The law of lease

27 Nov, 2022 - 00:11 0 Views
The law of lease

The Sunday Mail

Legal Matters with Arthur Marara 

Business models differ. Some businesses prefer leasing to outright purchases. Some businesses may actually be in the business of leasing properties, either movable or immovable. What is the law that governs lease agreements? What are the formalities?

What are the essential elements for a valid lease? What are the rights and obligations of parties to the lease agreement? What are the remedies in the event that a party breaches a lease? How is a lease agreement terminated? These are some of the questions that are topical when the issue of lease arises. I am doing this series to take you through some legal aspects around leases.

What is a lease?

There are various definitions of leases that have been proffered by several writers. Professor Khan offers a more detailed and apt definition: “A contract of letting and hiring of a thing (or a lease) is a reciprocal agreement between the lessor and the lessee, in terms of which the lessor binds him- or herself to give the lessee the temporary use and enjoyment of a thing, wholly or in part, and the lessee binds him- or herself to pay a sum of money as compensation for that use and enjoyment.”

Essentials of a lease

The above definition brings out two essentials of a contract of lease. These are:

An undertaking by the lessor (the person who lets) to give the lessee (the person who hires) temporary use and enjoyment of a thing;

An undertaking by the lessee to pay a sum of money in return for the use and enjoyment, which he or she will receive (i.e. an undertaking to pay rent).

In the next article, we shall be looking at the essentials of a lease agreement in greater detail.

A lease comes into being once the landlord and the tenant have agreed on the formalities that form the basis of their contract.

A lease agreement can either be verbal or written. In the interests of greater clarity, and certainty, it is highly recommended that parties always have written lease agreements. This will be useful in the event that there are disputes in the future.

There must be a property available for lease and the rent in respect thereof must be settled. The lessor’s obligation is to make the property’s occupation, use, and enjoyment available.

In fulfilling this obligation, he or she has to refrain from disturbing the lessee in the enjoyment of the property leased and he or she must maintain the property in the condition agreed upon.

In addition, the property must be fit for the purpose for which it is being let.

Further, he or she must warrant the lessee against eviction by a third party with better title. [Rolen Trading (Private) Limited v Parkside Holdings (Private) Limited (106 of 2022) [2022] ZWSC 106]

The primary obligations of the lessee are to pay the rent and incidental costs and the charges incidental thereto at the proper time and place agreed in the agreement, and at the time of termination of the lease, to restore the property in the same condition he would have found it.

It also happens that in certain instances, parties are not in agreement as to what is the rent due.

The regulations did not specifically provide for a situation where there may be disagreement on what constitutes the “rent due”.

One must of necessity resort to the common law to answer the following question: Where parties are not agreed on what rental is payable and there is no order by the board, what rental is payable in exchange for occupation of premises?

The position is settled that a tenant has no right to occupy property except in return for payment of rent and that where there is no agreement on the amount of rental payable, the lessee is liable to pay the lessor a reasonable amount for the use and occupation of the property.

To be continued

Arthur Marara is a corporate law attorney. You can follow him on social media (Facebook Attorney Arthur Marara)


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