Lease Contract Law in Nepal – Latest provision (2080)

This article will guide you through all the provisions relating to the lease contract law in Nepal.

If a contract is completed under which a person gives any goods in which he or she
has right and possession to another person for use and possession and enjoys the benefits from there in consideration for rent payable regularly for a certain period, such contract is called a lease contract. The provisions that guide lease contract is called lease contract law in Nepal. Lease contract law in Nepal is guided by Muluki Civil Code 2074.

Matters of Lease

The lessor shall ensure the lessee of the following matters:

1. To transfer certain goods for use and possession according to the contract.
2. To maintain the goods transferred pursuant to the clause in running condition so that they may be possessed or used at the time of the transfer.
3. To make arrangements so that the goods transferred pursuant to clause (1) or (2) can be possessed or used peacefully and without any hindrance.

Form of the Leased Goods not to be Changed

The lessee shall not change the original form of the leased goods without the consent of the owner during the period of the contract of lease.

To Use the Leased Goods in Good Faith

The lessee shall have the right to possess and use the leased goods in good faith and in a prudential manner as if the goods were owned by himself or herself.

To Pay the Lease Rent

The lessee shall pay the lessor the lease rent according to the terms and conditions of the contract of lease.

If the terms and conditions of payment of the lease rent are not specified in the contract, the lessee shall pay the lease rent on the next day after the end of each
month, in the case of movable property, within fifteen days of the end of every fiscal year, in the case of farmland, servitude, land leased for industrial or infrastructure building or housing, and within a week of the end of every month, in the case of other goods.

Validity Period of Contract of Lease

1. Thirty-five years in the case of housing land leased for the construction of a building or housing land in use after the construction of a building.
2. Thirty-five years in the case of the land leased for the purpose of servitude.
3. Forty years in the case of the land leased for the purpose of construction, development, and operation of the infrastructures such as industrial structure, roads, canals, and electricity generation.
4. Twenty years in the case of land for farming.
5. Nineteen years in the case of house and land leased for purposes other than that referred to in clauses (1), (2), (3), or (4).
6. Fifteen years in the case of a motor vehicle.
7. Fifteen years in the case of machinery equipment other than a motor vehicle.
8. (h) Fifteen years in the case of machinery equipment other than that referred to in clause (6) or (7).
9. Ten years in the case of a domestic animal,
10. Ten years in the case of goods other than that set forth in this Section having regard to their life and nature.

Leased Goods may be Sub-leased

The lessee may, with the prior consent of the lessor, sub-lease to any person the goods or any part thereof leased under the contract of lease, by concluding another contract of lease to that effect.
The lessee shall not be free from his or her obligation towards the lessor for the reason that he or she has made.

Special Provision Relating to the Lease Contract Law in Nepal of Immovable Property

1. A contract of lease of any immovable property shall be concluded in writing.
2. While leasing any immovable property for a period of more than ten years, the contract of lease, setting out such matter, shall be registered in a body legally authorized for that purpose.
3. No immovable property can, without consent of the Government of Nepal, be leased to a person who cannot acquire ownership in any immovable property in Nepal according to law, for the purpose of farming, constructing a building or housing, and land development.
4. In returning any building, shed, or other structure built by the lessee, or the garden, forest, or trees located, in the land leased under the contract of the lease to the lessor upon the expiry of the validity period of the contract of lease, except as otherwise provided for in the contract, the lessee shall have right and ownership in such building, shed or other structure or garden, forest, or trees located and the lessee shall accordingly remove such building, shed, structure, garden, forest, or trees from such land.
5. If the lessor desires to take such building, shed, or other structure or garden, forest, or trees located in such land on the as-is-where-is basis, the lessor shall pay the mutually agreed price for the same.

Statute of Limitation

Lease contract law in Nepal has the provision that a person who is aggrieved from any act done or action taken under this Chapter may make a lawsuit within two years after the date of the cause of action.