LEASES & TENANCIES PDF

LEASES Definition: Sec 2, LA & LRA - A lease is the grant, with or without consideration, by the proprietor of land, of the right of the exclusive possession of his or her land, and includes the right so granted and the instrument granting it, but does not include an agreement f...

LEASES Definition: Sec 2, LA & LRA - A lease is the grant, with or without consideration, by the proprietor of land, of the right of the exclusive possession of his or her land, and includes the right so granted and the instrument granting it, but does not include an agreement for lease. - Long-term lease-transfer-more than 21 years- read s7 of the LA. Sec 30 LRA- no CoT/CoL shall be issued unless the lease is for a term exceeding 21 years - A lese means any of the following A lease or a sublease, whether registered or unregistered Short-term lease Agreement to lease Registration of leases - Sec 36(2) LRA - nothing in this section shall prevent an unregistered instrument from acting as a contract - Sec 43(2) requires that no instrument shall operate to dispose of an interest in land, lease or charge unless it is registered in accordance with the registration requirements in the Act- No instrument effecting any disposition of an interest in land under this Act shall operate to sell or assign land or create, transfer or otherwise affect any land, lease or charge until it has been registered in accordance with the laws relating to the registration of instruments affecting the land in respect of which the disposition has been made - The section however does not prohibit the operation of any contract for disposition Essentials; Sec 56, 61 LA a. Sec 56 LA- the power to lease land - The owner of private land may lease that land or part of it to any person for a definite period or for life of the lessor or of the lessee, or for an indefinite period that may be terminated by the lessor or the lessee. b. Exclusive possession  - A lease must confer exclusive possession for a fixed or periodic term in exchange for payment of premiums or periodic payments- Street v Mountford c. Determinate term - Also derived from Sec 56- the owner of land may lease the land or part of it to any person for a definite term, or for the life of the lessor/lessee for a period which though indefinite may be determined by the lessor/lessee - A lease must have a defined term or a term that is capable of being defined. d. Defined premises - Heptulla Brothers Ltd v Jamba Thakor- no tenancy could be created where the premises intended to be let out could not be ascertained with sufficient precision. Distinction between Tenancies and other Agreements a. Tenancy vis-a-vis Assignment Tenancy Assignment Only a certain term of years is granted It conveys the entire leasehold interest to the lessee to the purchaser The lessor has the right of reversion at The vendor has no right of reversion. the expiration of the term granted The vendor can only assign the unexpired residue of this term Additional completion documents: transfer form and lease instrument b. Tenancy vis-a-vis Underlease ​ - A lease is a direct relationship between the lessor and the lessee. ​ - An underlease anticipates the existence of a headlessor. ​ - The underlessor is a tenant of the headlessor. ​ - Basically, a sub-lease  ​ - A sublease that is for a shorter or equal period to that of the head lease shall not operate as an assignment of the lease unless a contrary intention appears ​ - The term of a sublease shall not be longer than the term of a head lease c. Tenancy vis-a-vis Licence Distinctions Tenancy License Exclusive A tenancy grants exclusive Does not grant exclusive possession- Street v possession to the tenant to the possession- permits the Mountford- a lease exlusion of the lessor lessor to do something on is established as the property for a certain existing when an period of time occupier is granted Use of the premises without exclusive possession interfering with the grantor’s of a property for a right to possession fixed/periodic terms in consideration for premiums or periodic payments Transfer of interest Binding on successors, third-party Does not bind successors or lessees and third-party purchasers any third-parties Statutory protection Kenya’s land laws Contract law Revocation Only requires a notice Clauses that may - Grant of exclusive - Use of the premises indicate possession to the property without interfering - Lessor has limited right to with the grantor’s enter the property right of possession - The owner is entitled to request the licensee to transfer his occupation to another accommodation - Use of the property for a certain period of time during the day Types of Tenancies a. Periodic Tenancies sec 57 LA - The term is not specified  - There is no provision for giving notice to terminate the tenancy - The term is from week-week, month-month, year-year or any other periodic basis where rent is payable - For agricultural land, a period lease shall be for 6 months - Where the lessee remains in possession of land after the term has expired with the consent of the lessor, unless, the parties have agreed expressly or by implication that the continued possession shall be for a specified amount of time - A lease without a written agreement - A periodic tenancy may be terminated by either party giving notice to the other party. The notice period shall not be less than the period of the tenancy and shall terminate on one of the days that rent is payable. b. Short term Tenancies: sec 58 LA - A lease made for two years or less, without an option for renewal - A periodic lease - A lease for exclusive possession at a rent, but without a written agreement - May be made orally or in writing - Is not a registrable interest in land c. Lease terminating on the occurrence of a future event: sec 59 LA - A lease whose termination is pegged on the occurrence of a future event that is sufficiently defined in the lease so as to be identified when it occurs. Implied Conditions and Express Covenants (these are prescribed in the lease instrument); Sec 65 LA Implied Lessor Lessee As long as the lessee performs Pay rent at the time and manner covenants or conditions contained or specified in the lease implied in the lease, the lessee shall peaceably and quietly possess and enjoy the land leased without interruption from the lessor or any person claiming through him Not to use any of the adjoining land that Use land in a sustainable manner the lessor owns or leases in a way that and in accordance with any renders the land or buildings leased conditions imposed on the use of materially unfit for any any purpose that land by written laws, and the lease instrument In leased public land, not to harm, cut down or injure any living tree unless the reason the land was leased cannot be carried out without doing so Maintain external repairs including Yield up land and buildings in the common passages and walkways same condition they were at the beginning of the term except for: - Reasonable wear and tear - Damage or deterioration by fire, flood or an accident that is not caused by the negligence of the lessee, their invitees or employees Keep the leased property fit for human Keep all boundary marks in repair habitation Suspend a portion of rent if the premises Keep all buildings comprised in the are not habitable as a result of lease in a reasonable state of repair destruction by fire, flood, explosion or other accident not attributable to the lessee’s negligence, civil commotion or natural disaster If this is not remedied within 6 months, the lessee has a right to terminate the lease, giving one month- notice Pay all rates, rents, taxes and outgoings in respect of the property Enter the premises, giving 7 day notice to maintain external repairs, or conduct inspection of the condition of the premises. This shall not interfere with the lesses’s occupation and use of the land and buildings Issue one-month termination notice upon failure to pay rent for one month, whether or not a demand notice has been issued or the lessee has failed to perform an express or implied obligation in the lease. Rights of Lessor and Lessee/Landlord and Tenant Rights of lessor (obligations of lessee) Rights of lessee (obligations of lessor) Pay rent in the time and manner specified in Keep the premises fit for human habitation the lease Maintain internal repairs, and keep Suspend rent/a portion of it; natural disaster, boundary marks in repair civil commotion, accident caused that is not the negligence of lessor, employees or invitees- 6 months- termination Grant quiet use and enjoyment of the Pay all rates, rents, taxes and any other property for other tenants outgoings in relation to the property Give at least 1 month notice of termination Maintain all external repairs of lease Not to alter anything significantly without Ensure that the use of adjoining land they the consent of the lessor own or lease does not interfere with that of the lessee Grant peaceful and quiet enjoyment as long as obligations are met Issue 7 day notice to enter and inspect or maintain internal repairs Maintain common areas Lessee remaining in possession after termination of lease without lessor’s consent - If a lessee remains in possession of land without the lessor’s consent after termination of lease after expiration of the lease term, all the obligations of the lessee continue to be in force until they cease occupation- you will expected to continue paying rent and all other obligations of a lessee under the lease - Acceptance of rent by the lessor in this case does not equate to their consent for the lessee’s continued stay on the premises - If this acceptance continues for 2 months after termination of a lease, a periodic tenancy is considered to have arisen Determination of Leases Duties of lessor’s advocate - Obtain precise instructions from your client on the following, inter alia: a. Description of the property (obtain copy of the Title) b. Portion to be released (if not whole) c. Rent to be paid d. Proposed use of the property by the lessee e. Covenants. - Draw the lease to reflect the wishes of your client, ensuring all the essentials of a lease (exclusive possession, determinate term, description of the property, and parties) are included and the covenants protect your client’s interests - Obtain all requisite consents, e.g. consent to lease, consent to charge, etc. - Obtain stamp duty confirmation from the Lessee. - Register the lease Duties of lessee’s advocate - Investigate the landlord’s title - Approve the draft lease - Advise your client on the contents of the draft lease. - Collect disbursements from your client, e.g. stamp duty, registration fee, etc. - Avoid conflicts of interest (applicable to advocates for both the lessor and lessee) CONTROLLED TENANCY - This is a tenancy over a shop, hotel or catering establishment that is not in writing, if it is in writing is for a period of five years or less, contains a provision for termination other than a breach of covenant - It relates to tenancies governed by the BPRT- Business Premises Rent Tribunal - A catering est is a premises on which the business of supplying food or drink for consumption on such premises by persons other than those who reside and are boarded on such premises - A hotel is any premises in which accommodation/accommodation and meals are supplied or are available for supply to five or more adult persons in exchange for money or other valuable consideration - A shop refers to premises occupied wholly or mainly for retail or wholesale trade of business or for the purpose of rendering services for money’s worth  The Rent Book - The landlord is required to keep a rent book containing particulars of the parties to the agreement, premises occupied and rent paid and all repairs carried out on the premises. The tenant shall be provided with a copy of this book. - If the landlord appoints an agent to effect transactions in the controlled tenancy, these particulars shall be recorded in the rent book, authenticated by the landlord’s signature. - A landlord who fails to keep the book in the prescribed form or fails to make an entry or makes an entry they know to be false or has no reasonable cause to be true or makes an alteration to the prejudice of the tenant, shall be guilty of an offence-fine not exceeding ksh. 2000 or 2 months imprisonment, or both Void agreements - Do not comply with the provisions of the Act - Provides for termination or surrender of the tenancy in the event the tenant makes an application to the Tribunal - Provides for a penalty or disability on the tenant on making such application Termination and alteration of terms in a controlled tenancy - A notice of termination shall be in the prescribed form A in the L&T (Tribunal)(Forms and Procedure) Regulations and shall not take effect until 2 months after receipt of the receiving party. The parties may agree in writing to a lesser period of notice - A termination notice shall not be effective if it does not specify the following: Grounds upon which the requesting party seeks the termination Alteration or reassessment concerned Requires the receiving party to notify the requesting party, within one month whether they agree to comply with the notice. - A tenancy notice may be given by delivering it to the receiving party personally, an adult member of their family, a servant residing within or employed in the premises concerned, employer, sending it by prepaid registered post to his last known address, and any such notice shall be deemed to be given on the date it was delivered or on the date of the postal receipt  Alteration of the terms in a controlled tenancy - A tenant may apply for a reassessment of the rent of a CT or the alteration of any term or condition in, or of any right or service enjoyed by him under such tenancy, shall give notice in that behalf of the landlord in the prescribed form. Grounds of termination of tenancy by landlord a. Tenant defaulting in payment of rent for 2 months after rent has become payable or has persistently delayed in paying rent b. Tenant has committed substantial breaches of his obligations under the tenancy c. The landlord has- Rent Restriction Act, Cap 296 - Governs rent payable for residential dwellings where rent payable is less than Ksh. 2500 pm - The Act restricts the increase of rent, right to possession and creation of premiums and fixing of standard rents in relation to dwelling houses - Rent assessment shall only be after a rent assessment Duties of the Advocates Registration of Leases and effect of non-registration; Sec 54, 58 LRA Remedies and Reliefs of the Lessor and the Lessee a. Remedies of the Lessor Right of forfeiture - This right is accorded to the lessor if the lessee commits any breach or omits to perform his obligations under the lease, is adjudged bankrupt or being a company, goes into liquidation. - This right may be exercised by obtaining a court order or exercised where neither the lessee nor any person claiming through him enters into possession of the land and remains upon it. - The acceptance of rent after notice to exercise right of forfeiture does not indicate a waiver of the lessor’s right to forfeiture, unless the lessor  has by any other positive act shown the intention to treat the lease as subsisting. Effect of forfeiture on subleases - Forfeiture of a lease determines every sublease relating to that lease. - The exceptions are: where the forfeiture is set aside by the court on the grounds that it was procured by the lessor in fraud of the sublessee or where the court grants relief against forfeiture. Notice before forfeiture - Not less than 30 days specifying; the particular breach complained of, if the breach is capable of remedy, requiring the lessee to remedy the breach within the period indicated in the notice, in the case of breach by non-payment of rent, requiring the lessee to make compensation in money for the breach. - If the lessee has failed to remedy the breach within 30 days thereafter, if it is capable of remedy, and to make reasonable compensation in money. Relief against forfeiture - Apply to the court, and considering the circumstances of the case and the conduct of the parties, the court will adjudge. - The court may make an order to vest the property claimed by a sublessee or a chargee claiming under the charge provided that the forfeiture did not arise from a breach to which a sublessee is a party or from an express condition or agreement against subleasing, parting with the possession of or disposing of the property leased. - This section applies whether the lease is registered or not. Unlawful eviction - A lessee who is unlawfully evicted- contrary to the lease agreement shall immediately be relieved of the obligation to perform under the lease.  - A lessee shall be considered to be evicted if they are unable to obtain possession on commencement of the lease as a result of an action or non-action of the lessor. - Commence action against the lessor for remedies. b. Distress for Rent - Distress for Rent Act. - No distress shall be levied between sunset and sunrise or on any Sunday. So when please? - It must be carried out within 6 months after expiry of the lease. - Distrained goods must be held in situ for ten-10 days without selling them to allow the tenant to either replevy them or pay rent. - The goods must be impounded within a limited area of the premises. (find the exceptions to this) - Attempt to fetch the best price for the distrained goods and the surplus should be handed over to the owner of the goods. - A licensed auctioneer acting on behalf of the landlord may enter into any place where goods distrained have fraudulently been secured by a tenant/lesseee/their servant or agent/ or any other person assisting/aiding and abetting in this- in the day time girl Notice of distress- Sec 4,Distress for Rent Act - Reason for making distress - Left on the premises charged with the rent - The tenant can pay rent plus the cost of distress or replevy the goods giving sufficient security to the licensed auctioneer acting on behalf of the lessor Other remedies - Action for Recovery of Rent (limitation period of 6 years under the LLA) & for Damages - Injunctions - Repudiation Lessee’s remedies a. Institute proceedings for injunction or damages  b. Repudiation of the agreement c. Relief from rent- if unlawfully evicted- failing to gain possession at the commencement of the lease by an action or non-action of the Landlord. d. Notice for termination of the contract- typically one month notice is issued. Case Law: 1. Desai –vs- Cooper (1950) 214 KLR 32 - The premise of this case is licensee or lessor? - The defendants could not access the premises through the front door and had to go through the back. - The court held that they had exclusive use of a portion of the premises and not exclusive possession of the premises and were consequently licensees not tenants. 2. Hecht –vs- Morgan (1957) EA 741 - The court in this case was seeking to establish whether it had jurisdiction to determine the matter. - The applicant proved that he held exclusive possession and it was therefore, a lease. 3. London & North western Railway Co. –vs- Buckmaster (1874) 10 LR Q.B. 70 - Exclusive possession precludes interference from the landlord 4. Runda Coffee Estate –vs- Ujjagar Singh (1962) EA 564 - Possession does not exactly equate to a tenancy. 5. Street –vs- Mountford (1985) AC 809 - Whenever exclusive possession of premises is granted for a term of rent, then prima facie, a lease will be created. 6. Ratwani –vs- Deganela (1956) EACA 37 - For a lease to be granted the land leased must be defined in the instrument. 7. Antoniodes –vs- Millers (1988) 3 Weekly Law Reports 1205 8. Harvey –vs- Pratt (1965) IWLR 1025 9. James Michiki Mwangi & Anor –vs- Esther Wanjiru Kabugu (2006) eKLR 10. Bachelor’s Bakery Ltd –vs- Westland Securities Ltd; Civil Appeal No. 2 of 1978  - 11. Gusii Mwalimu Investment Co. Ltd & Others –vs- Mwalimu Hotel Ltd; Civil Appeal No. 160 of 1995 12. Francis Mugo & 22 Others –vs- James Muthee & 3 Others (2005) eKLR - This case resulted from an application for Andrew Musangi to cease acting for the Plaintiff. - The reason was that the advocate drew and witnessed a lease between the parties and would be required to act as a witness in the case. - Rule 9 of the Advocates Practice Rules- no advocate may appear in any matter as a witness to give evidence. 13. Rogan Kamper Vs Grosvenor (1977) KLR 123 14. Garibi Limited v Ogilvy East Africa Ltd [2014}eKLR Extension of leases - Before the expiry of a lease, a lessee may apply for extension of a lease to the NLC through the respective NLC county office in Form LA 22. - The NLC will forward the application to the CS-where the Govt is the lessor or the County Executive Committee member responsible for matters relating to land, in the respective CG, where the county govt is the lessor for consideration- within 7 days - Within 90 days upon receipt of the application, the CS/CEC Member will either approve the extension with such terms and conditions as may be specified or decline the extension with reasons. Considerations by the CS/CEC Member in approving or declining the extension of the lease - In the case of a company, the names and citizenship status of the directors. - In case of foreigners, the unexpired term of their lease to ensure that it does not exceed 99 years. - Information relating to any existing encumbrances of the lease. - The clearance certificates from the relevant authority - Evidence that the lessee has complied with the terms and conditions of the existing lease to the satisfaction of the lessor. - If extended, the extension takes effect after the expiry of the term. - The NLC shall not require the lessee to surrender their unexpired term in their application for an extension of lease. - Where the application is declined, the NLC will inform you within 7 days and inform you of your right to appeal the said decision. - No letter of allotment is issued in this case as the lease has not expired. Considerations in the extension of user- Third Schedule of the Physical and Land Use Planning Act - Whether the land is required for public purpose - Whether any special conditions in the lease were adhered to - Whether the land is developed - Whether the buildings on the land have been well maintained - The provisions of relevant approved physical and land use development plans - Defined location and size of the land  - Current user of the land - Infrastructure availability and adequacy Renewal of leases before expiry - Like baptism, starts counting afresh from the time of renewal. If you renew a lease, the new term starts at the point of renewal. The application is done in Form LA 23 - Where the national/county govt requires the land for a public purpose, they shall notify the NLC of this and inform the lessee accordingly. - Upon receipt of this notification, the lessee shall be required to not put up any new developments and the national/county government shall carry out an inventory of the developments on the land - When the approval of renewal of lease is granted; the lessee shall be required to revalue the land to determine payable land rents, resurvey and re georeferenced and issued a Letter of Allotment in Form LA 5 for the parcel and a new lease shall be issued in accordance with the provisions of the Act Renewal of a lease after expiry - Apply in Form LA 23 - In substantial transactions, the NLC in consultation with the national/county government shall ensure that the renewal is beneficial to the economy and country as a whole, the investment purpose is in accordance with the national, regional or county policies and plans, and the renewal is in public interest, public safety, public order, public morality, public health and land use planning - The NLC shall carry out a site inspection to verify the status of the developments. Notification of approaching expiration of lease - The NLC will notify the lessee of the approaching expiry of lease within 5 years by registered post or any other means specified in the Regulations. The notification shall include the lessee’s right of preemption to make an application for extension of lease and who to apply to and the date of expiry of the lease - If the lessee does not respond within 1 year, the NLC shall publish the notice in 2 newspapers of nationwide circulation and require the lessee to respond within 6 months.  - If the lessee does not respond, the NLC will conduct a physical site visit to verify the status of the property. - If the NLC establishes that the lessee is in occupation of the land, the NLC shall advise him of their right to apply for renewal and consequences of failing to apply for renewal. - The service of a notification by the NLC shall not preclude a lessee from seeking an extension of lease Jacktone on renewal and extension of leases - One of the factors considered by the NLC is your citizenship, whether rents and rates have been paid, whether you have complied with the terms of the lease throughout the term of the lease, the effect of the renewal on the economy and the public, nature of investment of the property (how long will they take?) - Notification that the lease is expiring and based on the said pre-emptive right your right to renew the lease. - A reason it may not be renewed is that the land will be used for a public purpose. - If approved, survey and valuation of the property is done by the applicant to fix the new rates and rents. Independent Appeals Committee - A lessee aggrieved by the decision not to renew or extend a lease may within 30 days of the receipt of the decision, appeal to the NLC through the office of the NLC in the respective county. - The NLC shall within 30 days of receipt of an appeal forward it to an ad hoc IAC established by the NLC at the county consisting of A rep of the NLC- chairperson A rep from the Kenya Institute of Planners A rep from the Institution of Surveyors of Kenya A rep from LSK A rep from the Kenya Bankers Association A rep from the Kenya Private Sector Alliance - They shall hear and determine the appeal within 60 days from the date of receipt of the appeal - Their decision shall be binding - Still aggrieved? Enda High Court