Lease Under the Transfer of Property Act: Rights and Duties of Lessor and Lessee (Sections 105 to 117)

Section 105 of the Transfer of Property Act, 1882 defines a lease in one long sentence. Most of the lease chapter, which runs from Section 105 to Section 117, follows from that sentence. If you can break it into parts, the rights and duties of the parties become easy to remember.

This blog is meant for aspirants of the Civil Judge Exam, PCS J Exam and APO Exam. Check section numbers against your Bare Act as you revise.

What a lease is

Section 105 says a lease of immovable property is a transfer of a right to enjoy the property, made for a certain time (express or implied) or in perpetuity. It is made 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 specific occasions to the transferor by the transferee, who accepts the transfer on such terms.

The article's simple example: A leases his house to B for eight months for Rs. 10,000 a month. That is the most basic lease.

What makes a lease valid

·        Competent parties: Both must be able to contract. The lessee must be a major, the lessor must hold title and authority to lease, and both must be of sound mind.

·        Subject matter: It must be immovable property, such as a flat or a house.

·        Consideration: Without it the transaction is a gift and not a lease. It is usually premium plus rent, but can be premium alone or rent alone.

·        Duration: A lease of more than a year must be made by a registered instrument under Section 107.

·        Delivery and acceptance: The lessor must give the lease and the lessee must accept it freely, without undue influence or coercion.

When there is no registered deed

Where a lease needs a registered deed but there is none, Section 106 supplies a default rule, as the article explains. If the property is used for manufacturing or agricultural purposes, it is treated as a year-to-year lease, which either side can end by six months' notice. For other purposes, it is a month-to-month lease, which either side can end by fifteen days' notice.

The notice must be in writing, signed by the person giving it, and delivered to the other party personally or by post. This is a common exam question, so memorise the two default rules.

Also Check: Doctrine of Lis Pendens: Section 52 TPA Explained

Agreement to lease and lease deed

An agreement to lease is only an early step. It creates no legal obligation and merely points to a possible future transfer, setting out terms of a lease to come. A lease deed, together with delivery of possession, is the final contract. It creates legal obligations and transfers rights from lessor to lessee for the stated period.

Lease versus licence

The article draws the difference this way:

·        A lease transfers an interest in immovable property. A licence is only permission to do an act that would otherwise be unlawful, and it transfers no interest.

·        A lease is transferable and heritable. A licence is not transferable, and rests on personal privilege.

·        A lessee can sue trespassers and strangers in his own name. A licensee cannot.

·        Death of either party does not end a lease, but it ends a licence.

Rights and duties of the lessor

Rights

·        Accretions: If anything is added to the property during the lease, whether naturally or at the lessee's cost, the lessor is entitled to it, and the lessee must hand it over at the end.

·        Rent: The lessor can collect rent or other consideration as agreed, without interruption.

Liabilities

·        Disclosure: The lessor must disclose material defects in the property. The article separates a latent defect, which cannot be found by reasonable inspection, from an apparent defect, which can. The lessor should disclose any apparent defect, since it interferes with the lessee's enjoyment.

·        Possession: The lessor must give possession when the lessee asks for it.

·        Quiet enjoyment: The lessor must not disturb the lessee during the lease. The article mentions a Madhya Pradesh High Court view that physical or direct interference in the premises breaches this duty.

Rights and duties of the lessee

Rights

·        Repairs: If the lessor fails to make repairs he is bound to make, the lessee can do them at his own cost and deduct the cost from the rent or charge it to the lessor.

·        Fixtures: The lessee can remove fixtures during the lease, but must leave the property in the condition in which he received it.

·        Assignment: The lessee can sub-lease or transfer his interest unless the lease deed forbids it. Even after transfer, he remains bound by the lease terms.

·        Crops: Where the lease is of uncertain duration, the lessee or his representative can take the benefit of crops grown.

Duties

·        Disclose material facts known to him that the lessor does not know, and compensate for loss if he does not.

·        Pay rent or premium at the proper time and place. Non-payment lets the lessor eject him or sue for arrears.

·        Maintain the property in good condition. Only changes caused by irresistible forces are excused. The lessor can inspect at reasonable times.

·        Give notice to the lessor of any attempt to damage the lessor's rights or endanger his title.

·        Use the property reasonably, as if it were his own.

·        Not build any permanent structure, except for agriculture, without the lessor's consent.

·        Give back possession when the lease ends, and pay damages if he stays on after the notice expires.

How a lease ends

The article lists eight ways:

·        Expiry of the fixed period.

·        Happening of an event on which the lease was to last.

·        Happening of an event on which the lessor's interest was to end.

·        Implied surrender by the lessee.

·        Mutual agreement of lessor and lessee.

·        Expiry of a clear, unconditional notice of intention to end the tenancy.

·        Forfeiture, which lets the lessor re-enter and reclaim the property.

·        Merger, where the interests of lessor and lessee in the whole property come together in one person in the same right.

Using this in your answers

For a short note on lease, state Section 105 and its elements. For a problem question about an unregistered lease, apply Section 107 and then the year-to-year or month-to-month default rule with the correct notice period. For a long answer, add lease versus licence and the lists of rights and duties.

Frequently Asked Questions on Lease Under the TPA

Which section defines a lease?

Section 105 of the Transfer of Property Act, 1882.

What is the difference between premium and rent?

Premium is the price paid for obtaining the lease. Rent is the money, crop share or service rendered periodically or on specific occasions.

When must a lease be registered?

According to the article, a lease of more than a year must be made by a registered instrument under Section 107.

What is the notice period for a year-to-year lease?

Six months, for immovable property used for manufacturing or agricultural purposes.

What is the notice period for a month-to-month lease?

Fifteen days, for property used for other purposes.

What is the difference between a lease and a licence?

A lease transfers an interest in property and is heritable and transferable. A licence is mere permission, creates no interest and ends on the death of either party.

What is the covenant for quiet enjoyment?

The lessor's duty not to interrupt the lessee's enjoyment of the property during the tenancy.

Can a lessee sublet?

Yes, unless the lease deed prohibits it. He remains liable under the lease.

What are the ways in which a lease ends?

Expiry of time, happening of an event, implied surrender, mutual agreement, notice, forfeiture and merger, among those the article lists.

What must a lessee do at the end of a lease?

Hand back possession in the condition in which he received it, and pay damages if he continues to stay after the notice.

Quick Revision

Remember the structure: definition in Section 105, form in Section 107, default notices in Section 106, then the rights and duties of lessor and lessee, and the ways of ending a lease.

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