Renting a house in Nigeria is common among many but only a few are aware of what it really entails as well as their rights and duties under the law. Often, rental agreements or tenancy agreements are regarded as lease agreements and the words ‘lease’ and ‘tenancy’ are used interchangeably. Although, they are very similar, there is a key difference which lies in the duration of the contract. Tenancy is usually for a short-term period; a period of less than three years while a lease could last for a period of three years and above. It is also important to note that a lease is created by deed, but a tenancy may be created orally or under hand, but not as a deed.
A lease is a direct relationship between the landlord and tenant, in which the lessee has exclusive rights over the property that is leased to him. There are certain elements that must be present in an agreement for it to be a valid lease. These elements are:
- Fixed Term: The lease must be for a fixed or periodic term as a lease cannot be for an indefinite period. If your agreement states ‘the term of the lease is for as long as possible’, then that agreement cannot be binding. The agreement must state that this term is for a period of three years or five years. There must be a definite period of when the lease is to come to an end, and this must be clearly stated in the agreement.
- Commencement date: The commencement date must be certain to calculate the period for which the term of the lease is granted. The commencement date in the agreement is usually drafted in this manner: This agreement dated or made this __(specific date)__day of __(specific month)__ 2022.
For example, your agreement with the landowner is to move in on the 18th of July 2022, so the lease agreement will state: ‘This agreement dated this 18th of July, 2022…’.
When a lease agreement does not have a commencement date, it reflects that the agreement is not legally binding, as the length of the term of the lease cannot be determined without a commencement date.
- Exclusive Possession: The tenant must have exclusive possession. Exclusive possession, in this case, means that he can exclude every person, including the landlord from entering the property that was leased to him. The only exclusion to this rule is where someone has a better title to the property.
Where a tenant has carried out due process to obtain an apartment or office space or whatever property it is, the law grants him the right to have exclusive possession over every other person including the landowner. Thus, he can sue against trespassing where any person forcefully enters his premise without prior consent.
- Lease must be by deed: The lease must be created properly, that is, it must be by deed. A deed is a document which is executed rather than just signed; it establishes an interest, right or obligation and transfers or passes this interest, right or obligation to another. It is enforceable and this makes it even more important to create a lease by deed. A breach of a deed gives the right to bring an action against the defaulter and recover damages for any loss. For an instrument to be created by deed:
(a) it must be in writing,
(b) the intention to be created by a deed must be stated in this wording- ‘This deed or this agreement is executed as a deed’
(c) it must be properly executed as a deed, meaning that the document must be signed in front of a witness or witnesses, who will then attest the signature(s) to the agreement. In the case of a company, the agreement may be signed either by one director in front of an attesting witness OR by two authorized signatories (either two directors of the company or one director and one secretary).
As said earlier, the breach of a deed will give rise to legal consequences so due process must be observed.
To establish the existence of a valid lease agreement, there must be an understanding of the following terms:
- Certainty of Parties: The parties to the agreement must be the landlord and a tenant. The law will not excuse the fact that you were ignorant (Ignorantia Juris Non Excusat- Ignorance of the law is no excuse). The lease agreement should be signed with the landlord directly or through his agent to avoid fraudulent schemes and future issues. If it is through the landlord’s agent, confirm that he or she is indeed the agent of the landlord before going through with the agreement. In the lease agreement, the names of the parties must be correctly stated after the commencement date.
- Certainty of Property: Take notice of the property to be leased, which is stated in the agreement, and be sure that it is the same one you intend to occupy. The extent and location of the property should be properly described in the lease.
- Payment of rent: The rent to be paid must be ascertainable and stated in the lease. The rent serves as the consideration of the tenant for the use and occupation of the property. The rent may also be paid in arrears except the lease states otherwise.
- The commencement date: It is one of the essential elements of a valid lease and as been stated earlier, the lease must be properly dated to determine the length of the lease.
- The length of the title: This is the same as the fixed term of the lease. The commencement date determines when the length of the tile will count from. The lease must have a definite period- certain commencement date and definite end. It may be for a period of three to five years.
If any of the term listed above is missing, the agreement to create that lease is not binding as seen in the case of African Coastal Shipping Service Ltd. V N.P.A. All the terms and essential elements must be properly followed to avoid issues and enjoy the term of your lease. Also remember to seek the legal advice of a lawyer before going through with the lease.
In the next articles, we will be focusing on the covenants in a lease agreement- the types and what each covenant should cover.
