A lease is the transfer of the right to enjoy immovable property for a certain period, either expressed or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, services, or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
The transferor is called the “lessor” or the “landlord,” and the transferee is called the “lessee” or “tenant.” The consideration or price paid is called the “rent.” The relationship between the lessor and the lessee is one of a contract for the possession and profit of land on one side, and recompense by rent or other consideration on the other.
A lease is the result of the rightful separation of ownership and possession. Before the lease, the owner had the right to enjoy possession of the land; however, by leasing it, the owner excludes themselves from that right. A lease is therefore not a mere contract but a transfer of an interest in land; it creates a right to possess and enjoy the property.
In Tanzania, the primary law governing leases is derived from the Land Act, which outlines the framework for lease agreements, including the maximum lease terms, registration requirements, and the rights of both the lessor (landowner) and lessee (tenant). Further regulations concerning financial leasing are specifically addressed by the Financial Leasing Act of 2008.
Key Points About Lease Law in Tanzania
- Land Act: This is the core legislation governing land ownership and lease agreements, defining the rights and responsibilities of the parties involved in a lease.
- Lease Duration: The Land Act specifies the maximum lease term depending on the type of land and the rights of occupancy held by the lessor.
- Registration: Long-term lease agreements, particularly commercial leases, typically require registration with the relevant land registry authorities to ensure legal validity.
Important Aspects of Lease Law in Tanzania
- Financial Leasing Act: This act specifically regulates financial lease transactions, where the lessor retains ownership of the asset while the lessee uses it for a period in exchange for periodic payments.
- Contractual Principles: General contract law principles apply to lease agreements, meaning that the terms of the lease must be clearly defined and agreed upon by both parties.
- Customary Land: Lease agreements on customary land may be subject to additional regulations based on local customs and practices.
On the other hand, there is a clear distinction between a lease and a sale. In a lease, the right to enjoy the property is transferred, but the right of ownership is not. In a sale, the right of ownership is transferred in exchange for a price.
