Determination Of Lease

Introduction

According to the Transfer of Property Act, 1882 section 1051 lease of immovable property is a transfer of the right to enjoy such property, made either for a certain period of time or in perpetuity for consideration of money or a share of crops periodically. The lessor is the one who owns the leased property while the lessee is the tenant enjoying only the limited right to enjoy the property.

This article will be focusing on the determination of lease mentioned in section 111 otherwise also known as termination of lease.

Determination Of Lease

Determination of lease as mentioned in section 111 2 refers to the termination of lease. It takes under 8 different circumstances as mentioned below:

  1. By Lapse Of Time
  2. By Happening Of Specified Event
  3. By Termination of Lessor’s interest
  4. By Merger
  5. By Express Surrender
  6. By Implied Surrender
  7. By Forfeiture
  8. By Expiry of notice to quit

Let us discuss them in more detail below-

  • By Lapse Of Time: 3

A lease is the transfer of the right to enjoy the property for a specified period.  Therefore, once the period specified in the lease expires, the lease is automatically determined. So, when a lease for a given period gets determined by a lapse of time no notice of it is needed.

Only if there is a prior agreement between the parties for the renewal of the lease does the lease continue even after the expiry of a given period. Also, the protection against eviction is given to a tenant only during the period covered by the lease, it cannot be used after the period expired.

Another important thing to note is that renewal of lease after expiry cannot be automatic which means that mere acceptance of rent by lessor after expiry does not mean the lease can continue.

  • By Happening Of Specified Event:

The lease may be made subject to certain conditions such as the happening of an event. In other words, it means that when the terms of the lease are such that they are limited to take place only on the occurrence of that event, then when the event takes place the lease is determined.

  • Termination of Lessor’s Interest:

When the lessors have limited interest in the immovable property, the termination of the lease takes place when that interest expires. So in case, a lessee sub-lets a piece of land the sub-lease ends with the lessee’s death.

Similarly, when a person in authority makes a lease it determines when it will be taken away / end.  When a mortgagee in possession makes a lease, it can be determined/terminated by redemption of the mortgage.

  • By Merger:

When one interest meets with the other it is known as a merger. Usually, when a limited interest becomes an absolute interest it is due to the merging of a larger interest with that of a smaller interest. In a lease, the tenant has a limited interest which is the right to enjoy the property. But if that same property is sold or gifted to the tenant he now becomes the owner no longer the tenant. This follows the principle of “Nemo potest esse tenens et deminus” which means nobody can be both landlord and tenant of the same property.

Therefore, in any case, be it as mentioned above or even if the lessee acquires rights of co-owners in the property, by merger his rights become absolute and the lease is determined he then becomes the owner. The thing to be noted is that the interests must be unequal and must combine at the same time in the same person, combining equal interests cannot be considered a merger. Originally the two unequal interests must belong to two different individuals.

So if the lease gets determined in any way mentioned above it shall be considered determined by merger.

  • By Express Surrender

This is the exact opposite of surrender. In this case, the smaller interest combines with larger interest while in the merger it’s vice versa. The similarity in both though is that the lease is only determined when both interests unite. So, when the lessee vacates the premise before expiry of the lease, his smaller interest of right to enjoy property reverts back to the lessor’s reversion i.e. the larger interest. Giving up the lessee’s interest in the lease and putting an end to the contract of lease is called surrender. Surrender without delivery of possession is irrelevant. Surrender can be expressed or implied. In an express surrender, the lessee expresses his intention to relinquish interest in the lease-hold followed by lessors agreement and delivery of possession.

  • By Implied Surrender

If a surrender takes place by operation of law, it’s an implied surrender. The surrender can take place either 1) by the creation of new leases or 2) Relinquishment of possession. When the lessee accepts a new lease from the lessor on the property already leased to him, there is implied surrender of the previously existing lease. In this way, the earlier lease gets determined.

In the case of relinquishment, the tenant can continue to stay , but once the nature of possession changes his status will change if he accepts it.

  • By Forfeiture

Forfeiture of a lease basically means that the lessee loses the right to enjoy the property because of his own fault. A lease can be determined by forfeiture in cases like-

  1. Breach Of Express Condition by Lessee- When the lessor had imposed upon the lessee any express condition which he failed to perform there is a breach. The condition must have been clearly agreed upon by the two parties, so that if it fails the lease can instantly be determined.
  2. Denial of Landlords title – We know that the lessee only has a limited interest in the property which is why he’s the tenant and not the owner. So when this tenant starts to claim he’s the owner , he denies the title of the landlord as well as his own original status of tenant. This forfeits his right to property and thus determines the lease.
  3. Insolvency of the lessee – Insolvency of lessee doesn’t automatically lead to forfeiture unless a stipulation between parties which states that if the lessee is insolvent , his right to enjoy the property is lost thus leading to the lessor resuming possession.
  4. By Expiry Of Notice To Quit: It has been mentioned in section 106 that a notice is necessary for the termination of periodical leases.  When the terms are fixed a notice isn’t required because such leases get determined by expiry of the terms. Where the notices are necessary lease is determined after expiry of the notice to quit.

This concludes the various ways in which a lease can be determined under the Transfer of Property Act, 1882.

                                                         Footnotes

  1. Section 105, Transfer of Property Act,1882
  2. Section 111, Transfer of Property Act,1882
  3. Of Leases of Immovable property, TPA by Dr.  R.K. Sinha (Pg- 481-489)

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