These slides describe the law that applies to leases and tenancies. This is from a lecture in Conveyancing conducted for the final year students of the Sri Lanka Law College in 2007

1. Indentures of Lease
Law and its applications
COPYRIGHT Ajithaa Edirimane - No part of this slide
presentation shall be copied or extracted or used in
anyway without the publisher’s permission -
ajithaa2001@yahoo.com
Ajithaa Edirimane, LLB MLB
Attorney-at-Law & Notary Public

2. DEFINITION
• LEASE –
A contract whereby one party, while reserving a
reversion to himself, grants and demises to the
other party the exclusive possession of the
property for a limited time –
1. the limit being either definite or for 99 years, or
2. for a term of years absolute or determinable, or
3. indefinite as a lease at will from year to year –
and receive as compensation payment in the form
rent.
In a lease there is an actual “demise” of the
premises.

3. • TENANCY – In the case of a tenancy, the
owner grants to the other (tenant) the
possession of the land, building or part of
the building as the case may be. But there
is no “demise” and the grantor retains
possession of the property.

4. • LICENSE – A license is the permission
granted to a person to use the property or
exercise rights in a certain way, but there
is no grant of exclusive possession of the
property.
• E.g. In the case of a Lodger where the
Landlord retains possession and control of
the premises.

5. Difference between
LEASE and TENANCY
• Even if the word ‘tenancy’ or ‘agreement’ is
used, if there is a ‘demise’ of the premises with
exclusive possession during a fixed term, it is a
LEASE and not a TENANCY.
• A tenancy is for successive periods, usually a
month, which can be terminated by either party
as provided under the Agreement for Tenancy.

6. • EXECUTORY AGREEMENT – if any of
1. the provisions of the lease remains to be
ascertained, or
2. the lessor is unable to demise and grant the
premises till certain conditions are fulfilled by
the lessor, or
3. the instrument itself provides that the grant of a
lease of the premises will take place at a future
date,
Then it is an Executory Agreement and not a
LEASE.

7. Juridical character of a lease
• In South Africa, where the Roman Dutch Law
(civil law) applies to immovable property, a duly
registered lease for a period over 10 years is
given the same status as ‘an interest in land’. A
similar recognition is given in respect of long
term leases in Sri Lanka.
• Gunawardena vs Rajapakse (1 NLR 217) it was
held that ‘a notarial lease gives a lessee during
the term the same legal remedies of an owner
and possessor’.

8. Juridical character of a lease (Cont.)
• The law in Sri Lanka is the same as the law in
South Africa, where such a lease can be
mortgaged or pledged. (G.L. Peiris in the Law of
Property)
• Abdul Azeez vs Abdul Rahim (1909) It was held
that ‘a lessee during the term is dominus or
owner for the term of his lease. He is owner
during the term against the whole world,
including the lessor’.
• Therefore a lease creates not only contractual
rights but also proprietory rights, within certain
limits and subject to the lessee’s observance of
the conditions and covenants incorporated in the
Indenture of Lease.

9. Juridical character of a lease (Cont.)
• Allis vs Sigera (3 NLR 5) – a Purchaser of a
property subject to a lease, acquires a right to
the rents and profits of such property accruing
after the purchase even without an assignment
of the lease upon the said land.
• Upon the acquisition of a dominium of land, the
fruits of the said land pass to the owner. If there
is a tenant on the land, the rents take place of
the fruits. - VOET

10. APPLICABLE LEGISLATION
• The Rent Act No. 7 of 1972 and the subsequent
amendments thereto.
• The Prevention of Frauds Ordinance No. 7 of
1840 as amended.
• Registration of Documents Ordinance
• Protection of Tenants (Special Provisions) Act
No. 28 of 1970 as amended by Act No 16 of
1984 ( Ceased to be operative w.e.f 2002)

11. The Rent Act No. 7 of 1972
• The provisions of this Act applies in every
area in which the provisions of the Rent
Restriction Act No. 29 of 1948 was in force
and any other area as declared by the
Minister by notice published in the
Gazette.
• The provisions of the said Act applies to all
premises in such area other than
Excepted Premises

12. What are “Excepted Premises”?
• Residential premises constructed after 1/1/1980 and let after that
date;
• Residential premises occupied by the Owner as at 1/1/1980 and let
after that date;
• Residential premises occupied by or let to (1) a person who has
been issued with a valid visa and whose income exceeds one
thousand rupees per month or occupied by or let to (2) a non-
resident company;
• The premises of which the landlord is a local authority or the
Commissioner of National Housing
• Business premises situated in the area indicated in Column I of the
Schedule to the Act, where the Annual Value for the purpose of
assessment of rates exceeds the amount specified in Column II of
the said Schedule.
• Business premises let at the time of coming into operation of the Act
or thereafter at a rent exceeding Rs.1500/- per annum

13. Important provisions under the
Rent Act
Sec 4 – the standard rent per annum of the
premises covered by the Act shall be -
• the annual value of such premises as specified
in the assessment in force during the month of
January 1955 or if the assessment is made after
that month, the annual value as specified in such
first assessment ;
• If the rates are paid by the landlord, then the
aggregate of the said assessment and the
amount payable as rates in respect of such
premises.

14. Sec. 5 – If the landlord has incurred or would
incur expenditure for repairs or for
improvement of the premises and -
1. if the consent of the tenant had been obtained
or
2. in the absence of such consent the approval of
the Rent Board has been obtained
The standard rent per annum can be increased for
a period of 5 years with an increase each year
by 25% of the amount of expenditure incurred
or to be incurred.

15. • Sec. 6 – The “Authorized Rent” of the
premises covered by the Act, is the
aggregate of the standard rent (Sec. 4)
and the permitted increase (Sec. 5) of the
rent

16. Sec. 22 – Ejection of Tenants under the
Rent Act
• Tenants of premises covered by the Act
can only be ejected under the
circumstances provided under Sec. 22 and
by following the procedure laid down in
this Section.

17. Application of the provisions of the Rent Act
and the position of the Landlord / Tenant
• In respect of premises for which the Rent Act
applies, the tenant is protected by law and
thereby the tenant’s right of possession has
almost equal status as that of an owner.
• In respect of Excepted Premises, which are not
covered by the Rent Act, the landlord holds a
strong position and the tenant’s right of
possession is of diminished value. This is further
consolidated in the absence of the Protection of
Tenants (Special Provisions) Act No. 28 of 1970,
which ceased to be operative after 2002.

18. Application of Prevention of Frauds Ordinance
& the Registration of Documents Ordinance
• In terms of the Prevention of Frauds Ordinance
(Sec. 2) every lease of immovable property, to
be of force and avail in law should be in
writing and be executed in the presence of
a Notary Public attested by 2 witnesses.
• Exceptions:
1. Lease at will
2. Lease for a period not exceeding one month
3. Agreements for the cultivation of chena or
paddy lands for a period not exceeding 12
months if the consideration for the grant of the
lease is a share of the produce
4. A lease of land by the State.

19. Registration of Documents Ordinance
• Every deed or other instrument…..for
establishing or transferring any security, interest
or encumbrance affecting such land or property
(other than a lease at will or for any period not
exceeding one month), is required to be
registered and in the event of failure to register,
it shall be void against all parties claiming an
adverse interest thereto on valuable
consideration.

20. The status of non-Notarial lease
• Aresakularatne vs Perera (1927) 29 NLR 342 – a
lease which lacks Notarial attestation and does not come
within the ‘excepted categories’, is void in Sri Lanka.
• What are the rights of the parties under such a
lease?
Perera vs Fernando (1864 Ramanadan Reports 83) It was
held that a lessee entering into possession under a lease
void in law, thereafter becomes tenant from month to
month, upon the terms of the writing, as far as it is not
inconsistent with a monthly tenancy.
Ukkuwa vs Fernando (1936) 38 NLR 125 –It was held that
the Plaintiff should give the Defendant ( lessee under an
informal lease) a months notice to terminate the monthly
tenancy and till that was done, the Plaintiff could not sue
the Defendant for ejectment.

21. This position changed after Perera vs Perera
(1967) 70 NLR 79 – It was held that a lease
‘which is of no force or avail in law’ as stipulated
under Sec. 2 of the Prevention of Frauds
Ordinance cannot give recognition even to a
monthly tenancy. Such a tenant is not entitled
even to a months notice and would be
considered a ‘trespasser’ of the property.
The courts have however recognized the rights of
the landlord to recover rents from a tenant of an
informal non-notarial lease under the Doctrine of
Unjust Enrichment. Perera vs Fernando (1864)

22. The Rights and Liabilities of the Lessor and
Lessee
• Between the Lessor and Lessee there is a
Privity of Estate and a Privity of Contract and
they are bound to each other by the Covenants
of the lease, expressed and implied.
• The Lessee is not discharged from the payment
of rent by assigning the lease to another even if
the Lessor has accepted the assignee as a
Lessee.

23. • The primary obligation of a Lessor is to put the
Lessee in possession of the premises. If the
Lessor fails to fulfill the said obligation, the
Lessee can rescind the contract and recover any
money paid in advance. Silva vs Josinahamy
(1911)
• The court will grant the lessee compensation in
the event of a cancellation of a lease by the
Lessor for a breach of a stipulation if the breach
did not warrant a cancellation. Perera vs Thalif
(8 NLR 118)
• A substantial interruption by the Lessor
discharges a Lessee from the payment of rent
and entitles him to claim damages and
cancellation of the lease. Marikar vs Bell

24. • Where the Lessee has effected improvements to the
premises and the Lessor had transferred the premises to
a third party, the Lessee is entitled to compensation for
the improvements effected even against third parties.
Mudianse vs Selandiar (10 NLR 409)
• Where A had leased a land to B for 20 years on the
condition that he should within 3 years render the land
cultivable by erecting strong dams and trenches and if B
failed to do so within the said period, it was held that A
was entitled to have the lease cancelled.
Wickremasekera vs Wickremasinghe (1918)
• In another case it was held that even if the Lessee’s
possession was temporarily interrupted by rioters , the
Lessor was still entitled to claim rent as it was the duty of
the Lessee to look after his possession as he could
recover it by a possessory action if he was wrongfully
dispossessed. Omardeen vs Marikar (1916)

25. • A covenant on the part of the Lessor to “repair,
uphold, support and amend the premises with all
manner of necessary reparations” will not make
him liable for damages occasioned by the
collapse of a wall, if he had no notice that the
wall was in a dangerous state. Martin vs
Colombo Commercial Co.

26. LANDLORD’S LIEN
• Lessors have a special legal mortgage over the
movables brought into the premises by Lessees
as security for rent due and damages to the
premises. Minors as well as Majors are subject
to this lien. Goonaratne vs Annesley
• This lien will be lost where there is complete
removal of the goods, but an arrest may be
made in the course of removal.
• A landlord’s lien is privileged and takes
precedence over a prior special mortgage.

27. Execution of leases by semi-govt. institutions
• Local Boards when they enter into agreements,
whether a sale or a lease, should comply with
the provisions of the Prevention of Frauds
Ordinance. L.B. Trinco vs Subramaniumpillai (2
ACR 146)