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HOW TO KNOW THE NATURE OF LEASE AGREEMENT
All you need to know about the nature of lease agreement.
CHAMAN LAW FIRM
5/11/20243 min read
HOW TO KNOW THE NATURE OF LEASE AGREEMENT
INTRODUCTION:
A lease agreement (or rental agreement) is a document that explains the terms under which a tenant rents a residential or commercial property from a landlord.
Lease agreements are legally-binding contracts that explain the obligations and rights of both the tenant and landlord. Even if you’re just renting out a room in your house to a friend or family member, you need a lease agreement for legal protection in case you encounter problems with your tenant.
A deed of lease in Nigeria is a contract that outlines the terms of one party agreeing to lease property owned by the other party. It guarantees the use of assets by the lessee (also called the tenant) and guarantees the lessor (property owner or landlord) to be paid by the lessee regularly within the specified month or year.
A lease is also a contract in which one party (lessee) leases equipment or services from the other party (lessor), so that the lessee can obtain the right to use the asset without purchasing it. Lease can also be further defined as an arrangement or agreement between the two parties (lessor and lessee), by which the lessor transfers the right to use the asset within the agreed lease period to the lessee, in exchange for rent.
The lease deed also defines the terms and conditions that govern the relationship between the landlord and the tenant during the lease.
The Deed of Lease plays an important role in controlling the relationship between the landlord and the tenant, and provides for legally binding agreement.
CONTENTS OF A DEED OF LEASE
The most important provisions that must be included in any Deed of Lease are as follows:
1. DESCRIPTION OF PARTIES:
A Deed of Lease must clearly state the names of the parties to the Lease and their address.
2. PROPERTY's DESCRIPTION:
The Deed of Lease must contain a description of the property, such as area, location, address, structure, furniture and accessories.
3. DURATION:
The Deed of Lease must state its validity period. If both parties wish to continue and renew the contract, the provision may also include information related to the renewal of the lease contract.
4. RENT, MAINTENANCE AND GUARANTEE:
The amount of rent, payment method, due date, security deposit to be paid, interest on delayed payment, etc. must be stated in the Deed of Lease. The Deed of Lease must also include detailed information and responsibilities for paying any maintenance fees, utility bills, and social expenses.
5. TERMINATION OF THE LEASE:
The Deed of Lease must state the reason why the lease agreement can be terminated. This may include violation of lease deeds, illegal use of property, unpaid rent, nuisance caused by tenants, etc.
6. SUBLET:
The Deed of Lease must state whether the lessee is allowed to sublet the property.
7. DISPUTE RESOLUTION:
The Deed of Lease must mention how to deal with legal disputes between the landlord and the tenant due to violation of the lease contract. This may include any recourse to an alternative dispute resolution (ADR).
The above clauses in Deed of Lease may be used for either residential leases and commercial leases. However, a Deed of Lease for commercial purposes must be more detailed and include details such as business and compensation.
After drafting the Deed of Lease, it must be registered with the land registry in the place where the property is located. The stamp duty and registration fees will be paid during the registration.
FACTORS TO BE CONSIDERED BY THE PARTIES IN LEASE AGREEMENT
The lessee needs to ensure that the lessor has ownership of the leased property and is capable of granting a quiet possession in respect of the property.
Similarly, the lessee must understand the terms and conditions for granting such a lease. It should be ensured that all previous dues, such as telephone and electricity bills, have been paid and there are no bills in case of a lease of residential property.
The lessor must understand the usage of the leased property before accepting such a lease. Since the lease is also for a long period of time, the lessee may choose to alter the leased property or use the property for a purpose not acceptable to the owner.
In Conclusion, It is pertinent to note that a Deed of Lease must be drafted by a competent lawyer who can understand the requirements of both parties and draft a fair deed to protect the interests of the lessee and lessor. Regardless, the long duration of the lease, it must revert back to the owner lessor to dispose of the property to the lessee in the course of the lease.
