The difference between lease and tenancy terms

My column today will be on leases and the importance of getting the right documentation when one enters into such agreement. There has been a lot of confusion about terminology when it comes to leases/tenancies.

Some people interchangeably use the terms lease and tenancies to refer to the landlord-tenant relationship. At times legal steps required to effect the tenant’s rights are not followed, thereby making the documentation null and void. There is a lot of case law on this subject.

I specifically wish to quote from Civil Appeal 68 of 1983, the case of Sapra Studio versus Kenya National Properties where the honourable judge stated, “I must admit that the minds of many people and probably some lawyers……the term lease connotes a formal document while a tenancy implies a less formal document that is wide enough to embrace the relationship between the two parties concerned.”

It is a common practice to use these terms interchangeably. The effects may be drastic as in the case of WJ Blakeman versus Associated Hotel Management Services Limited, where the court held that where a lease whose term exceeds one year is not registered, then the same becomes null and void and the rights therein would be interpreted as a periodic lease, which can be terminated with one month’s notice.

In commercial terms, a tenancy agreement is usually for a short period of time and is usually considered a periodic lease whereby the landlord or tenant can issue a termination period of one month.

The tenancy is not automatically renewable and this therefore gives the landlord the opportunity to introduce new terms to the tenancy, for example, an increased rent.

A lease on the other hand is for a set term and is usually longer. Under a lease, the terms are set and the landlord cannot easily introduce new terms into the lease until they expire.

The common practice I have seen is that tenancy agreements are preferred for short term residential stays. I believe the reason is that a landlord would not like to be strictly tied down to one tenant for a long time.

Tenancy agreements for residential houses range between three months to two years renewable at the expiry of this period.

I have noticed that leases are preferred for longer term such as commercial premises as the landlord would like to have security. The tenant cannot easily opt out of the lease without giving adequate notice of up to three months.

A lease should be registered if it is more than one year. This gives the tenant some rights. For example, if the landlord wishes to sell the building, then it may have to be subject to existing tenancies.

Licences on the other hand allow the licensee short term duration of occupancy without giving proprietary interests in the premises to the licensee. This would be very ideal for short term visits like home stays and holidays. The document can be revoked by the licensor at any time.

It is important to understand the nature of tenancy one is entering into, as this will inform the preparation of adequate documentation. From case law, when a document is not well prepared, the rights of the parties can be affected.