Q: I am the registered owner of a public leasehold property whose lease duration has expired. What do I need to know before applying for renewal of the lease?
A: A public lease refers to land owned by the government that is granted to an individual or an entity for occupation and use for a specified period. The holder of a public lease needs to apply for renewal of this specified period before it expires, otherwise, at the expiry of the lease term, the land reverts to the government.
A lease renewal refers to the application for the grant of a new lease on the same parcel of land upon the expiry of a previous lease term. Prior to expiry of the lease term, the owner should apply for renewal of the lease term to the National Land Commission. Failure to renew a lease upon expiry leads to loss of property rights over the land and the government can reallocate it to any person that applies. Regulation 3 of the Land (Extension and Renewal of Leases) Rules, 2017, places an obligation on the National Land Commission (NLC) to notify leaseholders of an impending lease expiry five years in advance.
Public leases often include a renewal option. However, in order to initiate such a renewal, the lessee must submit an application that is clear and unambiguous to the NLC. Once the application is received, it is forwarded to the Cabinet Secretary where the national government is the lessor or County Executive Committee Member responsible for land in the respective county government where the county government is the lessor for review on whether to grant or decline the renewal. In the event that the renewal application is declined, the lessee will be given reasons for the same.
In a recent landmark decision, Harcharan Singh Sehmi & Another v Tarabana Company Limited & 5 Others (Petition No. E033 of 2023), the Supreme Court provided important guidance on the implications of lease expiry, lease renewals, and the concept of “legitimate expectation.” In this case, the appellants were the registered owners of a leasehold property for a term of fifty-nine (59) years. Theappellants made an application for extension of the lease three months before the expiry of the lease. The application remained pending and unacted upon for eight years during which time the appellants continued to be in occupation while paying the applicable rent and rates for years. The Respondents argued that by the time the Property was allocated to them, the Appellants’ lease had expired, and the Property had reverted to the Government.
The Supreme Court held that, a public land lease may include an option for its renewal either conditionally or unconditionally. Conditional leases require the lessee to fulfill the pre-set conditions before applying for renewal. Where however, the lease is either silent or contains an unconditional option for its renewal, the lessee must expressly state to the NLC regarding his/her desire to have the lease renewed in his/her favour.
Further, the Supreme Court held that the appellants had a legitimate expectation that their lease would be extended before expiry. In this case the appellants were considered to have had a legitimate expectation as evidenced by their application for extension before expiry, their continued possession of the land, and payment of the applicable land rates and rent after the expiry of the lease. In conclusion, this Supreme Court decision underscores the importance of initiating the lease extension application well before they expire. This proactive approach helps mitigate risks associated with administrative delays and ensures the continued protection of property rights.
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