Lease
Also called: Lease of immovable property, Tenancy
A transfer of a right to enjoy immovable property for a certain time, or in perpetuity, in consideration of a premium or rent (Section 105 of the Transfer of Property Act).
Explained
Section 105 of the Transfer of Property Act, 1882 defines a lease of immovable property as a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. The transferor is the lessor, the transferee the lessee, the price the premium and the periodic consideration the rent.
The elements are: parties competent to contract; a transfer of a right of enjoyment, which is an interest in the property; a term, which may be fixed, implied or perpetual; consideration as premium or rent; and acceptance by the lessee. Because a lease transfers an interest, it differs from a licence under Section 52 of the Indian Easements Act, 1882, which is a mere permission to do something on the grantor's property that does not create an interest. The Supreme Court has held that substance prevails over the label in the deed, that intention is the test, and that exclusive possession is prima facie evidence of tenancy but not conclusive.
Formalities are tested often. Under Section 107, a lease from year to year, for a term exceeding one year, or reserving a yearly rent can be made only by a registered instrument executed by both parties; other leases may be made by registered instrument or by oral agreement accompanied by delivery of possession. Section 17(1)(d) of the Registration Act, 1908 makes such leases compulsorily registrable. Under Section 106, absent a contract, local law or usage, a lease for agricultural or manufacturing purposes is from year to year terminable by six months' notice, and any other lease is from month to month terminable by fifteen days' notice, the period running from receipt of notice.
Examiners ask the lease and licence distinction, the effect of an unregistered lease deed, and the notice periods under Section 106. Section 111 governs determination of a lease, and Section 108 sets out the rights and liabilities of lessor and lessee.
What the law says
A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
Lessor, lessee, premium and rent defined.—The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.
Defines lease, lessor, lessee, premium and rent
[(1) In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months’ notice; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days’ notice.
(2) Notwithstanding anything contained in any other law for the time being in force, the period mentioned in sub-section (1) shall commence from the date of receipt of notice.
(3) A notice under sub-section (1) shall not be deemed to be invalid merely because the period mentioned therein falls short of the period specified under that sub-section, where a suit or proceeding is filed after the expiry of the period mentioned in that sub-section.
Duration and notice periods absent a contract
A lease of immoveable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument.
[All other leases of immoveable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.
[Where a lease of immoveable property is made by a registered instrument, such
When a registered instrument is required
(d) leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent;
[(e) non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property:]
Provided that the [State Government] may, by order published in the [Official Gazette], exempt from the operation of this sub-section any lease executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees.
Clause (1)(d) makes such leases compulsorily registrable
(7) “Lease” includes a counterpart, kabuliyat, and undertaking to cultivate or occupy, and an agreement to lease;
Clause (7) extends lease to counterpart, kabuliyat, agreement to lease
Where one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a license.
Defines licence, the term a lease is contrasted with
Example
For example, an owner who puts a shopkeeper in possession of a shed at a monthly rent, on an unregistered five year deed, cannot rely on the deed to prove a five year lease, but the conduct of the parties can still establish a lease from month to month.
For the exam
- Section 105 TPA: transfer of a right to enjoy immovable property for a term, for premium or rent.
- A lease creates an interest; a licence (Section 52 Easements Act) does not.
- Year to year, over one year, or yearly rent: registered instrument only (Section 107).
- Default: manufacturing or agricultural lease, 6 months' notice; others, 15 days' notice (Section 106).
- Unregistered deed for over a year creates no such lease, but possession with monthly rent can be a monthly lease.
1,137 questions in the Law Maker question bank use this term. Practise Transfer of Property Act questions
Judgments
- Associated Hotels of India Ltd. v. R.N. Kapoor (1959)By majority, two cloak rooms in the Imperial Hotel let to a hair-dresser were 'rooms in a hotel' excluded from the Delhi and Ajmer-Merwara Rent Control Act, 1947, so no standard rent could be fixed; the appeal was allowed.
- Anthony v. K.C. Ittoop and Sons (2000)An unregistered five-year lease deed cannot create a lease, but a tenant put in possession on monthly rent holds a lease of up to one year under Section 107 TPA and is protected by the Rent Act.
Related terms
- Transfer of propertyUnder Section 5 of the TPA, an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and one or more other living persons.
- Immovable propertyLand, benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth. Defined inclusively in Section 3(26) of the General Clauses Act, 1897.
- EasementA right of the owner or occupier of land, as such, for its beneficial enjoyment, to do something, or prevent something being done, on other land not his own.
- MortgageThe transfer of an interest in specific immovable property to secure the payment of money advanced or to be advanced as a loan, an existing or future debt, or an engagement giving rise to a pecuniary liability.
- SaleA transfer of ownership in exchange for a price paid or promised or part-paid and part-promised (Section 54 of the TPA). Sale of goods is governed separately by Section 4 of the Sale of Goods Act, 1930.
Further reading
Checked 6 November 2026. Statutory text is quoted from the Bare Acts library, taken from India Code. See the full glossary.