99 Year Lease General The 99 year lease agreement is a Long Term Lease capable (the lessee is entitled to compel

the lessor to register the lease, ensuring protection for the lessee) of registration in the Deeds Office against the title deed of the subject land. The lease is registered in the form of a notarial deed against the title of ownership by the Lessor (the person letting the property) in favour of the Lessee (the person to whom the property is let). Nature At registration of the notarial deed, the lease agreement confers a real right (this means that the lessee as holder of a real right has a right to a thing, in this case the thing is the undisturbed use and enjoyment of the property let to him) in the property leased upon the lessee. The lessee can at any time enforce his real right against the lessor and all of his (lessor) successors in title in the ownership of the property (No person other than the lessor can deprive the lessee of occupation, as long as he performs his duties under the lease. This awards a great deal of protection for the lessee because he is ensured of a legal entitlement to enforce his undisturbed right of use and enjoyment over the property in return for payment of rent. Effect It virtually constitutes an alienation of the land, but does not alter the character of the rental to that of a purchase or payment of capital. The Long Term Lease can be bonded to a financial institution to secure the payment of money. At the end of the day, the 99 year lease is an ordinary lease agreement for a long duration, creating rights and obligations for both the lessor and the lessee on the subject matter; the occupation of the respective property in exchange for a set amount as rental. Irrespective of its length it does not constitute ownership over the property. The lessor or owner's right of ownership is limited by such an arrangement, and in event that the owner wishes to invoke his right the law accordingly awards him his due rights. Does a 99 Year Lease amount to a wise investment? Typically land or improved building may be the subject of a long lease with or without a renewal option. In the former, it will have some financial consequences in the long term in the sense that the lessee or his/her assigns or successors in title will be required to pay for renewing the lease after the expiry of the term. The latter of course would be of more benefit to the lessee. In the event that the purchaser (lessee) dies, we must consider two scenarios: a situation where a will provides for a disposition of the lease, in which case rental payments would

have to be continued and use and occupation would be secure for the beneficiary until expiry of the term, upon which the beneficiary would elect to renew or not. The other is when the obligations of the lessee under the contract are incapable of being performed accordingly, in which the landlord would be entitled to keep the property including any improvements made. The Landlord effectively becomes the owner of the property and the tenant is simply holder of an enforceable right against the "owner" for a period stipulated. Renal payments may be made in a lump sum or may be periodic instalments. For a commercial or residential property the issue of investment becomes a financial calculation as to whether you can get a return over that period. A long lease is a good investment if it is virtually long. For example, if a tenant leases the property for a long time at a nominal rate, putting up a building or making improvements may be a good decision, because he may amortise his costs and get his return over that period. Some Disadvantages Before termination of the contract, when the lessee commits breach of the contract, the lessor would be effectively entitled to cancel the agreement. This will result to the lessee losing out on the property ad any improvements made. It must also be noted that the long lease is not ownership but rather a lesser title to ownership. It is second best to title by ownership.
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