Commitment Towards Young Lawyers and Law Student Advancement

Wednesday 25 January 2017

PROPERTY LAW PRACTICE: COVENANTS IN LEASES THROUGH CASES AND PRINCIPLES




N.B COVENANTS IN LEASES WILL BE IN THE MISCELLANEOUS PART OF THE LEASE AGREEMENT.
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.

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
SUB G.R: We have two types;
1.      RECURRING RATES: This is usually paid by the tenant [it includes rates of service used by the Tenant; tenement rate, water rate, electricity bill]
2.      NON-RECURRING RATE: This is usually paid by the Landlord [it includes rates not involving direct tenant use like buying of electric poles.
SO,
MAIN RULE: A large number of the rates and outgoings are created and levied by the municipal authority where a property is located. The parties who will pay the rates depend on how the covenant is drafted.

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.

However, 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)

REMEDIES FOR BREACH OF THIS COVENANT
1.      An action to recover the outgoings and rates accrued
2.      An action for damages
  
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.

FUNCTIONS OF THE CLAUSE
1.      Protect Neighbors
2.      Prevent its use for illegal or immoral purpose
3.      Protect the reversionary interest

REMEDIES FOR THE BREACH
1.      Action for injunction to prevent a contrary use
2.      Action for damages to compensate for the misuse of the premises or breach of the covenants
3.      Action for forfeiture

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

CASES AND PRINCIPLES
IN OKE V SALAKO:  the court held that the tenant cannot however withhold the rent on the basis that the landlord refuses to repair

In DEMUREN V PLASTIC MANUFACTURING CO LTD: In this instant case, the Tenant relinquished the demised property before the end of the contractual term because the lessor had failed to repair.
            The court held that he was nevertheless liable to pay rent for the remaining term of the tenancy.

N.B: 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’’

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.

RULES ON CONSENT
RULE 1: THE LANDLORD MUST NOT UNREASONABLY WITHHOLD THE CONSENT.
IN HOULDER BROTHERS AND CO LTD V GIBBS: In the instant case, the Landlord refused to give consent on the ground that if he assignment went ahead it was likely that the assignee would terminate its tenancy of the adjoining property which he would difficulty re-letting
HELD: The court in discussing the matter which a Landlord may take into account when refusing to consent to an assignment of a lease;
     It must be something affecting the subject matter of the contract which forms the relationship between the Landlord and the Tenant and it must be something wholly extraneous and completely dissociated from the subject matter of the contract.
FURTHERMORE, IN ALAKIJA V JOHN HOLT:  The Supreme court held that where the consent to an assignment is unreasonably withheld, the result is that the tenant is at liberty to assign without the Landlord’s consent.
RULE 2: CONSENT CANNOT BE WITHDRAWN ONCE GIVEN
IN OBASUYI V MANDILS: In the instant case the Landlord consented and later sought to withdraw his consent when he knew that the defendant were subletting the premises for a much greater amount than he received. HELD: this was not allowed.
LASTLY, IN LISBOA V FAWA:  The court held that when the landlord accepts rents even after discovering the breach of the covenant not to assign or sublet, he is deemed to have waived his right to enforce the covenant.


                                                            TO BE CONTINUED!!!!!!!!!!
PRAY HARD
EAT HARD
READ HARD
REST HARD.............READ AND SHARE........DON'T GIVE UP.

0 comments:

Post a Comment