VARIOUS KINDS OF LEASE: ALL YOU NEED TO KNOW

• Perpetual lease: A perpetual lease is an ongoing tenure over state land in accordance with the Urban Land (Ceiling & Regulation) Act, 1976. A landholder of a perpetual lease is responsible for complying with the term of the perpetual lease deed failing which the property/land may be Perpetual leases are issued for a specific purpose (e.g. agricultural or commercial). The lease must only be used for the purpose for which it was originally issued.
• Tenancy at will: Tenancy at will, also known as estate at will, is a property tenure without a lease or written agreement that can be terminated at any time by either the tenant or the owner (landlord). It exists without a contract or lease and usually does not specify the length of a tenant’s duration or the exchange of payment.

• Tenancy at sufferance: A tenant at sufferance is the situation when a tenant of real estate continues to occupy the premises without the landlord’s consent after the original lease or rental agreement between the landlord and the tenant has expired. A tenant in this situation is also referred to as a holdover tenant. The tenant is responsible for payment of the monthly rental at the existing rate and terms, which the landlord may accept without admitting the legality of the occupancy. If a tenant at sufferance does not leave after a notice to quit (move out), he/she is subject to a lawsuit for unlawful

Tenancy by holding over: A holdover tenant is a renter who remains in a property after the expiration of the lease. If the landlord continues to accept rent payments, the holdover tenant can continue to legally occupy the property, and state laws and court rulings determine the length of the holdover tenant’s new rental term.

Periodic lease: A lease from year to year or month to month

Lease for a fixed period: Here the period is fixed

Lease for life: Lease for the lifetime of the lessee.

Some of the important terms and conditions stated in the lease document are focused on the following concerns/ aspects.

Lease Term: Date of commencement and date of termination of lease is stated. The lease period maybe 30 years, 60 years, 99 years or even 999 years.

Renewal Clause: Date of notice for renewal, completion date of the first term, second term period, and revision of rent, if any, for the second period is also mentioned.

Amount of Rent: Fixed Annual Rent or monthly rent i.e. ground rental for the whole period is stated. If ground rent is not fixed for the entire lease period then increased rental after a fixed period of intervals, say 10 years or 20 years is stated in the lease. Sometimes the revised rental is not stated in the agreement but it is mentioned that the revised rental for the second term will be as mutually agreed.

Lessor’s Covenant: The responsibility of land tax payment is normally on Lessor.

Lessee’s Covenant: Payment of building tax, building insurance, repairs, and up-keeping of property, timely payment of lease rent is duty of Lessee.

Right for Sublease: Right to sub-lease the property on condition or without any condition is stated. In some leases right to sublease is not permitted. In such cases, the lessee in distress has to surrender his lease rights back to the lessor even before the maturity date.

Right for assignment: This clause permits the lessee to sell his leasehold rights to another person during the lease period. In government lease, such assignment is permitted by charging a premium amount popularly known as share in the unearned increase in land value.

Restrictive Covenant: Not to alter building or change use of the land. This is a very important clause. Breach of this clause may result in termination of lease.

Vesting Back of Land Clause: Under this clause, it is provided that the Lessee would demolish the building erected on the Lessor’s plot and would hand over possession of open vacant land to the Lessor on the maturity of the lease period. Some leases provide for the return of land along with building, free of cost to the Lessor instead of open land. In some other type of private lease, the land is surrendered along with the building to the Lessor but the Lessor is required to pay the mutually agreed amount to the Lessee for the building.