Legal Rights and Duties of Landlords and Tenants in Leasing

Lessor and Lessee Rights & Liabilities in Lease Agreements

Introduction:

The relationship of landlord and tenant is the relationship that exists between the parties to a lease. It is the creature of the contract between the parties. The relationship arises when the owner of certain immovable property grants to another, for consideration, an estate less than absolute ownership and less than he himself possesses in that property.

Legal Rights and Duties of Landlords and Tenants in Leasing

It is essential for the establishment of the relationship of landlord and tenant that there should be a lease, actual or presumed. The relationship can exist only with respect to immovable property, which includes both corporeal hereditaments, such as buildings, mines, and land, and incorporeal hereditaments, such as franchises, easements, profits, etc.

The Parties to a Lease are:

The lessor, The transferor called the Landlord, and
The lessee, the transferee, tenant, which term includes joint tenants, tenants-in-common, and tenants for life.

Lessor:

Section 7 of the Transfer of Property Act shows that the following conditions are necessary to entitle a person to transfer property:

(a) He must be the owner of the property or must be authorized to transfer such property;
(b) he must be competent to contract;
(c) He can transfer only in the circumstances, to the extent and in the manner allowed and prescribed by any law for the time being in force.

The above principles are applicable to leases also as they are transfers of property.
Thus, a person who is neither the owner of property nor authorized to transfer cannot grant a lease of it.
On the same principle, a person cannot grant a lease so as to outlast his own interest in the property.

Lessee:

Every person, not rendered incompetent by some legal disability, can be a lessee, provided that he obtains a lease from a person competent to grant it. So, the assignee of a lessee is not a lessee, for there is neither a lease in his favor nor a privity of contract between him and the lessor.

In order to claim the status of a lessee over an immovable property, a claimant has not only to show a transfer of a right to enjoy such property in consideration of a price or promise, but also has to show an exclusive possession over such property, as the lessee under section 108 of the Transfer of Property Act, 1882 is entitled to be put in possession of such property and the lessor parts with his right to enjoy such property during the course of lease. Abdullah Bhai v. Ahmed Din PLD 1964 SC 106

You may also read Transfer of Property to an unborn child

Rights of Lessee/Tenant:

Relevant Provision: Section 108 of the Transfer of Property Act:

Disclosure of Material Defects To the Lessee/Tenant

SECTION 108 CLAUSE (A)

In the absence of a contract or local usage to the contrary, the lessor is bound to disclose to the lessee any material defects in the property but only with reference to its intended use, provided that:

(a) The lessor is aware of such a material defect,
(b) The lessee is not aware of that material defect, and
(c) The defect is such that the lessee could not, with ordinary care, discover.

Under this clause, the lessor is bound to disclose to the lessee only latent defects which are material, of which he is aware, and of which the lessee is not aware.
The lessee cannot claim that the lessor has committed a breach of the obligation imposed upon him under this clause, unless,

(a) The defect is latent,
(b) The defect is material,
(c) The defect is with reference to its intended use,
(d) The defect is one of which the lessor is aware,
(e) the defect is one of which the lessee is not aware, and
(f) The defect is such that the lessee could not, with ordinary care, discover.

If any of these factors is not present, the lessee cannot claim that the lessor has committed a breach of the obligation under this clause.

Keeping demised property in as good condition as it was at the time of delivery of possession to lessee, subject to reasonable wear and tear or irresistible force--Statutory obligation of lessee in the absence of a contract or local usage to the contrary. Tenant is bound to see the building not being irreparably damaged through his own neglect. [1978 PLD 316 KARACHI-HIGH-COURT]

Delivery of Possession To Lessee

(CLAUSE (B), SECTION 108)

The clause imposes a statutory obligation upon the lessor to give possession of the premises to the lessee. What amounts to delivery of possession depends on the nature of the property leased. Where the lessor fails to deliver possession in spite of the lessee’s request to put him in possession, the lessee may, in the absence of a contract to the contrary.

(a) Repudiate or rescind the contract on the ground of failure of the lessor to give possession, but he cannot do so, when he takes possession of a portion of the demised premises, if the lessee rescinds the whole contract, he can recover the consideration, if any, paid by him to the lessor,
(b) Sue for damages for breach of the obligation,
(c) Sue for possession of the property demised, even though he has failed to pay the stipulated consideration, he may also sue the third party in possession.
(d) Sue for specific performance,
(e) He may withhold payment of rent, or claim abatement or suspension of the rent.

Right to Enjoy the Possession without Interruption:

(CLAUSE (C), (SECTION 103)

In the absence of a contract or local usage to the contrary, the lessor shall be deemed to contract with the lessee that if the lessee/Tenant:

Pays the rent reserved by the lease, and
Performs the contracts binding on him

He may hold the property during the time limited by the lease, without interruption.

The clause lays down two other propositions:

The benefit of such contract shall be annexed and go with the interest of the lessee/Tenant as such, and may be enforced by every person in whom that interest is vested for the whole or any part thereof from time to time. The clause means that the title, which has been conveyed by the lessor to the lessee, is a good title and that there is no infirmity in it.

Right of Accession

(Clause (d))

The word “accession” means “accretion” or addition, not with some difference. Literally, the word “accretion” means the process of growing continuously, or continuous coherence, or any extraneous addition, while the word “accession” means simply an increase. It is not necessary for accretion to be imperceptible; it is sufficient if it is gradual.

The conditions necessary for the application of this clause are:

(a) There must be no contract or local usage to the contrary.
(b) An accession must have been made to the demised property.
(c) Such accession must have been made during the continuance of the lease
(d) There must be no law relating to allusion in force to the contrary.

If all the above conditions are fulfilled, then such accession shall be deemed to be comprised in the lease.

If, during the continuance of the lease, any accession (addition, growth) is made to the property, such accession shall be deemed to be comprised in the lease;

Right of Lessee in Case of Destruction of Subject Matter of Lease:

(Clause (e))

The clause becomes applicable only if,

(1) There is no contract or local usage to the contrary,
(2) Any material part of the property demised is

(a) wholly destroyed, or
(b) rendered substantially and permanently unfit for the purposes for which it was let,

(3) By fire, or tempest, or flood, or Violence of any army or of a mob or other irresistible force, and
(4) The injury is not occasioned by the wrongful act or default of the lessee.

If the above conditions are fulfilled, the lease shall, at the option of the lessee, be void, but if any of the above ingredients is not present, the lease shall not, at the option of the lessee, be void, and the lessee shall not be entitled to avail himself of the benefit of the provision.

If the lessee had expressly undertaken to restore the subject-matter of the lease in its original condition in case of fire, S. 108(e), Transfer of Property Act, 1882 would stand negated. [1995 PLD 351 SUPREME-COURT]

Right of Necessary Repairs:

(Clause (f))

The essential conditions for the application of this clause are:

(a) There must be no contract to the contrary.
(b) The lessee himself must be under no obligation to make any repairs to the property
(c) The lessee must have given notice to the lessor to make the repairs within a reasonable time,
(d) The lessor must have neglected to make the repairs within a reasonable time after notice.
If all the aforesaid conditions are fulfilled, the lessee acquires the following rights:
(a) To make the repairs himself, and
(b) To deduct the expense of such repairs with interest from the rent, or
(c) To recover the expense of such repairs with interest from the lessor.

Right of Necessary Payments:

(Clause (g))

The necessary conditions for the application of this clause are

(1) There must have been no contract to the contrary.
(2) The lessor must have neglected to make any payment, which he was bound to make, and
(3) Which payment, if not made by him, must be recoverable from (a) the lessee, or (b) against the property.

If all the above conditions are satisfied, the lessee may make such payment himself and deduct it with interest from the rent or otherwise recover it from the lessor. Apart from this clause, the tenant also has a right to recover the amount under Sec 69 of the Contract Act, if he pays it under protest. The reason is that when the lessee makes a payment which the lessor is bound to make, and which, if not made, is recoverable from the lessee or from the demised premises, the lessee is a person interested in the payment and is, therefore, entitled to be reimbursed.

Removal of Things Attached to Earth

(Clause (h))

The clause applies only in the absence of a contract to the contrary. It empowers the lessee, even after the determination of the lease, to remove, at any time, whilst he is in possession of the property leased, but not afterwards, all things which he has attached to the earth. But he can do so only if, after so doing, he can leave the property in the state in which he received it.

Rent note neither allowing nor prohibiting the tenant to make any construction in building-Conditions of tenancy in such case, held, to be governed by provisions of S. 108, Transfer of Property Act, 1882 and tenant cannot erect permanent structure without landlord's consent.[1979 CLC 774 LAHORE-HIGH-COURT]

Entitlement to Crops

(Clause (i))

If the following conditions are fulfilled, namely

(1) There is no contract or local usage to the contrary
(2) A lease of uncertain duration determines by any means except the fault of the lessee.
Then the lessee or his legal representative is entitled,

(a) To all the crops planted or shown by the lessee and growing upon the property when the lease determines, and
(b) To free ingress and egress to gather and carry them.

Right to Absolute Transfer

(Clause (J))

The clause lays down the following propositions, which apply only in the absence of a contract or local usage to the contrary:

(a) The lessee may transfer absolutely the whole or any part of his interest in the demised property,
(b) The lessee may transfer by way of mortgage the whole or any part of his interest in the property,
(c) The lessee may transfer by way of sub-lease the whole or any part of his interest in the property; and
(d) Any transferee of such interest or part may again transfer it,
(e) The lessee cannot, by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease,

But this clause should not be deemed to authorize:

(a) A tenant having a non-transferable right of occupancy, or
(b) The farmer of an estate in respect of which default has been made in paying revenue, or
(c) The lessee of an estate under the management of a Court of Wards, to assign his interest as such tenant, farmer, or lessee.

Rights of Lessor:

Payment of Rent or Premium

(Clause (L))

The clause provides that, in the absence of a contract or local usage to the contrary, the lessee is bound to pay or tender, at the proper time and place the premium or rent to the lessor or his agent in this behalf The right to recover rent, or the liability to pay or tender rent, accrues and subsists only if the relationship of landlord and tenant arises and subsists between the parties. Where the relationship of landlord and tenant is proved, it was held that there is liability to pay rent If no such relationship exists, there is no liability to pay rent; and that liability continues only so long as the relationship of landlord and tenant does subsist, or during the period for which rent is claimed.

Rights of Lessor during Restoration of Property

(Clause (M))

The clause applies only in the absence of a contract to the contrary. It casts an obligation upon the lessee

To keep, and
On the termination of the lease to restore, the property in as good condition as it was in at the time when he was put in possession, subject only to the changes caused

(a) By reasonable wear and tear, or
(b) Irresistible force, and

To allow the lessor and his agents, at all reasonable times during the term, to enter upon the property and inspect the condition thereof, and give or leave notice of any defect in such condition, and
When such a defect has been caused by any act or default on the part of the lessee, his servants or agents, to make it good within three months after such notice has been given or left.

Notice to Lessor

(Clause (N))

The clause enacts that the lessee, in the absence of a contract to the contrary, rests under an obligation to give, with reasonable diligence, notice to the lessor, if the lessee becomes aware,

(a) Of any proceeding to recover the property, or any part thereof, or
(b) Of any encroachment made upon the lessor's right concerning the demised property, or
(c) Any interference with the lessor’s right concerning the demised property.

Reasonable Use of Property

(Clause (O))

The clause lays down what the lessee may do and what he may not do.

It enacts that the lessee may use:

(1) The property, and

(2) Its products, if any, but only as a person of ordinary prudence would use them, if they were his own. Yet, it imposes an obligation upon the lessee.

(a) Not to use, or permit another to use, the property for a purpose other than that for which it was leased, or
(b) Fell timber, or
(c) Sell timber, or
(d) Pull down or damage buildings belonging to the lessor, or
(e) Work mines or quarries not open when the lease was granted, or
(f) Commit any other act which is destructive or permanently injurious thereto.

The clause enacts, in substance, that the lessee may use the property as a person of ordinary prudence would use it, if it were his own, but he should not use, or permit another to use it for a purpose other than that for which it was leased.

Erection of Permanent Structures

(Clause (p))

The clause imposes an obligation on the lessee, in the absence of a contract or local usage to the contrary, not to erect on the property any permanent structure, except for agricultural purposes. The fact that the tenant has improved the land by the permanent structure, or that the permanent structure will improve the demised premises, can afford no defense. But there are exceptions to the general rule. One such exception is that mentioned in the clause itself, viz., the tenant may build a house, or other permanent structure, for agricultural purposes. Another exception may exist where the lessor, by standing by and allowing the tenant to go on with the work without objection, may disentitle himself to the assistance of the court.

Return of Possession

(Clause (q))

Section 108 sets out the rights and liabilities of lessor and lessee. Clause (q) of that section imposes a liability to put the lessor into possession of the property on the termination of the lease. Such liability arises whether the lease is terminated by notice or by efflux of time.

Conclusion

In conclusion, the statutory framework under Section 108 of the Transfer of Property Act clearly delineates a balanced relationship between lessor and lessee. The lessee is assured fundamental rights such as disclosure of latent defects, peaceful possession, the ability to make essential repairs, and removal of fixtures—contingent on fulfilling obligations like timely notice and proper use of the property. Meanwhile, the lessor retains vital protections, notably the right to rent or premium, entitlement to restore the property post-lease in reasonable condition, and access for inspection tied to restoration obligations. Together, these provisions foster a fair, predictable leasing environment by enforcing clarity and accountability with minimal room for dispute. Understanding these rights and duties ensures both parties can uphold their legal responsibilities, minimize conflicts, and maintain a smoothly functioning lease relationship.

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The author is a law graduate with over seven years of legal experience. Through The Law Studies, the author writes on diverse legal topics, combining practical knowledge with comparative insights from Pakistan, the UK, the US, and other common law jurisdictions.