All about recitals and tes­ta­tums

HT Estates - - HTESTATES -

In the last col­umn, we had ex­am­ined the gen­eral prin­ci­ples gov­ern­ing the draft­ing of a lease. The dif­fer­ent parts of an agree­ment in­clud­ing recitals and tes­ta­tum were ex­plained. In to­day’s ar­ti­cle, we shall fo­cus a lit­tle more on th­ese two as­pects.

Recitals pro­vide the cir­cum­stances in the back­drop of which an agree­ment is signed. For ease of ref­er­ence, th­ese be­gin with the words ‘Whereas’. Though they can be of pow­er­ful ev­i­den­tiary value, recitals are not en­force­able. Since the tes­ta­tum forms the en­force­able and bind­ing part of the con­tract, it is very im­por­tant for both land­lord and ten­ant to re­tain such parts of their en­force­able un­der­stand­ing un­der the tes­ta­tum por­tion of the lease agree­ment.

Recitals are also of two types -- nar­ra­tive and in­tro­duc­tory . Nar­ra­tive recitals typ­i­cally ex­plain the man­ner in which ti­tle has de­volved upon the owner/land­lord.

It is good prac­tice for the nar­ra­tive recitals to con­tain rep­re­sen­ta­tions by both par­ties, which form the ba­sis on which the other party re­lies and en­ters into the lease agree­ment. From the land­lord’s end, such rep­re­sen­ta­tions would in­clude the sta­tus of their own­er­ship and ex­pla­na­tion on how the sig­na­tory de­rives it au­thor­ity to en­ter into the agree­ment and a rep­re­sen­ta­tion that the premises are not en­cum­bered in any man­ner.

If the premises are mort­gaged, the sta­tus thereof should be rep­re­sented ac­cu­rately, in­clud­ing a state­ment to the ef­fect that there are no out­stand­ings due and payable to the mort­gagee. The nar­ra­tive recital should also ac­cu­rately rep­re­sent the sta­tus of any lit­i­ga­tions/pro­ceed­ings pend­ing with re­gard to the prop­erty be­fore any ju­di­cial, quasi-ju­di­cial or ad­min­is­tra­tive au­thor­ity and their pos­si­ble im­pact on the lease dur­ing the term.

A rep­re­sen­ta­tion that all pay­ments, in re­gard to the premises, have been paid in­clud­ing prop­erty taxes, elec­tric­ity bills, tele­phone bills and main­te­nance charges and the same are not in ar­rears, is a must. Where the prop­erty in­volved is an HUF (Hindu un­di­vided fam­ily) prop­erty and the prop­erty is be­ing leased out of ne­ces­sity, the fac­tum of such ne­ces­sity should also be laid out in the recitals.

Th­ese rep­re­sen­ta­tions are im­por­tant be­cause they clearly show that the ten­ant re­lied on the faith of the rep­re­sen­ta­tions and took the premises on lease. Sim­i­larly, if there are any pe­cu­liar prom­ises made by the ten­ant, it would be wise from the point of view of the land­lord, to record them in the recitals.

Nar­ra­tive recitals are typ­i­cally fol­lowed by the in­tro­duc­tory recitals which would record the mo­ti­va­tion and in­ten­tion of both par­ties to en­ter­ing into the lease. Recitals must be well thought through and care­fully drafted be­cause gen­er­ally the courts will not per­mit a party to re­nege from rep­re­sen­ta­tions recorded in the recitals. Th­ese tend to be treated as ad­mis­sions on the part of the party that makes them.

The en­force­able and bind­ing part of a con­tract is car­ried in the tes­ta­tum. The tes­ta­tum usu­ally be­gins with the words, ‘Now this deed wit­nessth as fol­lows’. The oper­a­tive part of the lease should con­tain the monthly rent re­served, the mode of pay­ment and the date by which the rent shall be payable. It should also des­ig­nate the man­ner and mode of pay­ment of elec­tric­ity, wa­ter and main­te­nance bills, which are typ­i­cally payable by the ten­ant and also the pay­ment of prop­erty/mu­nic­i­pal taxes which gen­er­ally fall within the do­main of the land­lord.

The tes­ta­tum must pro­vide the obli­ga­tions of the lessor and lessee in de­tail. Obli­ga­tions of the lessee would in­volve the re­spon­si­bil­ity to keep the leased premises in good and proper or­der; not to cause nui­sance; not to make struc­tural changes, not to sub- let the leased premises. The lessor, on its part, would carry the re­spon­si­bil­ity of car­ry­ing out struc­tural and ma­jor re­pairs and pro­vid­ing peace­ful en­joy­ment of the premises to the lessee, pro­vided rent is paid in ac­cor­dance with the terms of the lease.

Other pro­vi­sions of the tes­ta­tum would in­clude breach and ter­mi­na­tion; con­se­quences of ter­mi­na­tion; acts of god and force ma­jeure, arbitration and ju­ris­dic­tion, no­tice, sev­er­abil­ity and sur­vival and the pay­ment of stamp duty and reg­is­ter­a­tion.

It is pru­dent to ap­pend a sched­ule of the prop­erty and a site map to avoid any dis­pute on the de­scrip­tion of the prop­erty.

If the par­ties want a cer­tain por­tion to be bind­ing and not merely a fac­tual as­ser­tion thereof, such part must also be re­peated from the recitals in the tes­ta­tum. Al­beit, recitals are not en­force­able, it is a set­tled prin­ci­ple of law and has been held in the mat­ter of Union of In­dia v Am­rindra Nath by the Cal­cutta High Court in 1967, that ‘recitals can be used to re­solve doubt as to in­ten­tion of par­ties’.


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