Lease agreement under transfer of property act

A right in property is generally created through the sale of such property. However, lease is an exception to this rule where a right in the immoveable property is created without selling it.

• Provisions relating to Lease are mentioned under Section 105 to 117 of Transfer of Property Act, 1882 (TPA).

Lease

• Section 105 of TPA defines lease.
• It states that a lease of immoveable 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 a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
• In the case of a lease, the transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.

Essential Elements of a Lease

• It is a transfer of a right to enjoy a property.
• It can be for a certain time, or for perpetuity.
• It can be made in consideration of a price paid or promised.
• Such consideration can be paid periodically or on specified occasions.

Essential Requisites of a Lease

• The Lessor – He must be competent to contract, and he must have a title or authority.
• The Lessee – He must be competent to contract at the date of execution of the lease.
• The subject matter of the lease must be immovable property.
• There must be a transfer of a right to enjoy such property.
• A lease must be made for a certain time, expressed or implied or in perpetuity.
• There must be a consideration, which may be premium plus rent as well as premium alone.
• The lessee must accept the transfer.
• The interest that the lessee acquires is a transferable interest.
• The relationship of the lessee is created with the property and not merely with that of the owner.
• A lease is both heritable and transferable.

Leases How Made

• If a lease of an immoveable property is made for a period exceeding one year, then such a lease can be made only by a registered instrument.
• All other leases of immoveable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.

Duration of Lease

• A lease of immovable property for agricultural or manufacturing purposes shall be a lease renewable from year to year. It shall be terminable by six months’ notice.
• A lease of immovable property for any purpose other than manufacturing and agriculture shall be a lease renewable from month to month. It shall be terminable by fifteen days’ notice.