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NATURE OF A LEASE
A leasehold interest is an interest in land conveyed by a rightful possessor of real property for use and
occupation of another in consideration for rent paid. The term granted could be for life, for a fixed
period or a period to be determined at will. A leasehold is capable of subsisting as a legal estate but it
must be created in a manner required by law or it is classified as an equitable interest.
TERM OF YEARS IN LEASES
A term of years or a lease may be for a year, years , year to year or it could be perpetually renewable.
It could also be for a life or lives.

It is usually couched as:

“To Oziengbe during the life of Ehimemen and Otue” or “To Itohan for 99 years if Izobo shall so
long live” or “To Nwayo for 30 years until Nwayo marries”
In National Bank of Nigeria Ltd v Companies Frassinet (1948) 19 NLR 4, the court held that the
words “the lessor agrees to let and the lessee agrees to take” are sufficient to create a lease once it
indicates the intention to give possession for a determinable time.
A term of years arises and the relationship of landlord and tenant is created whenever one person
called the landlord or lessor grants to another called the tenant or leassee, the right to the exclusive
possession of a piece of land for a definite period.
A term of years absolute means a term that is to last for a certain fixed period even though it may be
liable to come to an end before the expiration of that period by the service of a notice to quit. The re-
entry of the landlord, operation or provision for lesser on redemption as in the case of a mortgage
term. It includes a term for less than a year, a year, years or tenancy from year as is the common
practice in agricultural leases.
A term of years absolute constitute a legal estate irrespective of the fact that it does not entitle the
tenant to enter into immediate possession but is supposed to commence at a future date such a lease is
referred to as a reversionary lease.
PERPETUALLY RENEWABLE LEASES
There is no time limit to the renewing of leases. However under the Land Use Act, the maximum
period that may be granted is 99 years subject to renewal. It is the nearest approach to a perpetual
lease.
ESSENTIALS OF A TERM OF LEASES
For a term of years to arise and for the relationship of landlord and tenant to be created, there must be
in existence the relationship of landlord and tenant and possessory rights on a definite land for a
period of time must be conferred on the tenant or lessee while the landlord retains the reversion.
RIGHT OF EXCLUSIVE POSSESSION
It is essential for the subsistence of a valid lease, that the lessee shall acquire the right of possession to
the exclusion of the lessor.
The distinguishing factor in this regard between a licence and a lease lies in the fact that a lease
imports the grant of exclusive possession while a licence does not.
In Wilson v Tavener (1875) L.R 10 P.C 402

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A defendant agreed in writing to permit the plaintiff to erect a boarding on the forecourt of a cottage
and to allow him the use of a gable end of another house for a bill posting and advertising station at a
yearly rent payable quarterly. It was held that since the plaintiff had no exclusive occupation of
any piece of land, it was not a tenancy from year to year but a licence which was revocable at will on
the service of a reasonable notice
In Mobil Oil (Nigeria) Ltd v Johnson (1961) All NLR 83 A entered into an agreement with M & Co
Limited that A should operate one of their petrol service station at a standard set by the company and
on a remuneration based on rebate and commission. A was to employ staff subject to the company’s
approval but was to be responsible for their pay. It was further provided in the agreement that “the
station will be given to you with the firm understanding that upon receipt of thirty days” notice.
Following a disagreement between the parties the company took possession of the premises a
instituted proceeding against the company for unlawful entry. The court held that A had no lease but
only a licence since A had not been given any definite term of occupancy. The agreement merely
provided for its termination upon notice. The court further held that A was not entitled to damages for
trespass but since the notice he received was short of seven days, A was entitled to loss of earnings for
those seven days.
In Akpiri v West African Airways Corporations (1955) 14 WACA 195 where the appellant was
employed by the Respondent and given a house to live in on payment of a moderate rent. On the
determination of appointment he was asked to quit. He claimed he was a tenant and not a licensee. His
claim was upheld.
However, in Diocessan Synod of Lagos v Dedeke (1958) N.R.N.L.R 77, it was held that a vicar had
only a service occupancy and not a service tenancy of the vicarage and that he could therefore be
ejected when his service was terminated.

DEFINITE PERIOD
To constitute a valid lease, there must be certainty of term granted in other words, the term granted
must have a definite or certain beginning and a certain ending.
Where a lease is dependent on the happening of an uncertain event it is valid and becomes absolute
and enforceable on the occurrence of the event specified e.g. A lease to begin “ when the house
becomes vacant “

CLASSIFICATION OF LEASES
Leases can be classified as follows:

(i) Reversionary lease: A lease which is supposed to commence at a future date e.g
where a lese was made in 1996 to commence in 2026.

(ii) Lease of a reversion: Andrew grants a lease to Adesuwa from 2008 to 2012. The later
is a lease of Adesuwa’s reversion and constitutes a valid lease.

(iii) Periodic tenancy: This is a tenancy from e.g. week to week, month to month
or year to year. It is perpetually renewable until terminated by the issuance of a notice of
determination of the tenancy.

(iv) Tenancy at will: it arises when a person allows another on his land in the
understanding that he may leave at any time or be asked to leave at any time it also arise

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where a lesee of al land belonging to another authorizes a third party to occupy the land at
his will or pleasure .

(v) A tenancy at sufferance: It arises where a person continues in occupation of land

after the expiration of his lease without his landlord’s consent.
CREATION OF LEASES.
A lease may be made either by

(a) an express grant or

(b) an agreement for a lease
EXPRESS GRANT
In an express grant, the lessor or lessee must agree on all the terms of the transaction, there must be
sufficient memorandum in writing or an act of part performance.
What constitutes sufficient part performance is dependent on the perculiar circumstance of each case.
In Rawlinson v Ames (1925) Ch 96 the Defendant and the Plaintiff orally agreed to take a lease of a
flat. The Plaintiff requested that some alterations to be made to the flat and the Defendant made
frequent visits to the flat while the alteration was been made and suggested additional alterations
which was made by the Plaintiff. The Defendant subsequently repudiated the contract relying on the
absence of a written memorandum. It was held that the alterations made constituted sufficient acts of
part performance by the Plaintiff. A lease for more than 3 years is at law unenforceable unless it is
evidenced in writing but in equity such a lease could be treated as an agreement for a lease which is
enforceable by an action for specific performance.
DOCTRINE OF WALSH V LONSDALE
Where a tenant takes possession of a land under an oral agreement for more than three years, acquires
an enforceable right to call for the execution of a deed in favour of the tenant. As far as his rights and
liabilities are concerned, he is held to in the same position as if he had a deed of lease.
In Walsh v Lonsdale (1882) 21 Ch.D 9 the Defendant agreed to grant the plaintiff a lease of a mill for
7 years at an agreed rent. The lease was also to contain such stipulation in an earlier lease at a fixed
rent made payable yearly in advance. The plaintiff was let in to possession and paid rent quarterly not
in advance, for two years and a half. The Defendant then demanded one year’s rent in advance
and put in a distress. The Plaintiff instituted proceedings for damages for illegal distress, injunction
and specific performance. It was held that the Plaintiff’s held an interest similar to the position of a
grantee of a lease and under the terms of a lease, failure to pay a year’s rent in advance on demand
would have earned a distress.

EFFECT OF THE DOCTRINE OF WALSH V LONSDALE

The effect of the decision in Walsh v Lonsdale is that agreement for a lease is as good as a lease
however a lease by deed is more advantageous that an agreement for a lease in the following respects.

(a) The principle in Walsh v Lonsdale is inapplicable where equity will not grant
specific performance of the agreement.

(b) Whereas a lease is enforceable against the whole world, a mere agreement for a lease
confers only an equitable interest which is unenforceable against a bonafide purchaser for

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value of the legal estate. The doctrine of Walsh v Lonsdale is ineffective against third
parties’ rights

(c) A deed of lease constitutes a conveyance while an agreement for a lease does not.
TERMINATION OF TENANCIES
A lease may be terminated in any of the following manner;

(1) By surrender of the lease to the landlord in the manner it was granted e.g. if the lease
was granted by deed, it should be surrendered in like manner

(2) By effluxion of time. On the extinguishment of the lease, the landlord is

automatically entitled to the reversionary interest.

(3) By the merger of the lease and reversionary interest in the same person which could
be either the landlord or the tenant.

(4) By service of a valid notice to quit on the tenant by the landlord

IMPACT OF LAND USE ACT ON LEASES
The land use act did not significantly impact on leases. It provided that all existing laws relating to
interest in land or transfer of title in land shall have effect subject to such modifications as will bring
the agreements into conformity with the provisions of the act. See section 48 of the Land Use Act.
The only provisions of the Land Use Act which affects leases is the provisions earlier discussed
which mandates the consent of the Governor of the state in which the land is located to be first had
and obtained before any transaction relating to land can be validly embarked on. This evidently
includes leases.

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MORTGAGE
What is a mortgage?
A mortgage is a debt instrument, secured by the collateral of specified real estate property, that the
borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by
individuals and businesses to make large real estate purchases without paying the entire value of the
purchase up front. Over a period of many years, the borrower repays the loan, plus interest, until
he/she eventually owns the property free and clear. Mortgages are also known as "liens against
property" or "claims on property." If the borrower stops paying the mortgage, the bank can foreclose.

A legal agreement that conveys the conditional right of ownership on an asset or property by its
owner (the mortgagor) to a lender (the mortgagee) as security for a loan. The lender's security
interest is recorded in the register of title documents to make it public information, and is voided
when the loan is repaid in full.
Read more: http://www.businessdictionary.com/definition/mortgage.html
In Santley v Wilde: 1899. Ratio: Lord Lindley considered the nature of a mortgage and said: 'the
principle is this: a mortgage is a conveyance of land or an assignment of chattels as a security for the
payment of a debt, or the discharge of some other obligation for which it is given.
This is a conveyance of a legal or equitable interest in property from a person called a mortgagor to
another known as the mortgagee as security for the repayment of a loan or for the performance of
some other obligation in mortgage see. Santley v Wilde. As simple as that is, we may underline:
(conveyance, security, mortgagee, and mortgagor).
NOTE
A mortgage involves the transfer of an interest in land as security for a loan or other obligation. It is
the most common method of financing real estate transactions. The mortgagor is the party
transferring the interest in land.
What distinguishes a mortgage from other transaction is that it has "security". Thus, in mortgage
situation, the mortgagee has "a proprietary interest" use Zenith bank as example and Maazi Okoro.
Eg, where Wunmi (mortgagor) being a business woman and known to be an importer and exporter of
rice, when she met Adura (mortgagee), who represents Zenith bank in this instance. She gave Wunmi
100 million. However, she requested a collateral in the nature of security and Wunmi presented her 5
hectares of land as security.
Also note. In a mortgage situation, security for loan is what is used as collateral. Usually land is
usually the security for loan. Having said this, in a mortgage situation, there must be a “seizer upon
redemption’ (equitable redemption) clause that is the mortgage seizes upon redemption.

TYPES OF MORTGAGES
 Legal mortgage.

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 Equitable mortgage.
 Mortgage of equitable interest.

A person can have both legal and equitable interest in a land or property.
What Is A Legal Mortgage?
A legal mortgage is the most secure and comprehensive form of security interest. It
transfers legal title to the Mortgagee and prevents the mortgagor from dealing with the mortgaged
asset while it is subject to the mortgage. However, legislation has affected the characteristics of a
legal mortgage over land. As a result of the Law of Property Act 1925, a legal mortgage over land is
now normally created by a document creating a "charge by deed expressed to be by way of legal
mortgage" rather than by the mortgagor transferring the legal title to the land to the mortgagee. Even
though title is not transferred to the mortgagee (as it is with a mortgage of other assets), this type of
security interest gives the mortgagee equivalent rights.
This is a written document of conveyance. It can also be regarded as a deed which must be signed
sealed and delivered that is it must be properly executed. In the past, the red adhesive (wax) waiver is
used as a seal. Nb. In recent times, for a document to be signed seals and delivered, it must be
properly (executed). I.e, signed. Everyone must sign and it must be in the presence of witnesses.
Furthermore, if it is a company, the seal of the company must be on it.

What Is Equitable Mortgage?

An equitable mortgage arises where the formalities to create a legal mortgage have not been
completed or where the asset being mortgaged is only an equitable interest. An equitable mortgage
only transfers a beneficial interest in the asset to the mortgagee with legal title remaining with the
mortgagor.
Here you don't have a legal right to this property, but an equitable right. E.g, where you want to
borrow money with that same land that you no longer have a legal interest in, you may use your
equitable interest to borrow such. E.g. where you have transferred your legal right under a deed, you
may also use the land to activate an equitable mortgage. Hence, when two equities are in dispute, the
first in time prevail.

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TYPES AND MODES OF CREATING MORTGAGES
 Common law
 Equity
 Statutes.
COMMON LAW
In England then, there are two ways of creating mortgages; free hold & term of years.
FREEHOLD
The freeholder of a property owns it outright, including the land it's built on. If you buy a freehold,
you're responsible for maintaining your property and land, so you'll need to budget for these costs.
Most houses are freehold but some might be leasehold – usually through shared-ownership schemes.
This was a form of a pledge in the old England days. It operates in two forms. On the one hand is
where the mortgagee can use the security for loan to offset the principal & interest. Going further, this
is such that where the mortgagor cannot meet up with the living pledge, the mortgagee may use the
property to offset the principal and interest known as (vivum vadum (living pledge). Also, where the
mortgagee uses the security to offset the interest is known as (motum vadum. (dead debt-because the
mortgagor keeps on paying. This hasn’t release the mortgagor from paying).
Later in the 15th century, another form of mortgage came up – in that if the mortgagor does not pay up
at the particular time, the mortgagee becomes the owner of the property. Here this is harsh in that
where the mortgagor cannot pay, the mortgagee takes up the property. In Kreglinger v New
Patagonia meats and cold storage co. 1914, App g 5. Lord Haldane says-----this principle is so
unfair, even to the extent that the mortgagor will lose his security and still pay. Also Tom borough v
Baker, lord Northing ham says -it is very unfair for the mortgagee to hold the property and not to own
the property.
TERM OF YEARS
This can be divided into (I. Sub-lease/sub demise. & ii. Assignment.)
Sub-demise/sub-lease
A lease hold is for a certain term of years. It is not an absolute right to property. Here the
mortgagor has an interest for a certain number of years say 20 years and he may want to
mortgage 15 years. Also, in sublease, the mortgagee doesn’t lease the entire property out e.g.,
If you have a lease of 10 years, you can only mortgage for 8 years; there should be a
remainder in you (the mortgagor) at least for two years. Unlike an assignment where you can
lease everything out; the 10 years. The advantage in a sublease is that, there is no privity of
estate between the mortgagee-sublessee & the Headlessor.
Eg. Simi the headlessor (who the lease starst from) and also has a property in Lagos, leases
out the property to Ife, the headlessee. Ife wants to do business and she mortgaged 15 years
(of the land/house/farm) out of the 20 years to the sublessee who is also the mortgagee i.e,
Schempo (zenith bank) of which Ife, the headlessor-sublessor, sublets the land to Schempo
the mortgagee. Thus in essence, there is no privity of contract between the headlessor & the
sublesee mortgagee, i.e (Simi & Schempo) and he is not bound (the mortggee sublessee) by
covenants running with the land between the [headlessor & the headlesee-sublessor-
mortgagor.] i.e, between Ife & Simi.
Assignment

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An assignment of mortgage is a document which indicates that a mortgage has been
transferred from the original lender or borrower to a third party. Assignments
of mortgage are more commonly seen when lenders sell mortgages to other lenders. This
document indicates that the loan obligation has been transferred. In an assignment, you can
mortgage the whole interest you have in a property that is you can mortgage the entire 10
years.
EQUITY
 Equitable interest
 Agreement to create a legal mortgage.
 Delivery of title in equitable interest.

EQUITABLE INTEREST
An equitable mortgage arises where the formalities to create a legal mortgage have not been
completed or where the asset being mortgaged is only an equitable interest. An equitable
mortgage only transfers a beneficial interest in the asset to the mortgagee with legal title remaining
with the mortgagor.
If the interest one has in a property is equitable, it is the equitable interest that one can transfer. You
cannot vive what you don’t have, which is the equitable interest.

AGREEMENT TO CREATE A LEGAL MORTGAGE

If there is an agreement to create a legal mortgage between the mortgagor and a mortgagee; that in
itself will be regarded as a legal mortgage because equity sees as done what ought to be done. (this
happens where a legal mortgage has been created)
If a legal mortgage falls short of a legal mortgage, it will be regarded as an equitable mortgage.
Instead of throwing it away, it will be construed as an equitable mortgage. Whereas, a legal mortgage
has to be signed sealed and delivered.

DELIVERY OF TITLE DEEDS

It was held in Russell v Russell – that a mere deposit of title deeds amounts to (creation of mortgages
in equity). Now the position has changed into delivery in the case of ACB V Yesufu -that a mere
deposit of title deed does not suffice. It must be supported by a memorandum and delivered
contemporaneously (at the same time) with the document of title deed, under seal.

BY STATUTES
Under the property and conveyance law, S109 stipulates the way we can create a mortgage by
leasehold. S110, states the right of a mortgagee and a mortgagor.

RIGHTS OF THE MORTGAGEE AND THE MORTGAGOR

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RIGHTS OF MORTGAGEE :-
Following are the important rights of mortgagee :

1. Selling Right :-
A legal mortgagee has the power to sell this is statutory and implied in the mortgage deed. This arises
when the is a default in the principal sum or interest. NB. There is a different when the power of sale
arises and when it becomes exercisable. This can arise and may not become exercisable. The power of
sale will become exercisable where
1. There has been a notice of default of payment to the mortgagor and that power is exercisable
after 3 months.
2. If the interest or any instalment have become due for two months, this power may be
exercised.
3. If there is a breach of any covenant or agreement in the deed of mortgage that imposes an
obligation on the mortgagor
NB. The mortgagee is not a trustee for the power of sale but for the proceed of sale. And he can
exercise this power either by public or private auction. See Okonkwo v Coporative & Commerce
Bank of Nigeria 1997 6NWLR Pt 507 Pg48. Also Ekha-etet v Nigerian Development Society &
ORS. 1973 NSCC V8 Pg 373.

If borrower fails to return the loan in time then the mortgagee has the right to sell the property of the
mortgagor. But it will be sold and getting decree from the court. Property will be sold by auction.

2. Shortage Of Money Case :-

After selling the property if amount is less than the loan, the balance can be recovered from the person
by getting the decree from the court.

3. Usufructuary Case :-
In this case mortgagee has no right to sell the property and to obtain the decree from the court. The
banker can retain the possession till the recovery of the loan.

4. Refusal Of Debt :-
If a borrower refuses to return the loan or he is unable to pay the debt then the lender can get a
foreclosure decree from the court.

5. Adjustment Of Payment :-
The banker has a right to distribute the payment received after the sale of property according the
principal amount, interest and other charges.

6. Joint Suit :-
If the mortgagor are more than one person then suit will be filed against all of them if the loan is not
returned

7. Sale Of Private Property :-

In case of private property the mortgagee will issue at least 3 months notice to the mortgagor before
selling the property.

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8. Right of possession:
Ordinarily, it is not advised for the mortgagee to go into possession. This is so because equity doesn’t
initially advise this. However, certain circumstances may warrant this. Such as when other people
want to trespass or sell the land. Also, where the mortgagor is a reckless spender (he plays lotto and
gambles a lot); the mortgagee is advised to go into possession. Nb, the mortgagee has a right of
possession the moment the agreement of mortgage is entered into. In Foremate Ltd v Doubly
Marshal Property Ltd. 1957 I Chancery. In that case, Herman j says – ‘Even before the ink dries on
the mortgage transaction, the mortgagee has the right to go into possession’. The implication of this is
that- the mortgagee can enter into the land and collect rents. Also, the it isn’t as if the mortgagee can
squander the money or expense. The mortgagee has a right to account. He is to take his principal and
give the profits made to the mortgagor. But (does this happen in real life). However, where the
mortgagee lets the property to himself, he must pay fair rent which would be used to offset the
principal or interest without rendering account.
Also, the mortgagee could however, reasonably improve the property. See Nigerian loan v
Ajetumobi. Here, the defendant borrowed money from the plaintiff to improve the property. He spent
the money meant for improving the property on something else. For fear of dilapidation, the
mortgagee improved the property (repair). Subsequently, the mortgagee requested remuneration. The
court held that the mortgagor is bound to pay (remunerate) the mortgagee. It doesn’t matter that the
mortgagee improved the mortgagor out of his own estate.
In Awojugbagbe light industry v chinukwe where the mortgagee came into the property and the
mortgagor used his dogs to chase the mortgagee. the court held that the mortgagor cannot prevent the
mortgagee from entering into the property. He cannot be guilty of trespass.
An equitable mortgagee doesn’t have a right to go into physical possession like the legal mortgagee.
The right does not arise from inception and except that mortgage comes with a title deed. This was the
position in Marious v Anchor reversionary company.
9. Appointment of receiver.
This is a statutory right just as a receiver. A receiver is like a manager who will manage the property
on behalf of the mortgagee and the mortgagor. This is in their best interest. Usually the receiver is the
mortgagor’s agent. The reason for this is such that he deals with property in a way that justice will be
done.
How does the receiver spend the proceed of rent?
1. For discharge of all taxes, outgoing rates
2. Payment of mortgagees that rank before the present mortgage.
3. He will pay his own commission that he is entitled to as a manager
4. Payment of the mortgage interest owed by the mortgagor. (discharging of interest)
5. He will discharge the principal sum as directed by the mortgagee to the mortgagor.

10. Foreclosure.
This is one of the remedies of a mortgagee. This is where the equity of redemption of the is
extinguished. Here, the mortgagee will have to apply to the court for that. This only happens when the
mortgagor has defaulted in the principal and interest. Usually, the court is usually reluctant to grant
this order of foreclosure but convert it to the order of sale. In this scenario, foreclosure, means- winner

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takes all. Also, foreclosure brings finality. Once you pursue foreclosure, you cannot pursue any other
right. i.e, you cannot porsue possession, appoint receiver, sell, etc…
Before the court can grant a decree of foreclosure, it will initially grant foreclosure nisi-- (6 months).
This is so such that within this 6 months, the mortgagor may run around to rescue his property. If
there is no redemption after 6 months, the property may be foreclosed.
However, the law is so magnanimous such that the foreclosure may still be re-opened in special
circumstances. Jasell MR in Campbell v Holyland 1877 CD lays down some condition that will
make the court re-open foreclosure:

1. The promptness of the mortgagor. (equity aids the vigilant and not the indolent)
2. The mortgagor comes and cites accidents as an example. Where the mortgagor comes and
plead the defense of accident and that it is not your doing or intentional. E.g, if your shop got
burnt and you couldn’t immediately recuperate. Accident (act of God).
3. Where the mortgagor attaches a special value to the property. E.g, where a mortgagor can
show that the property is a generational property. Also, say there is a grave of the
grandmother or mother or sibling that was there, the court may consider that
4. If there is marked disparity between the value of the property and the loan. E.g, where the
property is valued at 100 million and the loan is just 20 million, the court may consider the
mortgagor to offset the mortgage loan. The rule is ------‘foreclosure down’.
LIABILITIES OF MORTGAGEE :-
When property is in the possession of the mortgagee then it has the following duties or liabilities :
1. Property may not be damaged.
2. No alteration is allowed in property.
3. The property must be insured.
4. Property must be kept secured.
5. Rent of the property must be collected.
6. Govt. Revenue must be paid.
7. Property must be kept clear from all dues.

RIGHTS AND LIABILITIES OF MORTGAGOR :-

1. Redeem Of Property :-
As the loan is returned then a mortgagor has a right to redeem the property. All documents and the
mortgage deed should be returned to the borrower.

2. Right To Claim Damages :-

If the property is damaged during the possession of the mortgagee then the mortgagor has a right to
claim the damages from the mortgagee.

3. Partial Redemption :-
If mortgagee wants to acquire a share in the mortgaged property through inheritance or purchase the
mortgagor has the right of partial redemption.

4. Right Of Lease :-
If the possession of the property is in the hands of mortgagor then he can make lease of this property
for the ordinary period.

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5. Follow The Agreement Deed :-

The mortgagor will observe all the conditions contained in the agreement deed. He will also defend
the title of property if the property is in his possession.

6. Recovery Of Possession :-
When the mortgagor returns the loan then he has a right to recover the possession of the property from
the mortgagee.

7. Liability Of Taxes :-
If property is in the possession of the mortgagor then the liability of all types of taxes will be on the
mortgagor over of Modarba certificates is not impressive. Now the ratio of equity is very high in
relation to debt financing.

8. Control Of Modarba Companies :-

There are many checks on the Modarba companies to regulate the modarba. The state bank, religious
board, corporate law authority and registrar of modarba are responsible to regulate the modarba
company.

9. Appointment Of Auditor :-
It is very necessary that modarba company should appoint the auditor. Auditor should be qualified
charted accountant approved by the registrar. The auditor should certify the objectives and accounts of
the modarba.

10. Audit Report Of The Company :-

Auditor verified balance sheet and profit and loss report about the company must be given to the
modarba certificate holders with in six month of the closing accounts period.
11. Right to bring action.
The mortgagor has the right to bring action against intruders and trespassers in respect of the property.

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EASEMENT AND PROFIT APPRENDRE
A lot of the concepts and rules here are quite similar to the rules for freehold covenants and it’s easy
to get them mixed up in the heat of exam pressure, but as with the rules for covenants it’s simply a
questionof working through the rules methodically and applying them to a scenario.
An easement is a property right that gives its holder an interest in land that's owned by someone else.
It's common for people to lack a clear understanding of easements and the numerous legal problems
that can arise in their creation, interpretation, and implementation. Luckily, you've come to the right
place. This article will provide some basic information about easements including how easements are
created and transferred. In this article you can also find out about the rights and remedies provided by
easements, and an overview of the legal issues consider when it comes to easements.
An easement can be a legal interest in land if it is granted for the equivalent of a freehold or
leasehold term. In other words, if it is granted or reserved forever or for a set period of time.
hasn’t beengranted for the equivalent of a freehold or leasehold term then thateasements can only ever
be equitable because it’s an easement for an uncertain term.

EASEMENTS AT A GLANCE
An easement is a "nonpossessory" property interest that allows the holder of the easement to use
property that he or she does not own or possess. An easement doesn't allow the easement holder to
occupy the land or to exclude others from the land, unless they interfere with the easement holder's
use. In contrast, the possessor of the land may continue to use the easement and may exclude
everyone except the easement holder from the land.
Land affected or "burdened" by an easement is called a "servient estate," while the land or person
benefited by the easement is known as the "dominant estate." If the easement benefits a particular
piece of land, it's said to be "appurtenant" to the land. If the easement only benefits an individual
personally, not as an owner of a particular piece of land, the easement is termed "in gross." Most
easements are affirmative, which means that they authorize use of another's land. Less common
are negative easements, which usually involve preserving a person's access to light or view by
limiting what can be done on neighboring or nearby property.
CHARACTERISTICS OF EASEMENT
1) There must be dominant and a servient tenement;
2) The easement must accommodate the dominant tenement;
3) The right of easement must be possessed for the beneficial enjoyment of the dominant
tenement;
4) Dominant and servient owners must be different persons;
5) The right should entitle the dominant owner to do and continue to do something , or to
prevent and continue to prevent something
being done, in or upon, or in respect of servient tenement; and
6) That something must be of certain or well defined character and be capable of forming
the subject matter of grant.
CREATION OF AN EASEMENT
Easements are usually created by conveyance in a deed, or some other written document such as a
will or contract. Creating an easement requires the same formalities as the transferring or creating of
other interests in land, which typically requires: a written instrument, a signature, and proper delivery

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of the document. In limited circumstances, a court will create an easement by implying its existence
based on the circumstances.
Two common easements created by implication are easements of necessity and easements implied
from quasi-easements. Easements of necessity are typically implied to provide access to a landlocked
piece of property. Easements implied from quasi-easements are based on a landowner's prior
utilization of part of his or her property for the benefit of another portion of his land. Other methods
of establishing easements include prescriptive use (the routine, adverse use of another's
land), estoppel, custom, public trust, and condemnation.
RIGHTS AND REMEDIES UNDER AN EASEMENT
As a general rule, an easement holder has a right to do "whatever is reasonably convenient or
necessary in order to enjoy fully the purposes for which the easement was granted," as long as he or
she does not place an unreasonable burden on the servient land. Conversely, the owner of the servient
land may make any use of that land that does not unduly interfere with the easement holder's use of
the easement. What constitutes an undue burden depends upon the facts of each individual situation.
The concept of reasonableness includes a consideration of changes in the surrounding area, as well as
technological developments.
TRANSFERABILITY
In general, an easement appurtenant is transferred with the dominant property even if this is not
mentioned in the transferring document. But, the document transferring the dominant estate may
expressly provide that the easement shall not pass with the land.
Because easements in gross are treated as a right of personal enjoyment for the original holder, they
are generally not transferable. However, several states have enacted statutes designed to facilitate the
transfer of easements in gross. The transfer of easements in gross for commercial uses such as
telephones, pipelines, transmission lines, and railroads is often permitted.
OTHER LEGAL ISSUES TO CONSIDER
Courts generally assume easements are created to last forever, unless otherwise indicated in the
document creating the easement. Despite this, an individual granting an easement should avoid any
potential legal or interpretive problem by expressly providing that the easement is permanent.
Although permanent easements are the norm, they can be terminated in a number of ways. Easements
of limited duration are commonly used to provide temporary access to a dominant estate pending the
completion of construction work.
An easement may also be terminated when an individual owning the dominant estate purchases the
servient estate, or when the holder of an easement releases his or her right in the easement (in writing)
to the owner of the servient estate. Abandonment of an easement can also extinguish the interest, but
as a general rule just not using an easement doesn't constitute abandonment. Under some
circumstances, misuse or the sale of a servient estate may terminate an easement. Finally,
condemnation of an easement by a public authority, or condemnation of the servient estate for a
purpose that conflicts with the easement, terminates an existing easement.

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LET AN ATTORNEY EASE YOUR EASEMENT CONCERNS

The prevalence of easements and their nonpossessory nature creates a unique set of considerations
when creating, interpreting, and implementing an easement. It's essential to have a basic
understanding of the manner in which they're created, their scope and transferability, and how they're
terminated. A real estate attorney with easement experience can help set you on the right path.

The fact that an easement exists necessarily involves some restriction of the use of the servient land. 'o
if the dominant owner is given a right of way over ad(joining land, then that will restrict what the
servient owner can do on that land because the right cannot be interfered with.

EASEMENTS VS COVENANTS

It’s important to understand that there is a deference between an easement which

indirectly restricts or interferes with the use or enjoyment of somebody else’s land and a restrictive
covenant which is a more direct interference or promise not to do something that directly interferes
with the use or enjoyment of land.

TYPES EASEMENT

• Positive easements

These give the dominant owner the right to physically do something " e.g. a right of way, right of
drainage.

• Negative easements

These don’t involve actually going onto the servient land" e.g. rights of light. !he dominant owner is
entirely passive in this situation.

• Both positive and negative easements

Restrict the use of the servient land. for example, if have a right of way over somebody’s land or a
right of drainage under it, the servient owner is restricted in his or her use of the land because they
won’t be able to build over or obstruct the route in any way. Similarly, if have a right of light over
my neighbor’s land, the servient owner is still restricted in what he or she can do because they can’t
interfere with the passage of light" so for example, they can’t build an extension or allow trees to
grow to such height that it obscures the light. Whilst positive easements indirectly restrict the way the
servient land is used, it’s fair to say that negative easements are usually more restrictive on the
servient owner. -e.g.

MEG AND ANNIE

Originally -e.g. owned a house and a held and she wanted to sell the held to Annie who might want to
build a house on it to live in when she starts her pig farm. if -e.g. is sensible when she sells the land to
Annie, not only will she think about the covenants that she’d like to impose, but she would also think
about the rights that she will need to keep or reserve for herself over the land that she is selling,
in order for hereto en(oy her part of the land to the full.-e.g. might want to reserve a right of way over
the footpath across the#eld to the main road. 'he might also want to reserve a right of drainage through
the pipes from the house under the #eld, to the connection with the main sewer under the road" and
she might also want to reserve a right of light to the back garden of her house, so that she can continue
to en(other sunshine./ere, the rights of way and the right of drainage which involves the

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rightto use the pipes, are positive easements. !he right of light doesn’tauthorise -eg to go on to Annie’s
land to do anything, so it’s a negative easement, but this means that Annie can’t do anything on her
land which would restrict the passage of light to -eg’s garden. Nevertheless, this is not a promise by
Annie not to build * that would be a restrictive
covenant. !his is much more oblique" depending on the layout of the land, Anniemay get away with
building a bungalow instead of a house. 'he would most certainly not get away with building a block
of 0ats, but the fact issue would be prevented from doing this not by a restrictive covenant but by an
easement of light.

CATEGORIES OF EASEMENTS
The categories of easement is not static but varies with modern societal requirement, trade and
circumstances they include:
Right of way.
Right of light that the light flowing over adjoining land to a window should not be unreasonably
obstructed
Right to water connection include a right to divert the course of a stream for irrigation purposes of a
right to discharge water to the land of another.
Right to fencing which includes right to have a fence maintained by an adjoining owner
A right to the support of buildings by adjoining lands or buildings
Miscellaneous easement includes:

(a) right to hang dothes on a line passing over neighbouring soil

(b) right to run telephone lines over neighbouring land
(c) right to fix a signboard on the walls of another person’s house
(d) right to lay stones on adjoining land to regulate soil erosion
(e) right to use an airfield.

DISTINCTION BETWEEN EASEMENT AND OTHER RIGHTS.

There is need to distinguish easement from other rights which have similar characterizes.

1) Licences: A licence is permission granted to enter the land of another for an agreed
purpose which otherwise would be a trespass. An easement is narrower than a licence. An
easement must be created by actual, implied or presumed grant. A licence can be created
informally. An easement is not a personal right but is as of necessity annexed to a dominant
tenement and once established, there can never be any question of its unilateral revocation by
the servient owner
2) Customary right: fluctuating number of person inhabiting of a village may be
entitled to exercise over another’s land rights which would properly be termed easement e.g.
where the inhabitants of a village pass across another’s land on their way to the farm or where
fishing inhabitants dry their nets on certain property. Such rights are not easements. An
easement lies in a grant and a vague and fluctuating body of persons such as fishing
inhabitants is not a legal person and is incapable of taking under a grant.
3) Natural rights: Natural rights differ from easement because it is not dependent on
some form of grant and cannot be extinguished by unity of seisin
4) Public rights: They are rights exercisable by members of the public e.g rights to pass
along a public high way. They are legal rights not dependent on the general tenement.

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LEGAL AND EQUITABLE EASEMENTS

An easement is either legal or equitable, the nature of a legal and equitable easement constituents will
subsequently be discussed.

LEGAL EASEMENT:

An easement is held to be legal or statutory when it complies with the law of property Act 1925 and
the interest held is equitable to an estate in fee simple absolute in possession or a term of years
absolute

EQUITABLE EASEMENT:

An equitable easement is any easement liberty or priiviledge over or affecting land for the life of the
grantee or created for value informally.

DETERMINATION OF EASEMENTS

The mode of extinguishing easement include:

(1) By statute: Easement may be extinguished by statutory provisions. Where a right has
been regulated by town and country planning laws or revoked on grounds of public policy,
all private rights of way, rights of laying down, erecting, continuing to maintain any
apparatus on, under or over the land is affected

(2) By release: the extinguishment may be effected by express or implied release. A

dominant owner is free to execute a deed of release relieving the servient tenement from the
burden of any easement to which it is subject. Release can be implied by the non user of an
easement together with the surrounding circumstances. In Swan v Sinclair (1925) A C 227
the court held that although mere non user is insufficient to extinguish an easement of right
of way, the surrounding circumstance sufficiently show an intention on the owners to
abandon the project.

(3) By Unity of Seisin : Easements are extinguished by unity of seisin. This occurs when
both the dominant and the servient tenement become united in the same owner as the owner
is at liberty to do what he likes with his property.

DISTINGUISH' EASEMENTS FROM PROFITS A PRENDRE

A profit is a right to take something from somebody else’s land. Traditionally these include rights to
cut wood cut peat, to fish, or to gra1e pigs in somebody else’s forest. !hey are not taught on the
syllabus, but they will probably be encountered if you practice in a rural area.
PROFITS À PRENDRE, meanwhile, are to do with the right of one party (the owner of the dominant
tenement) to take part of the soil, minerals or natural produce that is found on or in land owned by
another party (the owner of the servient tenement). This is a right that does not occur in easements.
Further, profits à prendre exist “in gross”, which means that the land which comprises the dominant
tenement need not be adjacent or neighboring to the land subject to the servient tenement, whereas
with easements there is a requirement for neighboring or adjacent land.

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Profits à prendre entitle the owner of the dominant tenement to take either a part of the land itself
(such as soil or sand) or take parts of things that grow on or in the land (for example, timber or crops)
or to take living creatures that grow on or in the land or waters within the servient tenement. Water is
exceptional in that it cannot be owned (Alfred F Beckett Ltd v Lyons [1967] Ch 449, CA).
Examination Consideration: Can you remember the distinctions between easements and profits à
prendre? In an exam, it is crucial to correctly discern whether a right of one landowner over land
owned by another is an easement or a profit à prendre because they each have different conditions
and different rights.
PROFITS À PRENDRE
Profits are classified into those enjoyed by the owner to exclusion of others referred to “several profits
are prendre “ or those enjoyed by the owner of the owner in common with other persons including the
owner of the subservient tenement referred to as profit a prendre in common or simply “commons”.
A right of common may be said to exist where two or more take in common with each other from the
soil of a third person, a part of the natural profit then produced. While every common is a profit a
prendre, all profits a prendre are not necessarily common.
CLASSIFICATION OF PROFIT A PRENDRE
Right of profits are classified according to their subject matter into four kinds namely:

(a) Commons of pastures: It is the most common pasture. It arises when the owner of
cattle is in common with others entitled to graze cattle on the land of another.

(b) Commons of piscary: The right to take fish from another’s private’s private pond or
river.

(c) Commons of turbary: The right to take turf or peat from another’s land
(d) Commons of estovers: The right to take materials for house building or house hold
purposes from another’s land.
DISTINCTION BETWEEN EASEMENT AND PROFIT A PRENDRE
Profits and easement have similar trails but differs in certain respects as follows:

(a) A profit involves the taking of something from the land of another whereas an
easement does not

(b) A profit may exist in gross. In other words one need not be an immediate neighbour
or even a land owner in order to enjoy a profit whereas this is an essential condition for the
enjoyment of an easement

(c) A profit may be appended to land that is annexed at common law without the
necessity for the grant of a deed.
ACQUISITION OF PROFIT A PRENDRE
The various methods of acquiring easement are applicable to the acquisition of profit a prendre with
very few exceptions. They include:

(i) Statutorily acquisition.

(ii) By express grant

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(iii) By implied grant
(iv) By presumed grant or prescription.

DETERMINATION OF PROFIT A PRENDRE

A profit a prendre may be extinguished in any of the following methods:

(a) Unity of Seisin: If the owner of the profit or common also becomes owner of the land
over which the right is exercisable, it extinguished the right provided there is unity of his
estate in the right and in the land. In other words, when one person becomes seised of the
dominant and subservient tenement, the profit a prendre lapses. Where however the
owner of the profit takes a lease of the servient tenement, the result of the unity of
possession which is distinguishable from unity of seisin is that the seisin in suspended and
will revive on the expiration of the lease.

(b) Release: A release of a profit in favour of the servient owner extinguishes it as a man
cannot have a profit or common on his own land

(c) Alteration of dominant tenement: Non user of a profit a prendre does not
extinguish the right but where the character of the dominant tenement is so altered as to
make any further appurtenances impossible, it raises the presumption of extinguishment.
If for example a land in which a common of pasture was granted is converted to a building,
the common is destroyed. However where the conversion is revocable as where an orchard
is planted, the profit is suspended but could be resumed on the restoration of the land to its
original state.

(d) Approvement and inclosure of commons: Right of commons may be partially

extinguished by approvement and wholly extinguished by inclosure.

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