Lease (Section 105 of the Transfer of Property Act)

Lease is a transaction whereby one person, known as the lessor, transfers the right to enjoy an immovable property to another person, known as the lessee, either for a certain time or perpetually, in return for consideration.

Essentials of a Lease Agreement:

1. Parties to the Agreement: Lessor and lessee.
2. Identification of the Property: Subject matter of the lease.
3. Term of Lease: Duration of the lease agreement.
4. Rent: Consideration paid by the lessee to the lessor.
5. Date of Commencement and Expiry: Start and end dates of the lease.

Procedure of Forming a Lease Agreement:

• Lease of immovable property for one year or more must be made by a registered instrument. Other leases may be made by unregistered instruments or oral agreements.
• In absence of a written contract or local law, lease terms vary for agricultural/manufacturing purposes versus other purposes.

Rights and Liabilities:

• Section 108 of the Transfer of Property Act outlines guidelines in the absence of a lease agreement.
• Upon transfer, the lessee possesses all rights and is subject to all liabilities of the lessor, unless specified otherwise.
• Lease commencement is either from the specified date or from the agreement date if unspecified.

Modes of Determining a Lease:

• Determination occurs by efflux of time, termination of lessor’s interest, mutual agreement, or other specified conditions.
• Surrender, implied surrender, or forfeiture can also determine the lease.

Prerequisites of the Agreement:

• Holding over occurs if lessee remains in possession after termination, renewing the lease until noticed otherwise.
• Relief from forfeiture may be granted by the court if lessee remedies non-payment within 15 days.

Lease and License:

• Distinguished based on whether the document creates an interest in the property (lease) or permits use without transferring possession (license).

Stamp Duty Act 1899:

• Stipulates stamp duty payable on lease documents based on average annual rent multiplied by the lease period.
• Lessor and lessee must comply with Transfer of Property Act provisions, registration requirements, stamp duty, and lease terms.

In conclusion, lessor and lessee must adhere to legal requirements and terms outlined in the lease agreement, ensuring a valid and enforceable transaction.