Terms and con­di­tions ap­ply

A lessor and lessee’s re­spon­si­bilites have to be clearly de­fined in a lease deed, fac­tor­ing in pay­ment of prop­erty-re­lated dues, re­pair work

HT Estates - - HTESTATES - Su­nil Tyagi

The pre­vi­ous col­umn dis­cussed var­i­ous clauses that par­ties must in­clude in the lease deed at the very out­set to make their rights en­force­able. This col­umn cap­tures other as­pects that the par­ties must take into con­sid­er­a­tion when ne­go­ti­at­ing the terms of the lease deed.

Rights and du­ties of lessor: A lessor has the right to re­strain the lessee from us­ing the prop­erty in an un­law­ful man­ner or in a man­ner which vi­o­lates the con­di­tions laid down in the lease deed. In the event of the lessor de­lib­er­ately sup­press­ing vi­tal in­for­ma­tion about the prop­erty be­fore ex­e­cu­tion of the lease deed, the lessee may ei­ther claim da­m­ages, or re­scind the lease con­tract, or en­force spe­cific per­for­mance of the con­tract. Be­fore en­ter­ing into a lease, it is the le­gal duty of the lessor to dis­close ma­te­rial de­fects, if any, in the ti­tle of own­er­ship of the prop­erty. At the time of ex­e­cu­tion of lease, the lessor should hand over peace­ful, phys­i­cal pos­ses­sion of the prop­erty to the lessee. Dur­ing the en­tire term of lease, the lessor is not en­ti­tled to ob­struct, hin­der or un­duly in­ter­fere with the lessee’s quiet and peace­ful pos­ses­sion and en­joy­ment of the premises, pro­vided the lessee is not in breach of terms of the lease deed. It is the lessor’s duty to make timely and full pay­ment of charges at­tached to the land/ prop­erty (ie house tax) un­less oth­er­wise spec­i­fied in the lease deed. Th­ese ba­sic covenants are im­plied in na­ture – that is, they ap­ply in the ab­sence of a con­tract to the con­trary be­tween the par­ties.

Rights and du­ties of lessee: Upon ter­mi­na­tion of the lease, a lessee may re­move all fix­tures/ fit­tings in­stalled by him in the prop­erty. In force ma­jeure con­di­tions, if any ma­te­rial part of the prop­erty is wholly de­stroyed or ren­dered per­ma­nently unfit for oc­cu­pa­tion, the lessee has the op­tion to ter­mi­nate the lease. A lessee is re­quired to pay rent on time and in the proper man­ner as spec­i­fied in the lease deed. He is also ob­li­gated to main­tain the prop­erty in a good, hab­it­able con­di­tion through­out his term of oc­cu­pa­tion. A lessee should not use ( or al­low any other per­son to use) the prop­erty for pur­poses other than what it was orig­i­nally leased for, with­out ob­tain­ing the lessor’s con­sent. A lessee can­not con­struct any per­ma­nent struc­ture in the prop­erty, with­out first ob­tain­ing the lessor’s con­sent. Also, a lessee can­not deny the lessor en­try to the prop­erty at all rea­son­able times for the pur­pose of in­spec­tion.

Upon ex­piry or ter­mi­na­tion of the lease, as the case may be, the lessee must hand over peace­ful, phys­i­cal pos­ses­sion of the prop­erty, in the state in which he and she had first re­ceived the prop­erty, ex­cept for rea­son­able wear and tear. Th­ese ba­sic covenants are also im­plied in na­ture.

Ter­mi­na­tion: The par­ties should clearly enu­mer­ate the con­di­tions of breach lead­ing to ear­lier ter­mi­na­tion of the lease.

Some in­stances of breaches by a lessee in­clude de­layed pay­ment or non- pay­ment of rent and util­ity bills, use of premises in a man­ner which vi­o­lates the per­mis­si­ble us­age, dam­ag­ing the premises, etc. In­stances of breaches by a lessor in­clude in­ter­fer­ence with the lessee’s peace­ful en­joy­ment of the premises, and fail­ure to re­pair/rec­tify ma­jor struc­tural dam­age, etc.

Stamp duty and reg­is­tra­tion: If the par­ties want to share the bur­den of pay­ing stamp duty, they must spec­ify so in the lease deed. Un­less oth­er­wise spec­i­fied in the lease deed, it is the lessee’s re­spon­si­bil­ity to pay stamp duty on the lease deed. If a lease agree­ment is not ad­e­quately stamped and/or regis­tered, it would amount to be­ing a mon­thto-month lease.

Un­der the Reg­is­tra­tion Act, 1908, lease doc­u­ments for mon­thto-month ten­ancy not ex­ceed­ing 11 months do not re­quire com­pul­sory reg­is­tra­tion. How­ever, lease of a prop­erty from year to year, or for a term ex­ceed­ing one year, or re­serv­ing yearly rent, re­quires com­pul­sory reg­is­tra­tion.

Crys­tallis­ing th­ese terms while set­ting out the par­ties’ rights, obli­ga­tions and en­ti­tle­ments in the lease deed shall go a long way in min­imis­ing land­lord-ten­ant lit­i­ga­tion.

THINKSTOCK

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