Leases

General provisions on leases, licenses et al are to be found under section 20 to 36 of the Land Act (Revised 2016).

“Lease” means the grant, with or without consideration, by the proprietor of land of the right to the exclusive possession of his or her land, and includes the right so granted and the instrument granting it, and also includes a sublease but does not include an agreement for lease; Section 55- Unless otherwise specified in the lease agreement or governed by the community Land Act this section on leases will apply. Furthermore under this section unless unfeasible a reference to a lease shall include a sub-lease.

Essentialities of a Lease

1. Subject matter- must be sufficiently described. Heptulla Brothers Ltd v Jambha Jeshangbhai Thakore- An agreement by lessor to rent out a shop to lessee to store goods and move them from shop to shop at his pleasure? Was held not to amount to a lease. The rights given did not refer to any specific area
2. Parties – lessee and lessor
3. Term- The term must be definite or ascertainable. A lease may become void if there is no definite term e.g A lease for the duration of war- Lace v Chantler
4. Consideration/rent- Lack of rent does not invalidate lease
5. Exclusive possession- Right of possession to the exclusion of land lord and land lords agents ruling in Street vs Mountford. In Desai vs Cooper, X was using a shop that belonged to Y. X had no keys of his own to the shop and often had to wait for Y to get access through the front door. It was held to be a licence other than lease. There was no exclusive possession by the lessee. Licence: permission to use property for specific reason and time for payment of fee. Licence is a personal contract

The owner of the land has the power to lease land to any person for a definite period or for the life of the lessor or of the lessee or for a period which though indefinite, may be terminated by the lessor or the lessee[1].

Periodic Leases- This occurs;

1. Where in a lease the term is not specified and no provision is made for the notice of termination. In this instance the term shall be deemed to be the same as the intervals of the rent payment(if its agricultural land then the term will be deemed to be 6 months(this is the period it averagely takes to harvest crops))
2. If the owner of land permits the exclusive occupation of the land or any part of it by any person at a rent but without any agreement in writing, that occupation shall be deemed to constitute a periodic tenancy.

(Is there a difference between a periodic lease and tenancy?)(Yes) The spirit of the legislation

3. When a lease comes to an end but the lessee continues to remain in possession without the consent of the lessor but continues paying rent as per regular intervals[2].

A periodic tenancy may be terminated by either party giving notice to the other, the length of which shall be not less than the period of the tenancy and shall expire on one of the days on which rent is payable[3].

Short Term Leases

A short term lease is a lease made for a term of two years or less without an option for renewal; and/or that is a periodic lease. It may be made orally or in writing. A short term lease is not a registrable interest[4].

A lease that that provides for its termination or permits notice of its termination to be given on the occurrence of a future event shall not be invalid provided that the event is sufficiently defined in the lease so as to be identified when it occurs[5].

Future leases- a lease of land may be made for a term to begin on a future date, not being later than twenty-one years after the date on which the lease is executed. This is so as to be in line with the rule against perpetuities. A future lease, which is expressed to be for a period of more than five years, shall be of no effect unless and until it is registered[6].

Sub leases-A sublease that is for a term which is the same as or shorter than the term of the head lease shall not operate as an assignment of the head lease to the sub lessee. The term of a sublease shall not be longer than the term of the head lease. Sublease: P obtains a lease for a commercial plot from the government for 99 years. He runs a bar and restaurant but leases out other shops in the large premises to others to do business The lease between him and the government is a head lease The other leases he has entered into are sub leases.

A surrender to enable a new head lease to be entered into not to affect the sublease. Such a sub-lease shall continue in force as though it had been entered into in respect of the new head lease: All rights and obligations under the sublease, including those which relate to any period before the surrender of the head lease, shall continue to be enforceable[7].

Covenants implied in a lease on part of the lessor

1. Grant lessee quiet enjoyment
2. Non derogation from grant (Not to use or permit any adjoining or neighboring land that the lessor owns or leases that would in any way render the leased land or any buildings on the leased land unfit or materially less fit for any purpose for which they may be used)
3. If only part of a building is leased, to keep the roof, all external and main walls and main drains, and the common parts and common installations and facilities, including common passages and walkways in a proper state of repair.
4. If any dwelling house, flat, or room is leased, that the house, flat or room is fit for human habitation at the commencement of the lease and shall be kept fit for human habitation during the lease.
5. That if the leased premises is destroyed or damaged by civil commotion, natural disasters or by fire, flood or explosion or other accident not attributable to the negligence of the lessee- so as to make the leased premises or any part of it wholly or partially unfit for occupation or use, the rent and any contribution payable by the lessee to the outgoings on the premises or a just proportion of that rent of contribution according to the nature and extent of the damage sustained shall be suspended and cease to be payable until the leased premises have been, once more, rendered fit for occupation and use; and if the leased premises have not been rendered fit for occupation and use within six months after their destruction or damage, the lessee shall have the option to terminate the lease after giving one month’s notice
6. If it is an express or implied term of the lease that the leased land or a building on it may be used for any one specific purpose or purposes, the lessee may terminate the lease, on giving one month’s notice to the lessor, if the land or building cannot be, or can no longer lawfully be, used for any of those purposes
7. To pay all rates, taxes, dues and other outgoings that are payable in respect of the leased land except to the extent otherwise specified in the lease[8].

Rights of Lessor

1. Either personally or by agents, enter, the leased land or buildings at any reasonable time and upon giving a seven days' notice to the lessee for the purpose of inspecting the condition and repair of the premises, or for carrying out repairs and making good any defects that it is the lessor’s obligation so to do; but in the exercise of that power, the lessor shall not unreasonably interfere with the occupation and use of the land and buildings by the lessee.
2. Terminate the lease by serving a notice of intention to terminate the lease on the lessee where; Any rent is unpaid for one month after the due date for payment, whether or not a demand, in writing, for payment has been made by the lessor or an agent of the lessor; The lessee has failed for a period of one month, to observe or perform any condition, covenant or other term, the observation or performance of which has been assumed by the lessee expressly or impliedly in the lease.

Duties of Lessee

1. To pay the rent reserved by the lease at the times and in the manner specified in the lease
2. To use any land in a sustainable manner and in accordance with any conditions imposed on the use of that land by the lease, or any written law or any provisions in a grant of a public land out of which that lease has been created and, in particular, not to cut down, injure or destroy any living tree on the land unless the purpose for which the land has been leased cannot be carried out without so doing
3. To yield up the land and buildings in the same condition as they were when the term of the lease began, except that the lessee shall not be bound to repair damage or restore the land and buildings to the same conditions they were at the beginning of the lease if the damage or deterioration of the condition is caused by; reasonable wear and tear; civil commotion; natural disasters; and fire, flood or explosion or other accident not attributable to the negligence of the lessee, or the lessee’s invitees or employees
4. To keep all boundary marks in repair
5. To keep all buildings comprised in the lease in a reasonable state of repair[9].

Consent by Lessor

A lessee may want to take an action with regards to the lease which requires consent of the lessor. This may include;

1. Transfer or assign the lease;
2. Enter into a sublease;
3. Part with possession of the leased land or buildings;
4. Change the use of the land or buildings from a use which is permitted under the lease;
5. Extend, improve, add on to or in any other way develop any building beyond what is permitted in the lease;
6. Create a charge over the lease

When the lessee requests this consent it must not unreasonable be withheld. Consent is unreasonably withheld if the lessor;

1. Requires the lessee to pay any money, by way of additional rent, or a premium or a fine or other consideration for the consent, other than the payment of the lessor’s reasonable expenses incurred in connection with the giving of consent;
2. Imposes on the lessee any unreasonable condition or precondition;
3. The lessee has requested for consent to transfer or assign the lease or enter into a sublease, and the lessor objects to the gender or nationality or other personal characteristic of the transferee, assignee or sub-lessee, in circumstances that a reasonable person would consider those factors irrelevant to the granting of such consent

The burden and benefits of the lease Burden shall run with whoever has the reversionary rights.

What is transfer and assignment of a lease?

One may transfer a bit of his interest in land however in n assignment one assigns the whole interest to the assignee.

Once transferor assigns his interest he ceases to be liable to pay rent and observe other covenants. However, if the transferor remains in possession such person shall be liable for covenants to the lessor. Such a move shall not absolve a transferor or assignor of a lease from any obligation to pay rent or remedy and breach of a covenant that accrued or arose during the term of the lease when that transferor or assignor was bound by all the covenants in that lease.

By the assignment of lease the vendor transfers unto the purchaser the entire unexpired remainder of the leasehold term.

A lessee who, with the agreement of the lessor, vacates land before the termination of a lease shall remain liable to pay rent and observe all the covenants in the lease for one year from the date on which the lessee vacates the land or buildings, unless the lease provides expressly for a shorter period[10].

Transferor or assignee as lessee

A person who accepts a transfer or assignment of a lease shall become the lessee and shall be required to acknowledge the lessor as such; take possession of the land or building that is the subject of the lease. A person to whom this section applies who becomes a lessee; shall pay the lessor the rent payable under the lease; shall observe and perform all the covenants on the part of the lessee expressed or implied in the lease; and may enforce all covenants made by and binding on the lessor expressed or implied in the lease[11].

RIGHTS AND REMEDIES

Lessor’s

Distress for rent

Action to recover arrears

Injunction against lessee

Lessor’s right of forfeiture

lessor shall have the right to forfeit the lease if the lessee; commits any breach of, or omits to perform, any agreement or condition on his part expressed or implied in the lease; is adjudicated bankrupt; being a company, goes into liquidation.

The right of forfeiture may be; exercised, where neither the lessee nor any person claiming through or under him is in occupation of the land, by entering upon and remaining in possession of the land; or enforced by action in the court.

Forfeiture determines every sublease.

No lessor shall be entitled to exercise the right of forfeiture for the breach of any agreement or condition in the lease, whether expressed or implied, until the lessor has served on the lessee a notice of not less than thirty days—

(a) Specifying the particular breach complained of; and

(b) If the breach is capable of remedy, requiring the lessee to remedy the breach within such reasonable period as is specified in the notice; and

(c) In any case other than non-payment of rent, requiring the lessee to make compensation in money for the breach, and the lessee has failed to remedy the breach within thirty days thereafter, if it is capable of remedy, and to make reasonable compensation in money.

A sublessee/lessee whom a notice has been served may apply to court for reliefs only if they are not a party to the breach. A lessee who is evicted from the whole or a part of the leased land or buildings, contrary to the express or implied terms and conditions of a lease, shall be immediately relieved of all obligation to pay any rent or other monies due under the lease or perform any of the covenants and conditions

against lessee

Lessee’s Rights and Remedies

In case of any of the breaches by the land lord he may file suit, claim damages. The tenant may also seek injunction. For serious breach he may terminate the lease

Consents required for transfer of Leasehold Properties?

NLC consent

Land Rates

Land rent

Title document

Termination of Lease

Effluxion of time

By surrender

By notice

By frustration

By Forfeiture

Assignment vis a vis Sub Leases

A sublease is when you transfer some (but not all of) your rights to use and enjoy the premises; you keep some right to re-enter or retake the premises. Say, for example, you want someone else (called the “subtenant” or “sublessee”) to live in your apartment for three summer months in the middle of your 12-month lease; you want the subtenant then to leave after these three months, at which time you have the right to re-enter the premises. During those three months, you’re the subtenant’s landlord, also known as the “sublessor”.

If you want to leave permanently, but your landlord will not cancel your lease or allow a sublease, consider assigning your lease. An assignment is when you transfer all of your remaining interests in the lease to someone else, called the “assignee” (you’re the “assignor”). If you want to leave six months into a 12-months lease, the assignee takes over your lease when you move out. If the assignee damages the rental, your landlord can sue the assignee; and if the landlord fails to make repairs, the assignee can pursue legal remedies against the landlord

Easement vis a vis License

Easement is right attached to a parcel of land, which allows the proprietor of the parcel either to use the land of another in a particular manner or to restrict its use to a particular extent, but does not include a profit. Easements are entered both n the proprietor section of the title to the dominant tenement and in the encumbrances section of the servient tenement title.

License is a personal permission granted by a land owner to another person to occupy, personally, for a consideration, the other’s land, and may be for a limited time or unlimited.

Previous Bar Exam Questions on Leases

Q5-2015-CONVEYANCING

Mohamed Ali Mahmood is registered as the proprietor as lessee of all that property known as Makatiani Town/Block 10/4494 located in Isiolo town. He has erected a commercial building on the property comprising of shops and offices. He leased a shop on the ground floor of the building to Ahmed Haji Kaji. The written lease between Mohamed and Ahmed commenced on 1st October, 2007 and expired on 31st December, 2013. During the last year of the lease Ahmed was paying a monthly rent of Kshs.150,000/- quarterly in advance. At the end of the lease term no new lease was signed but Ahmed remained in possession of the premises. He continued to pay the monthly rent of Kshs.150,000/- quarterly in advance until 30th of June, 2015. He has not paid the rent for the 3rd and 4th quarters. Ahmed told Mohamed two days ago that he intends to vacate the premises by 30th November, 2015. Mohamed informed Ahmed that his payment of rent in January 2014 extended the lease for another 5 years and 3 months and that Ahmed will be liable for all unpaid rent during this period.

1. a) Critically analyse whether Ahmed is liable for all the unpaid rent until 31^st March, 2019 giving reasons for your answer. (5 marks)

The parties entered into an agreement. The lease came to an end however the parties continued with the payment and receiving of the rent for the better half of the next year. In Kenyan Land Law, the registered Land Act holds that when a lease comes to an end and the parties do not renew but the lessee continues paying monthly rent then this will be known a periodic lease. Section 57(c)(i) states that when if in any lease the lessee remains in possession of land with the consent of the lessor after the term of the lease has expired and unless the lessor and lessee have agreed, expressly or by implication, that the continuing possession shall be for some other period, the lease shall be deemed to be a periodic one. The lessor and lessee never renewed their original lease.

As such Ahmed is liable for the rent of the period with which he has been in occupation but has not paid (3^rd and 4^th quarters). This is as opposed to paying rent till 2019. Such a view does not have the blessing of the law and is more inclined towards the sin of exploiting a lessee. Ahmed needs to give one three month notice as this is consistent with the rent payment arrangements.

1. b) Ahmed was not able to find a shop that was as strategically located as Mohamed's shop. He agreed to renew the lease with Mohamed. Ahmed has appointed you to act on his behalf. You have received for your perusal a one page document drawn by Mohamed's nephew, a 1st year law student in a local University.

The lease states as follows:

'This lease will take effect from 1st January 2016 for 5 years 6 months. The monthly rent of Kshs.200,000/- is payable quarterly in advance. The rent will escalate by 10% every year. The Lessee will pay a monthly service charge of Kshs.30,000/- payable quarterly in advance. The service charge may increase depending on expenses. Service charge accounts will be furnished to the Lessee every year.'

Your client was requested to execute the lease document. List at least 5 covenants that should be imposed on the Lessor and 5 covenants that should be imposed on the Lessee.

Covenants for Lessor

The Lessor undertakes, without fail to;

1. Account to the Lessee each year the moneys spent in the service charge
2. Grant the Lessee exclusive and quiet possession
3. Not to use or permit any adjoining or neighboring land that the lessor owns or leases that would in any way render the leased land or any buildings on the leased land unfit or materially less fit for any purpose for which they may be used
4. To keep the roof, all external and main walls and main drains, and the common parts and common installations and facilities, including common passages and walkways in a proper state of repair
5. To pay all rates, taxes, dues and other outgoings that are payable in respect of the leased land except to the extent otherwise specified in the lease.

Covenant for Lessee

The Lessee undertakes, without fail to;

1. To pay the rent reserved by the lease at the times and in the manner specified in the lease
2. To use any land in a sustainable manner and in accordance with any conditions imposed on the use of that land by the lease
3. To yield up the land and buildings in the same condition as they were when the term of the lease began, except for damages caused by wear and tear, civil commotion, act of God and anything not attributable to the Lessee
4. To keep all boundary marks in repair
5. To keep all buildings comprised in the lease in a reasonable state of repair.

Q9-2015-NOVEMBER

Shindig Limited is registered as the absolute owner of all those properties known as Ngong/Ngong/2030 and Ngong/Ngong/2031 measuring approximately 5 acres each. Sindig Limited leased all that property known as Ngong/Ngong/2030 to a religious order so that they could use the property as a convent. The lease commenced on 1st January, 2015 for a term of 15 years and a monthly rent of Kshs.300,000/- which is escalated with 10% every year. Subsequent to granting the lease to the convent Shindig started constructing a state of the art pub, wedding and conference venue on the property known as Ngong/Ngong/2031. There are two trucks going to and from Ngong/Ngong/2031 delivering supplies. Once the convent started operations on the buildings erected on Ngong/Ngong/2030 they realized that some parts of the building had a leaking roof causing damage to their furniture and equipment.

Shindig Limited has directed the contractor of the pub to store some of the building materials on Ngong/Ngong/2030. Upon completion of the construction of the pub there are parties held there day and night. The religious order requested the Lessor to have the noise reduced. However Shindig Limited responded by saying it had a constitutional right to own property.

1. a) Briefly highlight the covenants that the Lessor has breached if any. (5 marks)
2. b) Discuss the Lessees remedies, if any. (5 marks)
3. c) The Lessee has approached you for legal advice on whether it can assign the lease to a third party. Advise. (5 marks)

QUESTION FIVE 2016

(a) Anastatia Nduku is a proprietor of land in Kisii County. For the last two years, the land has been leased to Kamukunji Pember for Kshs.50,000/= per year. Kamukunji leases the land annually to grow maize for sale in the local market. It is 900 acres in size. Anastatia sold the land to Matimbi Hezo at the price of Kshs.100,000/= per acre. After registering the land, Matimbi finds that Kamukunji has not vacated the land. His maize crop is not yet ready for harvesting and his equipment and workers are still on the land. Matimbi would like to take immediate possession of the land. What legal recourse does he have in light of the Land Act and the Land Registration Act on the transfer of land from Anastatia to him? (3 marks)

(b) Amidi Sachu is a prisoner in Malewa Prison in Laikipia County. He is doing time for murdering his wife after she left him for another man. While in prison, he decides to sell the land he owns in Eldoret County in order to pay school fees for his only child who expects to join form one at Malewa High School in three months' time. Through a friend, he has found a buyer who lives in Kisumu County by the name Amollo Pondi. He is willing to buy the five acres of land for half a million Kenya Shillings. Explain the steps you will take to represent Amidi to carry out the disposition of the land.  (4 marks)

(c) Ben Hamizi is in the process of purchasing a house from Oliver Tito. He has paid a 10% deposit. He expects to take possession of the house in six months' time when the sale and transfer process is expected to be complete. Soon after paying deposit on the house, a lessee/tenant in possession of the house at the time knocks over a kerosene lamp during a blackout one evening. Unfortunately a fierce fire engulfs the whole house and it burns down completely. The buyer, Hamizi has demanded the 10% deposit back. The seller, Oliver, is demanding the full purchase price from Hamizi and full rent from the lessee. Explain who should prevail and why. (3 marks)

[1] Section 56 Land Act 2012 (Rev 2016)

[2] Section 60 Ibid

[3] Section 57 Ibid

[4] Section 58 Ibid

[5] Section 59 Ibid

[6] Section 61 Ibid

[7] Section 64 Ibid

[8] Section 65

[9] Section 66 Ibid

[10] Section 71

[11] Section 72