All about recitals and testatums
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’.