Rights And Liabilities of Lessor And Lessee

INTRODUCTION

A lease is defined under section 105 of Transfer of Property Act, 1882 as, “A lease of immovable 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.[1]

From this definition, the important ingredients which can be crystallized are:

• Lease is always for an immovable property
• There is a transfer of rights only to enjoy such property. (only the right to enjoy such property, neither the title nor the ownership is transferred)
• As far as the duration of the lease is concerned, it can be for a certain expressed or implied duration, or it can be for perpetuity (99 years)
• Consideration is must for a lease; it can be money, a share of crops or any other thing of value.
• Consideration can be paid periodically or on specified occasions which are decided between lessor and lessee.

Lessor is the one who is the ‘transferor’ of property and Lessee is the one who is the ‘transferee’ of the property. Consideration is known as the ‘Premium’ and Money, share, or service is called ‘rent’.

RIGHTS AND LIABILITIES OF LESSOR AND LESSEE

Section 108 elaborately enunciates the Rights and Liabilities of both, the lessor and the lessee.

As the lessor and lessee share a legal relationship with each other. Therefore, both are having certain rights against each other and also are having liabilities against each other. In case any of their rights got infringed or if anyone fails to comply with or fulfill the duty against the other, one can take the aid of the instrument (Lease deed) to trace down the consequences of such Infringement or non-fulfillment of the liabilities against each other.

Rights and Liabilities of Lessor against the lessee

Following Mentioned are the Rights and Liabilities of Lessor against lessee given Under Section 108 of Transfer of Property Act, 1882[2]:

1. The Lessor is bound to disclose to the lessee any material defect in the property. The material defect is with respect to its intended use and the defect about which the lessor is aware and lessee with his ordinary prudence and intelligence cannot discover.

2. The lessor is bound on the lessee’s request to put him in possession of the property.

3. It shall be deemed to contract with the lessee that, if the lessee pays the rent reserved by the lease and performs the contracts binding on the lessee, he may hold the property during the time lessor in any way whatsoever cannot interrupt the possession and enjoyment of the property by lessee if lessee pays the agreed rent and performs all the conditions of the lease contract on his part. (This is something which flows naturally arose out of the contractual obligation that is promissee or acceptor is fulfilling everything on his part, performing the contract according to the conditions, then promisor is not allowed to do anything outside the contract and prevent such performance.)

4. The benefit of such contract (lease) shall be annexed to and go with the lessee’s interest as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested. That is, the benefits arising out of such lease shall be annexed with every other person in whom such lease hold rights will vest with.

Rights and Liabilities of Lessee against Lessor

Following Mentioned are the Rights and Liabilities of Lessee against Lessor given under Transfer of Property Act, 1882[3]:

These all rights and Liabilities are subject to any contract or any local usage. Lessor and Lessee may have a contract or local usage to the contrary.

1. If during the continuance of the lease any accession (it is a mode of acquiring a property that involves the addition of value to the property through labour or the addition of new materials) is made to the property, such accession (subject to the law relating to alluvion for the time being in force) shall be deemed to be comprised in the lease,

2. If by fire, tempest or flood, or violence of an army or of a mob, or other irresistible force, any material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was let, the lease shall, at the option of the lessee, be void. These all are in a kind are those supervening impossibilities which are out of control of lessee, and if the entire subject matter of the lease deed is destroyed or unfit for the use, then the whole object of the lease deed is frustrated and hence attains nullity at the option of lessee. Lessor cannot ask the lessee to perform his obligation if any of such circumstances exists.

There is a proviso to the above clause that if any of the injuries are caused by wrongful act or default of lessee (e.g. short circuit in the premises due to carelessness on the part of lessee’ workers, building ruptured due to carelessness in managing and repairing the premises etc.) he shall not be entitled to avail himself of the benefit of this provision. This Right is provided to the lessee because of ‘no-fault theory’ In Equity there shouldn’t be an unjust loss to the Lessee and unjust enrichment to the lessor.

3. If the lessor neglects to make any repairs which he is bound to make to the property, within a reasonable time after notice, the lessee may make the same himself, and deduct the expense of such repairs with interest from the rent, or otherwise recover it from the lessor. The thing to be noted here that, the lessee must give notice to the lessor if the leased property needs any type of maintenance and repairing, and only after the negligence to do the needful within a reasonable time frame, the lessee can proceed to do the repairs on his own. How Much Time is reasonable after giving notice will depend upon the circumstances and facts like repairing shall be done on an urgent basis or it can wait for days or so.

4. If the lessor neglects to make any payment which he is bound to make, and which if not made by him, is recoverable from the lessee or against the property, the lessee may make such payment himself, and deduct it with interest from the rent, or otherwise recover it from the lessor.

5. The lessee may even after the determination of the lease[4] (by efflux of time, by happening of an event on which lease depends etc.) remove all things which he has attached to the earth, at any time whilst he is in possession of the property leased but not afterward, provided he leaves the property in the state in which he received it. He has the right to remove all the things he had brought to the leased property while he is in possession but not afterward for e.g. (any machinery which fastens any plant or an accessory he attaches to the earth for his work. Also if any unfastening causes loss or damage to the property, costs shall be borne by the lessee as he is bound to leave the property in the same state in which it was received.

6. When a lease of uncertain duration (when the term/duration of the lease is uncertain) determines by any means except the fault of the lessee, he or his legal representative is entitled to all the crops planted or sown by the lessee and growing upon the property when the lease determines, and to free ingress and egress to gather and carry them.

7. The lessee may transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. The lessee shall not, by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease that is even if the original lessee subleases any part or whole of the property, this will not extinguish any of his liabilities which are attached to the original Lease.

The proviso to the above-mentioned clause is that in case of untransferable right of a tenant or any lessee of an estate under the management of Court of Wards or farmer of an estate who defaults in paying the revenue cannot assign their interest as such tenant, lessee or farmer.

8. Liability of the lessee to disclose any fact with regards to the nature and extent of interest which materially increases the value of such interest. A fact about which lessor is not aware of but lessee is.

9. The lessee is bound to pay or tender, at the proper time and place, the premium or rent to the lessor or his agent.

10. The lessee is bound to keep the property in as good condition as it was when he received it except few changes which are caused by reasonable tear and wear of the property.

11. Lessee is bound to restore the property in as good condition as it was when he enters the premises, at the termination of his lease.

12. Lessee must allow the lessor and his agents, at all reasonable times during the term, to enter upon the property and inspect the condition.

13. Lessee should give or leave notice of any defect in such condition and when such defect has been caused by any act or default on the part of the lessee, his servants, or agents, he is bound to make it good within three months after such notice has been given or left.

14. If the lessee becomes aware of any proceeding to recover the property or any part thereof, or of any encroachment made upon, or any interference with, the Lessor’s rights concerning such property, he is bound to give, with reasonable diligence, notices thereof to the lessor (As the lessee is in the possession and enjoyment of the property, so he would and he must know with all his prudence and intelligence about any proceeding or any interference with the property he is in possession. He is bound to protect the property and give all relevant information to the Lessor.)

15. The lessee may use the property and its products (if any) as a person of ordinary prudence would use them if they were his own; but he must not use, or permit another to use, the property for a purpose other than that for which it was leased, or fell [or sell] timber, pull-down or damage buildings [belonging to the lessor] work mines or quarries not open when the lease was granted, or commit any other act which is destructive or permanently injurious thereto.

Rights of Enjoyment of the property on a specified consideration is given to the lessee and not to anybody else, hence the right to use the property or its products vests with lessee only. He must use the property for the purpose for which it was leased. For e.g. if the property is leased for residential purposes then it cannot be used for commercial purposes, if it is used otherwise, rights are reserved with the lessor to enforce consequences as mentioned in the lease contract in the Court of Law.

16. Lessee should not correct on the property any permanent structure, except for agricultural purposes without the Lessor’s consent. Again this clause is in the absence of any contract or local usage to the contrary

17. On the determination (When the lease deed came to an end) of the lease, the lessee is bound to put the lessor into possession of the property. Ultimately the ownership and exclusive rights vests with the lessor only and it’s his exclusive right to get back his property in the way and condition it was given.

CONCLUSION

Both the lessor and lessee have equitable rights and duties against each other. If on one hand, the lessee has a duty of maintaining the property in good condition, pay rent on the specified date, give notice of the defects to the lessor, and do all the needful for the protection and conservation of the property then, on the other hand, the lessor is duty-bound to allow the enjoyment of the property without any interference if the lessee is performing his obligations; lessor is bound to make repairs as and when needed, to disclose any material information if it involves any of the Lessee’s interest. Lessor’s rights are there to get back the property and lessee rights are there to use the property for which it was leased.

[1] Section 105, TPA, 1882

[2] Section 108, TPA, 1882

[3][3] Section 108, TPA, 1882

[4] See, Section 111, TPA, 1882

This article has been written by Neha Gupta Kaushik, 2nd Year, LLM student at DDEKUK.

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