Rafed English

Orders Regarding Key Money

Out of the common transactions one is that of 'Key money'. which creates confusion and needs to be explained. Basically key money which is connected with places of business is taken because the rent of the place of business increases day after day, but the lessor cannot eject the lessee from that place, nor can he increase the rent. And sometimes it so happens that a shop or a place d business remains in the possession of a tenant for years on the same initial rent and not even a dollar is added to it because the lessor can neither eject the tenant nor can he increase the rent, although similar places are leased out on rent which is many times as much as paid for that place.

2850. Such places of business are of three kinds. In one kind of these places it is unlawful to do business or to take key money without the permission and agreement of the owner. As regards the other two kinds it is permissible to take key money for the same and the criterion of its being permissible or otherwise is that when the lessor has the right to get the premises vacated and to increase the rent, but the tenant, relying on force. neither increases the rent nor vacates the premises, it is not permissible to take key money for those premises and it is unlawful to work in them without the permission of the owner. And in, all those cases in which the owner of the property does not enjoy the right of increasing the rent or getting the premises vacated and the tenant is entitled to vacate the premises for some one else it is lawful to take key money and to work in those premises without the agreement of the owner. In the succeeding articles distinct examples of the three kinds will be given to make the matter clear.

2851. If a property was leased out at a time when there was no question of key money, and the owner was entitled to get the premises vacated on the expiry of the period of lease, or to increase the rent. and it was also necessary for the tenant to vacate the premises or to pay higher rent, and there was no condition of increase in the period d lease, and later the government enacted a law in accordance with which the owner lost the right of increasing the rent or ejecting the tenant. and in case the tenant, relying on that law, does not vacate the premises and does not also increase the rent, when similar places have been leased out after the promulgation of that law on rent many times more than that paid for the building in question, which may have occasioned the taking of key money. it is not permissible for the tenant to take key money and it is also unlawful for him to remain in occupation of the premises without the sanction of the owner.

2852. Suppose some persons are constructing a shop and are spending money on it, and the rent of the shop is, for example. $ 10,000 per month, but being in need of money they lease it out voluntarily for one year on a monthly rent of $ 1000 and besides this on $ 500.000 in cash. and stipulate in this behalf that so long as the tenant remains at that place the lease will be renewed every year for a monthly rent of $ 1000, and the owners will not be entitled to increase the rent, and in case the tenant so desires he will transfer the premises taken on lease to another person, and the owners will charge the same rent from that person as they have been charging from the first tenant i.e. they will not increase the rent and the lease deed stipulating rent of $ 1000 will be renewed year to year. In this Condition the tenant is entitled to transfer that place to someone else and he may charge from the person to whom he hands it over, key money equal to or more or less than that which he has paid himself. The owners have no right to object to it because according to the conditions settled by them he is entitled to take key money and to transfer the premises to another person. and the key money taken by him is lawful.

2853. Suppose some persons construct a shop and spend money on it and lease it out at the usual rate and do not also take key money, but stipulate in the lease deed that so long as the tenant stays there they (i.e. the owners of the shop) will not have the right to get the shop vacated and they will renew the agreement from year to year, and if the rent of the premises increases with the passage of time, the tenant will not be entitled to transfer it to some other person, and the lessor will not be obliged to agree to its transfer to someone else. Now, a third person appears in the capacity of a buyer and allures the lessee and says to him: "If you vacate these premises I shall pay you $ 100,000.' He then goes to the owner and makes him agree to lease out the premises to him on payment of some money. He then pays $ 100.000 to the first lessee and gets the premises vacated and then pays to the owner the promised amount and obtains the lease from him. In these circumstances it is lawful for the first lessee to take $ 100.000, because he has not taken anything for the transfer of the premises to which he was not entitled. On the other hand he has taken money for vacating the premises which he was entitled not to vacate, and the buyer has taken possession of the premises by means of a lease granted by the owner of the premises. In this case it should be noted that key money has been taken for vacating the premises and its lease has been granted by the owner, (and so it is lawful).

2854. If a person takes certain premises on lease and stipulates with the owner that he (the owner) will not be entitled to eject him. and to get the premises vacated, but will realize rent from the tenant at the usual rate every month or every year, and also stipulates that the tenant will be entitled to transfer the right of his stay at that place to some other person, the tenant can sell the key money to someone else i.e. he can take money from some person and transfer his own right to him.

2855. Insurance means that a person may give to another person or company a fixed amount every year, without claiming any return for it, but it may be stipulated that if, for example. his person, shop, motor car or house sustains any harm, the other person or company would compensate him for the loss incurred, of remove the harm, or arrange for his medical treatment, such a transaction amounts to a compensatory gift for which compensation has been paid and, if the body or property of that person meets harm, it a necessary for the other party to meet his obligations in accordance with the agreement and there is no harm in receiving money by him on this account. Current Issues

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