As with every other investment, being a commercial property owner comes with (legal) issues, but having the right real estate lawyer in charge or by your side would be the right decision for a rewarding real estate investment and a rancor-free landlord-tenant relationship. Without having an experienced property lawyer on your side, engaging and managing contractual relations with certain kind of tenants in Nigeria could be a nightmare.
The relationship between a landlord and a tenant requires that parties carry out their obligations to each other as set out in their contract and the applicable law. Some of these obligations are either contractual or implied by law.
Some are paraphrased as follows:
LANDLORD
- Obligation not to disturb the tenant’s enjoyment and peaceable existence on the property;
- Duty to pay all rates and charges as required by law
- Duty to effect repairs on the property ascertained to be required by the landlord to carryout.
- Duty not to seize or withdraw from the tenant the use of any facility that will enable the tenant’s stay on the property peacefully and conveniently.
- Duty not to inhibit the tenant’s access to the property in any manner.
TENANT
- Duty to pay all rates and charges not required by the law to be paid by the landlord.
- To pay rents at the time and manner required.
- To keep the property in a good and tenantable condition at all times except for reasonable wear and tear.
- Duty not to sublet any part of the property without the written permission of the landlord.
- To not carry out any alterations without first getting the written consent of the landlord.
As easy as the above-listed obligations may look, it must be mentioned that the landlord-tenant relationship, oftentimes, ends bitterly for many reasons. Some of the notable issues stem from avoidable mistakes, including acts and omissions of the parties before the commencement and during the existence of the tenancy, which are either underrated or not properly addressed.
From our experience in managing commercial properties, advising and representing parties in commercial property transactions, we have identified the following avoidable mistakes in landlord-tenant relationship:
1. LACK OF WRITTEN TENANCY AGREEMENT: Every landlord or tenant is advised to engage a real estate lawyer to advise and draft agreement for the parties to document the process of entering a landlord-tenant relationship and the terms agreed to by the parties. The courts, in a number of decided cases, have held that where there are no signed contracts between parties clearly stating out rights and obligations of parties, the courts will determine their relationship or dispute based on implied terms.
Section 3 of the Tenancy Law of Lagos State 2011 recognizes both written and oral tenancy agreement in Lagos State. While it is also true that the court may not close its eyes to the existence of a tenancy relationship just because of the absence of a tenancy agreement, it is however important that parties insist on a written agreement, which is a useful reference point whenever parties are aggrieved and need to insist on any obligation to each other.
In the case of Metibaiye v. Narelli International Limited (2009) 16 NWLR (Pt. 1167) 326 at 349 paragraph B-C the Court of Appeal underscored the foregoing point when it held as follows:
“The agreement between a landlord and a tenant is a contract of agreement governed by the law of contract. It is desirable that agreements be in writing for the purpose of record in case there is dispute as to the content of the agreement. The fact that an agreement is not in writing but made orally does not make it unenforceable. An oral agreement is backed by the same force of law as a written agreement where such an oral agreement has been satisfactorily proved in court.”
Notwithstanding the above judicial pronouncements, it safer for both parties that the terms of the relationship be reduced to writing to ensure clarity and exclude implied terms to which the court may be inclined to resort in adjudicating any dispute between them.
2. NON-ISSUANCE OF RENT RECIPTS: Every lawyer in the practice of property law will advise that the issuance of payment receipts is very helpful to both landlord and tenant. Section 5 of the Tenancy Law of Lagos State has made it compulsory that tenants be issued a receipt upon payment of rent. This law regards failure to do this as an offence and prescribes a punitive fine of N100,000 Receipts are veritable means for tenants to show that they have actually paid their rent. Receipts are very important in settling records especially when a tenant (with a prior approval of the landlord) has made payment in installments. The payment receipts will be helpful in resolving any issues arising from settling records when, for example, there is a change of management or ownership of the property.
3. NON-PAYMENT OF UTILITY BILLS: The court docket is inundated with cases of tenants who vacated a rented property with huge unpaid bills for their helpless landlords. In the case of electricity bills, the court has held that a landlord cannot force the indebtedness from an outstanding electricity bill of a past tenant on a new tenant in a property. An ill-advised landlord who fails to foresee this possibility may likely inherit huge unpaid bills from a bad tenant and will be forced to clear up such bills in order to meet up with his obligations to a new tenant.
Where circumstances permit, it may be proper for the landlord to set out clearly in the tenancy agreement provisions permitting him to collect utility bills from the tenant and to initiate a recovery suit in the event of failure to pay. It is interesting to note that in Adejumo v. David Hughes (1989) 5 NWLR (Pt. 120) 146 at 161, the Court of Appeal (per Akpata, JCA, as he then was) held that a landlord cannot make a claim for “an order that the defendant pay all electricity and telephone bills and other rates and taxes.”
Also, in Unreported Suit No. FCT/HC/CV/493/2012: Ojika v. Bosah, the Honourable Justice Peter O. Affen of the High Court of the Federal Capital Territory, Abuja, in rejecting the landlord’s claims in Relief (e) for unpaid bills, held as follows:
“Relief (e) is for payment of electricity bill of N14,444.41 and water bill of N92,340.00. It occurs to me that these bills are not ordinarily payable by a tenant (such as the Defendant) to a landlord (such as the Plaintiff). Electricity bills are usually paid directly to PHCN in the same way water rates are paid directly to the FCT Water Board. No evidence was led to establish the existence of any agreement or understanding that entitles the Plaintiff to act as collection agent on behalf of either PHCN or FCT Water Board or both. The Plaintiff did not also demonstrate that he has already settled these bills/rates owing to the Defendant’s failure or neglect so to do such that he is merely seeking a refund from the Defendant.”
4. NON-DIFFERENTIATION OF INTENTIONAL FORMS OF DAMAGE FROM REASONABLE WEAR AND TEAR: while the law recommends that reasonable wear and tear is expected from the use of a property, sometimes tenants use the property in a manner that could actually cause damage on the property but this is quite different from damages that were intentionally brought upon the property by the tenants.
5. UNCOOPERATIVE AND DIFFICULT TENANTS OR LANDLORDS: Problems between landlord and tenant arise from lack of cooperation and difficult attitudes of either of the parties. This could range from tenants’ habitual failure to use a property in a manner as prescribed by the tenancy agreement, to making the property almost uncomfortable for other co-tenants in a shared property or landlord’s intolerable acts to the tenants. Lack of cooperation amongst tenants could result from refusal to contribute to the maintenance of shared facilities, refusal to contribute to shared utility bills when due, playing loud music to the disturbance of or other forms of nuisance to co-tenants, refusal to pay rates and charges not required by law to be paid by the landlord, refusal to carryout repair works on the property even when damage was caused by the said tenant. This sort of experience inevitably leads to dispute.
6. ARBITRARY INCREASE OF RENT: while some states have taken steps to control rent and rent increase, in reality, tenants are still at the mercy of some landlords who engage in arbitrary rent increase in total disregard of the law and the economic realities of the environment. It is a great undoing for a landlord or his lawyer to omit a rent review clause in a tenancy agreement as no landlord has the right to unilaterally increase tenancy rent.
In Yahaya v. Chukwura (2002) 3 NWLR (Pt. 753) 20, the Court of Appeal held that tenancy is in the nature of a contract and that once the landlord and the tenant have previously agreed on a fixed rate as rent, the landlord cannot unilaterally increase that rate as that would amount to a breach of contract. In that Yahaya v. Chukwura case, the Court of Appeal held that if the appellant had unilaterally increased the rent which had not been accepted by the respondent, there is no justification for the respondent to be asked to pay rent above the amount the parties were in agreement.
7. LACK OF MAINTENANCE ON RENTED PROPERTY: Maintenance is a critical aspect of property rental services and a major issue leading to landlord-tenant dispute. Usually, there are covenants in a tenancy agreement that require landlord carryout maintenance on the property periodically. In a number of court’s decided cases, most landlords failed in this regard and tenants are forced to carry out repairs and maintenance at their own expense, thus, leading to a dispute when seeking refund from the landlord.
8. FAILURE TO CHARGE A CAUTION FEE OR SECURITY DEPOSIT: A good real estate lawyer understands the need to charge a new tenant a caution fee. A caution fee, though not statutorily required, is an amount of money that a tenant has to pay while renting a property. It is usually a percentage of the annual rent but parties are at liberty to fix the amount of their caution fee. A caution fee is expected to be a buffer against any loss suffered by the landlord arising from damage to the property, unpaid utility bills and holding over of the rented property unlawfully. Please note that Section 10 of Tenancy Law of Lagos State 2011 requires a separate receipt for Security Deposit from the Rent Payment Receipt. Failure to charge a caution fee may lead to unsavory situations for the landlord or property manager including inherited bills, damage to the property and loss of rental value where the property is unlawfully held over.
9. HOLDING OVER A PROPERTY UNLAWFULLY: There is no doubt that the tenancy laws in Nigeria have been fashioned to protect the interest of the tenants as they are seen to be the vulnerable parties in tenancy matters. However, the legal protection appears to be consistently taken advantage of by some tenants who, upon being served with the required statutory notices, still make a conscious effort not to vacate the property or lock up the property unlawfully. This is a situation that can create loss of income to the landlord and potential damages claims against the defaulting tenants.
10. UNLAWFUL/CONSTRUCTIVE EVICTION: No landlord should embark on any process of eviction unless on the advice of a lawyer. Self-help and unlawful acts of landlords is a major avoidable mistake in a landlord-tenant relationship. There are several unlawful acts that may qualify for unlawful or constructive eviction of a tenant and criminal offences under Section 44 of the Tenancy Law of Lagos State 2011, such as disconnection of electricity, water supply, removing the roof, door, gate or window of the rented property, or using other means to inconvenience a tenant in a bid to force the tenant out. Landlords should desist from this action and seek the counsel of real estate lawyer to avoid uncontemplated troubles with the law enforcement agencies.
