Introduction
It is important for parties entering any form of legal relationship to clearly define their contractual rights and obligations from the outset. Well-drafted agreements not only help to prevent or minimise disputes but also outline how parties should resolve their disputes when they arise. Tenancy relationships are among the most the common forms of contractual relationship worldwide. In Nigeria, the court dockets, particularly those of the lower courts, are saturated with tenancy disputes. Many of these disputes are avoidable and can easily be resolved if the terms of the agreement are put into writing.
This article shall briefly highlight the importance of tenancy agreements across various types of tenancies.
The Need for Tenancy Agreement
In all tenancy relationships, the landlord and tenant have competing interests that ought to be addressed before the tenant takes possession of the premises. Many tenancy agreements in Nigeria are hastily made orally, often overlooking fundamental issues. Therefore, it is advisable for both parties to draft comprehensive written agreements, as they offer clearer evidence. To this end, a standard tenancy agreement should contain certain clauses and the parties, particularly intending tenants, should consult their lawyers and read in between the lines before appending their signatures. This is particularly critical as most provisions in tenancy laws across Nigeria give precedence to tenancy agreements.
Salient Clauses in Tenancy Agreements
Type of tenancy: This clause stipulates whether the tenancy is tenancy at will, periodic tenancy or lease (fixed term or term certain). The type of tenancy dictates the timeline for the payment of rent and, in some jurisdictions, the extent of advance rents that can be demanded from or offered by a tenant.1
Commencement date: The date of commencement of all types of tenancy is crucial as it determines when to start computing the duration of the tenancy. This is particularly so for lease agreements because uncertainty of commencement date renders them invalid.2
Rent: This clause provides for the amount of rent payable by the tenant to the landlord. It should be noted that where the rent is above the threshold set by the applicable law in the location where the rental property is situated, the rent provided for in the agreement may be unenforceable.3
Rent review: Unilateral review of rent is unlawful.4 Therefore, a rent review clause is important because it clearly defines how rents are to be reviewed, the frequency of such review and the length of notice that the tenant is entitled to before the new rate takes effect.
Rates and Charges: This clause should outline the bills, rates and charges that are payable and whose duty it is to pay each.
Length of notice to quit: This clause provides for the length of notice to quit that the tenant is entitled to when the landlord intends to recover possession. This term is imperative as it supersedes the default length of notice contained in tenancy laws. Therefore, instead of the six-month notice to quit that a yearly tenant is entitled to under the law, a tenancy agreement could stipulate that such tenant is entitled only to a one-month or one-week notice to quit.
Visitation and cohabitation: To strike a balance between the landlord's interest to safeguard his premises and the tenant's freedom of association, this clause provides for the number and categories of people that the tenant can admit into the premises.
Subletting: This clause ensures that the tenant does not sublet the premises without the written consent of the landlord first had and obtained. It also provides that the landlord's written consent should not be unreasonably withheld.
Maintenance of premises: This clause addresses the tenant's obligation to keep the premises in good condition at all times. It forbids the tenant from committing waste and it may require the tenant to make a security deposit to be used to fix damages arising from his malicious or negligent conducts. Such security deposit may be fully or partially refunded depending on the quantum or absence of damage at the end of the tenancy.
Inspection: The clause should provide for how and when inspections should be conducted. It should also provide for adequate notice to be issued to the tenant prior to every inspection.
Alteration: Essentially, this clause provides that a tenant should not do any act that would alter or change the structure or nature of the premises without first obtaining the written consent of the landlord.
Repairs: Faults and damages that are not caused by the tenant, including those arising from normal wear and tear should ordinarily be fixed by the landlord. Therefore, this clause should provide that the landlord should be promptly notified of such defects and that there should be no undue delay in fixing them. In the event that the landlord fails to effect the necessary repairs, the agreement may grant the tenant the power to do it on the landlord's behalf and thereafter deduct the cost from his subsequent rent(s) as set-off.
Insurance: This clause is especially important in transactions involving commercial tenants. It protects the landlord against uncertain risks such as fire incidents. The clause stipulates the type of insurance cover to take, who pays the premium and the beneficiary.
Dispute resolution: This clause should provide the dispute resolution mechanism that will be used in the event of a dispute arising. Examples of dispute resolution methods are negotiation, litigation, mediation, and arbitration. It is important that parties choose a mechanism that is suitable for their transaction. For instance, mediation may be preferable for low value rental agreements as it is generally a quick and cheaper method of resolving disputes. In other instances, arbitration may be used if the parties have considerable resources at their disposal and if the rental and property value of the property is high. Tenancy laws allow parties to decide what mechanism to use in resolving tenancy disputes.5
Conclusion
The thrust of this article is that tenancy agreements should be reduced to writing, as this would clearly define the rights and obligations of the contracting parties. In addition, the clauses highlighted in this article are by no means exhaustive. It merely serves as a pointer to clauses that should be considered in drafting tenancy agreements. Landlords and tenants are encouraged to consult their legal advisers before concluding their contracts to ensure that they draft and sign robust tenancy agreements specific to their particular circumstances.
Footnotes
1. See section 4 Tenancy Law of Lagos State 2011.
2. Okechukwu v. Onuorah (2000) LPELR-2431(SC).
3. Ogar v. Iloetomma (2015) LPELR-40694(CA).
4. Cobra Ltd. & Ors v. Omole Estates & Investment Ltd. (2000) LPELR-6809(CA).
5. Section 30 and 32 of Lagos State Tenancy Law 2011.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.