Lease Agreements

A lease agreement is a contract under which one party (the landlord) grants to another party (the tenant) the right to occupy and use property for a specified period in exchange for rent. In Kenya, leases are governed by the Land Act, 2012, the Land Registration Act, 2012, the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (Cap 301) for controlled tenancies, the Transfer of Property Act (where applicable), and the general principles of contract law. Leases of more than two years must be in writing and must be registered to be enforceable against third parties.

This area covers the drafting, negotiation, and registration of residential and commercial leases. For commercial leases, they draft and negotiate the full range of lease terms: the demised premises and permitted use; the term (duration), commencement date, and renewal options; the rent and the rent review mechanism (fixed increases, open-market review, or indexation to inflation); the service charge and the management of common areas; the tenant's covenants (to pay rent, to use the premises for the permitted use, to keep the premises in good repair, to insure, not to assign or sublet without consent); and the landlord's covenants (quiet enjoyment, non-derogation from grant, and repair of the structure).

Advocates pay particular attention to the commercial provisions that determine the financial economics of the lease. In a gross lease, the landlord bears all operating costs; in a net lease, the tenant bears some or all of the operating costs; in a triple-net lease, the tenant bears all operating costs, including structural repairs and insurance. Advocates ensure that the allocation of costs is clearly documented and that the service charge provisions are transparent and auditable.

Advocates also handle the more specialised lease provisions: the fit-out and reinstatement obligations (which govern the tenant's responsibility for fitting out the premises at the start of the lease and restoring them at the end); the assignment and subletting provisions (which govern the tenant's ability to transfer the lease to another party); the break clauses (which allow one or both parties to terminate the lease before the end of the term); and the dispute resolution provisions (which determine how disputes over rent review, service charge, or dilapidations will be resolved).

For residential leases, they draft tenancy agreements that comply with the Landlord and Tenant Act (where applicable) and that clearly set out the rights and obligations of both parties. Advocates address the deposit and its protection, the rent and the rent payment terms, the tenant's responsibility for utility bills, the landlord's responsibility for repairs, the grounds for termination, and the procedure for recovering possession at the end of the tenancy.

Advocates also handle the registration of leases at the land registry, the preparation of variations and renewals, the management of rent reviews, and the resolution of lease disputes — including dilapidations claims, service charge disputes, and forfeiture proceedings. For controlled tenancies under Cap 301, they represent landlords and tenants before the Business Premises Rent Tribunal.