Lease is also specie of transfer of immoveable property. A lease is a partial or limited transfer of property. The enactment of Transfer of Property defines a lease as 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 for promised or of money, a share of crop, 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. Thus the owner of the property to be leased is termed as Lessor and the person who takes such property on lease and is bound to pay the consideration to the Lessor (Owner) is termed as Lessee. This type of transfer is called in conveyancing ‘a demise’. Thus by a lease or demise only a right to use the leased property is transferred subject to the terms and covenants that may be agreed upon between the Lessor and the Lessee and no ownership is transferred.
A lawyer specialised in document compliances undertakes drafting of Lease Deed subsequent to the drawing up of Search Report and issuance of Certificate of Title after he/she is of the definite opinion that the property is qualified for lease and is not subject of any legal impediment.
Once the Lease Deed is properly executed by the Lessor and Lessee the property which is the subject matter of lease gets conveyed to the Lessee who then comes into possession and occupation thereof with statutory limitations, restrictions and conditions. During the subsistence of the lease the ownership of leased property remains with the lessor/owner thereof though the possession rests with the Lessee who acquires a qualified right and limited title in the property as distinguished from the deed of Leave and License which is neither the attribute of property transfer nor it creates any legal estate in the Licensee but is only a outcome of contractual and personal relationship.
The instrument of Lease Deed is primarily governed by the special legislation of TRANSFER OF PROPERTY and incorporates therein the attributes of lease i.e. the Rights and Obligations of Lessor and Lessee, Period and commencement, Consideration, Possession, Marketable title of the Lessor, Option to renew the lease, Forfeiture clause, surrender of lease, inheritance, transfer of leasehold rights and many others.
Many states in India have their own rent control enactments which governs the operation of lease in different forms at some place running parallel to the central enactment of Transfer of Property, at other place inconsistent to it and at some another place in smooth synthesis therewith. Such state enactments term the Lessor as Landlord and the Lessee as Tenant and the consideration payable is called as rent or premium or charges or pugdee which are all traits of lease.
Where the lease created is to be concluded by the Lessee then the Lessee has to surrender his/her leasehold rights in the property in favour of the Lessor by executing appropriate Surrender or Lease Deed.
The Deed of Lease is to be drafted keeping in provision as incorporated in various Union and State statutes and legislations as applicable to and affecting the nature of the property to be leased and relating to Registration; Cantonment areas, Regional and Town Planning; Land Revenue; Rent Control; Easements; Land Acquisition; Laws relating to Freehold & Restricted Properties; Laws relating to Flats & Apartment Ownership; Tax implications, Laws relating to Agricultural & Non-Agricultural lands; Guardian and Wards to name the few.
The instrument of Lease may be in the following Forms:
- Agreement for letting furnished dwelling house or flat on short period tenancy
- Agreement to lease for a long period
- Agreement for Building lease
- Deed of Lease for a term of years
- Deed of Lease for a term in Perpetuity
- Deed of Building Lease
- Deed of Lease by Tenant Ownership Co-operative Society
- Lease of a floor premises
- Deed of Lease of space for advertisement
- Mining Lease for quarrying stones
- Deed of Sub-Lease
- Deed of Assignment of Lease
- Deed of surrender of the whole property
- Deed of Surrender of Lease of a part of property