What is a Lease Certificate?

As per Section 4 (c) of the RERA Act, 2016, the promoter is responsible to obtain the lease certificate, where the real estate project is developed on a leasehold land specifying the period of lease, and certifying that all dues and charges in respect of the said land has been paid, and to make lease certificate available to the association of allottees.

General points relating to Lease Certificate:
1. A lease certificate is a security issued by an asset leasing company to provide the finance against the leased or acquired assets.
2. It entitles its holders to the revenues attained from such assets in proportion to their shares.
3. The asset leasing companies are the joint-stock corporations incorporated by brokerage houses, banks and originators, in order to issue lease certificates.
4. With the purpose of generating lease income by subletting to the originators the assets assigned to them by the real owner issue lease certificates backed by the returns from such lease, and assigning the asset in question back to the originator at the end of the lease term.
5. To offer a more secure alternative to the investors, the lease certificates are backed by the assets which may be sold and liquidated.
6. In the first phase, asset leasing companies finance these assets through the lease certificates it issues and uses the periodical lease revenues from the originator for the payments of the lease certificates.
7. At the end of the lease term, the revenues from the assets which were transferred back to the originator are distributed to the lease certificate holders in their respective ratios thereby redeeming the issued leased certificates.

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Tags:  certificates, allottees.