There are some anxieties that owners of commercial properties have, while leasing out the same to their tenants. They often wonder about any scenario where the tenant can claim ownership of the commercial property. From a legal standpoint, tenants are always perceived as tenants without any provisions for claiming ownership of the property. Landlords are required to make sure that there are stamped and registered lease agreements with proper renewal clauses, durations, the whole renewal chains, and the clauses for vacating premises upon the agreement’s expiry. Yet, there are a few things that you should know more about in this regard.
Adverse possession and what it entails
Now the only thing you need to be aware of in this regard is called adverse possession. Here are some points worth noting:
• Adverse possession laws are present within The Limitation Law and the principles of the same were created in 1963.
• Based on this law, in case there is no appeal for revising any limitation over a particular time period, then the circumstances of the title will stay unchanged.
• The law keeps this period at 12 years and if the tenant has occupied the premises for this period, then he/she may obtain ownership rights.
• Exceptions are there including scenarios where the owners are not mentally well or are serving in the armed forces.
• The system may shift towards the core principles, if the owner has neglected the property for 12 years or due to a lack of proper knowledge.
• The Supreme Court stated in 2019 that by the perfection of title on extinguishment of the owner’s title, a person cannot be remediless. In case he has been dispossessed by the owner after having the lost the right by adverse possession, he can be evicted by the plaintiff by taking the plea of adverse possession.
• The tenant should personally occupy the property continuously for 12 years. The date of possession, nature of possession, duration, and knowledge of the general public are the things that have to be brought before the Court.
• Tenancy through lease agreements is not under the adverse possession law in the country. Yet, if the owner defaults on a few clauses in the agreement or the lease expires, tenants have used these scenarios for filing their claims through the law of adverse possession.
• The owner can take action within a period of 12 years if there is a breach of contract. After the expiry of the agreement, if the property owner gets rent from the tenant, then he cannot apply for ownership as per this law.
What are some other crucial things that property owners should know about?
• Tenants in commercial properties have to legally vacate these properties if the landowners direct them, based on landowner directives.
• No other legal provisions are there to enable tenants to legally own commercial properties.
• Landlords should have suitably registered, written, and stamped agreements, while renewing them within the expiry date.
• Tenants should not be allowed to occupy commercial properties without legal agreements.
• Records of rent, utility bill, and maintenance payments should be maintained to prove that the occupier is a tenant.
• The Draft Model Tenancy Act of 2015 also states that tenants may be evicted for breaching agreements, sub-letting premises or any part without the landlord’s consent, rental payment defaults for a certain time, property misuse, and permitting illegal activities on the premises.
• Landlords also have legal repossession rights (temporarily) for renovations, alterations, repairs, and other tasks.
Hence, if you are a commercial property owner, you need not worry about tenants claiming ownership of the same, provided you maintain all records and execute everything in a legal manner.
