The Statutory Framework

Provision	What it governs
Transfer of Property Act, 1882 — Section 105	Definition. A lease is a transfer of a right to enjoy immovable property for a term, for consideration by way of premium or rent. It creates an interest in the property
Transfer of Property Act — Section 106	Duration in the absence of contract. A lease for agricultural or manufacturing purposes is deemed year to year, terminable on six months’ notice; any other lease is deemed month to month, terminable on fifteen days’ notice. Notice must be in writing and the period runs from receipt
Transfer of Property Act — Section 107	A lease from year to year, for a term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. All other leases may be made by a registered instrument or by oral agreement accompanied by delivery of possession. Where a lease is by registered instrument, it must be executed by both lessor and lessee
Transfer of Property Act — Section 108	Rights and liabilities of the parties in the absence of contract. The default code that operates on every silence in the document
Transfer of Property Act — Section 108(A)(a) and (b)	Lessor’s duty to disclose material latent defects, and to give possession on request
Transfer of Property Act — Section 108(A)(c)	Covenant for quiet enjoyment during the term
Transfer of Property Act — Section 108(B)(e)	Where by irresistible force a material part is destroyed or rendered substantially and permanently unfit for the purpose let, the lease is voidable at the lessee’s option. A high threshold, and the reason force majeure must be drafted expressly
Transfer of Property Act — Section 108(B)(h)	The lessee may remove, during the term and while in possession, all things he has attached to the earth — the statutory basis of fixtures and reinstatement disputes
Transfer of Property Act — Section 108(B)(j)	The lessee may transfer his interest absolutely or by sub-lease unless the contract restricts it, and remains liable on the covenants notwithstanding the transfer. Silence therefore permits assignment
Transfer of Property Act — Section 108(B)(m)	The lessee must restore the property on determination in the condition in which he received it, subject to reasonable wear and tear
Transfer of Property Act — Section 109	Rights of the lessor’s transferee. A purchaser of the reversion steps into the lessor’s position as to the lease
Transfer of Property Act — Section 111	Determination of a lease — efflux of time, happening of a specified event, merger, surrender, forfeiture, or expiry of a notice to quit
Transfer of Property Act — Section 116	Holding over. Where a lessee remains in possession after determination and the lessor accepts rent or otherwise assents, the lease is renewed on the same terms, year to year or month to month according to the purpose
Transfer of Property Act — Sections 114 and 114A	Relief against forfeiture for non-payment of rent, and on breach of an express condition after notice specifying the breach. A forfeiture clause is not self-executing
Transfer of Property Act — Section 65A	Limits on a mortgagor in possession granting leases. The mortgage deed may exclude the power entirely
Registration Act, 1908 — Section 17(1)(d)	Compulsory registration of leases from year to year, for a term exceeding one year, or reserving a yearly rent
Registration Act, 1908 — Sections 23, 25, 28 and 49	Four months to present for registration; condonation up to four further months with fine; presentation at the office for the sub-district where the property is situated; and the consequences of non-registration
Indian Easements Act, 1882 — Sections 52, 60 and 62	A licence creates no interest in property, is generally revocable, and is not transferable. The boundary with a lease turns on substance
Indian Stamp Act, 1899 — Article 35, Schedule I	Duty on a lease, computed by reference to the term and the average annual rent, with premium and non-refundable amounts brought into charge
Delhi Rent Control Act, 1958 — Section 3(c)	The Act does not apply where monthly rent exceeds ₹3,500, placing most modern tenancies outside rent control and squarely within contract and the Transfer of Property Act

The Statutory Defaults, and Why You Draft Around Them

This is the table to read before agreeing to sign a short form document.

If the agreement is silent	The statute supplies	Why parties usually vary it
Duration and notice	Month to month with fifteen days’ notice; year to year with six months’ notice for manufacturing or agricultural purposes — Section 106	Fifteen days is far too short for a tenant with any investment in the premises; six months is far too long for a landlord who wants flexibility
Assignment and subletting	Permitted. Section 108(B)(j) allows the lessee to transfer his interest absolutely or by sub-lease unless the contract restricts it	Landlords almost always want to restrict it. Silence favours the tenant, which surprises most landlords
Repairs	A fragmented allocation across Section 108, with the lessee bound to keep the property in the condition in which he received it and the lessor bound to make repairs the contract requires	The structural versus day-to-day boundary needs to be drawn expressly, or every significant repair becomes an argument
Fixtures and fit-out	The lessee may remove things he attached, during the term and while in possession — Section 108(B)(h)	Landlords want reinstatement; tenants want to remove or be paid. Both need a defined standard and a recorded baseline condition
Destruction or unusability	Voidable at the lessee’s option only where a material part is substantially and permanently unfit by irresistible force — Section 108(B)(e)	The threshold is high. Rent abatement on temporary closure must be an express term
Continuing in possession after expiry	Holding over under Section 116 renews the tenancy on the same terms, month to month or year to year	Neither party usually intends an automatic renewal on old terms. An express holding-over clause with enhanced rent is standard
Sale of the property	The purchaser of the reversion takes subject to the lease under Section 109, where the lease is registered	Tenants need this protection recorded; unregistered tenants largely do not have it
Forfeiture	Requires written notice of intention to determine, and the court may relieve against it under Sections 114 and 114A	Landlords assume a default clause self-executes. It does not

Lease or Licence: The Distinction That Cannot Be Drafted Away

Clients arrive with a document titled “Leave and Licence Agreement” for premises the occupier will hold exclusively for three years. The title does no work.

A lease under Section 105 transfers an interest in the property. A licence under Section 52 of the Easements Act is permission to do something on the grantor’s land which would otherwise be unlawful, and creates no interest at all. The courts determine which one exists by looking at the substance of the transaction — the intention of the parties as it appears from the whole document and the surrounding circumstances — and the single most weighty indicator is exclusive possession. Where exclusive possession is granted for a term at a rent, the arrangement is very likely a lease however it is labelled.

The consequences of getting it wrong run in both directions:

• A landlord who documents a lease as a licence to avoid registration has an unregistered lease, and Section 49 will obstruct him in proving its terms just as it obstructs the tenant
• A licensor who assumed revocability may find he has granted an interest that cannot be revoked at will and must be determined under Section 111
• A licensee who has spent on fit-out holds, on the face of his own document, a revocable permission that binds no purchaser of the property
• Stamp duty and registration are assessed on the substance, so mislabelling does not reliably save duty and may create a deficiency with penalty

We advise on which instrument the arrangement actually is before drafting it. Where a licence is genuinely appropriate — shared premises, no exclusive possession, a licensor who retains control and access — we draft it as a leave and licence. Where the commercial reality is a tenancy, we say so, and we draft a lease. For office, retail and warehousing tenancies specifically, see our commercial rental agreements practice.

Types of Lease, and What Each Requires

Type	Drafting priorities
Residential lease	Term and renewal, notice, deposit and refund mechanics, permitted occupants, maintenance split, society rules and NOC, restrictions on alteration, and the position on utilities and society charges. Where rent is below the Delhi Rent Control threshold, that Act’s protections may apply and change the analysis entirely
Commercial lease	Term, lock-in and renewal formula, escalation, CAM and outgoings, fit-out and rent commencement, permitted use against sanctioned land use, assignment and change of control, reinstatement, and mortgagee consent
Industrial and warehousing lease	Permitted activity under the allotment or lease, pollution control consents, factory licence, power sanction load, fire compliance for the storage class, floor loading, and environmental liability allocation between the parties
Long-term and ground lease	Ninety-nine or thirty year terms, construction obligations and timelines, ownership of the building during and at the end of the term, mortgageability of the leasehold interest, renewal and reversion, and ground rent revision
Lease of a leasehold property	Where the lessor himself holds under an authority lease, whether that lease permits sub-letting, whether the Authority’s permission is required, and what the head lease conditions impose on the sub-lessee
Institutional and school or hospital premises	Regulatory approvals tied to the premises, the effect of a change of occupier on those approvals, and long notice periods reflecting the difficulty of relocation
Agricultural lease	Governed substantially by State tenancy and revenue legislation rather than by the Transfer of Property Act alone. Tenancy rights can attach in ways that materially affect the landowner, and this requires State-specific advice before anything is signed

Registration and Stamp Duty: An Honest Assessment

Registration. A lease exceeding one year, or from year to year, or reserving a yearly rent, must be registered. Below that, registration is optional but available — and optional registration is worth more than clients expect, because it gives the tenant an instrument that can prove its own terms and that binds a purchaser of the reversion under Section 109.

Execution. Section 107 requires a lease made by registered instrument to be executed by both lessor and lessee. A lease signed only by the landlord and handed to the tenant is defective, and it is a defect we see regularly in documents prepared by non-lawyers.

Timing. The four-month period under Section 23 of the Registration Act applies to leases as it does to sale deeds, with condonation up to four further months under Section 25 on payment of a fine, and no possibility of registration after eight months. A lease executed and then left unregistered “until the tenant settles in” can pass the point of no return.

Stamp duty under Article 35 is computed by reference to the term and the average annual rent, and it rises in bands as the term lengthens. Premium, non-refundable amounts and advance rent are brought into the computation, which is why a large interest-free deposit is sometimes recharacterised. The banding is the arithmetic behind the eleven-month convention, and it differs across Delhi, Uttar Pradesh and Haryana. We compute the exact figure for the specific term and rent before execution.

Where we advise registration even below the threshold: where the tenant is making material fit-out investment; where the term with renewals will exceed three years; where the premises are mortgaged; where the lease supports a corporate registration or a regulatory filing; and wherever the rent is high enough that a dispute would be worth litigating.

Anatomy of a Well-Drafted Lease

• Parties and capacity. Full description, and for a company, LLP, trust, partnership or co-owned property, the authority to grant or take the lease and the resolution or instrument conferring it
• Recitals and lessor’s title. How the lessor holds, and a warranty of title and authority to lease, with mortgagee consent where the property is charged
• Demised premises. Identified by schedule, area, floor, boundaries and a plan — with common areas, parking bays, signage locations, terrace and basement rights expressly included or excluded rather than assumed
• Term. Commencement, expiry, and whether commencement runs from execution, handover, or completion of fit-out
• Rent. Amount, due date, mode of payment, whether inclusive or exclusive of taxes and outgoings, and interest on delay
• Escalation. Rate, interval, base, and whether it applies to rent alone or to rent and other charges
• Security deposit. Amount, interest position, permitted deductions stated exhaustively, refund period running from a defined event, and interest on delayed refund
• Permitted use. Stated precisely and matched to the sanctioned land use, with the consequences of unauthorised use allocated
• Maintenance and repairs. The structural and day-to-day boundary drawn expressly, displacing the fragmented default in Section 108
• Alterations and fixtures. What the tenant may install, what consent is needed, what may be removed at the end, and what must be reinstated — with a schedule of condition recorded at handover
• Assignment, subletting and change of control. Expressly restricted, since Section 108(B)(j) permits transfer by default, with carve-outs for group companies where the tenant is corporate
• Quiet enjoyment and access. The lessor’s covenant, and the terms on which he may enter for inspection or repair
• Insurance. Who insures what, in whose names, and the position on the tenant’s contents and third-party liability
• Force majeure. Drafted expressly, with the events, the notice mechanism, and whether rent abates during a defined suspension
• Default, cure and forfeiture. Defined events, cure periods, and notice — recognising that Sections 114 and 114A allow relief against forfeiture
• Termination, notice and holding over. Contractual notice periods displacing Section 106, and an express holding-over provision displacing Section 116
• Handover and reinstatement. The standard, the process, joint inspection, and settlement of the deposit against it
• Indemnity, dispute resolution and governing law. Arbitration seat or named courts, and the scope of indemnities on each side
• Execution formalities. Both parties’ signatures as Section 107 requires, witnesses, stamping before execution, and registration within the period allowed

Before Drafting: What We Verify

• The lessor’s title, and whether he holds freehold or under a lease that restricts sub-letting
• Where the lessor is a company, LLP, trust, partnership, HUF or co-owner — the authority to grant the lease and whether every co-owner has joined
• Whether the property is mortgaged, and the mortgagee’s written consent, given Section 65A
• Occupancy certificate, sanctioned plan and permitted land use for the tenant’s intended activity
• Society or apartment association rules and any no objection certificate required
• For an authority allotment, whether the Authority’s permission to lease is required and has been obtained
• Property tax and outgoings position, and whether arrears exist
• The physical premises against the description — area, boundaries, parking and access, recorded with photographs at handover

For higher-value or longer tenancies this is done as a scaled property due diligence exercise.

Common Mistakes

• Leaving a term to the statutory default without knowing what the default is — most commonly assignment, which Section 108(B)(j) permits unless restricted
• Executing a registered lease signed only by the lessor, when Section 107 requires execution by both parties
• Letting the four-month registration period lapse, and then the eight-month outer limit, after which the lease cannot be registered at all
• Paying stamp duty after execution rather than before or at the time of execution
• Computing duty on rent alone, when premium, non-refundable amounts and advance rent are brought into the Article 35 computation
• Labelling a lease a licence where exclusive possession is granted for a term, and losing both the registration saving and the licence characterisation
• No express holding-over clause, so that continued possession renews the tenancy on the old terms under Section 116
• Treating a forfeiture clause as self-executing, when Sections 114 and 114A permit relief and Section 111(g) requires notice of intention to determine
• No mortgagee consent where the premises are charged, when Section 65A may leave the lease not binding on the mortgagee
• Permitted use drafted loosely and inconsistent with the sanctioned land use, leaving the occupier exposed to sealing
• No schedule of condition at handover, so that reinstatement and damage are assessed at exit against an undefined baseline
• Deposit refundable on “settlement of accounts” rather than within a fixed period from handover of vacant possession
• Renewal on “mutually agreed terms”, which is an agreement to negotiate rather than an enforceable option
• Ignoring that an agricultural lease is governed by State tenancy legislation and can create rights that materially affect the landowner
• A residential tenancy at a rent within the Delhi Rent Control threshold drafted as though that Act does not exist
• Relying on a power of attorney to execute or register that does not satisfy Section 33 of the Registration Act

How Delhi Legal Company Assists

• Instrument selection — lease, licence or services agreement, determined on the substance of the arrangement rather than the template in circulation
• Drafting — residential, commercial, industrial, warehousing, institutional, long-term and ground leases, and sub-leases under a head lease
• Vetting and mark-up — review of the counterparty’s draft against the statutory defaults, with a written note on what has been given away and what should be resisted
• Pre-drafting verification — lessor’s title and authority, mortgage position and mortgagee consent, occupancy certificate, land use, society and authority permissions
• Stamp duty — computation under Article 35 against term and average annual rent, treatment of premium and deposits, and e-stamping
• Registration — presentation at the correct Sub-Registrar office, attendance by both parties, biometrics and witnesses, and certified copies
• Execution for absent parties — powers of attorney satisfying Section 33 for clients abroad, and board resolutions and authorisations for corporate parties
• Variation and renewal — renewal deeds, supplementary agreements, rent revision, and change of party on assignment or amalgamation
• Surrender and handover — documented surrender, joint inspection, reinstatement settlement and deposit release
• Enforcement and exit — notices under Sections 106 and 111, forfeiture, relief applications, arrears and deposit recovery, dilapidations, and injunctions against unlawful re-entry
• Standard forms — portfolio templates for landlords with multiple properties, and lease abstracts and covenant registers for occupiers with multiple sites

Frequently Asked Questions

1. What makes a lease agreement legally valid?

A. A lease under Section 105 of the Transfer of Property Act requires identified parties with capacity, identified premises, a defined term, consideration by way of rent or premium, and a transfer of the right to enjoy the property. Where the lease is from year to year, exceeds one year, or reserves a yearly rent, Section 107 requires a registered instrument executed by both lessor and lessee.

2. Does my lease have to be registered?

A. If it is from year to year, for a term exceeding one year, or reserves a yearly rent — yes, under Section 107 of the Transfer of Property Act and Section 17(1)(d) of the Registration Act. Below that threshold it is optional, though optional registration is often worth taking.

3. What happens if a lease that should have been registered is not?

A. Section 49 of the Registration Act prevents it from affecting the immovable property or being received as evidence of the transaction. It may be used for the limited purposes in the proviso — a suit for specific performance, part performance, or a collateral transaction — but the rent, term, renewal and other core terms are terms of the lease and cannot be proved by it.

4. Does the landlord alone sign a registered lease?

A. No. Section 107 expressly requires that where a lease is made by registered instrument, it be executed by both lessor and lessee. A lease signed by the landlord alone is defective, and this is one of the most common errors in documents prepared without legal input.

5. How long do I have to register a lease after signing?

A. Four months from execution under Section 23 of the Registration Act. The Registrar may condone up to four further months under Section 25 on grounds of urgent necessity or unavoidable accident, with a fine of up to ten times the registration fee. After eight months the lease cannot be registered at all.

6. How is stamp duty on a lease calculated?

A. Under Article 35 of Schedule I to the Indian Stamp Act, by reference to the term and the average annual rent, with duty rising in bands as the term lengthens. Premium, non-refundable amounts and advance rent are brought into the computation. Rates differ across Delhi, Uttar Pradesh and Haryana, so we compute the figure for the specific term and rent before execution.

7. What is the difference between a lease and a leave and licence?

A. A lease transfers an interest in the property. A licence, under Section 52 of the Indian Easements Act, is only permission to do something on the grantor’s land and creates no interest. Courts decide which exists by looking at the substance, and the weightiest indicator is exclusive possession. The label on the document does not determine the answer.

8. Can I write “licence” on the document to avoid registration?

A. You can write it, but where exclusive possession is granted for a term at a rent, the arrangement will be treated as a lease. The result is an unregistered lease — the worst of both positions, since the parties lose the licence characterisation and also cannot prove the lease terms under Section 49.

9. If the agreement says nothing about subletting, can my tenant sublet?

A. Yes. Section 108(B)(j) permits the lessee to transfer his interest absolutely or by sub-lease unless the contract restricts it, though he remains liable on the covenants. Landlords are frequently surprised by this. Silence favours the tenant, and any restriction must be expressly drafted.

10. What notice is required to end a lease?

A. Whatever the agreement provides. In the absence of contract, Section 106 supplies fifteen days for a month-to-month tenancy and six months for a lease for agricultural or manufacturing purposes. The notice must be in writing and the period runs from receipt, not despatch.

11. My tenant has stayed on after the lease expired. What is the position?

A. Section 116 governs holding over. Where the lessee remains in possession and the lessor accepts rent or otherwise assents to the continued possession, the lease is renewed on the same terms — year to year or month to month according to the purpose. This is rarely what either party intended, which is why an express holding-over clause with enhanced rent should be included.

12. Is a forfeiture clause enough to end the lease on default?

A. No. Section 111(g) requires the lessor to give written notice of his intention to determine the lease, and Sections 114 and 114A empower the court to relieve against forfeiture — for non-payment of rent on payment of arrears with interest and costs, and for breach of an express condition where notice specifying the breach was given.

13. Who is responsible for repairs?

A. Whatever the lease provides. Where it is silent, Section 108 supplies a fragmented allocation under which the lessee must keep the property in the condition in which he received it and the lessor must make only the repairs the contract requires. The structural and day-to-day boundary should be drawn expressly, or every significant repair becomes a dispute.

14. Can the tenant remove what he has installed?

A. Section 108(B)(h) permits the lessee to remove, during the term and while in possession, all things he has attached to the earth. That right does not survive indefinitely after determination, and it interacts with any reinstatement obligation. Both should be dealt with expressly, together with a schedule of condition recorded at handover.

15. What if the property is sold during my tenancy?

A. Under Section 109 the transferee of the lessor’s interest takes subject to the lease and steps into the lessor’s position. This protection is materially stronger where the lease is registered — an unregistered tenant faces the evidentiary bar in Section 49 when trying to establish the terms against a new owner.

16. Can rent be reduced or waived if the premises become unusable?

A. Only if the lease says so. Section 108(B)(e) makes the lease voidable at the lessee’s option where a material part is destroyed or rendered substantially and permanently unfit by irresistible force, which is a high threshold. Abatement on temporary closure must be an express contractual term.

17. Does the Delhi Rent Control Act apply to my lease?

A. Under Section 3(c) it does not apply where the monthly rent exceeds ₹3,500, which excludes most modern tenancies. Where rent is at or below that figure, the Act’s protections on eviction and rent may apply and change the analysis substantially, so the position should be checked rather than assumed.

18. Is an oral lease valid?

A. Section 107 permits a lease not falling within the compulsory registration category to be made by oral agreement accompanied by delivery of possession. It is valid, and it is a poor idea — nothing about the term, the rent revision, the repairs or the exit can be proved except by disputed testimony.

19. Can a lease be granted over mortgaged property?

A. Section 65A permits a mortgagor in possession to grant leases only within stated limits, and the mortgage deed may exclude the power entirely. A lease granted outside those limits may not bind the mortgagee if the security is enforced. Written mortgagee consent should be obtained before execution.

20. What if the lessor is a company, a trust or one of several co-owners?

A. The authority to grant the lease must be verified — the board resolution and the object clause for a company, the powers in the trust deed for a trust, the partnership deed for a firm, and the joinder of every co-owner where the property is co-owned. A lease granted by one co-owner does not bind the others.

21. Can a lease be registered if one party is abroad?

A. Yes, through an attorney under a power of attorney satisfying Section 33 of the Registration Act, authenticated in the country of residence before an Indian Consul, a Notary Public or a court or magistrate as applicable, and stamped in India within the permitted period.

22. How is an agricultural lease different?

A. Substantially. Agricultural tenancies are governed largely by State tenancy and revenue legislation rather than by the Transfer of Property Act alone, and tenancy rights can attach in ways that materially affect the landowner’s ability to resume possession or to sell. State-specific advice should be taken before anything is signed or possession given.

23. What is a ground lease, and what should it contain?

A. A long lease of land, typically thirty to ninety-nine years, on which the lessee constructs. The critical terms are the construction obligation and timeline, who owns the building during and at the end of the term, whether the leasehold interest is mortgageable, ground rent and its revision, renewal, and the position on reversion of the structure.

24. Can you review a lease I have already been sent?

A. Yes, and it is the most useful point at which to involve us. We mark up the draft against the statutory defaults and return a written note setting out what the document gives away, what should be resisted, and what is missing — which is usually more important than what is badly worded.

25. How long does drafting and registration take?

A. A first draft within two to three working days of receiving the commercial terms and the property documents, negotiation depending on the parties, and registration on a booked appointment once stamping and any required consents are in place. The item that most often delays completion is a society no objection certificate or an authority permission nobody applied for early.

26. What does your fee cover?

A. Quoted fixed and in writing after a short consultation, covering drafting or vetting, negotiation support, stamp duty computation, coordination of consents, and attendance at registration as agreed. Stamp duty and registration fee are statutory and shown separately. We act for either landlords or tenants, but not for both sides of the same transaction.