FOUR TYPES OF LEASE-ALL YOU NEED TO KNOW
BUILDING LEASE
Building Lease:- It is a legal contract used by landlords and tenants to formally agree on the rental terms of commercial buildings that are used for office, industrial, or retail purposes. Landlords receive payments from their tenants in return for being able to use the commercial property for their business as needed.
A building lease differs from a residential real estate lease because the tenant is expected to use the property solely for business operations instead of everyday living. The space a business uses for their daily tasks is referred to as ‘demised premises’ because it is not a whole real property but is actually space within real property.
A building lease is known to be referred to as other names including:
- Business lease
- Industrial lease
- Office space lease
- Commercial lease
OCCUPATIONAL LEASE
Occupational Lease :- This lease is for use (Occupation) of land and building together. Building is erected by Lessor on the land owned by him and then it is leased together for occupation of Lessee. Ownership of land and building are both with the Lessor.Occupational lease can also be in form of leasing of ownership flat, ownership office or ownership shop which belong to lessor but is leased to lessee for occupation. This type of lease is very common in all cities of India.
Lease of ownership premises are rented out for short term period of 3 years, 5 years or 10 years. There is generally a provision of increase in rent after one year or two years interval. In India these types of leases are less for residential premises due to fear of Rent Control Act.
Flat owner prefers to give flats for occupation on leave and license basis which is under Easement Act and no occupant can claim protection under Rent Act. However some flat owners do grant occupational lease (Company lease) of flats to reputed limited companies. Occupational lease of the commercial premises is very common in all parts of our country. It is normally under Transfer of Property Act.
SUBLEASE
Sublease:- It is the re-renting of property by an existing tenant to a new third party for a portion of the tenant’s existing lease contract. The sublease agreement may also be called a sublet.
Subleasing may or may not be permitted in the terms of the original lease, and may be subject to additional restrictions by jurisdiction. Even if a sublease is permitted, the original tenant is still liable for the obligations stated in the lease agreement, such as the payment of rent each month.
- A sublease is the legal transfer of tenancy from an existing tenant to a third party for a specified period.
- The owner of the real estate must typically approve any subletting arrangement offered by the first tenant, subject to local laws and regulations.
- If a tenant decides to sublease, they remain responsible for rent payments and other contractual obligations.
LEASE FOR LIFE
Lease for life:- Under this type of lease, period of lease is directly linked (co-terminus) with the future life span of the Lessee. On the death of Lessee the lease comes to an end. This type of lease is not common in India.