Saturday, 2 June 2018
NOTES ON LEASES OF IMMOVABLE PROPERTY
(S 105-117 OF TRANSFER OF PROPERTY ACT
Definition( S.105)
A lease of immovable property is a transfer of a right to enjoy such property for a certain time,or in perpetuity,in consideration of price paid or promised or money,a share of crop, service or any other thing of value to be rendered periodically or on specified occasions, to the transferor by transferee,who accepts the transfer on such terms.
In the case of a lease, the price is called the premium,and the money,share,service or other thing to be rendered is called the rent;the transferor is called the lessor,and the transferee is called the lessee.
The following are essential elements of a lease:-
1) The lessor-He must be competent to contract and he must have title or authority.
2) The lessee- He also must also be competent to contract at the date of execution of the lease. A sale or a mortgage to a minor is valid. But a lease to a minor is void, as the lease is to be executed both by the lessor and the lessee. (S 107)
3) The subject matter of the lease must be immovable property.
4)There must be transfer of a right to enjoy such property.
5) Duration of lease- A lease must be made for a certain time, express or implied, or in perpetuity.
6) Consideration- Like every agreement,a lease must have consideration, which may be premium plus rent,as well as premium alone or rent alone.
7) The lessee must accept the transfer.
Difference between agreement to lease and lease:-
An agreement to lease does not give rise to right in rem. It creates only a personal obligation, which may be enforced by a suit for specific performance under specific relief Act, provided that agreement to lease is in writing and is accompanied by delivery of possession. In this respect,it materially differs from an agreement to sell. The latter agreement may be specifically enforced even if oral and unaccompanied by delivery of possession;but not in respect of agreement to lease. A lease does but an agreement for lease does not establish the legal relationship of landlord and tenant between the parties. This is so, because a lease is a transfer of a right to enjoy property, whereas an agreement to lease is not.
Difference between lease and licence:-
Ordinarily a lease is a grant of property, for a time by one who has a greater interest in the property, the consideration being usually the payment of rent. A licence ,on the other hand is governed by Indian easement Act, and is a permission to do some act which without such permission,would be unlawful. Both have certain elements in common,but the following are the points of difference between the two:
1) In a lease there is a transfer of an interest in the immovable property. In the case of a license, there is no transfer of interest, although the licensee acquires a right to occupy the property.
For determining whether an interest in land is transferred or not,the main test is the delivery of exclusive possession. If the exclusive possession is not with the grantee,and the subject matter is in control and possession of grantor, then it is a license and not a lease. It is always open to a licensor to have access to property, possession being with him,and not transferred to the licensee.
2)If during the continuance of the lease,any accretion is made to the property,such accretion is deemed to be comprised in the lease.A licensee has no property in the land,and therefore he acquires no right by accretion.
3) A lease is transferable and heritable. A licence being purely a personal privilege is non-transferable and non- heritable.
An exception is made in the case of a licence to attend a place of public entertainment,which can be transferred by licensee,unless a different intention is expressed or necessarily implied(S 56 of Indian easement Act).
4) A lease can be terminated by forfeiture. There is no corresponding provision in the case of licence in the Indian easement Act.
5) A lease can be terminated only in eight different ways as mentioned S 111 of transfer of property Act. A licence can be revoked at pleasure,unless(a) it is coupled with transfer of property and such transfer is in force;or (b) licensee acting upon the licence has executed a work of permanent character and incurred expenses in the execution. Therefore, unlike a lessee, a licensee is not entitled to a notice to quit before eviction.
6) Lessee's interest is not liable to be defeated by subsequent transfer of leased property as per S 109 of Transfer of property Act. A licence is determined when the grantor makes an assignment of subject matter of licence as per S 59 of Indian easement Act.
7) A lessee is entitled to maintain a suit in his own name against trespassers and strangers. A licence does not create an interest in property in favour of licensee and therefore,he is not entitled to maintain suits in his own name.
8) Death of either party does not affect a lease,whereas a licence is terminated in such circumstances.
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Leases how made (S 107)
1) A lease of immovable property can be made from year to year,or for any term exceeding one year,or reserving yearly rent only by a registered instrument.
2) In any other case,either by a registered instrument,or by oral agreement accompanied by delivery of possession.
Duration and termination of lease S 106:-
1) A lease of immovable property for agricultural or manufacturing purposes is deemed to be a lease from year to year terminable on the part of either lessor or lessee by six months notice.
2) A lease of immovable property for any other purpose is deemed to be a lease from month to month terminable on the part of either lessor or lessee by fifteen days notice.
S 106 also clarified that the period of notice mentioned above commences from date of receipt of notice. It is also provided that even if a short period is mentioned in the notice,as long as the suit or proceeding is filed after expiry of period stipulated above,the notice would not be invalid.
The above statutory presumption as to duration arise only when there is no agreement between the parties or a local law or usage to the contrary.
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Requisites of notice under S 106 of transfer of property Act.
1)Every notice under S 106 must be in writing, signed by or on behalf of person giving it,
2) Sent by post or delivered personally to lessee,or
3) affixed to conspicuous part of property.
Waiver of notice to quit as per S 113 of Transfer of property Act
Notice to quit is deemed to have been waived
1) when with the express or implied consent of the person to whom it is given,
2) the person giving it does an act showing an intention to treat the lease as subsisting.
Rights and liabilities of lessor [S 108(a) to (c)]
1) the lessor is bound to disclose to the lessee, any material defect in the property with reference to its intended use which the former is and latter is not aware, and which the latter could not with ordinary care discover.{S 108(a)}.
A defect in the lesser's title can not be said to be material defect in the property within the meaning of this clause.
2) the lessor is bound on the lessee's request, to put him in possession of the property.{S 108(b)}
3) The lessor is also deemed to contract with the lessee that if the latter pays the rent reserved by the lease and performs the contract binding on the lessee,he may hold the property(during the time limited by the lease) without interruption: S 108(c).
This covenant is called a covenant for quiet enjoyment, and is absolute and unconditional. It protects the lessee against the disturbance of his possession by lessor or by person claiming under the lessor, but not against any disturbance by a trespasser.
Rights of lessee
1) If during the continuance of the lease, any accession is made to property, such accession is deemed to be comprised in lease.
2) If by fire, tempest or flood, or violence of an army or of mob or other irresistible force, any material part of the property is wholly destroyed or rendered substantially and permanently unfit for the purpose for which it was let,at the option of the lessee,the lease becomes void.(However,if injury is occasioned by the wrongful act or default of lessee,he is not entitled to avail himself of this benefit).
3) If the lessor neglects to make within a reasonable time after notice,any repairs which he is bound to make to the property, the lessee may make the same himself, and deduct the expense of such repairs with interest from rent or otherwise recover it from the lessor.
4) If the lessor neglects to make any payment which he is bound to make,and which,if not made by him,is recoverable from the lessee or against the property,the lessee may make such payment himself and deduct it with interest from rent or otherwise recover it from the lessor.
5) the lessee may even after the termination of the lease, remove at any time whilst he is in possession of the property leased, all things which he has attached to the earth, provided he leaves the property in the state in which he received it.
6) When a lease of an uncertain duration determines by any means except due to fault of lessee,he or his legal representative is entitled to all the crops planted or sown by the lessee and growing upon the property when the lease determines, and to free ingress and egress to gather and carry them.
7) The lessee may transfer absolutely or by way of mortgage or sub-lease,the whole or any part of his interest in the property and any transferee of such interest or part may again transfer it. In such a case the lessee does not by reason only of such transfer cease to be subject to any of the liabilities attaching to the lease.
Liabilities of lessee
1) the lessee must disclose to lessor any fact which materially increases the value of such interest.
2) lessee must pay the premium and rent to lessor at proper time and place.
3) The lessee must keep the property in good condition. (reasonable wear and tear excepted).
4) If lessee becomes aware of any encroachment on the property or any proceeding to recover the property, he must inform the lessor about the same with reasonable diligence.
5) The lessee must use the property as a man of ordinary prudence would use his own, but he cannot use it for any other purpose or commit any act which may destroy or permanently injure the property.
6) Without the lessor's consent, the lessee can not erect any permanent structure on the property.
7) When the lease is over, the lessee must put the lessor in possession of the property.
Determination of lease
A lease terminates in eight ways:
1) by efflux of time.
2) If the duration of the lease is until the happening of some event-when that event happens.
Thus for instance,if a lease is for twenty years and at the same time made conditional upon life of lessee, the lease terminates on the death lessee, even if death of lessee takes place within stipulated period of twenty years; if the lessee does not die within this period lease terminates at the end of the period.
3)If the lessor's interest in the property is to terminate on the happening of some event- when that event happens.
This clause operates in cases where the lessor has only limited interest or limited power to grant a lease. Thus it has been held that a lease by hindu widow who is entitled only to a life-estate terminates on her death.
4) Merger that is when the interest of the lessee and the lessor in the whole of the property becomes vested at the same time in one person in same right.
Merger may take place either by act of parties or by operation of law.
5) By express surrender by lessee.
6) By implied surrender by lessee.
Thus if a lessee accepts from his lessor a new lease of leased property to take effect during the continuance of existing lease, this is an implied surrender of former lease, and such lease terminates thereupon.
7) By forfeiture
8) on the expiry of a notice to terminate the lease,or to quit (or of intention to quit) the property leased duly given by one party to the other.
A valid notice must satisfy the following three requisites Viz-
A) It must expressly convey the intention to terminate the tenancy.
B) It must specify the date on which the tenancy is to expire.
C) It must be unconditional. Thus a notice given by a tenant that he will quit when he gets another suitable accommodation is not valid.
