LEASES

Definition And Characteristics

Prudential Assurance Co. Ltd V London Residuary Body
(1992)AC 286 it was defined as
“a contract for the exclusive possession and profit of
land for some determinate time”

Street –vs- Mountford 2 All ER 289

A lease is said to exist when an occupier is granted
exclusive possession of property for a fixed term
or periodic terms in consideration for premiums
or periodic payments
• S2 LA defines a lease as
– The grant, with or without consideration by the
proprietor of land of the right to 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 to lease.
• A grantor = lessor while the grantee = the
lessee

• ‘lease’ vs ‘tenancy’

• Under the Landlord and Tenant(Shops, Hotels

and Catering Establishments) Act Cap 301 a
tenancy is described as a tenancy created by a
lease or underlease, by an agreement for a
lease or underlease by a tenancy agreement
or by operation of law, and includes a sub-
tenancy but does not include any relationship
between a mortgagor and mortgagee as such;
 Application of Part VI LA
• S55 LA provides that unless otherwise
provided in a lease instrument the provisions
of Part VI of the Act shall apply to all leases,
other than leases governed by legislation
relating to community land.

• What does the above provision mean?

 Leases and Assignment
• In a lease only a term of years is granted to
the lessee and the lessor has a right of
reversion after the expiration of the term
granted
• An assignment conveys or assigns the entire
leasehold interest to the purchaser and the
vendor has no right of reversion. The vendor
can only assign the unexpired residue of his
term.
 Lease and Underlease

• A lease is a direct relationship between the

lessor and the lessee.

• An underlease anticipates the existence of a

headlessor. The underlessor is a tenant of the
headlessor, indirectly
 Lease and License
• A license is a relationship whereby the licensee is
granted a right to enter into or use the premises
without becoming entitled to exclusive possession.
A licensee has no interest in the premises but he
can exclude the whole world from the premises
except the licensor
• S2 LA defines a license as permission given by the
commission(for public land) and proprietor(for
private land) allowing the licensee to do some act
in relation to the land which would otherwise be a
trespass but does not include an easement or
profit.
 Lease v License
• Exclusive possession is the central and
indispensable feature of a lease.

• Desai V Cooper(1950)214 KLR 32- the defendants

did not have keys to the front door of a shop and
could only access it from the back. They could
not enter the front when they pleased but had to
go to their portion through the plaintiff’s portion.
The plaintiff sought to recover the portion
occupied by the defendants. The Court held that
even though the defendants had exclusive use of
a portion of the premises, they did not have
exclusive possession and were licensees not
tenants.
• Hecht V Morgan(1957) EA 741- ‘paying guest’ . The
respondent lodged a complaint under the Central Rent
Tribunal Board against his landlord. The tribunal had to
decide whether it had a jurisdiction(only if it was a
lease). The respondent proved that he had exclusive
possession and the court of appeal held in his favour.
The court held that there must be a clear intention to
create a lease
• London Northwestern Railway Co. Buckmaster(1874)
10 LR –exclusive possession precludes interference
from the landlord

• Possession does not necessarily mean tenancy- Runda

Coffee Estate V Ujjagar Singh(1962) EA 564
• Halsbury’s Laws of England Volume XX page 9(2
ed.)
...a grant under which the grantee takes only the right to
use the premises without exclusive possession
operates as a license, regard must be had to the
substance of the agreement. If the effect of the
instrument is to give the holder, the exclusive right of
occupation of land though subject to certain
reservations and a restriction of the purposes for
which it may be used, it is a lease. If the contract is
merely for the use of the property in a certain way
and on certain terms while it remains in the
possession and control of the owner, it is a licence. To
give exclusive possession there need not be express
words to that effect, it is sufficient if the nature of acts
to be done by the grantee require that he should have
exclusive possession....
 Lease V Licence
Lease Licence
• Lord Templeman in Street V • Permission to use premises
Mountford(1985)AC 809 said
“whenever exclusive possession
of premises is granted for a
term of a rent, then prima facie
a lease will be created
• Can assign /transfer
• Cannot assign/transfer
• Confers more rights- quiet
possession, non derogation • Rights limited
from grant, repairs, fit for
habitation etc
• Not easily revoked • Can be revoked upon
reasonable notice
• Protection granted by other • No protection by statute
statutes eg Cap 301 and Cap
296
 Requirements of a Valid Lease
• Property and parties must be sufficiently identified
• Certainty and duration
– Commencement date must be fixed or capable of
ascertainment
– Term granted must be ascertainable
– Eg A grants to B a lease for 7 years commencing when E
vacates the premises. Is this ascertainable?
– A grant to determine on the death of lessor or expiry of
20 years whichever is longer?
• Exclusive possession
– The lessee must have an interest that entitles him to
exclude all other persons including the lessor from the
premises
 1. Defined area and parties
• The land or part thereof must be defined

• S56 LA gives power to lease whole or part of

the land. If part of land is being leased it shall
be accompanied by a plan or other description
which the registrar deems adequate to
identify the property.

• Parties must also be identified

• Ratwani V Deganela(1956)17 EACA 37- for a
lease to exist the land must be defined. In this
case the lessee was to share a shop and his
portion was not defined.
• Antoniodes v. Millers (1988) 3 Weekly Law
Reports 1205
The landlord and the tenant shared a one
bedroom flat and they were both paying rent
equally (It was like a sub tenancy) it was held
that the plaintiff was not a landlord in the strict
sense of the word as both of them held
exclusive possession.
 2. Certainty of duration
• If the lessee has a fixed term, he can underlet
or sublet the whole or a portion of his leased
term
• S 56 LA the owner of land may lease the land
or part of it to any person for a definite term
or for the life of the lessor or the lessee or for
a period which though indefinite may be
determined by the lessor or lessee.
• Avoid creating leases that have clauses for
perpetual renewal
• Leases can either be in possession or commence
at a future date.
• S61 LA A lease can be made to commence at a
future date not being later than 21 years after the
date it is executed. If the term of a future lease is
for more than 5 years it must be registered.
• A term made to come into effect at a passed date
is called a lease in possession. A lease to
commence at some future date is called a
reversionary lease
• S 61 LA a lease may be made for a term to
commence in future within 21 years from the
date of its execution otherwise it is void
• Harvey vs Pratt (1965) IWLR 1025

• Lace –vs- Chantler

An Agreement to let premises for “the duration
of the war” was held to be void due to
uncertainty of the period of the intended lease
 Exclusive possession

• Already discussed under licence

• London & North Western Rail Co vs

Buckmaster (1874) 10LR Q.B. 70
 Periodic Leases
• Periodic S 57 LA
– Term not specified and no provision is made for giving
notice to terminate the tenancy (it is deemed to be for
the period by reference to which rent is payable)
– Term is from week to week, month to month, year to
year or any other periodic basis for rent payment in
relation to agricultural land it shall be for 6 months
– Lessee remains in possession with the consent of
lessor after expiry of the term of the lease unless
there is an express or implied term agreed. The
conditions and term of expired lease apply.
– No agreement in writing but there is occupation and
payment of rent.
• May be terminated by giving notice whose
length is not less than its period and shall
expire on the day when rent is payable.
S 57(4)
• Does the above provision conflict with S4 of
cap 301

Leases or agreements for leases for a term not exceeding

two years, periodic tenancies and indeterminate tenancies
 Short Term Leases
• S58 LA
– For a term of 2 years or less without an option for
renewal
– Periodic lease
– No agreement in writing but there is occupation
and payment of rent.

• It may be made orally or in writing

• A short term lease is not a registrable interest
in land
 Registration of Leases
• S58 LA - leases of more than 2 years should be
registered
• S54 LRA- after registration of lease with a
requirement for consent of Lessor no dealing will
be registered without consent of Lessor.
• S30 LRA - no Certificate of Lease shall be issued
unless the lease is for a certain period exceeding
25 years.
• S32 - the Registrar shall note the disposition on
the original and duplicate Lease or Charge.
• S7 LA- title to land may be acquired through a
long term lease exceeding 21 years.
 Registration of Leases
What is the effect of non-registration of a
lease?

• S43(2) LRA
• S36(2) LRA- unregistered instruments shall be
construed as contracts.
• S4 of the Registration of Documents Act
requires registration of leases and licenses of
over 1 year.
 Registration of Leases
• James Michiki Mwangi & Ano. V Esther Wanjiru
Kabugu & Ano (2006) eKLR
– Lease for 5 years 1 month not registered. Walsh V
Londsdale (1882)21 Ch.D quoted(where a tenant holds
under an agreement for a lease equity regards him as
holding a lease). The tenant continued in occupation after
expiry of term and landlord accepted rent. S 52 RLA
provided that acceptance of rent was evidence of consent
to continue in occupation
• Bachelor’s Bakery Ltd V Westlands Securities Ltd Civ
Appeal No.2 of 1978.
– Lease of shop was for 6 years and was unregistered. Upon
its expiry the landlord sought possession. It was held that
it was not a protected tenancy as there an unexecuted
lease for more than 5 years which created a tenancy and
did not require to be registered under ITPA S107
 Implied Covenants-Lessor S65 LA
1. Quiet enjoyment
2. Non-derogation from grant
3. Duty to repair
4. Fitness for habitation
5. Suspension of rent
6. Fitness for purpose
7. Pay all rates, taxes dues and outgoings
 Lessor’s Rights
• S65(2) LRA
– Either personally or by agents enter leased land or
buildings at a reasonable time to inspect the
condition of premises and repair.
– Terminate lease by serving a notice of intention to
terminate
• If any rent is unpaid for one month after due date
whether or not it has been demanded in writing
• There is breach of lessee’s covenants by lessee for one
month
 Consent
• Sec 67A

• Unreasonable withholding entitles one to seek

damages and recover money lost

• Chantly V Ward (1913) 29 TLQ the court held

that the landlord must show a solid and
substantial cause for withholding the consent
Conditions Implied On Leases On Part
Of Lessee S 66
1. Pay rent at time and in the manner specified
2. Use land in a sustainable manner and in accordance
with the conditions in the lease including not to cut
down any tree unless this is necessary to enable use
of the land
3. Yield up the land and buildings in the same
condition as they were when the term of the lease
began except for deterioration caused by:
• Reasonable wear and tear
• Fire, flood, explosion, civil commotion, lightning, storm, earthquake,
volcanic activity or other natural disasters
4. Keep all boundary marks in repair
5. Keep all buildings comprised in the lease in a
reasonable state of repair
 Remedies And Relief
1. Forfeiture-
Sec 73, LA
It is exercised in two ways
– If lessee is not in occupation by entering and
remaining in possession of the land
– By court action
• S 74 LA forfeiture has the effect of determining every
sublease and other interest appearing on the register
relating to the lease unless the court sets it aside on
grounds that it was procured by fraud or grants relief
under S 76 LA
• Lessor must give one month notice under s 75
– Specifying the breach
– If breach is capable of remedy require the lessee to
remedy within a reasonable period specified in the notice
– In any case other than default in rent payment require
payment of compensation in money for breach
• Relief against forfeiture s 76 application by lessee(court
may grant or refuse to grant relief) or by sublessee or
chargee(court may vest the property on the sublessee
or chargee so long as they are not involved in breach.
This section applies whether lease is registered or not
 2. Distress for Rent
• Right given under S.3 of Distress for Rent
Act(Cap 293)

• Gusii Mwalimu Investment Co. Limited &

others V Mwalimu Hotel Ltd Civil Appeal no.
160 of 1995 –destrained goods must remain in
situ for at least 10 days.

• Distress must be carried out within 6 months

after expiry of lease
 Others
3. Action for recovery for rent arrears- subject to
the limitation period of 6 years under the
Limitation of Actions Act(Cap 22). Landlord may
only sue after distraining if the goods already sold
are inadequate to meet the rent arrears

4. Action for damages- to put the landlord in the

position he would have been had the breach not
occurred

5. Injunction to restrain the committing of a breach

 Lessee’s
• To institute proceedings for injunction or
damages

• Repudiate the agreement altogether

• S77 LA a lessee unlawfully evicted shall be

relieved from paying rent
 The LandLord and Tenant( Shops,
Hotels and Catering Establishment)
Act Chapter 301
• Applies to
– “catering establishment” means any premises on which is
carried out the business of supplying food or drink for
consumption on such premises, by persons other than
those who reside and are boarded on such premises.

– “hotel” -any premises in which accommodation or

accommodation and meals are supplied or are available
for supply to five or more adult persons in exchange for
money or other valuable consideration

– “shop” -premises occupied wholly or mainly for the

purposes of a retail or wholesale trade or business or for
the purpose of rendering services for money or money’s
worth
• S 2(1) “controlled tenancy” means a tenancy of a
shop, hotel or catering establishment—
– (a) which has not been reduced into writing; or
– (b) which has been reduced into writing and
which—
• (i)is for a period not exceeding five years; or
• (ii)contains provision for termination, otherwise than
for breach of covenant, within five years from the
commencement thereof; or
• (iii)relates to premises of specified by the Minister as
controlled tenancies
• Provided that no tenancy to which the
Government, the Community or a local
authority is a party, whether as landlord or as
tenant, shall be a controlled tenancy
• Tenancy agreement may be in prescribed form. Terms
and conditions to be implied in every tenancy not
reduced in writing or not in controlled form.
– (i)That the premises are fit for habitation and comply with
the laws relating to health in all respects.
– (ii)That where the premises are destroyed by fire, civil
commotion, or accident, through no negligence on the
part of the lessee, any liability to pay rent shall be
suspended until the premises are again made fit and
habitable.
– (iii)The lessee shall have quiet enjoyment of premises
provided that he complies with express or implied
covenants.
– (iv)The lessor shall not use adjoining land or premises in a
way which would render leased premises unfit for the
purpose for which they were let.
– (v)The lessor shall be responsible for all repairs to roofs,
main walls, main drains, main electric wiring and
structures, and shall be responsible for all necessary
renewals to the premises.
– (vi)The lessee shall be responsible for all internal repairs and
decorations, fair wear and tear excepted.
– (vii)The lessor shall be responsible for the repair, maintenance,
cleaning and lighting of common parts where part of a building is let.
– (viii)The lessee shall pay rent for the premises in advance.
– (ix)The lessor shall pay all rates, taxes and similar outgoings, unless
the lessee is responsible therefor under any written agreement.
– (x)The lessee shall keep the fixtures and fittings in good and
tenantable repair.
– (xi)The lessee shall permit the lessor or his agent and his workmen
to enter the premises and to examine or repair the same at all
reasonable times after giving reasonable notice thereof.
– (xii)The lessee shall not transfer, part with possession, or sublet the
premises or any part thereof without the consent of the lessor,
which consent shall not be unreasonably withheld.
 Cap 301

• S4 (Cap 301)Termination or alteration of terms

of a controlled tenancy to take effect 2
months after service of tenancy notice

• Does this conflict with s 57(4) on termination

of periodic tenancies?
 Rent Restriction Act (Cap 296)
• The purpose of the Act is to restrict the
increase of rent, right to possession and
creation of premiums and for fixing of
standard rents in relation to dwelling houses.
• The Act applies to dwelling houses which have
rent of Kshs. 2,500/= and below
• Increase in rent shall only be after a rent
assessment. The Act controls the
management of tenancies for the houses
within its ambit.
 Express Covenants
• These are the covenant expressed in the lease
document and usually include implied
covenants.

• They may differ depending on the usage of

the leased property.

• Purpose- implied covenants may not cover

everything
 Express Covenants -Examples
• Users covenant
• Insurance covenant
• Covenant to repair
• Covenant against assignment, transfer or
otherwise parting with possession
• Covenant for renewal
• Covenant against alteration
• Covenant to deliver possession at the end of the
term
• Option to purchase the reversion
 Option To Renew Clause
• One of express covenants that at the end of
term, the landlord is willing to extend the
lease for another period as may be agreed by
the parties
• Contents
– Time within which the tenant must indicate his
desire to renew the lease eg 3 months to expiry
– Manner in which it will be exercised- eg in writing
– Conditions to be fulfilled eg repairs, compliance
with covenants of present lease
– Terms on which new lease will be granted
 Insurance
• Inserted to protect against loss of rent or
property

• Who should insure?

– Both landlord and tenant have insurable interests
– Either or both can insure looking at the nature of
the premises, existing obligations, payment of
service charges, risk in the use of the property
 Duties of Lessor’s Advocate
1. Obtain precise instructions from your client on the
following inter-alia:
– Description of the property(obtain copy of title)
– Portion to be leased(if not whole)
– Rent to be paid
– Proposed use of the property by lessee
– Covenants
2. Draw the lease to reflect the wishes of your client
ensure all the essentials of a lease are included and
the covenants protect your client’s interests
3. Obtain all requisite consents eg consent to lease
4. Obtain stamp duty from the Lessee
5. Register the lease
 Duties Of The Lessee’s Advocate
1. Investigate landlord’s title
2. Approve draft lease
3. Advice your client on the contents of the draft
– Sykes V Midland Bank & Trustee Ltd (1970) All ER
471 there was a prohibition on any other use of the
premises unless permission is granted by lessor and
headlessor. The former gave consent while the latter
did not. Held the solicitor ought to have explained the
consequence of this clause
4. Collect disbursements from your client eg stamp
duty, registration fees etc.
 Duties of Advocates
• AVOID CONFLICT OF INTEREST- See Francis Mugo
& 22 others V James Muthee & 3 others (2005 )e
KLR- application for Andrew Musangi to cease
acting for plaintiff because he drew and
witnessed a lease between the defendant and
other parties relevant to the suit and would be a
witness in the suit. Rule 9 of the Advocates
Practice Rules was quoted.- No Advocate may
appear in any matter in which he may be called
as a witness to give evidence
• The Advocate was ordered to disqualify himself.
ASSIGNMENT AND TRANSFER
 Assignment and Transfer
• What is the difference?

• Effect of the two is more or less the same.

• The subject of transfer or assignment is the

interest held in the lease and the reversion.
– S69
– s70LA
– S71 LA
 Assignment and Transfer
• The assignor/transferor is discharged from the rights and
obligations of the lease from date of transfer/assignment
unless he remains in possession. S71 LA

• If lessee vacates the land before the termination of lease he

shall remain liable to perform all obligations including
payment of rent for the next 1year unless the lease
provides for a shorter period or the lessor leases the
property to another person before the end of the year.

• Under common law the Lessee would be liable for breaches

committed after assignment or transfer but the LA liability
only falls on lessee before assignment or transfer.
 Determination of Leases
• A lease may come to an end by:
– Expiry
– Surrender
– Merger
– Disclaimer
– Frustration,
– Forfeiture
– Notice
 Determination
• Forfeiture: S73 of LA forfeiture available where
the lessee commits a breach of covenants, is
adjudged bankrupt or goes into liquidation.

• Surrender: the lessee voluntarily yields up the

premises to the lessor. It can be express or
implied. Under S 64 LA surrender of a lease for
renewal shall not affect a sublease if the latter
will expire on or before the new head lease
expires or if the sublease is periodic which
means notice can be given for its termination
• Expiry: the lease lapses because of effluxion of
the term. Periodic tenancies and tenancies at
will are an exception since they do not have
an agreed term
• Merger: occurs where there is a vesting of the
reversion and the leasehold interest in the
same person at the same time eg the lessee
acquires the reversion.
• Disclaimer: By trustee in bankruptcy- S 58 of
Bankruptcy Act cap 53 if the property is
burdened with unnecessary covenants making
it unsellable
• Notice
 Determination-Notice & Frustration
• It is required for fixed term leases if the lease
agreement provides as such. Under periodic
tenancies s 57(4) LA requires notice equivalent
to the period of tenancy

Frustration- S65(e) LA destruction of property

through fire, earthquakes, civil commotion etc
entitles a lessee to terminate the tenancy if after 6
months it has not been repaired by giving 1 month
notice