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12 Jan

LAND LAW 2.4 COVENANTS IN LEASES

COVENANTS IN LEASES.

Who are bound by the covenants?

  • If there is privity of contract, between the lessor and lessee, either can enforce the covenant against the other whether it concerns the land or not.
  • Where there is no privity of contract, a covenant can only be enforced IF:
  • There is privity of estate between the parties and the covenant in question touches and concerns the land. Privity of estate can occur where the lessor or lessee ASSIGNS his reversion or lease (respectively) to a third party making the third party to step into his shoes.

A covenant touches the land if it lays down something to be done or not to be done upon the land. The test being to ask whether the covenant affects the landlord qua landlord or tenant qua tenant. It should be reasonably incidental to the relationship of landlord and tenant e.g. covenant to pay rent, taxes, to repair, to renew lease. Personal or collateral covenants do not touch or concern the land e.g covenant to pay a sum of money, covenant that the lessor would not open another beer or spirit house within half a mile radius of the demised premises-Thomas V Hayward.

For example, where A grants a lease to B, there is privity of contract between A and B and either can enforce any covenant in their agreement against the other. Where B (the tenant) assigns his Interest to C, there is no privity of contract between A and C but there can be privity of estate between A and C if the covenant in question touches and concerns the land. But if B creates a sublease with C, there can be no privity between C and A. As was seen in Nigerian Properties Co Ltd V Doherty, where the court held that there was no privity of contract or estate where the lessor (landlord) sought to enforce a covenant (not to sublet) against the sub-lessee. It is better if he sues the lessee rather than the sub lessee.

TYPES OF COVENANT

A covenant may be implied, express or usual.

IMPLIED COVENANTS.

Lessor’s Implied Covenants:

  • That the lessee shall have quiet enjoyment of the lease. Under Section 6 of the Tenancy Law of Lagos State 2011, it includes right to privacy freedom from unreasonable disturbance and so on. Damages can be awarded to the lessee where there is substantial disturbance/interference by the lessor-Jones V Lavington. In Lavender V Betts, disturbance was held where the landlord with a view to ejecting the tenant removed the doors and windows of the demised premises. Note also Section 17(3) LTL. Trespass in addition to breach of this covenant may also be construed where there is actual interference with the demised premises as was seen in Lavender V
  • That the premises shall be reasonably fit for habitation from the commencement of the tenancy-Collins V Hopkins.
  • Non-Derogation from grant: The purpose for which the land was let must not be made impossible to perform/use by the landlord-Browne V Fowler.

 

Lessee’s Implied Covenants.

  • Obligation to use and keep the premises in a tenant-like manner. Lord Denning in Warren V Keen noted that the tenant must maintain and protect the property. Not to damage the house willfully or negligently. E.g. cleaning the house and unblocking the sink. Except such damage is caused by ordinary operation of natural causes (Fair wear and tear)-Section 7(3) LTL. Taylor V Webb. However, the court in Regis Property ltd V Dudley requires that the tenant takes steps to prevent consequences flowing from wear and tear.
  • Obligation not to commit waste: Waste may be seen as destruction or alteration of the demised premises or things attached to it. Waste may be voluntary, permissive, ameliorating or equitable.

:: Voluntary waste is actual and deliberate… like pulling down a house, altering structure, converting the house into a shop and so on. Where voluntary waste is committed by a tenant at will, the tenancy automatically determines and he becomes liable for trespass-Countess of Shrewsbury’s case.

:: Permissive waste is negligently allowing the premises or things on the premises to rot or spoil.

:: Ameliorating waste is voluntary waste that improves the demised premises like replacing a door, changing the window, and so on. For injunction to lie in ameliorating waste, substantial damage must be proved-Doherty V Allman.

:: Equitable waste was (before the Judicature Act) only recognized by the courts of Equity. Consists of acts of gross damages like cutting down ornamental trees.

 

EXPRESS COVENANTS.

These are covenants which the law would not imply or enforce except expressly stipulated in writing by the parties. Some of the most popular/common express covenants may include:

  • Covenant to Pay Rent: since rent is not a pre-requisite for a valid lease, it must be expressed in writing by the parties as the law does not imply the covenant to pay rent (Although this covenant is implied under the tenancy law of Lagos State 2011). Rent should be paid to the landlord or his agent or an authorized person or another who steps into the shoes of the landlord. Death of the landlord does not extinguish this duty/debt-Section 72 Rivers State Landlord and Tenant law. The law presumes that rent is payable in arrears-B olivant V Alakija… i.e. immediately after the midnight of the due date. Except the tenancy agreement provides for advance payment. Such covenants are usually accompanied by a proviso for forfeiture or re-entry in the event of breach (non-payment) by the lessee Provided there has been a demand for the rent and the lessor fails or refuses to pay-Dawodu V Odulaja. Except a clause to the contrary has been inserted to dispense with the condition of a demand-Danmole V Dawodu. There may also be a clause for periodic rent review.

Note also that the rent should not be arbitrary or too high especially in cases of residential accommodation where various statutes in different States (like Tenancy law of Lagos state 2011, and the various Rent Control legislations) frown upon (and prohibit) arbitrary rent increases. These legislations prohibit a charge of rent in excess of the standard rent prescribed by law… penalties are imposed (see Section 4(5)Tenancy Law of Lagos State). Section 4 of the Rivers State Law 2004 provides that the tenant may only pay the standard rent or the agreed rent… whichever is lower. Lord Denning in Kiriri Cotton Co ltd V Dewani noted that rent paid in excess should be recoverable and in Feyisitan V Williams, the court noted that this right (of recovery) may be exercised even after the tenancy.

The law mandates that rent book be kept in respect of residential accommodation e.g. Section 33 Laws of Rivers State 1999. Under Section 5 TLLState, the landlord is mandated to issue a payment receipt.

  • Covenant to pay rates and outgoings: Rates and outgoings are usually paid by the owner of the tenement but the tenant can covenant to do so in the agreement. (i.e. to take up the responsibility) The landlord should however not appropriate money meant for rent or other purposes by the tenant for payment of rates and outgoings. This was frowned upon in Olorun-Nimbe V Lucas where the landlord appropriated monies received as rent partly towards rates and partly towards rent.
  • Covenant not to assign or underlet: Since a tenant has an estate in land, he generally can assign or sublet… but where the landlord wishes otherwise, the parties can have an express covenant in the agreement prohibiting assignment or subletting. Such covenant can be absolute or qualified. Where it is qualified (i.e. There can be assignment if the consent of the landlord has been obtained) the landlord must not unreasonably withhold consent especially where the assignee is a responsible and respectable assignee or sublessee-Theodorou V Bloom. Consent once given cannot be withdrawn-Obasuyi V Mandilas and Karaberis where the landlord consented and later sought to withdraw his consent where he knew that the defendants were subletting the premises for a much greater amount than he received. Not allowed. By virtue of Section 3 Conveyancing Act and Section 159 of the PCL, such consent cannot be made conditional upon the payment of a fine or other charges-Obasuyi V Mandilas and Karaberis. Except there is a term to the contrary in the agreement.

Where the required consent is not obtained, the following shall apply to the purported/proposed assignee/sublease (i.e. The person to whom the interest in land is being assigned or sublet)

  • He CANNOT succeed in an action for specific performance (i.e. forcing the lessee to assign or sublet)-LSDPC and another V Nigerian Lands and Sea Foods Ltd.
  • He can succeed in an action against the sub-lessor for damages for non-performance-LSPDC and Another V Nigerian Lands and Sea Foods Ltd.
  • All these notwithstanding, it is an act of trespass for the headlessor to move into the demised premises to demolish a building in which the sub-lessee is in possession-LSDPC and Another V Nigerian Land and Sea Foods, damages was awarded where such occurred. Meaning that if the lessee goes ahead to assign without consent, the landlord cannot go to the premises and harass the sub-lessee or trespass with his chattel. He is to sue the lessee for breach of covenant not to assign or sublet.

The head-lessor, may sue the assignor or sub-lessor for damages for breach of covenant. The sub-lessor (This is the lessee who disobeys the covenant not to assign or sublet) may also be liable to forfeiture of his interest at the option of the landlord through the appropriate process of procuring the appropriate order of the court and not through self-help-Apena V Balogun.

Note that if the Landlord accepts rent 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-Lisboa V Fawa.

Note that assignment is not the same thing as underletting or depositing title deeds for equitable mortgage… nor is underletting the same thing as permitting to use-Chaplin V Smith. Meaning that if the covenant prohibits “assignment”, then the tenant can sublet. If it prohibits “subletting”, the tenant can assign, and so on. As such, the covenant must be couched in broad and all encompassing language so that it prohibits the doing/permission of an act which would ordinarily have amounted to trespass.

 

  • Covenant as to use: Generally, the tenant can use the premises for any lawful purpose whether it is different from that originally contemplated except there is a covenant expressly and prohibitively restricting use in a particular manner-Dawodu V Odulaja. Such covenants can be enforced by injunction, or damages where there has been breach… there could also be forfeiture if there is a right of re-entry.
  • Option to renew: The clause must be clear and unambiguous… stipulating steps and conditions which the lessee or tenant must comply with. Such option to renew is an offer which the lessee must accept in toto (as it is). Varying or making new terms does not constitute a valid exercise of this option… and unless the new terms are accepted by the lessor, the option lapses. In International Institute of Tropical Agriculture V Khawam, where the appellant offered a different rent of #3,520 as opposed to the #4,440 provided in the clause. The court held that such variation can at best be seen as a counter offer which the respondent can accept or reject and since the respondent did not accept the new term, the option lapsed. This option to renew is assignable and devolves on death on the lessee’s personal representatives-Kuforiji V Z Co Ltd.
  • Covenant to repair: As defined in Alabi V Sipe, repair here means restoration of damaged or worn out parts into a good condition. Generally, repairs should be taken out by the tenant except there is an express covenant to the contrary. It is usual for the tenant to maintain the internal part while obligations for external parts are usually on the landlord. For example, the obligation of keeping the roof and main walls in repairs has been imposed on the landlord by Section 8 Tenancy Law of Lagos State, and Section 64 Registered Land Law Lagos. Specific performance may be sought, damages too. A smart tenant may effect the necessary repairs and sue for reimbursement from the landlord (where it is the duty of the landlord to do the particular repair taken out by the tenant). The tenant cannot however withhold rent on the basis of refusal to repair by the landlord-Oke V Salako. In Demuren V Plastic Manufacturing Co ltd, the tenant relinquished the demised premises 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.
  • Covenant to insure: Although this is implied under the Tenancy Law of Lagos State. The agreement can provide otherwise. Section 65 of the Registered Land Law mandates that all buildings on the demised premises be insured against loss or damage in the joint names of the lessor and lessee. Where the lessor has insured, then the lessee should reimburse. If a covenant to insure is imposed on the tenant or implied by statute, he is to keep the demised property insured with a reputable insurance company. Where the premises are kept uninsured for any part of the term (however short notwithstanding that no hazard has occurred), there is a breach of this covenant-Penniall V Harborne. The landlord can sue for specific performance, forfeiture, reimbursement where he has insured or reinstated the property (in the event of actual loss) and so on. If the landlord receives rent after notice of this breach, he is said to waive his right-Doe V Gladwin.
  • Covenant to build in a workmanlike mannerWilliams V Eko Properties Investment Ltd.
  • Covenant to comply with town planning regulations: breach of this may import illegality so that the landlord may rescind the contract.
  • Option to purchase reversion: This covenant does not touch the land… as such cannot be enforceable between the assignee of the lessee and the original lessor. Except where the benefit of the covenant has been specifically assigned to him-Re Button’s lease. If this covenant exists an attempt (or actual sale) by the landlord to sell the reversion to a third party may be set aside in Owosho V Dada, where this was done, the court held that the subsequent fraudulent sale of the land to the third party was postponed in equity in the principle of priority.
  • Covenant to deliver up possession: upon expiration of the agreed term. This can be done by the tenant vacating the premises (and delivering possession and keys to the landlord). Breach of this covenant entitles the landlord to damages (Looking at the rents or profits that the landlord could have gotten if he had not been kept out of possession). Remember that where the tenant holds over, he becomes one at sufferance but in states where the Recovery of Premises Law exists, the lessee automatically becomes a statutory tenant and relevant statutory notices and procedures must be observed before ejecting the tenant.

 

USUAL COVENANTS.

They are “usually” implied for residential accommodation by the various Landlord and Tenant Laws. They vary… determined by the general conveyancing practice, nature of lease, usage of trade, custom of the locality and other facts and circumstances prevailing at the time-Section 33(2) Landlord and Tenant Law of Rivers State, Flexman V Corbett.

Section 33(1) LLT Rivers provides that parties shall be deemed to agree that a lease shall contain covenants which are usual for the type of lease contemplated in the area where the demised property is situated. Under Section 34(1) LLT Rivers (and similar laws), the covenant to pay rent, keep and deliver premises in good repair, use premises only for purpose which the sublease is created, quiet possession… are usual covenants implied into the lease.

For NON-RESIDENTIAL Accommodation and in other states that do not have the Landlord and Tenant Law, usual covenants are not implied except the parties expressly agree and provide that all usual and proper covenants should apply.

Note that he who alleges a usual covenant must prove it- Section 170 Evidence Act, 2011.

The following have been held as UNUSUAL covenants: clause for forfeiture of lease upon Lessee’s bankruptcy-Hyde V Wardon, covenant not to assign without licence-Henderson V Hay.

REMEDIES FOR BREACH. It depends on the kind of covenant that was breached.

For breach of covenant to pay rent: the landlord can distrain for rent (personally at common law or pursuant to a court order under statute (in accordance with the sheriff and Civil Processes Act). In Eliochin Ltd V Mbadiwe, the defendant did not obtain a court order nor did he serve the statutory notice before ejecting the plaintiffs. Held that plaintiffs were entitled to damages.

The landlord may also sue for the arrears of rent ((I.e. to recover the rent that the tenant has refused to pay even after the landlord has formally demanded for it- Dawodu V Odulaja (not demanding in this case vitiated his claim). A residential monthly tenancy automatically determines under the Rent Control and Recovery of Residential Premises Law where he is in arrears for 3 months or more… (under Section 13 of the Lagos law, it is 6 months).

The Landlord may also sue for forfeiture (i.e. that the landlord wants to terminate the tenancy before the due date) provided there is a forfeiture clause in the contract-Koya V Babayale. Note also that due process of recovery of premises as prescribed by statute must be followed. Self-help is not an option-Osho V Foreign Finance Corporation. The court of equity may grant the tenant a relief against forfeiture thereby allowing the tenant to tender rent even after the landlord has re-entered possession-Ribiero V Chahin except the premises is used for immoral purposes-Egarton V Explanade Hotels, Taiwo V Akinwunmi.

There are various defences available to the tenant. E.g. that the action is time barred, landlord has illegally evicted him, the tenancy is illegal/contrary to public policy/morality and so on-Section 100 Landlord and Tenant Law of Lagos

For the breach of covenant against assignment, subletting or parting with possession: the landlord may either sue for damages OR forfeiture of the lease provided the lease has a forfeiture clause-Dawodu V Odulaja. Forfeiture is through court order not self-help-Apena V Balogun.

For breach of other covenants: he may go by way of damages, injunction, specific performance, forfeiture etc Section 14 Conveyancing Act and Section 161 of the Property and Conveyancing Laws provide requirements or conditions for forfeiture in cases other than rent, assignment, subletting and parting with possession (i.e. for breach of other covenants). They include:

– There must be a forfeiture provision in the lease agreement.

– Notice specifying the particular breach complained of (and requiring remediation) must be served and the tenant must have failed to respond or remedy the breach within a reasonable time.

– The lessor must prove that the notice was served to the lessee himself, or his underlessee or the person who last paid the rent.

As noted above relief against forfeiture may be granted except the premises is being used for immoral or illegal purposes or on equitable grounds.

A lessor who accepts rent with the full knowledge of the breach is deemed to have waived his right to sue for remedies-Mathews V Smallwood.

Isochukwu

Quite eccentric really

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