Whenever the word ‘lease’ is mentioned, three things must come to mind; periodic holding, terms and conditions, and reversionary interests. These features are indispensable to this tenure system because by definition, it is the form of land holding that affords exclusive ownership to be granted by an owner of land, whom we call “the lessor” or “landlord” to another person, called “the lessee” or “tenant” for a period of time, after which such land “reverts” to the lessor. Leases accommodate no perpetuity, however long the period in the lease may be.
As such, you should know that while this kind of tenure will give you a title, and the ability to use the property exclusively, and for the most part, do as you please with the land including selling your interest in it, the day the years mentioned on that lease expire, you or whoever you sold your interest to will be bound to seek an extension of the lease, secure a new one or humbly exit the land. It is therefore imperative to understand the effect of the periodic nature of leases from the onset to ensure that you or your successors in title are in position to plan for the impending expiration of the lease.
While at it, we must also be keen to distinguish leases from two other arrangements that are fundamentally different from it yet similar; tenancy agreements and licences.
Many Ugandans in urban and sub-urban areas live in rental houses or apartments. This arrangement, like a lease, has the requirement for payment of rent, and keeping the property in good and “tenantable” repair. This landlord-tenant relationship, typically for a term not exceeding three years, is a tenancy agreement which grants no legal interest in the property. What one gains from such an agreement is a periodic entitlement to use the property subject to payment of rent and keeping the premises in tenantable repair. This tenancy, being short term can, unless the landlord and tenant agree otherwise, typically be terminated by issuing one month’s notice. In Uganda, tenancies of this nature are still broadly under-regulated since the Landlord Tenant Bill is yet to be passed into law. Another key difference between tenancy agreements and leases is that in the latter, the terms are set and the lessor cannot easily introduce any new terms until the lease expires.
When a person gives another a licence, they are merely giving a personal permission to them to occupy or do something on their land. Again, this does not confer on the licencee a legal interest in the land the way a lease does, after all, most licences are given free of charge to the licencees.
While leases are registrable, tenancies and licences are not. You cannot pledge tenancies and licences as security for a mortgage, for example, while you can do so with your leasehold title.
Customary tenure
Over 70 per cent of land in Uganda is held under the customary land tenure system. Under this tenure, people own land, individually or as communities depending on the customs of the area, even when they do not have land titles. Some communities allocate individual plots to their members, with known and defined boundaries marked by ridges, trenches, or trees whereas others maintain common property at all times, not accommodating individual use. The law, in boosting security of tenure, allows for the issuance of a certificate of customary occupancy where customary land is not overawed by disputes. Owners of customary land can apply either individually or as an association, for conversion to freehold tenure. This conversion, from a development perspective, is well advised since it confers a more clearly indefeasible title to the owner.
Local customs tend to recognise kinship and customary relations, thereby creating restrictions on transfer of the land outside the designated customary unit. A developer seeking to purchase customary property must therefore know these pre-existing restrictions and endeavour to meet them before committing to the purchase. Indeed, as a developer, it is more advisable to require the relevant customary authorities to apply for a conversion of the property to freehold before acquiring it from them. This kind of land, owing to the many restrictions that attend its commonly communal nature, makes for more tedious negotiations and due diligence before one can transact in it.