Wednesday, 18 June 2014


Having discussed about leave and licence in the previous issue, we shall study the lease of a property in this issue. 
Lease is mode of conveyance of property, different from leave and licence and sale, gift, exchange etc.In leave and Licence,the Owner of the property does not transfer of any of his rights, and in case of sale, gift or exchange,the owner transfers his entire right, possession, and ownership of the property.In case of lease, the owner parts with his right of possession, but retains the right of ownership.Generally such a transfer of possession is for certain and agreed period for some agreed consideration.
The person who transfers the possession (owner) is the Lessor and the person who gets the right of possession is the Lessee.The consideration paid by the Lessee is rent/premium.In English Law, the transfer of interest in the property is called demise.The words Landlord and tenant are also used instead of Lessor and Lessee respectively.
Section 105 of Transfer of Property Act defines Lease.Without bothering about the legal jargons,we shall try and understand important ingredients of Lease.They are:-
1.It involves transfer of right to enjoy the property (possession).
2.The period of lease should be certain, i.e. the date of commencement and date of expiry.
3.The consideration for lease shall be periodical payment termed as rent or premium or both.
There is a distinction between rent and premium. Consolidated, A fee payable in lump sum is premium and payable in a specified period is rent.The right of the Lessor to receive the premium/rents is called reversionary rights.
In other words, lease is form of encumbrance on property in the form of a right to possession and enjoyment of property owned by some other person. This is legal separation of ownership from possession.There are different types of Lease depending upon the duration.Perpetual Lease, Tenancy at will, Tenancy by sufferance, Tenancy by holding over, periodical Lease and Lease for fixed term.
English Law does not recognize the Perpetual Lease, but Indian Laws have given legal validity as per Section 105 of the Transfer of Property Act, according to which lease may be for a certain time or in perpetuity.Tenancy at will is lease, which is terminable at with at pleasure of both the parties.If a person is lawfully in occupation of a property, he is not a trespasser and does not become a tenant holding over and such tenancy is by sufferance. 
There is a fine distinction between tenancy by sufferance and tenancy by holding over.A tenant who continuous to be in possession of the property after the determination of the lease without the consent of the Landlord is tenancy by sufferance.In contrast, if it is with the consent of the Landlord it is a tenancy holding over.Section 116 of the Transfer of Property deals with tenancy by holding over.The determination of the lease means termination of the lease period. The Landlord, after such termination may consent for continuance of the lease by accepting the rents though without any agreement. Periodical lease is for certain period which is determinable by due notice.The lease for fixed period is granted for certain period which may be long or short.
The transfer of Property Act has prescribed the mode of computing lease period.The Section 110 is the relevant section. When the lease is limited by time and said to commence from a particular day. Such particular day should be excluded while calculating the lease period. But this rule does not have application in month to month tenancy and there is no need to omit the first day of the month while calculating the lease.
If the lease is mentioned year or years and if the agreement does not contain any condition of commencement of lease,the lease will run during the full anniversary of the day from which such time commences.If the agreement does not mention the date of commencement,the lease starts from the date of execution.In general, the day of the commencement has to be excluded, while its anniversary is to be included in calculating the lease period.
The Transfer of Property Act provides the procedure for determining the lease period;if the agreement does not specifically contain any such condition.The lease for agricultural or manufacturing purpose is year to year. This can be termination by six months notice by either of parties.
The lease for any other purpose is month to month terminable by fifteen days notice by either of the parties.The period mentioned in the notice commences from the date of the receipt of the notice.The notice should be in writing and signed by the Lessor or lessee or his representative.The notice may be sent by post (Registered post for purpose of records) or may be delivered personally to the other party or his family, servants against acknowledgement.In case the delivery by post or in person is not possible,the notice may be affixed to conspicuous part of the property.The notice of fifteen days stipulated should end by the end of the tenancy month. 
Any lease of immovable property for any term exceeding one year has to be made only by a registered deed and lease less than one year made by a registered instrument on unregistered or oral agreement followed by delivery of possession.However in all cases,the agreements attract stamp duty, which varies from state to state and also depending upon the lease period and amount.In simple words, payment of stamp duty is must and registration of instrument is optional in case of tenancy of less than one year and is a must if it is more than one year.

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