This article is written by Ananya Garg, a student at Chanakya National Law University. The meaning, and various rights and liabilities of landlord and tenant are discussed in the following article.

Introduction

When the right to enjoy an immovable property is transferred to another person for a certain period of time in consideration of a pre-defined specific value, which is either to be given periodically or on specific occasions by the transferee to the transferor, it is called a lease. After a lease agreement, a tenancy comes into existence where the transferor or the lessor is known as the landlord, and the transferee or the lessee becomes the tenant. Section 105 of the Transfer of Property Act defines the terms lease, lessor, lessee, premium, and rent.

There are a number of rights and duties associated with a lease. The relationship of landlord and tenant come into existence subsequent to a contract between the two respective parties. The rights and duties of landlord and tenants are essentially governed by the terms of the contract and the provisions regarding the same in the Transfer of Property Act. This article discusses the various provisions regarding the landlords and the tenants in Chapter V of the Act.

Definition

Landlords

The lessor/landlord must be competent to contract,that is they must be of the age of majority and possess a sound mind, at the time of granting the lease. A minor cannot grant lease since he is incompetent to contract. But his guardian of property may grant such lease, without the court’s permission, for a period not exceeding five years or lasting for more than one year after the minor attains majority. 

A lessor must also have the right to transfer the possession of the property to the tenant. His authority to effect the lease cannot be questionable. Such ‘authority’ either stems from the ownership of the property, or from having the possession of the property. Since a lease is only the transfer of the possession of a property, thus it is not required that the lessor be the owner of the property, a lessee may also authorise a lease in favour of another person subject to the provision that such title must not extend beyond such person’s own possession. A subsequent lease granted by a lessee is known as a sub-lease, or derivative lease. 

Tenants

In case of lease, the lessee/tenant must also be competent to contract as it contemplates agreement to a liability of payment of the consideration on part of the tenant. Thus, a minor or a person of an unsound mind cannot be tenants. A juristic person such as a company, or a registered firm may also be the lessee, but an unregistered firm, not being a juristic person, is not competent to be a lessee. Where a firm is a tenant, and a partner executes the lease deed on its behalf, the lease continues to exist even after retirement of the partner and there is no subletting by the partner to the firm, the firm continues to be the lessee, it was held in the case of Raunak Ram And Ors. vs Pishori Singh And Ors.

Rights and liabilities

Landlord

According to Section 108 of Transfer of Property Act, the landlord or the lessor of the property possesses following rights and liabilities after a lease agreement:

• Duty to disclose latent material defect:
  If there exists any latent material defect in the property, it must be disclosed by the landlord to the tenant. A latent material defect can be defined as a defect which is of substantial nature and is not apparently visible but the landlord has the knowledge of it. The substantial nature of the defect implies that had the defect already known to the tenant he would either not have accepted the lease or would have taken it on different terms. The defects may be patent,that is, apparent or of unsubstantial nature for the tenant, in such cases the landlord is not obligated to disclose the defect.

• Duty to give possession:
  Lease is an agreement to transfer the right to possession of a property, thus, the landlord is obligated to deliver the possession of the property to the tenant so that he can use it. The delivery of the possession may be actual or constructive, as may be possible under the circumstances. The tenant is entitled to sue the landlord if he failed from being put in the possession of the property. He may also claim damages in such case. If the property is in possession of a third party, the tenant has the right to sue such third party for getting possession. The tenant may also repudiate the whole lease if he could get the possession of only a part of the property.
• Covenant for quiet enjoyment:
  Quiet enjoyment refers to the absence of interference or objection. Lease is a transfer of right of enjoyment of a property, thus it is an implied duty of the landlord to ensure the tenant a peaceful enjoyment of this right. This covenant protects the tenant from any disturbance only from the landlord or any person claiming under him. The tenant is not protected from the wrongful acts of a trespasser. Thus, if there is any trespasser, the tenant must take an action on him and not against the landlord.

The implied covenant for quiet enjoyment is deemed to be annexed to the leased property. Therefore, if the tenant sub-lets the property, such covenant for quiet enjoyment shall pass on to the transferee. 

Tenant

In the absence of any contract or local usage to the contrary, the rights of a tenant are given under Section 108 of the Transfer of Property Act.

• Right to accretion:
  Additions made to the property either by human beings or by operation of natural forces are called accretions. If during the continuation of the lease some accretion is made to the property, it is presumed to be a part of the property. The tenant can enjoy such accretions during subsistence of the lease. In both the cases, where the accretion is created by the natural forces or where the tenant makes them himself, they will be considered to have been made for the benefit of the landlord and the tenant can enjoy them only as long as the lease subsists.
• Right to avoid lease on destruction of property:
  The very object of a lease is to confer the right of enjoyment and use of an immovable property to the tenant. Thus, if an injury to the property renders the enjoyment of the property impossible, the tenant has the right to avoid the lease. Where the property has been rendered substantially and permanently unfit for use due to violence, fire, flood, mob or other uncontrollable reasons, the tenant has the right to get the lease terminated before the expiry of the term. The property must be damaged to the extent that it cannot be used for the purpose for which lease was made. If the property is destroyed by the wrongful or neglectful act of the tenant himself, he cannot avoid the lease.

In the case V. Kalpakam Amma vs Muthurama Iyer Muthurkrishna, a site formed the part of the building leased out and such building was totally destroyed. The Kerala High Court held that the relationship of landlord and tenant nevertheless existed and the lease was not avoidable under Section 108(b)(e) of this Act merely because the subject matter of the suit, that is, the building has been destroyed, the lease does not stand terminated. The right conferred under this clause is, however, optional; unless the lessee exercises the right by giving notice to the lessor, the lease is not terminated.

• Right to deduct cost of repairs:
  Under an express agreement, the landlord may undertake the obligation to make necessary repairs in the tenanted property. His duty to repair the property may arise under some custom or local laws such as Rent Control Act as well. In case the landlord fails to repair the tenanted property despite express covenant or in violation of local law or custom, the tenant has the right to repair the property and deduct its cost from the rent. The tenant has the right to deduct the cost of repairs only if the landlord is bound to repair the property under an express local law or covenant or custom. The landlord’s obligation to repair the premise overrides the tenant’s right for quiet enjoyment and thus the landlord may not use the right for quiet enjoyment as an excuse for not being able to enter the premises to make the repairs.

• Right to deduct outgoings:
  The payment of the public charges such as municipal tax revenue, etc. is the duty of the landlord. In case there is an anticipated default on the part of the landlord, the tenant may pay such public charges to avoid the sale of the property. Where a tenant makes payment of the public charge in respect of tenanted property, he has the right to deduct the amount from the rents.

• Right to remove fixtures:
  Fixtures refer to all the things fixed or attached, by the tenant, to the tenanted premises, it includes trees, machinery, and buildings. The tenant has the right to remove the fixtures which were made by him, during continuance of the lease, after the lease is terminated. The tenant cannot be prevented from entering into the premises and remove the fixtures on the ground that his right to enter into the land has been terminated with the lease. However, he must remove the things without disturbing the state of land or the premises.

• Right to remove crops:
  If there are crops sown by the tenant on the property during the subsistence of the lease, he is entitled to remove them even after the lease is terminated. The tenant or his representatives are entitled to enter into the property after the termination of the lease for removing and collecting the crops growing on the land. This right is exercisable where the leases are of uncertain duration, e.g., leases from year to year. In other classes of leases, the parties themselves may stipulate in respect of removal of crops.

• Right to assign his interest:
  A lessee has the right to assign or transfer his right of enjoyment in the property in case of absence of any contract to the contrary. Right of enjoyment of the possession is a ‘property’ owned by the tenant, he can transfer it to any other person provided there is no prohibition imposed by the landlord. However, the tenant cannot assign his right to use the land for a term extending beyond his own lease. The tenant is entitled to transfer his interest also by the way of mortgage. The transferee of the tenant too gets the same interest which the original tenant had. But the original tenant continues to be subject to liabilities attached to the lease. He cannot take the plea that the lease-hold has been transferred. In cases of non-transferable tenure or an estate in which there is a default in payment of revenue or where the estate is in management of Courts of Wards, the tenant cannot transfer his interest.

Section 108(B) clauses (k) to (q) lay down the liabilities of the tenant and the same are discussed below:

• Duty to disclose facts:
  The tenant is bound to disclose any material fact known to him which increases the value of the property. For example, if the tenant finds that there is a gold mine in the leased property he must disclose this to the landlord because this materially increases the value of the property. In case the tenant does not disclose such fact to the landlord, his breach does not amount to a fraud and this does not give the landlord a right to terminate the lease, but he may sue the tenant for damages.
• Duty to pay rent:
  The tenant is bound to pay rent or premium as stipulated in the lease-deed. It is obligatory on him to tender or pay the rent at proper time or place. His liability to pay the rent begins from the date on which he takes possession and not from the date on which the landlord signs the deed. In case the lessee is unable to take possession of any part of the leased property, he is entitled to claim reduction of rent in proportion of the property not in his possession. Where the landlord has no title at all in the property which he has leased and consequently the tenant has to vacate the possession, tenant has no liability to pay the rent.

Where the property is leased to more than one lessee jointly, rent paid by any one is sufficient. Similarly, in case of property leased being a joint-property, rent paid to any one landlord is sufficient. The landlord has two remedies in case the tenant fails to pay the rent, firstly, he is entitled to sue the tenant for the arrears of the rent with interest. Secondly, he may start proceedings for ejectment on the ground of non-payment of rent after giving a proper notice for the stipulated time.

• Duty to maintain property:
  The tenant has the obligation to take reasonable care of the property leased to him. He must maintain the property to keep it in the state in which it was given to him. This duty involves repairs to the property which become necessary because of his use. He is not liable for any change in the property which has not resulted from his use of the property. Thus, he has no duty to repair the property damaged in cyclone or earthquake or other irresistible forces. Thus, incidentally, the tenant is bound to allow the landlord to enter the premises to inspect the property.

• Duty to give notice of encroachment:
  Where the tenant becomes aware of any encroachment or interference or of any proceedings or suit in respect of the leased property, he is bound to give notice of this fact to the landlord so that the landlord may protect his interest.

• Duty to use property reasonably:
  The tenant must only use the property as a person of ordinary prudence would use his own property. He must not do any act which is destructive or permanently injurious to the property. The tenant is allowed to make minor alterations in the property in the form of repairs and maintenance but he must not make any major alterations thereto.

• Duty not to erect permanent structure:
  The tenant cannot erect any permanent structures on the leased property without the consent of the landlord. If the tenant makes a permanent construction without the landlord’s consent, he is entitled to remove them without causing damage to the tenanted property. If the permanent structures on the leased property are not removed by the tenant, then on the expiry of the lease they belong to the landlord. The landlord has to pay the price of the structures as may be agreed upon between the parties. However, the prohibition under this clause does not apply where the parties have contracted that the land is being leased for erection of a dwelling house or a shop thereon.
• Duty to restore possession:
  Upon the expiry of the term or termination of the lease before its expiry, the tenant must re-transfer the possession to the landlord. It is the duty of the tenant to vacate the possession and restore it to the landlord after the expiry of the term. If the tenant continues the possession after the expiry of the term, his occupation is unauthorised possession and the court may direct him to pay damages and also mesne profits(profits of an estate which are received by the tenant in wrongful possession and which are recoverable by the landlord) to the landlord upon an action.

Conclusion

When the right of enjoyment of possession of a property is transferred, a lease agreement comes into existence. The person who leases the property is called the landlord, and the person to whom the lease is made is called the tenant. With the title of landlord and tenant, comes various obligations attached on part of both the parties. Section 108 of the Transfer of Property Act specifies these rights and liabilities. In the absence of any local law, custom, or written covenant to the contrary, these rights and liabilities are followed by both the parties to protect each other’s interests. 

References

• https://www.juscholars.com/post/concept-of-lease-under-transfer-of-property-act-1882
• https://www.myadvo.in/blog/rights-duties-landlord-tenant/
• https://cleartax.in/s/rent-control-act
• http://14.139.60.114:8080/jspui/bitstream/123456789/3383/1/005_1980_Law%20of%20Property.pdf

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