Know all about a ‘holding over’ lease
This lease refers to the lessee retaining possession of the premises beyond the original lease term. But it does not automatically create a new tenancy
In our previous columns, we discussed the implications of having a renewal clause and an extension clause in a lease deed for an immovable property. Renewal and extension of lease deal with a situation where the lessee ( ie, tenant) wishes to continue occupying the leased premises, after the expiry of the original lease period. In both renewal and extension of lease, the rights and duties of the lessee and lessor flow from the written lease deed executed by them.
This column deals with the third kind of situation that may arise, wherein although there is no written contract that is executed, a fresh lease may come into effect by an implied agreement between the parties.
It is common knowledge that on expiry of a lease, it is the duty of the lessee to hand over vacant and peaceful possession of the premises to the lessor. The expression ‘holding over’ is used in the sense of a lessee retaining possession of the premises, beyond the original lease term. However, the mere act of retaining possession of the premises after expiry of the lease term does not necessarily or automatically create a new tenancy. In such situations, there must be a bilateral act by the parties for a new lease to be created.
Under ordinary circumstances, the lessee’s conduct of remaining in possession of the leased premises and/or offering to pay rent would indicate his desire to continue as a lessee. The lessor’s consent to this offer may be indicated by conduct such as voluntarily accepting rent from the lessee. Acceptance of rent is in most cases treated as a form of consent to the lessee continuing to have possession. Upon receiving the lessor’s consent, a fresh tenancy would stand created by virtue of an implied agreement between the parties, unless of course there is an agreement to the contrary. This would amount to a fresh tenancy even if the parties decide to continue the tenancy on the same terms and conditions of their earlier lease.
Here, a distinction must be drawn between the two classes of lessees who may be in possession of the premises after the expiry of the lease term – on one hand is X who is occupying the premises without the consent of the landlord, and on the other hand is Y who does so with the landlord’s consent. Under the law, X is a ‘tenant at sufferance’ while Y is a tenant ‘holding over’.
In simple terms, a tenant at sufferance is one who earlier had lawful possession of the property but who wrongfully continues to be in possession despite termination or expiry of the lease term. As no tenancy relationship exists in such a situation, the lessor would be entitled to seek possession of the premises by filing a suit of eviction forthwith against X. However, in the case of Y who is a lawful occupant, the lessor would first be required to give a notice for termination of the ongoing tenancy. In the event Y fails to vacate the premises beyond the termination notice period, the lessor may seek the relief of eviction.
Hence, for creation of a lease by ‘holding over’, fulfillment of two conditions are necessary. Firstly, the lessee should be in possession of the premises after expiry of the lease. Secondly, the lessor or his representative should accept rent or otherwise give his consent to the lessee continuing in possession as a lessee. The author is senior partner at Zeus Law, a corporate commercial law firm. One of its areas of specialisation is real estate transactional and litigation work. If you have any queries, email us at htestates@ hindustantimes. com or ht@ zeus.firm.in