Can the lessee transfer his interest i.e. leasehold interest to a third party?

Yes. Lessee can transfer his interest to a third party: The lessee may transfer his interest in the leasehold property whether for consideration or otherwise; this transfer could be absolute. It could also be by sub-lease/under-lease. This transfer could also be done by the lessee mortgaging his leasehold interest as and, by way of, security. This is because, just as the sole owner of the property could mortgage his ownership rights, similarly, the law recognizes the lessee’s interest as being a subject matter of mortgage. The Transfer of Property Act, however, prescribes three exceptions to the lessee’s right of transfer of his leasehold interest . These are;

  • In the case of a tenant whose right of occupancy is non-transferable,
  • In the case of a farmer who has defaulted in the payment of land revenue and
  • When the subject matter of the lease is under the management of the Court of Wards.

The transfer of a leasehold interest is known as the assignment of the leasehold interest.

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On assignment, what happens to the lessee’s obligations?

The lessee, by transferring the whole or part of his interest, does not absolve himself from his contractual liabilities to the lessor. Even notice to the lessor of the transfer does not affect the lessee’s liability. The original lessee continues to be liable to the Lessor. The liability of the lessee ceases when the lessor releases the lessee.

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5 Comments

  • Pran Wali says:

    I have a problem for which I need advice on interpretation of the provisions under Delhi Cooperative Societies Act 2003. I own a flat in NAV SANJIVAN CGHS LTD Sector 12 DWARKA which is allotted in my name. I applied for conversion of the flat to freehold a year back jointly in my name and name of my wife as co-allottee. After furnishing all the documents including conversion charges amounting to around Rs.80000.00 and having reached the final stage of execution of conveyance deed, my case is held up for want of NOC from society, asked by DDA ,in favour of my wife as co-allottee. Society is not issuing NOC on the plea that my wife stands as my nominee in the records of the society and that NOC would lead to revision of share certificate etc. Reference was made to rule 79-80 of the DCS Act 2003 but society holds that the said rule relates to transfer of property rights in event of death of the original allottee .
    Kindly give your views on this matter.
    Regatds,
    Pran wali

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  • arun says:

    Company A is having a land, it transfer portion of the land on lease to Company B. both the Company is having the same management/ Directors. now the Company A want to sell the leased land to the third party without taking back or cancelling the leased portion of the land. any suggestion?

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  • Bhushan says:

    Dear sir

    I am facing a Parking problem in my society as per Society rules we should have 2 gates one is in and second out gate but we don’t have out gate in our society because of which I face problem to remove my vehicle out of my privet parking and when I complain abt this to Secority and the management of the society they say that every society in our area has only one gate open because of theft activities happening and they say that Secority & management of the society is not responsible for your parking problems and for your vehicle kindly help me what action should I take again them
    All society members are against us

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  • S. A. Akbar says:

    Dear Sir,
    Can a Lessee transfer his lease-hold rights to a third party for a specified period and which deed/document inter-se the Lessor, Lessee and the Third Party is to be executed.
    Regards Sir.

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  • Uday says:

    I am the owner of property. I gave my property to bank for 9 years. now I sale my property to third party who agreed to continue the lessee. please give me draft of sale deed.

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