N.B COVENANTS IN LEASES WILL BE
IN THE MISCELLANEOUS PART OF THE LEASE AGREEMENT.
N.B: PLEASE READ OUR BLOG POST ON
COVENANTS IN LEASES THROUGH CASES AND PRINCIPLES
N.B: YOU MUST LEARN HOW TO DRAFT
THESE COVENANTS FOR THE PURPOSE OF BAR PART 2 AND YOU CANT DRAFT WHAT YOU
DON’T KNOW……..MRS JAMES
We have
three types of Covenants;
1.
Express
Covenants
2.
Implied
Covenants
3.
Usual
Covenants.
For the
purpose of our write up we will be discussing EXPRESS COVENANTS.
1. COVENANT
TO PAY RATES AND OUTGOINGS
GENERAL RULE: it can either be paid by the
Landlord or the Tenant, depending on the drafting of the covenant
DRAFT 1:
‘’The
Tenant covenants to pay all existing rates, taxes, and outgoings in respect of
the demised property/ premise’’
IMPLICATION:
In this draft the Tenant is to pay only rates and outgoings that was in
existence of the lease not new rates and outgoings coming into existence after
the lease agreement.
EXCEPTION
1: In SMITH V SMITH: The court held that where the new rate is of
the same specie of the former rate, the tenant would pay. E.G NEPA BILL now
PHCN BILL
EXCEPTION
2: Where the new law provides that it is the occupier that will pay for it, the
Tenant would pay.
DRAFT 2:
‘’The Tenant covenants to pay all taxes and
outgoings, payable now or as they subsequently arise in respect of the demised
premises’’
IMPLICATION:
This is still not the ideal draft, in that the Landlord is still responsible to
pay owners rates.
DRAFT 3:
‘’The Tenant
covenants to pay all taxes, rates and outgoings, payable now or as they
subsequently arise in respect of the demised property/premises whether payable
by the owner or the occupier’’
IMPLICATION:
Perfect draft for the Landlord.
TAKE
NOTE: IN LAGOS STATE, if this
covenants is silent;
By
Virtue of SECTION 7(2) LAGOS STATE
TENANCY LAW 2011 provides that;
‘’the tenant shall pay all existing
and future rates and charges not payable by the Landlord by law’’ (OCCUPIER
RATES).
By
Virtue of SECTION 8(2) LAGOS STATE
TENANCY LAW 2011 provides that;
‘’the Landlord shall pay all rates
and charges as stipulated by law’’ (OWNERS RATES)
2. USER
COVENANTS (COVENANT TO USE)
GENERAL RULE: When the covenant is silent, the tenant can make use of the demised
property for any lawful purposes even if it is for a use different from the
purpose originally contemplated. DAWODU
V ODULAJA
DRAFTING: it must be clear and unambiguous. For example;
‘’the lessee covenants to make use
of the premises and to permit the premises to be used for the purpose of
[residence/ commerce/ agriculture] only.
3. COVENANTS
TO REPAIR
GENERAL
RULE: Unless otherwise stated in the covenants both the lessor and lessee
are responsible for repair
SUB G.R 1: The Lessor is responsible for
the repair of STRUCTURAL PARTS[ roofs, drains, etc] and COMMON PARTS
[Staircase, Lift etc]
SUB G.R 2: The Lessee is responsible for the
repair of the INTERIOR PARTS [Windows, doors, keys]
FURTHERMORE, when the covenants is not included in the Lease Agreement, by implied
covenants the Lessee is under the obligation to use the premises in a
TENANT-LIKE manner, to make fair tenantable repairs and not to waste on the
premises
In other
words the Lessee is required to keep the premises in substantially the same
condition as they were at the time of letting out the premises.
IN DRAFTING the covenant it must contain;
1.
Who
to undertake the repair
2.
What
is to be repaired
And
must consider also;
1.
Age
of the property
2.
Locality
TAKE NOTE: IN LAGOS IF THE COVENANT IS SILENCE;
By
virtue of SECTION 7(3) LAGOS STATE
TENANCY LAW 2011;
‘’The Tenant shall keep the premises in good and
tenantable repair, reasonable were
and tear excepted’’
N.B: The word ‘’reasonable wear and tear excepted’’ simply means that the
lessee is relieved from liability for any state of disrepair so long as the
disrepairs results from a reasonable use of premises and the effects of the
natural elements.
By
virtue of SECTION 8(6) LAGOS STATE
TENANCY LAW;
‘’ The Landlord shall effects repairs and maintain the
external and common parts of the premises’’
4.
COVENANTS AGAINST ASSIGNMENT AND SUB-LETTING
GENERAL RULE: When the covenants is silent, a tenant has the unrestricted right to assign
his tenancy or to create sub-lease of such tenancy. INUWADA V BRYNE, KEEVES V DEAN
N.B PLS NOTE THAT
THIS IS NOT APPLICABLE IN LAGOS, BY VIRTUE OF SECTION 7(6) Lagos State Tenancy
Law;
‘The Tenant shall
not assign or sublet any part of the premises without the written consent of
the landlord’’
N.B:
The draft shows how the covenants can be construed, it can either be Absolute,
Qualified or Balanced;
ABSOLUTE DRAFT
‘’The Lessee
covenants not to assign, sublet or otherwise part with possession of the demised
premises or any part of it’’
IMPLICATION:
The lessee cannot sublet the premises in such a case. Where he applies to the
lessor for permission to sublet, the lessor can refuse without stating any
reasons for the refusal.
But
please note that, where the Tenant permits another person to use the premises
e.g a Licensee to use the premises, this does not amount to breach of the
covenant not to assign or sublet. This was affirmed in the case ISHOLA WILLIAMS V HAMMOND PROJECTS.
QUALIFIED/CONDITIONAL
DRAFT
‘’The Lessee covenants not to assign, sublet,
charge or part with the possession of the premises or any part without the
consent of the Landlord’’
IMPLICATION:
The draft makes the consent to be subjective, it still not the perfect draft.
BALANCED/IDEAL
DRAFT
‘’The Lessee covenants not to assign, sublet,
or otherwise part with the possession of the demised premises without the
written consent of the Landlord, such consent not to be unreasonably withheld
in the case of a responsible and respectable person’’
However,
the grounds for refusal are;
1.
Personality
of the proposed Sub-tenant or Under-lessee
2.
The
use or purpose for which the Under-lessee requires the premises.
5
.RENT REVIEW CLAUSE
FUNCTION: It is inserted in a lease to
enable the landlord take advantage of prevailing market rates in property
value. It is a hedge against ravages of inflation on the value of money.
ABSENCE OF THE CLAUSE WHAT
HAPPENS?
In the
absence of such clause, and subsequent disagreement, the court may imply fair
market or reasonable rent and this would always be a matter of evidence.
UNILIFE DEVELOPMENT CORP. V.ADESHIGBIN
THE DRAFT
Firstly
we must note the content of the Clause which includes;
- Method of initiating the review (notice/time frame of notice)
- Period of the review (when it is renewable and date when it is payable).
- Valuation formula-The method of calculating the new rent .g. by expert valuation.
- Conflict resolution provision-OLANIYAN V. SHOKUNBI
THE
DRAFTING OF THE CLAUSE
METHOD-The lessor and the lessee
covenant that by a notice in writing to the lessor three months before the
expiration of the current lease.
PERIOD-The rent reserved shall be
subject to review every five years for a term equivalent to the term granted
under this lease payable immediately after the new rent has been agreed.
VALUATION-FORMULA- Subject to the agreement of the
parties, the rent may be determined by an independent estate valuer in line
with the prevalent market rate of the property.
CONFLICT RESOLUTION-PROVIDED THAT any further
conflict shall be resolved by a single arbitrator to be appointed by the
parties in accordance with the Arbitration and Conciliation Act Cap A18 Laws of
the Federation of Nigeria 2004
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