Provisions of Section 105 of ITPA – transfer of right to enjoy certain property.
Assignment of lease is a transfer of the whole interest of the lessor or lessee under a lease to a third party. If it s landlord it must be his entire interest and if it is the tenant it must his entire interest.
3 fundamental of a valid lease
Right to possession at a fee to be agreed for a valid area.
Section 45 of RLA – area leased must be identifiable through a map or other means. Description of the area is a fundamental term of the relationship between Lessor and lessee.
Under Section 47 RLA – requirement that they be in the prescribed format, there is a prescribed format at the back of the Act. It has an outline which has been improved over the years. This is the format to adopt for commercial purposes. The advocate for the tenant is the one who peruses the lease and approves the lease.
For all commercial leases, they have to be registered. For RLA we have freehold and leasehold titles, they will be noted on the encumbrance section of the register
Section 53 – covenants and encumbrances on the part of the rules
Section 54 – covenants include, right to pay rent, land rates and rent, obligation to keep property in good repair, if furnished keep it in good repair fair-wear accepted.
For commercial leases it is usual to find that when one is acting for the landlord there is requirement of payment of service charge, cost of cleaning, offering security services. Tenants are entitled to statement of accounts on how the service charge has been utilised. They should receive a statement of accounts on how service charge has been utilised.
The landlord can utilise service charge to pay insurance and renewal of building like painting.
Open combustion fire is not allowed but if your client is operating a restaurant, then the clause will prejudice them and one must ensure that it is not in the lease. When acting for the landlord and people are acting to lease for the restaurants, there should be precautionary steps against fire may be by adding clauses that insist on adequate fire fighting equipment due to the risk of open fire combustion.
There is a restriction on obstruction of common areas, passages and stairways. It is in the interest of the landlord to ensure that the areas are not congested.
Where the tenant would like to make changes to the demised premises, they must seek approval of the landlord before they embark on the changes. When acting for the landlord, ensure there is a clause that the tenants must seek the consent of the landlord before they can make any changes in the demise premises. At the end of the lease the tenant is required to yield back the premises to the landlord in the state there were in at the beginning of the lease. There will be a restriction in the lease document against introducing material such as equipment to ensure the building does not collapse.
In commercial leases there is a clause on acts which would void the landlords insurance on the building, find out what businesses the tenant intends to carry in the demised premises. The landlord’s insurance could have restrictions on adherence and the building may not be exposed to certain risks.
Obligation to use the demised premises as authorised – if acting for the landlord ensure that this clause is included in the lease document.
Tenant must comply with municipal bylaws. If commercial the local authorities require certain licences and therefore compliance with municipal bylaws must be included in the lease.
There is an obligation for the tenant to pay stamp duty for the lease document. The landlord has the right to instruct his advocate to draft the lease. It is the landlord who gets to draw the terms of the lease. The legal cost for preparation of the lease including the stamp duty and registration costs of the lease and the floor plan should be paid by the tenant.
The tenant has an obligation to yield back the premises after the term has ended. It is the obligation of the landlord to pay the insurance.