HOMES & PROPERTY: Tenant rights in lease transfers

Section 93(2) states: “Where an application is made by a lessee to a lessor for consent to take one or more of the following action, that is to say –

(a) transfer or assign the lease;

(b) enter into a sublease;

(c) part with possession of the leased land or buildings;

(d) change the use of the land or buildings from a use which is permitted under the lease;

(e) extend, improve, add on to or in any other way develop any building beyond what is permitted in the lease;

(f) create a mortgage over the lease;

(g) take any of the actions referred to in subparagraph (a), (b), (c), (d), (e) or (f) in relation to any part of the leased land or buildings, or for any part of the term of the lease, the lessor must, on receiving the application and within a reasonable time thereafter–

(i) give that consent; or

(ii) withhold that consent, and in either case must inform the lessee in writing of his decision on the application.”

The lessor will unreasonably withhold the consent if, for example, he demands the lessee to pay additional rent, premium or fine in consideration for the consent or if the lessor imposes on the lessee any unreasonable condition or precondition or, where the lessor objects to the gender or nationality or other personal characteristics of the transferee or assignee as the case may be.

The law permits, however, payment of the lessor’s expenses incurred in connection with giving the consent, even these expenses must be reasonable as well. It may also happen that during the subsistence of a lease, the landlord or lessor may transfer his interest to another person.

Such a transfer does not extinguish the lease, obligations the lessor has under the lease will move with his interest to the new holder of interest and the lessee will enforce those obligations as against the new owner. Therefore, if you are a tenant and the property you have rented has been sold, do not worry, you can enforce your lease agreement against the new owner of the property as per Section 95 of the Land Act, 1999.

Where the property has been sold, and you, unknowingly that it has been sold, pay rent to the previous land owner, you will be released from the obligation of paying that rent. This is provided under Section 96(1) of the Land Act, 1999, which discharges the lessee or tenant to the extent of the payment made provided the lessee or tenant did not have the actual notice of the transfer or assignment as the case may be.

The Act goes further to provide to the effect that even the registration of the transfer does not amount to actual notice to the tenant, regardless of any other provision, which provides to the contrary in any other written law.

The implication of this provision is that once the transfer is done, the tenant or lessee must be notified expressly by the responsible persons, if the tenant is not notified and he proceed to pay the rent to the previous owner, it follows that the lessee will be discharged of the obligation to pay to the extent of the amount paid to the previous owner or landlord.

We have looked at the situation, where the landlord transfers or assigns his interest to another person; now let’s shift our focus on what happens when the lessee or tenant transfers his lease.

It must be known from the onset that the common law rule that the transferor or assignor of the lease remains liable for the personal covenants to the landlord for the payment of rent and for all other breaches of the covenants, even though he/she is no longer in occupation of the premises has been abolished under the provision of Section 97(1) of the Land Act, 1999.

Therefore, the effect of transfer or assignment of the lease is to discharge absolutely the transferor from any and all obligations as of the date of the transfer or assignment.

However, the transfer of a lease does not discharge the transferor from those obligations which accrued before the transfer, thus the landlord may enforce all obligations against the transferor as long as they accrued before the date of the transfer or assignment.

In a situation, where a lease has been transferred but the transferor remains in occupation of the leased property, he will remain liable to pay rent and observe all other obligations as long as he remains in occupation of the property. Thus, this is an exception to the rule mentioned earlier that he will be absolutely discharged from all obligations under the lease.

Additionally, if the lessee vacates the leased property before the date of termination of the lease, the Land Act, 1999 provides that he will be liable to pay rent and observe all other covenants in the lease for the period of one year from the date on which he vacates the property unless the lease agreement provides expressly for the lesser period or if the landlord leases the property to another person before the expiration of one year, in which case the obligations will cease from the date of execution of that lease.

The above position of the law abolished the application of a common law rule in Tanzania that the lessee will remain liable to comply with all the covenants, including the covenant to pay rent, even if one has vacated the leased property with the agreement with the landlord