Section 105 of the Transfer of Property Act talks about lease. It is transfer of a right to enjoy an immovable property for a certain time, or in perpetuity against consideration of a price paid or promised (premium).


  • Lessee acquires a transferable interest and can sub-lease.
  • It is both heritable and transferable.
  • Lessor and Lessee must be competent to contract and cannot be the same person.
  • Subject matter of the lease must be specific immovable property.


  1. Absolute/Primary (when lessor has absolute right over the property)
  2. Derivative/Sub-lease/Under-lease (when lessor himself has limited interest in the property)
  3. Lease for a fixed term, 5 years, 10 years, etc.
  4. PeriodicLease (Seasonal Lease)
  5. Leasein perpetuity (without a term)

Closed and Open- ended Lease: Comparison

 In the close-ended lease, the assets gets transferred to the lessor at the end of lease, the risk of obsolescence, residual values etc. remain with the lessor being the legal owner of the assets. In the open-ended lease, the lessee has the option of purchasing the assets at the end of lease period.

Section 108 of the Transfer of Property Act talks about right and liabilities of lessor and lessee.

Determination of Lease: Modes of [Section 111]

  1. By efflux of time (when time for which it was made expires)
  2. Where such time is limited conditionally on the happening of some event, by the happening of such event.
  3. Where the interest of the lessor in the property terminates on or his power to dispose of the same extends only to the happening of any event, by the happening of such event.
  4. By merger
  5. By express surrender of the whole of the interest
  6. By implied surrender, e.g. acceptance of a new lease taking effect during the continuance of the existing one, with the consent of the lessee of the existing ones.
  7. On the expiration of notice to determine the lease or to quit or of intention to quit the property leased, duly given by one party to the other.
  8. Forfeiture (lease becomes VOIDABLE at the option of the lessor)
Forfeiture, When?
  • Lessee breaks an express condition which provides that on breach thereof, the lessor may re-enter, or
  • Lessee renounces his character as such by setting up a title in a third person or by claiming a title in himself, or
  • Lessee is adjudicated an insolvent and the lease provides that the lessor may re-enter on such even happening.

Lease and License: Differences



transfer of an interest mere permission to do something without any transfer of interest
both transferable and heritable neither transferable nor heritable
Comes to an end only in accordance with the terms and conditions stipulated in the contract can be withdrawn at any time at the pleasure of the grantor
entitled to any improvement or accession made to the property Not so entitled
unaffected by the transfer of the property by sale in favour of third party and continues comes to an end immediately if the property is sold to a third party
lessee has the right to protect the possession in his own right A licensee cannot defend his possession in his own name as he does not have any propriety right in the property
does not come to an end either by death of the grantor or the grantee comes to an end with the death of either grantor or the grantee

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