Lease

- PART I: Leases I -

What is a Lease

A lease is an estate contract by which a rightful possessor conveys the right to use and occupy property to another for a consideration of rent - Black’s Law Dictionary 9th ed.

• A grant of exclusive possession for a term of years or period;
• The interest created (term of years) is called the leasehold interest;
• The lessor must have a reversionary interest;
• Hallmark: exclusive possession given to lessee while ownership remains with lessor.

Lease vs Tenancy

Lease	Tenancy
Long term of years (above 3); must be by deed	Short term of years (3 or below); by tenancy agreement

In practice the terms are used interchangeably: lease/lessor/lessee with tenancy/landlord/tenant.

6 Features of a Lease

1. A grant of a term above 3 years - must be by deed;
2. Title to land NOT conveyed - only use and occupation;
3. Relationship for fixed/definite period;
4. Lessee may, subject to conditions, assign or sub-lease;
5. Rent usually but not necessarily paid;
6. Right of reversion to lessor.

Key Lease Terminology

Term	Meaning
Lessor	Person who grants a lease
Lessee	Person to whom lease is granted
Sub-Lessor	A lessee who grants part of his term to a third party
Head-Lessor	A lessor whose lessee has further granted part of his term
Under-Lessee	Third party who receives the part-grant from a lessee
Demise	Technical term for ‘let’ or ‘lease’
Demised premises	Property that is the subject of the lease
Term of years	Quantum of interest transferred (also “leasehold”)
Sub-let / sub-demise	Grant of a part of leasehold interest
Reversionary interest	Interest remaining with lessor on grant; reverts at end of term
Assignment	Transfer of entire residue of grantee’s leasehold interest

Parties to a Lease - UBA v Tejumola & Sons Ltd

Bipartite Lease

1. Lessor / Landlord;
2. Lessee / Tenant;
3. Sometimes a Guarantor.

Tripartite Sublease

1. Headlessor (lessor under headlease);
2. Sublessor (lessee under headlease);
3. Sublessee (third party).