Lease of immomavable property

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LEASE OF IMMOVABLE PROPERTY.

Introduction: Transfer of immovable property will take place by transferring it from one person to another. To make the transfer valid it is very essential that the person should be competent to make a contract and it should not be forbidden by law. Lease under Transfer of Property Act, 1882 deals with section 105 to section 117. A lease can be done only of immovable property. A lease is the enjoyment of immovable property for a certain period of time or in perpetuity. But, in lease transfer of immovable property is not absolute like there it is in sale. The right of possession is separated from the right of ownership. According to section 105 of TPA, 1882 what does lease means Lease is defined as, a lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of price or promised, or of money, a share of crops, service or any other thing, of value, to be rendered periodically or on specified occasion to the transferor by the transferee who accepts the transfer on such terms. Where does the lessor, lessee, premium and rent is defined. And what does those terms mean? Lessor, lessee, premium, and rent are defined under section 105 of TPA, 1882. One who transfers the property i.e. transferor called Lessor, one who accept it i.e. the transferee called lessee, the price is called the premium and services and other things which is rendered is called rent.

The essentials of Lease

1. A lessor must be competent: To make a lease a lessor must be competent to make a contract. He must be of sound mind and should not be disqualified by the contracting law. And also he must be the true and absolute owner of the property which is grant in a lease. 2. Ownership and possession: lease is different from a sale. In lease there is only a transfer of possession to the lessee whereas the ownership is still remained to the lessor. 3. Acceptance: A property which is granted in a lease must be accepted by the lessee on the terms and conditions which are agreed between the parties. 4. Consideration: A lease must be made of consideration which may be in the form of premium or rent. It can be rent with premium or rent alone or premium alone. 5. Certain period or in perpetuity: In a lease the right to enjoy the property is given for a certain period or in perpetuity. However, generally the time period is mentioned in the agreement. 6. Right to enjoy the property: In a lease, right to enjoy the property is transferred. A lessee having a right to enjoy the property at certain period of time but he does have right to further transferred that property because in lease merely possession is transferred not the ownership. What can be the duration of a certain lease, if there is an absence of written contract or local usage? According to section 106 of TPA, 1882, if there is an absence of a written contract or a local usage to the contrary then in the case, a lease of immovable property for manufacturing and agriculture purpose will be valid till the time until it was terminated by either of the party, by six months notice and if there is a lease any other purpose except agriculture or manufacturing then it will be terminated by 15 days notice.

How lease can be made?

According to section 107 of TPA, 1882, a lease can be made, if there is a lease of immovable property for a year, or for a term which may be exceeding one year or may be reserving a rent for a year, then it can be made only by the registered instrument. Whereas. All other lease of immovable property can be by the registered instrument or by an oral agreement which is accompanied by the delivery of possession. How is a lease executed? Section 107 states about lease how made. This section covers three aspects: 1. When there is a lease of Immovable property for a term of 1 year or more – This can only be made by a registered deed. 2. All other leases of Immovable property – Can be either made by a registered deed or an oral agreement or settlement along with the transfer of possession of that property. 3. When the lease is of multiple properties that require multiple deeds, it will be made by both the parties of the lease. In the case of Punjab National Bank v. Ganga Narain Kapur (1.), Court held that if the lease is done through an oral agreement, then the provisions of Section 106 will apply. Rights and liabilities of Lessor and lessee

Rights of the lessor are 1. A lessor has a right to recover the rent from the lease which was mentioned in the lease agreement. 2. Lessor has a right to take back the possession of his property from the lessee if the lessee commits any breach of condition. 3. Lessor has a right to recover the amount of damages from the lessee if there is any damage done to the property. 4. Lessor has a right to take back the possession of his property from the lessee on the termination of the lease term prescribed in the agreement. Liabilities of the lessor 1. The lessor has to disclose any material defect relating to the property which the lessee does not know and cannot with ordinary supervision find out. 2. Lessor is bound by the request of the lessee to give him the right of possession over his property. 3. Lessor can enter into a contract with the lessee if he agrees to abide by all terms and conditions prescribed in the agreement, he can enjoy the property for the rest of the time period without any interference with an obligation to pay the rent later on. Rights of the lessee 1. During the period lease is in effect if any alteration is made (alluvion for the time being in force) then that alteration will come under that same lease. 2. If a significant part of the property that has been leased is destroyed wholly or partly by fire, by flood, by war, by the violent acts of the mob or by any other means resulting in its inefficiency of being a benefit for the lessee. If this happens, the lease is voidable at his option. Liabilities of the lessee 1. Lessee is under an obligation to disclose all related material facts which are likely to increase the value of the property for which the lessee has an interest in and the lessor is not aware of. 2. Lessee is under an obligation to pay the rent or premium which is settled upon in the agreement to the lessor or his agent within the prescribed time. 3. Lessee is under an obligation to maintain the property in the condition that he initially got the property on commencement of the lease and he has to return it in the same condition. 4. If lessee gets to know about any proceedings relating to the property or any encroachment or any interference, then lessee is under an obligation to give notice to the lessor.

How does a Lease end?

Determination of lease Section 111 states about the determination of the lease, which lays down the ways in which lease is terminated: 1. Lapse of time – When the prescribed time of the lease expires, the lease is terminated. 2. Specified event – When there is a condition on time of lease depending upon a happening of an event. 3. Interest – Lessor’s interest to lease the property may cease, hence resulting in the termination of the lease. 4. Same owner – When the interest of both lessor and lessee are transferred or vested in the same person. 5. Express Surrender – This happens when the lessee ceases to have an interest in the property and comes into a mutual agreement with the lessor. 6. Implied Surrender – When the lessee enters into a contract with another for the lease of property, this is an implied surrender of the existing lease. 7. Forfeiture – There are three ways by which a lease can be terminated: • When there is a breach of an express condition by the lessee. The lessor may get the possession of the property back. • When lessee renounces his character or gives the title of the property to a third person. • When the lessee is termed as insolvent by the banks, and if the conditions provide for it, the lease will stand terminated. 8. Expiry of Notice to Quit – When the notice to quit by the lessor to the lessee expires, the lease will also expire. Conclusion Lease is a very important aspect of real life. Every person has witnessed a lease deal involving renting of a house, car or etc. Therefore it is important for the general public to know about the rights of every individual in a lease, and to know about the provisions that govern lease. The lease is mentioned from Sections 105 to Section 117, out of which Sections which may help the general public, law students and the legal fraternity have been discussed in this article to give clarification and a basic idea about the lease.