” language. • The Kesslers offered no evidence of a mutually explicit understanding adding such a limit.
7. Conclusion
   • With timely notice and no surviving condition precedent, the Kesslers’ property interest ended voluntarily; hence no unconstitutional taking occurred.

Impact

The decision delineates the boundaries of “property” for Takings Clause purposes when public leases lapse into month-to-month tenancies:

• Contractual limits that become impossible (e.g., referencing abolished boards) will not prolong the tenancy.
• Public landlords may substitute reasonable alternative procedures where the original mechanism can no longer operate, without risking takings liability.
• Takings vs. Due Process: The Court reinforces that procedural infirmities generally sound in due process, not takings. Litigants must frame claims carefully.
• Practical Governance: Municipalities can reorganize boards or administrative structures without automatically extending every dependent private right indefinitely.

Complex Concepts Simplified

• Hold-Over (Tenancy at Sufferance vs. Tenancy at Will): When a tenant remains after lease expiration with the landlord’s consent, Florida presumes a month-to-month tenancy “at will,” meaning it continues so long as neither party ends it with proper notice.
• Condition Precedent: A contractual event that must occur before another event (here, non-renewal) becomes effective. If the condition is impossible to satisfy (e.g., the required board no longer exists), courts ask whether the condition still “applies.”
• Takings vs. Due Process: • Takings concerns the government’s substantive acquisition or destruction of property. • Procedural Due Process addresses how the government acts (notice, hearing, etc.). A procedurally flawed eviction may violate due process yet not amount to a “taking.”
• Statutory vs. Contractual Entitlements: A statute limiting eviction creates a public-law entitlement (stronger for takings analysis). A private contract alone, even with a public entity, may not rise to constitutional “property” unless coupled with state-law protections or explicit understandings.

Conclusion

Kessler v. City of Key West refines Eleventh Circuit takings jurisprudence in the leasing context. It underscores that:

1. The expiration of a written lease converts the relationship into a hold-over tenancy governed only by those original terms still “applicable.”
2. A contractual hearing requirement tethered to a now-defunct government board is not “applicable.”
3. Absent a statutory or valid contractual barrier, timely notice suffices to terminate the property interest, precluding any Takings Clause violation.

The ruling offers practical guidance to public landlords, tenants, and litigators alike: when administrative structures evolve, rights that depend on them do not necessarily crystalize into perpetual property interests. Future litigants asserting takings claims must pinpoint a live, enforceable limitation on the government’s power—not one that time or reorganization has rendered obsolete.