Q # 03: Discuss lease and describe it’s essentials as well as

explain how it is made?

1. Introduction
 A lease is basically a written agreement between the owner of property and a person who
will use the property for a prescribed period of time by paying a specific amount as
prescribed in the agreement. In this situation the ownership of the property does not
transfer to the lessee but lessee only can enjoy the property by paying a certain amount
against this enjoyment.
 The owner of the property is known as the lessor and the person using the property is
known as a lessee.

2. Relevant provision
 Sec 105, 107 and 108 of transfer of property act deals with lease.

3. Definition of lease
 Lease is basically a written agreement between the lessor and lessee in which lessor
allows lessee to use his property as a tenant for a specified period of time by paying
certain amount of money to lessor.

4. Parties of Lease
Following are the parties of a lease.

1. Lessor
 Lessor is a person who leases his property to another person is known as lessor, he
is the owner in fact

2. Lessee
 Lessee is a person who holds the lease of a property is known as lessee, he is the
tenant in fact

5. Essentials of lease
Following are the essential elements of a lease. Details are as under:

1. Subject matter
 The subject matter of the lease is an important essential of a lease and it must be an
immoveable property.

2. Name and address

 The full name of the tenant should be mentioned in a lease agreement and address
of the property which is being leased should be mentioned in a lease agreement if
property is on multiple locations in this each address of each property should be
mentioned in the agreement
 3. Duration of lease
 The duration of lease should be mentioned in lease agreement whether expressed or
implied. The period of lease may be of one year, or more than one year.

4. Termination of lease
 The agreement of a lease between the lessor and a lessee must contain the terms and
conditions of the termination of lease that when and how an owner of the property can
end the lease.

5. Security deposit
 The amount required for the security deposit and its relevant terms and conditions
should be mentioned in the lease agreement.

6. Consideration
 The agreement of a lease between the lessor and lessee should be based on the
consideration.

7. Repair and damages

 The responsibilities of the owner and the tenant should be mentioned in the lease
agreement which will be defining that whether owner or tenant is responsible for the
repair and damages of the property if any.

8. Right of entry
 The right of an owner to enter his property to inspect the premises with the prior notice
to tenant should be mentioned in a lease agreement but the tenant has also a right of
privacy and owner cannot subject to multiple visits.

9. Signatures
 A lease agreement should be signed by the all adult parties. The owner will provide One
copy to the tenants by keeping the original for him.

6. How it is made
 A lease agreement is made of an immoveable property from year to year or for any other
duration which is exceeding one year by delivery of possession of the property to lessee as
tenant for a prescribed payment.
Following are the ways of lease.

1) By registered deed
  A lease is made and recorded in the register of deed where the record is kept by the
designated government officer that who is owner of the property and who is tenant
under lease agreement

2) By transfer of possession
 A lease is made by transfer of possession where the owner of the property transfers the
possession of the property to the tenant

3) By execution of instrument
 A lease is made by execution of instrument where both of the parties create a contract
by signing it , in order to make it enforce by the law

7. Types of lease
Following are the different kinds of leases.

1. Gross lease
 In this type, the tenant pays monthly against the lease in which electricity , heat and air
conditioning are included

2. Step lease
 In this type, the amount of rent is increased after every year within the period of life of
the agreement.

3. Cost of living lease

 In this type, the rent is increased with the general inflation

4. Single net lease

 In this type, the tenant pays a monthly rent after adding some of other expenses

5. Double net lease

 In this type the tenant pays rent also pays real estate taxes for the space occupied.

6. Triple net lease

 In this type, the tenant pays rent, real estate taxes and other land’s operating expenses
too.

8. Conclusion
 To conclude i can say that in the lease agreement there are two parties one of them is
known as lessor who is owner of the property and second one is known as lessee who is
a tenant and receiving the property for its use by making an agreement between them. In
a lease agreement the title of the ownership does not transfer but remains with real
owner.