All of us at one point of time or another have entered into some kind of Lease agreement/arrangement for a residential, commercial, business and other purposes. Most of us enter into a adhoc lease agreements without really examining the implications of such agreements. It to be noted that all transactions relating to granting of a right, title or interest in properties is governed by the provisions of the Transfer of Property Act, 1882 (the Act). A lease arrangement creates in favour of the Lessee/tenant lease hold rights over the concerned immoveable property and therefore the the Act becomes applicable to lease arrangement and govern all such agreements.
Let us now examine the provisions of the Act relating to lease arrangement/agreement. The specific Sections that addresses and governs lease arrangements/agreements are Sections 105 to 111 of the Act. The Act states that a lease grants a right or an interest to enjoy a demised property and that the tenant is entitled to possession of the demised property until the lease is duly terminated or eviction takes place.
It is also to be further noted that in terms of Section 107 of the Act, a lease of an immoveable property for any term exceeding one year can be only under a registered document. It is to avoid registration, in most cases lease agreements are entered into between the parties for a period not exceeding 11 months with the option to renew to further periods of 11 months on the expiry of the lease by efflux of time.
In view of the fact that all lease arrangements/agreements exceeding one year requires registration, the consequences of non registration is enumerated herein below. It is relevant to note that various courts have held time and again any lease agreement exceeding one year can be made only under a registered instrument. However, in the event of the lease deed/agreement requiring registration is not registered, the same is not fatal to the lease arrangement but only creates a lease for less than one year. In other words notwithstanding the understanding between the Parties and the terms of the lease deed the Agreement would be taken to be effective only for a period not exceeding one year.
The next question that arises, if the unregistered lease agreement is deemed as not exceeding one year, what is the consequences of such deeming provision? On expiry of the initial 11 months of the unregistered lease agreement, the lease arrangement/agreement would be deemed as a month to month lease arrangement between the Parties. The terms and conditions of un registered lease agreement would therefore become non enforceable and non binding on the parties. The lease would be reduced to a month to month tenancy without the binding effect of the terms and conditions of the non registered lease agreement.
In order to ensure quite, peaceful and uninterrupted possession of a leased property through proper legal documentation, email Jayashri or Sharada, Directors of Lex Valorem India Pvt. Ltd., Bangalore at firstname.lastname@example.org or email@example.com