A lease is a temporary transfer or grant of possessory interest in a property (usually land) to another (lessee) by the owner (lessor) for a definite time in consideration for rent which may be money or money’s worth. The lessor retains a reversionary interest in the leased property.
Essential Elements of a Valid Lease
Knowing the essential elements of a valid lease will help us identify the defects in a lease agreement. As such, for a lease to be valid, it must contain the following elements:
1. Certainty of Parties
A lease is a contractual transaction and as such, parties must be involved. However, it is important that these parties are either natural or juristic persons, who are legally recognized and can sue or be sued. As such, they must be adequately described. See the cases of UBA v Tejumola & Sons; Bosah v. Oji. The parties must be identified by their designation and be mentioned in the agreement along with their addresses - Odutola v. Papersack (Nig) LTD. Their designation may be as follows:
- Lessor - Lessee
- Sub-lessor - Sub-Lesse
- Landlord - Tenant
2. Certainty of Property
The property must be in existence at the commencement date of the lease. By certainty of the property, it also means that the property to be leased must be identifiable, ascertainable and sufficiently or adequately described, otherwise, nothing is demised and the agreement is void.
3. Certainty of Time
There must be definite time frame where the lease will commence and the time it will come to an end. The lease cannot be in perpetuity. At this point, it is important to note that the lease may be expressed to take effect upon the happening or occurrence of an ascertainable future event or contingency which is certain in time to occur; see: Okechukwu v. Onuorah, UBA v. Tejumola & Sons Ltd and Bosah v. Oji. In such circumstance the lease will become valid if the event or contingency occurs. An example of this is stating that a lease will commence upon the receipt of Governors Consent, On Christmas Day, New Year’s Eve, Valentine’s Eve etc.
4. Exclusive Possession
There must be exclusive possession by the lessee; Osho v. FFC & Anor. This is so even against the lessor unless there is a clause allowing the lessor to enter the premises maybe for the purposes of checking or effecting repairs.
5. Creation in Proper Manner
The lease must be created in the proper manner–if the lease is for a period above 3 years, it must be created by deed but if it is 3 years or below then it need not be by deed but by a tenancy agreement.
Relevant cases and principles
2. Applicable laws and jurisdiction of applicability.
TERMS TO BE FAMILIAR WITH
1) Demised Property: Subject matter of a lease usually a property
2) Term of Years: Duration
3) Lessor/Landlord/Sub-lessor: Grantor of leasehold interest
4) Lessee/Tenant/Sub-lessee: Grantee of leasehold
5) Guarantor: A person who undertakes to guarantees the due performance of the covenants and terms of lease.
1) Certainty of Parties
3) Certainty of Terms
4) Certainty of Commencement Date and Duration of Lease
5) Exclusive Possession
6) The lease must be properly created.
POSER: CAN A MINOR BE A PARTY?
Generally, only natural persons who are capable of being sued and can sue can be a party. A minor suffers from a legal disability which affects his capacity to sue in his own capacity.
Consequently, by virtue of Section 7 of Land Use Act, it provides that it shall not be lawful for the governor to grant a statutory right of occupancy or consent to the assignment or subletting of a statutory right of occupancy to a person under the age of 21 years.
However, by virtue of Subsection (a) of that Section 7, where there is a guardian who for that person under the age of 21, the governor may grant or consent to the assignment, subletting of a statutory right of occupancy to such guardian on behalf of such person under age.
So what this means is that in a tripartite agreement, the minor can be a party when there is a guarantor.
POSER: Assuming we have ‘’BETWEEN, ENEFAA CHAMBERLAIN OF 45, TELLER ROAD, ONITSHA, ANAMBRA STATE( LANDLORD) OF THE FIRST PART AND NANS( TENANT)OF THE SECOND PART’’
The defects in this draft are;
1) No commencement part: THIS TENANCY AGREEMENT made this__ day of __ 20___
2) NANS is not a juristic person so it cannot be a party: Incorporated trustee of NATIONAL ASSOCIATION OF NIGERIA STUDENT
3) The Address of NANS is missing
We believe that you understand this certainty of Party
CERTAINTY OF TERMS
A lease must;
Ø Grant a definite term
Ø The duration which is made up of the commencement date and expiration date must be expressly stated
In UBA V TEJUMOLA: The court laid down some principles in relation to certainty of term; the lease must have a certain beginning and ending, and the terms must be clear and unambiguous that it will not be capable of having another meaning
.
CERTAINTY OF COMMENCEMENT DATE AND DURATION
Ø Usually, the commencement date is inserted in the lease agreement.
Ø It must be expressly stated and not ambiguous or
Ø Predicated upon the happening of a contingent that is not probable.
In LACE V CHANDLER: in this instant case the lease agreement was purportedly granted ‘’FOR THE DURATION OF THE WAR’’. The issue was, ‘’the duration of the war’’ certain enough to grant a good leasehold interest?
CAPITAL NO, the reason the court gave was that;
Ø Neither was the length of the war certain, nor was the method of determining if and when the war was ended
Ø Prospective certainty is required in the certainty of duration of a lease.
IN BOSAH V ORJI: The main issue, for determination is whether the deed of lease signed by both parties is valid and subsisting. It is the case of the plaintiffs that the lease is not valid because the commencement date of the lease was hinged on the day the defendant obtains Certificate of Occupancy for building on the inbuilt part of the land, and the lease should run for 60years.
PRINCIPLES FROM THE CASE
Ø For a lease to be valid its date of commencement must be certain or capable of being ascertained
Ø Although the date of commencement of the lease was not named therein, the date has been made certain by the contingency reserved therein. The result is this. The date of commencement is certain. And the duration of the term of the lease is also certain.
In OKECHUKWU V ONUORAH: In the instant case the commencement date of the lease was hinged on the date the Certificate of Occupancy is obtained by the lessee on the property demised.
Ø The court held that the commencement date of the lease agreement is hinged on a future occurrence taking place as long as the future occurrence is ascertainable, then the lease will be valid.
Ø Furthermore, the court held that; Parties who enter into a contract are expected to honour its terms. A party who induced the other party to enter into a contract, which contract provides benefits for the inviting party which he has utilized without complaint, he cannot be found to deny the validity of that contract
IN OSHO & ANOR V FORIGN FINANCE CORPORATING & ANOR
The court sets out requirements of a valid lease including;
1) Words of demise
2) Complete agreement leaving no ambiguity to its purport
3) The identification of the parties to the agreement
4) The premises must be clearly identified
5) Commencement and the duration of the agreement
IN AMINU V NZERIBE: A lease that had no date was declared invalid.
In UBA V TEJUMOLA: just put this case on your head because it very unique, most of the ratio decided in the case touch on various elements of a lease.
PRINCIPLES FROM THE CASE
Ø It is settled law that an essential term of an agreement for a lease is the day of the commencement of the term to be created by the lease.
Ø that the date of the commencement of an agreement for a lease must be agreed to by the parties
Ø a contract for a lease is enforceable notwithstanding that the commencement of the term may be expressed by reference to the happening of a contingency which is at the time uncertain provided that at the time that the contract is sought to be enforced, the event has occurred and the contingency has happened.
CREATED IN A DUE AND PROPER MANNER
This simply means the lease should be evidence in a valid document where the law stipulated it to be so.
Ø A lease agreement for or less than 3 years usually referred to as tenancy agreement may be made orally or in writing
Ø A lease for over 3 years must be by deed. See section 77(1) PCL
Ø The intention of the parties must be contained in the lease.
In ODUTOLA V PAPERSACK LTD
PRINCIPLES FROM THE CASE
Ø It is the general accepted practice that tenancy agreement is made in writing, but where a party alleges it existence in oral agreement, he must give credible evidence as to the modalities of such agreement i.e He must prove such agreement to the hilt.
Ø The court laid down some content that will make an oral agreement valid and enforceable;
a) The parties concerned
b) The property involved
c) The term of years
d) The rent payable
e) The commencement date
f) The term as to the covenants
g) The mode of its determination.
The court held that in the absence of these evidences, the court cannot speculate or conjecture of the content of the so-called oral agreement
Section 5 of the Law Reform Contract Law Cap.66 Laws of Lagos State which provide as follows;
"No contract to which this section applies shall be enforceable by action unless the contract or some memorandum or note in respect thereof is in writing and is signed by the party to be charged therewith or by some other person lawfully authorized by him."
However, based on the principle of equity, in the case of WALSH V LONSDALE: the court applied the principle of equity that states
‘’equity looks at the intention of the parties and not the form and equity regards as done which ought to be done’’
In the line from the case, this means that the court will deem an agreement to create a lease with all the elements to operate as a lease not withstanding that it is not created under a seal. Such a circumstance must not be contemplated by that party who intend to rely on it, it must come as naturally and the circumstance of the case will determine.
EXCLUSIVE POSSESSION
The ground rule is that a leased property must be held to the exclusion of other persons including the landlord. It must not be subject to any disturbance or other conditions of sharing with the lessee.
In the case of SWEET V MOUNTFORD: The court held that for there to be a valid lease, the lessee must have exclusive possession. The court held that the defendant had an exclusive possession and then the landlord will only have the limited right to repair.
The court went further to differentiate between a party that enjoys exclusive possession and a lodger (licensee). The occupier will be a lodger if the landlord provides attendance or service which requires the landlord or his servants to exercise unrestricted access to use of the premises. A lodger is entitled to live in the premises but cannot call the place his own.
A PERSON MAY OCCUPY A PROPERTY WITHOUT NECESSARILY BEING A TENANT BUT A PERSON CANNOT BE A TENANT WITHOUT EXCLUSIVE POSSESSION. EXAMPLE YOU AND I IN THE LAW SCHOOL HOSTEL
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