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

HT Estates - - HTESTATES - Sunil Tyagi

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

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