Lease
Section 105 says a lease of a immovable property is a transfer of a right to enjoy property, made for a certain time, express of implied, or in perpetuity, in consideration for a price paid or promised, or of money, 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.
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 rendered is called the rent.
Essentials of lease:
Parties – Lessor and Lessee
Property – Immovable
Period – Any period, day, week, month or year or perpetual
Premium – Money or any other valuable
Partial transfer – Transfer of only right to enjoy
A lease likewise a sale and a mortgage is a transfer of an interest in specific immovable property but that interest extends only the enjoyment of the property. Rights of ownership are not transferred in a lease.
Duration of the lease:
The essential of a lease is that the right to enjoy the property must be transferred for a certain time, expressed or implied or in perpetuity. The document must itself show when the lease is to operate and for how long it is to remain operative. It may commence either in the present or on some date in future or on the happening of a certain contingency, which is bound to happen e.g. on the determination of a prior lease for life or for a certain no. of years. It may also be expressed to commence from a past date, but that is only for a purpose of computation of the period of the lease. The interest of the lease begins only from the date of execution.
Perpetual lease – A permanent lease can be created by express terms or by implication. Where the words used are not sufficient to create permanency, regard must be had to other terms of the document, the object of the lease, the circumstances under which it was created and the subsequent conduct of the parties. Such consideration will show that a lease without a term is a permanent lease. Whether a lease is permanent or not? The burden of proving it is on the tenant. The court held that a lease in perpetuity can be created, however an interest still remains in lessor. The Supreme Court held that there is no inflexible principle that every variation in the rate of rent payable under a registered deed of lease necessarily implies surrender of the said lease and creation of a new tenancy or that whenever a rate of rent is altered, a new relationship between the parties shall be created.
Renewal of lease
The lease may contain a covenant for renewal, i.e. a covenant to grant a renewal of the lease either at the end of the term, or at some stated period within the term. Such a covenant confers an immediate right to a further term. Such a covenant does not create an interest in property and runs with the land, it cannot; therefore infringe the rule against perpetuities.
A covenant for renewal contained in a lease does not ipso facto extend the tenure or term of the lease, but only entitles the lessee to obtain a fresh lease. A lessee has to give a notice of renewal to the lessor within a specified time and if no time is specified then within a reasonable time. It requires the lessee to give notice of his intention to renew the lease before the expiry of the term, or the right of renewal may be lost by not applying within the specified time, though relief will be granted in special circumstances against failure to give notice in time. If no time is mentioned for giving notice, it must be given in a reasonable time.
