TRANSFER OF PROPERTY

UNIT-4

1-LEASE OF IMMOVABLE PROPERTY

Lease of an immovable property is defined under Chapter V of the Transfer of Property Act,
1882.

Section 105. Lease defined. – 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.

Lessor, lessee, premium and rent defined.—The transferor is called the lessor, the transferee
is called the lessee, the price is called the premium, and the money, share, service or other
thing to be so rendered is called the rent.

A lease is a transfer of partial interest (and not absolute interest) in an immovable property
and not a transfer of ownership. Lease is considered as transfer of property since, interest in
an immovable property is considered as property. The right to enjoyment of property is
transferred for some consideration for a fixed period. The person who transfers the property
is called lessor (landlord) and the person to whom it is transferred is known as lessee (tenant),
the price is called the premium and the money, service, share or any other thing to be
rendered is called the rent.

2-LEASE AND LICENSE

Sr. No. Lease License

1 Should be according to the provisions of Section 105 Governed by provisions of Section 52 of the
of the Transfer of Property Act, 1882. Easement Act, 1882.

2 There is immediate transfer of right to enjoy There is no transfer of right. But licensee
immovable property with immediate effect. acquired right to occupy the property.

3 If during the lease-period, any accretion is made to the Licensee acquired not right in property.
property leased, such accretion is deemed to be
comprised in the lease.

4 A lease is transferable and heritable. A license is neither transferable or heritable.

5 Lessee gets a proprietary right in respect of the land; Licensee gets only a personal right of using
this right is called demise. the land of another person. The right of
 license is in the nature of a permission to do
or continue to do certain things on the
licensor’s land.

6 Lease cannot be revoked before expiry of the term or License is generally revocable subject to
without breach of any express condition by the lessee. certain conditions.

7 A lease cannot revoke at pleasure. A license can be revoked at pleasure unless

it is coupled with a transfer of property and
such transfer is in force or the licensee,
acting upon the license has executed a work
of a permanent character and incurred
expenses in the execution.

8 A lessee is entitled to a notice to quit leased property. A licensee is not entitled to such notice.

9 A lessee is entitled to maintain a suit on his own name A licensee is not entitled to maintain a suit.
against a trespasser.

10 A lessee’s interest is not liable to be defeated by a A license is determined when the grantor
subsequent transfer of the leased property. makes an assignment of the subject matter
of the license.

11 Death of either party does not affect a lease. Whereas is such circumstances as license
shall be terminated.

12 In lease amounts to transfer of property. In license no estate or interest in property is

created.

3-DURATION OF LEASE

What happens when the lease agreement does not prescribe the time period of the lease?

Section 106 provides for the duration of the lease in the absence of the lease agreement. It
lays down that in the absence of a contract, lease can be ended by both parties to the lease by
issuing a notice to quit. The prescribed time period always commences from the date of
receiving the notice to quit. Following are the circumstances:

Purpose Term (Deemed) Notice Prescribed End

Agricultural or manufacturing purpose. Year to Year 6 month 1 year

7Any other purpose. Month to Month 15 days 1 month

In this table, there is a distinction of two purposes in regard to Section 106 i.e. Agricultural or
manufacturing and other purposes. Hence, two things can be derived from this table:

1. When a lease for Agricultural or manufacturing purpose is deemed to be of year to

year, then it will attract a 6-month notice that the lease will end on the expiry of 1
year from the date of the commencement of the lease.
2. When a lease for any other purpose is deemed to be of the month to month, then it
will attract a 15-day notice that the lease will end on the expiry of 1 month from
the commencement of the lease.
There is proviso to this section which states that the notice to quit in this section should be
written and conveyed to the party who is required to abide by it. If this is not possible then it
should be attached to a conspicuous place in that property.

4-RIGHTS AND LIABILITIES OF LESSER AND LESSE

Rights and liabilities of Lessor and lessee

Rights of the lessor are

1. A lessor has a right to recover the rent from the lease which was mentioned in
the lease agreement.
2. Lessor has a right to take back the possession of his property from the lessee if
the lessee commits any breach of condition.
3. Lessor has a right to recover the amount of damages from the lessee if there is
any damage done to the property.
4. Lessor has a right to take back the possession of his property from the lessee on
the termination of the lease term prescribed in the agreement.

Liabilities of the lessor

1. The lessor has to disclose any material defect relating to the property which the
lessee does not know and cannot with ordinary supervision find out.
2. Lessor is bound by the request of the lessee to give him the right of
possession over his property.
 3. Lessor can enter into a contract with the lessee if he agrees to abide by all terms
and conditions prescribed in the agreement, he can enjoy the property for the rest
of the time period without any interference with an obligation to pay the rent later
on.

Rights of the lessee

1. During the period lease is in effect if any alteration is made (alluvion for the time
being in force) then that alteration will come under that same lease.
2. If a significant part of the property that has been leased is destroyed wholly or partly
by fire, by flood, by war, by the violent acts of the mob or by any other means
resulting in its inefficiency of being a benefit for the lessee. If this happens, the
lease is voidable at his option.
There is a proviso to this section that states if the damage is done due to any act of the lessee
himself, this remedy will not be available for him.

1. Lessee has the right to deduct any expenses he has made for repairs in the property
from the rent if the lessor has failed to in reasonable time.
2. Lessee has a right to recover any such payment which a lessor is bound to make by
can deducting it from the interest of the rent or directly from the lessor. He has this
right when the lessor has neglected to make that required payment.
3. Lessee has a right to detach all things that he may have attached in the property or
earth. His only obligation is that he has to leave the property in the same condition
as he received it.
4. When a lease is of unspecified duration in the lease agreement, lessee or his legal
representative have a right to collect all the profits or benefits from the crops which
were sown by the lessee at that property. They also have a right of free ingress and
egress from such property even if the lease ends.
5. Lessee has a right to transfer absolutely the property or any part of his interest in
that property by sub-leasing or through mortgaging. Lessee is not independent of
the terms and conditions mentioned in the lease agreement.

Liabilities of the lessee

1. Lessee is under an obligation to disclose all related material facts which are likely
to increase the value of the property for which the lessee has an interest in and the
lessor is not aware of.
2. Lessee is under an obligation to pay the rent or premium which is settled upon in
the agreement to the lessor or his agent within the prescribed time.
 3. Lessee is under an obligation to maintain the property in the condition that he
initially got the property on commencement of the lease and he has to return it in
the same condition.
4. If lessee gets to know about any proceedings relating to the property or any
encroachment or any interference, then lessee is under an obligation to give notice
to the lessor.
5. Lessee has a right to use all the assets and goods which are on the property as an
owner would use which is preserving it to the best of its nature. He is although
under obligation to prevent any other person from using that asset or good for any
other purpose from what was prescribed in the lease agreement.
6. The lessee cannot attach any permanent structure without the consent of the lessor
except for the purpose of agriculture.
7. Lessee is under an obligation to give the possession of the property back to the
lessor after the expiry of the prescribed term of the lease.

5-DETERMINATION OF LEASE

Section 111 states about the determination of the lease, which lays down the ways in which
lease is terminated:

1. Lapse of time – When the prescribed time of the lease expires, the lease is
terminated.
2. Specified event – When there is a condition on time of lease depending upon a
happening of an event.
3. Interest – Lessor’s interest to lease the property may cease, hence resulting in the
termination of the lease.
4. Same owner – When the interest of both lessor and lessee are transferred or vested
in the same person.
5. Express Surrender – This happens when the lessee ceases to have an interest in
the property and comes into a mutual agreement with the lessor.
6. Implied Surrender – When the lessee enters into a contract with another for the
lease of property, this is an implied surrender of the existing lease.
7. Forfeiture – There are three ways by which a lease can be terminated:

• When there is a breach of an express condition by the lessee. The lessor may get
the possession of the property back.
• When lessee renounces his character or gives the title of the property to a third
person.
• When the lessee is termed as insolvent by the banks, and if the conditions provide
for it, the lease will stand terminated.
 8. Expiry of Notice to Quit – When the notice to quit by the lessor to the lessee expires,
the lease will also expire.

6-WAIVER OF FORFEITURE & NOTICE TO QUIT

WaiverofForfeiture:
Sec 112 enacts that a forfeiture incurred under Sec 111(g) could be waived in any of the
following:-
(1) By Acceptance of rent accrued due after the forfeiture was incurred, but if it is accepted
after the institution of an ejectment suit against the lessee it is no waiver.

(2) By distress for rent accrued due after the forfeiture was incurred

(3) By the lessor doing an act showing an intention to treat the lease as subsisting.
Provided, that the lessor was aware of his rights that the forfeiture was incurred.

(1) Acceptance of Rent

A forfeiture incurred u/s 111 (g) is waived by the lessor or his agent had a general authority to
receive rent[2] accepting rent accrued due after the forfeiture has been incurred. But acceptance
of rent after the institution of a suit to eject lessee on the ground of forfeiture is no waiver. The
election to forfeit is complete and irrevocable once the suit for ejectment is instituted. The
acceptance of rent after the determination of the lease would not amount to waiver since the
payment of rent by a statutory lessee does not amount to lease money in the true sense of rent
but it is a statutory solatium which a lessee is required to pay to the landlord, there is no element
of contractual liability. Therefore, in W. Suryabhan v. Maharashtra Revenue Tribunal, Nagpur,
where the landlord recovers the rent from statutory lessee after obtaining an order of
termination of the lease under Berar Regulation of Agricultural Leases Act, 1951, it was held
that there is no waiver of his right to obtain the possession of the land. The institute of the suit
is simply a mode of manifesting the possession of the land.[3] On re-admission after
determination of the tenancy upon the forfeiture the old tenancy is not revived. The lessee is
bound to pay compensation for use and occupation of the immovable property in the subject
matter.[ Chengiah v. Damara, (1913) 24 MLJ]
Also, the waiver of the past breaches does not preclude the lessor from enforcing forfeiture
when the same or any other condition is subsequently broken, the condition breach aids with
re-entry.

The rent accepted which is pleaded as a waiver under Sec. 112, T.P. Act, must have accrued
after the date of the forfeiture and not prior to it. (provided under section 112 of TPA, 1882)[4]
(2) Distress for Rent: -Forfeiture is waived by distress for rent due since the forfeiture. In case
of a continuing forfeiture as for non-repair, there is no waiver after the time of distress. Distress
is regulated by the Presidency Small Causes Courts Act and not by the usual jurisdiction of the
local court.
However, proviso 1 of the Sec.112 lays down that no waiver is operative unless the lessor
waives with the knowledge that the forfeiture has been incurred. The onus would be on the
lessee to prove knowledge of the lessor. Similarly, the Proviso 2 expressly says that where rent
is accepted after the institution of a suit to eject lessee on the ground for forfeiture, such
acceptance is not a waiver. In case of State v SS Devi, it was held that he rent claimed for the
period subsequent to the forfeiture in a suit for eviction on the ground of forfeiture can be
accepted by the landlord only after the institution of the suit. It was further laid down that if
the acceptance itself does not amount to waiver, the mere claim acceptance in respect whereof
can take place only after the institution of the institution cannot be said to be under the mischief
of the clause ‘any other act on the part of the lessor showing an intention to treat the lease as
subsisting’ in Sec112. Once the election to forfeit is complete and irrevocable the institution of
the suit, claim for rent cannot be waived]

There is an exception to the general rule. The section provides that acceptance of rent due after
a forfeiture has been incurred is not waiver if it is accepted after the institution of a suit.

(3) Scope: -An act of forfeiture on the part of the tenants as contemplated by Cl. (g) of sec 111
of the Act only renders the lease voidable at the option of the landlord. The landlord, after such
forfeiture has taken place by the happening of any of the event specified in Cl. (g) of the Sec
111, is obliged to make an election as soon as he becomes aware of the tenant’s default either
to forfeit the lease or alternatively to treat the lease as still continuing by waiving the act of
forfeiture. Essentially, the rule of waiver of forfeiture is designed to prevent the landlord from
taking two consistent positions. He cannot be allowed to both approbate or reprobate. But if he
chooses to do something such as demanding or receiving the rent which can only be so
consistent with the existence of continuance of lease or tenancy he cannot thereafter be heard
to say that he has elected the forfeiture. The waiver of a right to forfeit is to be treated as an
aspect of the wider doctrine of election. However, Halsbury has observed that a landlord does
not waive the forfeiture by merely standing by and seeing it occur where, for instance, the
tenant makes alterations in breach of covenant and the landlord does not interfere; there must
be some positive act of waiver.[Held in the case of Rambux v. Sohanlal, 1961 RLW 623][5]
(4) Determination of lease by Notice to Quit: -Sec 111(h) talks about the determination of
lease by notice to quit. A lease may be terminated by a notice to quit given by the lessor, or of
his intention to quit given by the lessee. A lease may be terminated on the expiration of a notice
to determine the lease, or to quit, or of intention to quit, the property leased, duly given by one
party to another. In other words, a tenancy at will is terminated by demand for possession. A
tenancy for a fixed term determines on the expiration of the term. A periodic tenancy, however,
is terminated only by proper notice to quit. Since notice is a unilateral act performed in the
exercise of a contractual right, it must conform to the terms of the contract; and the onus of
proof of its validity is upon the person who gives it.[ Lemon v. Lardeur, (1946) 2 All ER 329]
(5) Waiver of Notice to Quit: -According to Section 113 of the Transfer of Property Act, 1882;
a notice to quit is waived with the implied or express consent of the person to whom it is given,
by any act on the part of the person giving it showing an intention to treat the lease as subsisting.
Principle
Once a valid notice is given, the tenancy will be determined upon its expiration. The parties
can waive the notice. The consent of the parties makes a new agreement. The parties can nullify
the operation of the notice as to quitting, by agreeing upon a new tenancy, whether on the terms
of the former or not, to commence from the time of its expiration. However, the tenant has to
establish that the rent taken by the landlord was legal to rent indicating his assent to the former’s
continuing in possession. [Mohan Lal Goela v. Siri Krishnan, AIR 1978]

A waiver of notice to quit cannot be merely inferred by an act on part of one of the parties and
either one of the actions or any act which thereby does not spell a contract or agreement
between the parties to a particular effect spelling a waiver. Waiver essentially presupposes an
election by the landlord and also on the part of the tenant where the tenant consents to the
notice being waived. An election is not a matter of inference but is a matter of positive choice.
Hence an election should not be merely inferred from the circumstances that after the institution
of the suit for the ejectment, payment was received by the landlord.[ Ramjilal v. Gulabrao, AIR
1979]

Section 113 would come into picture only when there is an act on the part of the lessor showing
an intention to treat the lease as subsisting. There could not be any occasion for the landlord to
show such an intention when he has already filed a suit on the basis of the termination of
tenancy. In such a case, it is the suit that has to be decided and mere payment of some amount
of rent would be irrelevant, unless a party pleads and proves that on account of the said
payment, there was a compromise of the suit[ Hashmatrai v. Tarachand, AIR 1979 BOM 95]

7-HOLDING OVER

according to Section 116 of the Transfer of Property Act 1882, these circumstances would
lead to tenancy by holding over:

��� The lessee or underlessee of the property remains in possession after the
determination of the lease granted to the lessee
��� The lessor or his legal representative either accepts rent from the lessee or
underlessee, or assents to his continuing in possession
��� There is absence of an agreement to the contrary
In such cases, the lease is renewed from yea r to year In such cases, the lease is renewed
from year to year, or from month to month, according to the purpose for which the property is
leased. For example, assume A lets a house to B for five years. B underlets the house to C
at a monthly rent of Rs 5,000.
UNIT-5