Termination of lease agreement
If the lease is for a certain specific period, can the lease be terminated before the end of the period of lease?
When lease can be terminated ?
Sec.111 of the Transfer of Property Act, supplies the circumstances in which a lease could be determined. These circumstances could be summarized as follows:
- on the expiry of the period of lease;
- on the happening of an event, which is a condition for expiry;
- on the happening of such event when the lessor’s interest in the property terminates;
- when the persons holding the ownership and the lease become one and the same person, at the same time, own the right; this state is also known as a ‘merger’;
- when the lessee, expressly, yields up its interest to the lessor;
- in the case of an ‘implied surrender,’ i.e. by the creation of a ‘new relationship’ e.g. where the lessee becomes the mortgagee, the rights of the former remain in abeyance because his larger rights, as the mortgagee, come into effect. His rights, as the lessee, are restored when the mortgage is redeemed.
- When the lessee breaks the express condition giving the lessor the right to re-enter the property: when the lessee sets up a title detrimental to the interests of the lessor: or, when the lease stipulates that the lessor may re-enter the property when the lessee is adjudged insolvent. In such cases, the lessor may give the lessee notice to terminate the lease.This is, technically, known as forfeiture;
- On the expiry of the notice to terminate the lease or, to quit or, of information to quit duly given by either party to the other.
Can a lease be renewed?
How is this option to be exercised?
The provision in the Lease Deed, generally, requires the lessee to give notice of his intention to renew before the expiry of the term; and if no time is mentioned for giving notice, it will suffice if the notice is given within a reasonable time. However, it should be noted that if there are any conditions precedent to the exercise of the option, the right of renewal arises only when notice is given to the lessor in terms of the renewal clause and the lessee has performed all the conditions indicated in the renewal clause. The option for renewal should be worded clearly and properly, otherwise, it may give rise to ambiguity.