LEASES
• S.3(5) of the Land Act defines a
leasehold tenure as a form of tenure
where one party grants to another
exclusive possession of land for a
period usually but not necessarily in
return for a monetary consideration
called rent.Fixed term lease v
Periodic lease
• A fixed term lease is one whose
duration is fixed by the parties at the
onset so that once the term expires
the lease comes to an end.
• A periodic lease is a lease which
continuously renews from one term
to another until terminated by proper
notice served by either party.Tenancy at will v Tenancy at
sufferance
• A tenancy at will is implied where a landowner
allows another person to enter into possession
as a tenant without specification of the terms
of the tenancy agreement
• Either party may terminate such a tenancy at
any time.
• A tenancy at sufferance is implied where a
former tenant remains in possession after the
expiration of a fixed term without the consent
and without the objection of a land owner. It is
terminable at any time without notice.Leases distinguished
from Licences
• A licence is permission to enter another’s
land for some specified purpose which
otherwise would become tresspass.
• A lease creates an interest in land and a
licence does not.
• A licence unlike a lease only binds the
licensee and the licensor but not other
persons dealing with the land.
• A licensee cannot sue in trespass.Essential features of a
lease
Duration
• At common law, a lease must have a certain
or ascertainable beginning and ending.
• This requirement has been criticised in
several English cases as unnecessary and in
some cases judges have attempted to give it
a broad interpretation
• Lace v Chantler [1944]1 ALLER 305
• Ashburn Anstalt v Arnold and Another
[1988] 2 ALLER 147Cont’d
• S.3(5) c states that the duration of a
leasehold tenure is usually but not
necessarily defined by reference to a
specific date of commencement and
to a specific date of ending.
• This implies that parliament intended
to dispense with the common law
requirement that the beginning and
ending of a lease must be certain.Exclusive possession
• This is a right to use land to the exclusion
of everyone else including the land owner
for the duration of the grant.
• This is what distinguishes a lease from a
licence.
• Whether the occupier has exclusive
possession depends on the intention of the
parties objectively determined from all the
terms of their agreement and the
surrounding circumstances.Cont’d
• If the landowner retains general control over
the premises it is a strong indication that the
occupier has no exclusive possession and
therefore he or she is a mere licensee.
• City Council of Kampala v Mukiibi
[1967] EA 368
• City Council of Kampala v Mukubira and
another [1968] EA 497(U)
• Errington
v
Errington
and
another[1950] 1 KBCont’d
• The fact that the owner retains a right of
access for certain purposes or occasions does
not necessarily mean that the occupier does
not have exclusive possession .
• As to whether a grant of exclusive possession is
conclusive of a lease has generated much
controversy in England.
• In Street v Mountford[ 1985] 2 ALLER 289
court concluded that a grant of exclusive
possession was the determinant whether an
occupant was a licensee or a lessee.Cont’d
• In this case court also conceded that there
could be exceptional circumstances in
which a person with exclusive possession
could be a licensee especially where the
parties had no intention to enter into a
contract e.g family arrangements.
• Ugandan courts are yet to consider
whether a grant of exclusive possession is
conclusive of a lease.Cont’d
• S.3(5)c of the Land Act that defines a
leasehold as a tenure under which a
land owner “granted another person
exclusive possession” seems to
support
the
proposition
that
exclusive possession is conclusive of
a lease.Creation of a Lease
• A lease can be created by contract or by
operation of law. (S.3(5)a).
• A contract to grant a lease may be oral or
written.
• It may also be inferred from the conduct of the
parties.
• Tenancy may also be created by estoppel. This a
well established commonlaw principle that
where a person enters onto land as a tenant of
another both parties are estopped from denying
that a lease existsCont’d
• There must be evidence of the
parties conduct from which it would
be established that the parties
recognised each other as landlord
and tenant.
• The effect of a tenancy by estoppel is
that neither the tenant nor the
landlord can set up lack of title in the
other as a defence to an action for
breach of covenant or for rent due.Registered leases
• Leases over land registered under
the RTA are created subject to the
provisions of the Act.
• S.101 of the RTA empower a
proprietor of land to lease or sub-
lease it by executing the prescribed
forms.
• S.54 is to the effect that such a lease
can only create an estate in the land
when it is registered.Unregistered lease ( Equitable
or informal lease)
• At common law a purported lease that
does not comply with formalities
merely operates as a contract.
• Failure by either party to comply with
the agreement could result in an
action for damages.
• In equity, failure to follow legal
formalities to create a lease does not
necessarily render the lease void .Cont’d
• Equity treats as done that which ought to
be done.
• In Walsh v Lonsdale court held that
though the agreement was ineffective to
create a legal lease it was effective to
bring into existence an equitable lease. In
the eyes of equity the parties were already
landlord and tenant subject to the same
terms and remedies they would have had if
their lease had been created by deed.Cont’d
• Souza Figueredo & Co Ltd v
Moorings Hotel Co LtdRIGHTS AND OBLIGATIONS OF A
LANDLORD AND TENANT
Conditions and Covenants
• The terms of a lease may be expressed as
conditions or covenants
• Conditions are terms of a lease which are so
fundamental breach of which entitles the
innocent party to terminate the lease.
• A covenant is a term of a lease agreement
whose breach does not warrant the
innocent party terminating the lease unless
the agreement expressly gives that right.KEY TERMS
• Description of premises
• Description of parties and their
addresses
• Term of years
• Consideration
• Conditions and covenants
• Provision as to nuisance, offensive
use or matter considered
promiscuousCont’d
• Purpose or user clause
• Provision for extension and renewal
• Provision as to re-entryExpress covenants ( terms)
• These are those which are stipulated
in writing or orally in the agreement
• Parties in a lease are free to
incorporate any terms in the lease
provided that the terms are not
contrary to any rule of law.
• Certain terms commonly found in
formal lease agreements are set out
in the ninth schedule
of the Act.Covenants implied against the
landlord
Quiet enjoyment
• This covenant implies that the landlord
and those claiming through him/her will
not interfere with the tenant’s possession.
• The breach of this covenant takes various
forms.
• Opinya v Mukasa CC No. 167 of 1964
• The Kampala Cotton Co. Ltd v
Privinlal Madhvani CC No.485 of 1952Cont’d
• Where the interference with the
tenant’s possession is due to
unlawful activities of other persons,
the landlord is not liable for the
breach of covenant of quiet
enjoymentNo derogation from
grant
• This means that the landlord will not
frustrate the use of the land for the
purposes that in the contemplation of
both parties, it was let.
• The covenant is normally implied in a
situation where the landlord leases
part of his or her land and retains the
other part.Cont’d
• The effect of the covenant is that the
landlord must desist from carrying on
activities on the land retained that
renders the part leased materially
less fit for the purposes for which it
was leased .
• ( Telex ( Australasia) Pty Ltd v
Thomas Cook and sons Ltd [1970]
2 NSWLR 257Fitness for human
habitation
• Where premises are rented fully
furnished, common law implies
against the landlord that the
premises
are
fit
for
human
habitation.
• This covenant is implied only at the
beginning and not throughout the
term.
• Premises are unfit for human
habitation if they are in such a stateCovenants implied against the
tenant
• These are provided for under s. 102 RTA
• Parties to a lease agreement may by express
declaration in the lease exclude or modify any
or all the covenants implied under the RTA
• At common law it is implied against the tenant
that he or she will pay rent as it falls due and
all rates and taxes
• It is also implied that at the determination of
the lease the tenant will deliver up vacant
possession.Cont’d
• Common law also implies against the
tenant that he or she shall use the
premises in a tenantable manner.
• This obligation means that the tenant
should take proper care of the premises.
• A tenant must not commit voluntary or
permissive waste.
• Voluntary waste refers to damage that
is committed deliberately or negligently.Cont’d
• It also included altering the premises
without the landlord’s consent.
• Permissive waste implies an omission
that results in the dilapidation of the
property such as where property is
allowed to decay by inaction.Sub- lease and
Assignment
• A sub-lease is a transaction whereby a
lessee creates a lease that is less than
the term that the lessee has.
• Legal principles that apply to leases
also apply to sub-leases.
• At common law the power to sublease
or assign is incidental to all types of
leases unless such power is expressly
excluded in the lease agreement.Case Scenario
• Babirye is the owner of a certain
mailo land and he leases it to
Nakachwa for a period of 15 years.
Three years later, Nakachwa leases
the land to Balintuma for a term of
6 years. Nakachwa’s lease is the
head lease and Balintuma’s is a
sub-lease.Cont’d
Babirye - Lessor/ Land lady
Head- lease
Nakachwa – Lessee/ Land lady/sub-lessor
Sub- lease
Balintuma – Sub-lesseeCont’d
• S. 109 of the RTA empowers a
proprietor of a lease to sub-let it.
• Most formal leases exclude the
power to assign or sub-lease.
• The exclusion may be absolute or
qualified by a requirement of the
landlord’s prior consentEnforcement of covenants in a
lease
• This depends on whether there is privity of
contract or privity of estate between the
parties.
• Privity of contract means direct contractual
relationship.
• Privity of estate means the existence of tenure
or relationship of landlord and tenant.
• When there is privity of contract between the
parties then all the terms of the lease are
enforceable in accordance with the general
principles of the law of contract.Cont’d
• Where there is neither privity of
contract nor privity of estate
between the parties they cannot
directly sue each other to enforce
covenants in the lease.Assignment
• An assignment of a lease is a transaction
whereby the lessee transfers absolutely the
remainder of a term to another person.
• At common law, where there is no privity of
contract between the parties but there is
privity of estate, only covenants that touch
and concern the land are enforceable.
• A covenant touches and concerns the land
if it affects the nature, quality, use or value
of the land e.g paying rent, repair,Registration of transfer
• Section 113 RTA
• The
section
implies
that
the
transferee binds himself to indemnify
the transferor against any suits or
claims for breach of such covenants.Assignment of a
reversion
• At
Common
law
apart
from
covenants that are inherent in the
relationship of landlord and tenant,
neither the benefit nor the burden of
a covenant runs with the reversion.
• An assignee of the landlord cannot
directly enforce covenants on the
original lease against a tenant who
entered into possession prior to the
assignmentCont’d
• The assignee of the landlord can overcome
the problem by instituting a chain of actions.
• Another way of avoiding the problem is for
the assignee of the landlord to enter into a
fresh contract with the lessee on the
assignment of the reversion so that privity of
contract is established.
• Another way is for the lessor to assign his
rights and obligations to the assignee with
the express and implied consent of the lesseeRemedies for breach of
covenant
• The
tenant may seek any
appropriate remedies under the
general law of contract or tort.
• He could sue for damages and or
injunction to prevent future breach.
• The tenant may also terminate the
lease where the agreement expressly
provides such power.Cont’d
• The tenant cannot terminate the lease for
breach of a lease agreement unless it is a
fundamental breach or repudiation of the
agreement.
• In practice, it is rare for tenants to sue their
landlord for breach of covenant.
• Tenants resort to a self –help remedy of
withholding rent to force the landlord to
perform his or her obligation under the
lease.Cont’d
• This action may be counter
productive especially where the
landlord sues the tenant for breach
of covenant to pay rent which may
result to forfeiture.Landlord’s remedies
Damages
• The landlord can sue for damages
where the tenant fails to deliver up
the premises in good condition on
termination of the lease.
• If the breach is non-payment of rent,
the landlord may sue to recover the
outstanding rent.Mesne profits
• These are damages that the landlord
may claim where the lease is determined
and the tenant remains in possession
contrary to the landlord’s wishes.
• The right to mesne profits accrues from
the date the tenant was supposed to
deliver vacant possession to the time
when vacant possession was actually
given and the premises made habitable.Distress for rent
• It is an ancient common law remedy
for self-help by which the landlord
may enter the leased premises if rent
is in arrears and confiscate any
goods found on the premises of the
value of the outstanding rent.
• The landlord has no power to sell
without a judicial order.Cont’d
• Distress must be carried out by the
landlord in person, a lawyer or a duly
licensed bailiff
• Distress by any licensed agent is
illegal.Forfeiture
• This is the termination of a lease by
the lessor before the term expires.
• In the absence of an express
provision, only breach of a condition
entitles the landlord to enforce
forfeiture of a lease
• Most formal leases reserve a right of
forfeiture for breach of any term of
the lease agreementCont’d
• Where a lease is registered, (s.103
(b) implies in the lessor power of re-
entry after breach of any covenant
expressed in the lease and the
covenant has continued for 30 days.
• The implied powers of re-entry can
be modified or excluded by express
agreement of the parties.
• The lessor may also waive this rightHow is the right of re-entry
enforced?
• There is no legal requirement for the
landlord to serve a notice of
forfeiture unless the agreement says
so.
• Once the right accrues the landlord is
entitled to enforce it without
recourse to courts.
• It is effected by physically entering
the premises with the intention of
determining the tenancy.Cont’d
• If necessary, reasonable force may
be used to eject the tenant.
• Where the tenant refuses to vacate
the leased premises peaceably, the
lessor can seek a judicial order for re-
entry.
• Upon a successful re-entry the lease
is effectively determined.Registration of re-entry
• The Lessor may apply to the registrar
to register the re-entry.
• Upon proof of satisfactory re-entry,
the
registrar
may
make
the
appropriate entry in the register
book.
• The lease is terminated for all intents
and purposes as between the parties
whether or not re-entry is registeredRelief from Forfeiture
• Forfeiture of a lease may entail loss to the lessee
of a substantial proprietary interest in land.
• Court of equity always regarded the proviso for
re-entry for non- payment of rent as merely
security for rent
• If a lease was terminated for non- payment of
rent, the court at its discretion grant the tenant
relief from forfeiture provided he or she was
ready and willing to pay outstanding rent and all
relevant expenses incurred by the lessor.Cont’d
• The purpose of equity’s intervention
was to prevent the lessor from taking
advantage of a breach from which he
or she was not proportionately or
irreparably damaged.
• The equitable power to grant relief
from forfeiture for non- payment of
rent is derived from S.25 of the
Judicature Act Cap 13.Factors considered by courts before
granting relief from forfeiture
• According to s .25 of the Judicature Act, relief
from forfeiture can only be granted where the
breach is for non- payment of rent and not for
breach of other covenants.
• See Butagira v Namukasa CA No. 69 of
1989
• The period of non-payment of rent
• The conduct of the lessee
• See Lugogo Coffee Co. (U) Ltd v Singo
Combined Coffee Growers Ltd CS No. 554 of
1973Cont’d
• In
the
case
of
Butagira v
Namukasa court held that
high
handed conduct of a tenant may not
be sufficient to deprive him or her of
relief from forfeiture.
• Delaying to apply for relief
• See the case of Lugogo Coffee Ltd
where relief was refused to an
applicant
who
brought
the
application 10 years after defaultCont’d
• Disparity between the value of the
property forfeited as compared to the
loss likely to be suffered by the lessor
as a result of the breach.
• If the lessee pays into court all
arrears and expenses incurred by the
lessor
• Where the lessor has already leased
or sold land to an innocent third
partyCont’d
• See Kiwanuka – Musisi v Seggane [ 1973
] EA 561 where court declined to grant the
lessee relief from forfeiture because by the
time he applied for relief the lessor had let
the premises to another tenant.
• Registration of a re-entry should not be used
as an absolute bar to the exercise of the
court’s discretion but as one of the factors to
be considered in determining whether to
grant relief.Cont’d
• Read Gomba Marines and
Contractors( Ltd) v Kiwana Misc
Application No 131B/93
• Haji Musa Magala v Ondowa CS
No. 360 of 1971