Lease and Mortgage
Gaurav Agarwal
(Querist) 10 November 2009
This query is : Resolved
What are the laws governing the lease of immovable property (Land)? Does Government charge stamp duty on lease of land? How stamp duty for such lease is determined? How I can find same for Gujarat?
Can a property leased to "A", be mortgage to "B"?
arunprakaash.m.
(Expert) 10 November 2009
Section 105 to 117 of the transfer of property Act 1882 govern law relating to the lease.
A V Vishal
(Expert) 10 November 2009
A lease is the transfer of the right to enjoy the property. Such transfer might be for certain duration or in perpetuity and usually is in consideration of the payment of rent.
The essentials of a lease are
Parties to the agreement;
The identification of the property subject matter of the arrangement;
Term of lease,Rent,Date of commencement and expiry.
Lease of immovable property for one year, or term exceeding one year, can only be made by registered instrument. All other leases may be made by unregistered instruments or oral agreements.
Where there is no contract or local law governing the execution of a lease deed then lease of immovable property for agricultural or manufacturing purpose shall be deemed to be on yearly basis and terminable on the part of either lessor to lessee by giving 6 months notice. On the other hand a lease of immovable property for any other purpose shall be for monthly basis, terminable by either lessor or lessee by giving 15 days notice.
In the absence of a lease agreement in writing or the existing agreement is silent on the rights and liabilities of lessor or lessee then section 108 of the Transfer of Property Act sets down the guidelines to be followed for a working relationship in a lease arrangement. Once the lessor transfers the property leased to the lessee, the lessee in the absence of contract to the contrary shall possess all the rights and will also be subject to all the liabilities of the lessor as he is the owner of it. For computing the time for a lease of immovable property, if time is expressly mentioned then the lease of immovable property will commence from that particular day and where no time is mentioned the lease begin from the day when it was entered into.
Where the time is limited and the lease can be terminated before the expiration, but the lease deed omits to mention at whose option it is terminable. In such a case the lessee will have the option to determine the lease. A lease of an immovable property can be determined through 8 modes and it is only by one of these methods that the lease stands determined and the lessor gets back right of possession of the property;
by efflux of time limited thereby;
where the interest of the lessor terminates on happening of an event;
the interest of the lessor terminates on, or his power to dispose of the same extends to the happening of any event;
in case the interest of lessor and lessee becomes vested;
express surrender before the term is over;
implied surrender;
forfeiture;
when the lessee renounces his character.
Holding over comes into play when even after the determination of lease the lessee remains in possession of the property and the lessor or his legal representatives accept the rent and assent to the continuing possession by the lessee. In such a case the lease stands renewed year after year or month after month according to the purpose for which the property is leased. Where lease of immovable property has been determined by forfeiture for non-payment of rent and the lessor files a suit to evict the lessee. If the lessee at the hearing of the suit pays to the lessor rent in arrear with interest, full cost of suit or provides sufficient security within 15 days, the court may pass an order to relieve the lessee from forfeiture and allow him to hold on to the property.
Vineet
(Expert) 10 November 2009
The stamp duty on lease vary from state to state and also dependant on period of lease. Please refer to rates of stamp duty prescribed in Schedule I of Indian Stam Act as applicable in State of Gujrat.
Yes, you can mortgage leased land provided the facts are disclosed to the mortgagee and mentioned in mortgage deed. However, kindly note that no clause in mortgage deed can superssed lessee's right until he gives his consent to the same.
adv. rajeev ( rajoo )
(Expert) 10 November 2009
I agree with anuprakash. Stamp duty varies from state to state.
if it is agrl., land it cannot be leased, it is ban.
leaed property cannot be mortgaged.
Gaurav Agarwal
(Querist) 10 November 2009
Dear All
Thanks for the quick reply. I wish re-frame part of my question.
In case of non-agricultural land can lessor mortgage the land to the bank, when lease deed permits so and lesser gives his consent for such mortgage to lessor in writing?
Vineet
(Expert) 10 November 2009
Lessor can certainly mortgage the property but I am certain the lessee would not agree to a mortgage arrangement with the elemenet of posession of property More particularly, in nature of Usufructary or English Mortgage.
The Hon'ble Supreme Court in the case of S B Abdul Azeez 1989 AIR 553 held that in the case of Usufructary Mortgage, the mortgagee partakes the character of landlord and even can get eviction of the tenant. Thus it is not uncommon for mortgage of leased property.
Raj Kumar Makkad
(Expert) 10 November 2009
The opinion of Vineet is breif and accurate. I go with this opinion.
