PL-PRACTICE WEEK 10 LEASES 2
WEEK 10 – LEASES 2
COVENANTS IN LEASES (REFLECTING THE POSITIONS IN ABUJA AND LAGOS STATE):
A covenant is an agreement or promise by the parties to do or refrain from doing a thing specified. Covenants may be implied, usual and express and the imputation would depend on the type of lease, nature and jurisdiction of the property.
- IMPLIED COVENANTS: are inferred by law.
II: That Landlord should ensure quiet enjoyment, not derogate from grant and follow due process in evicting tenant.
II: That tenant should pay rent, not commit waste and deliver up the premises in tenantable condition.
- USUAL COVENANTS: are proper, common and reasonable covenants that can be inserted considering the type of lease, nature of property, usage of trade, locality, previous dealings and other facts and circumstances. May include; rent, quiet enjoyment, good state of repairs, tenantable use, taxes, etc. are common. Flexman v Corbett.
- EXPRESS COVENANT: agreed upon by the parties to cater for their particular preferences and (often times) to negate the application of certain implied covenants.. They include;
II User Covenant: This is to protect property, neighbours, lessor’s reversionary interest and prevent illegal/immoral use.
“The lessee covenants to use (or permit the use of) the premises for residential / commercial / agricultural purposes only”.
In absence of this, the lessee can use the premises for any legitimate purpose.
II Covenant to Pay Rent: should be expressly included in the agreement as rent is not implied-Ingram v I.R.C.
II Covenant to Pay Rates and Outgoings (i.e. Rates and Taxes): generally owner but can put on tenant by agreement.
“To pay rates, taxes, levies, duties and outgoings now or as may be subsequently imposed on the property whether payable by the landlord or not”.
II Covenant to Repair: keep in tenantable manner and maintain property in good condition and not commit waste. Looking at the nature and cost of repairs, locality and other circumstances-Reynolds Construction Co v Rockonor Properties. External/Structural repairs is usually that of Landlord/Lessor, lessee handles others. The shorter the lease the more likely the obligation falls on the landlord. Look at the nature of repair, locality, lease, etc.
“The tenant covenants and promises to keep and maintain the property in good state of repair, fair wear and tear and permit landlord inspect state of repair and deliver up premises in good condition/state of repair”.
II Covenant against assignment/subletting: “The tenant covenants not to assign, sublet, charge or otherwise part with possession of the premises (or any part of it) without the prior written consent of the landlord which should not be unreasonably withheld in the case of a respectable person”.
Landlord should be objective in his refusal. In determining reasonability, look at the sub-tenant, nature of property and purpose it would be put to, etc. The covenant can be made absolute. i.e. no leeway for consent of the landlord at all. It could however be qualified. If landlord is unreasonable, tenant can seek declaration in that regard or specific performance or go ahead and sublet then apply to court to injunct the landlord from harassing the sub-tenant. Ishola Williams v Hammond.
II Covenant not to make alteration or changes to the premises. (May require consent of landlord and may stipulate that he is to restore premises to original state upon lapse of his term.
II Covenant to Insure: the demised property. The clause should provide for who shall insure, what risk would be insured, how compensation shall be gotten and applied (i.e. to reinstate property)-Upjohn v Hitchins. Look at the nature of the property and existing obligations.
II Option to renew: is the lessor’s covenant. Should contain mode of institution, time within which application can be made, duration, condition precedent and terms of new lease.
Be careful not to create perpetually renewable lease. Care should be taken to prevent the clause from making the rent perpetually renewable-Re Hopkins Lease, Stephen Idugboe and Sons Ltd v Anenih
II Forfeiture and Re-entry: needed if lessor may desire to bring the lease to a premature end (exercise this right by peaceable entry or action for possession (usually upon anticipatory breach of a covenant)) as law presumes against forfeiture except where expressly stated. Although this right is implied under Section 17 Lagos State. In
- PARTS OF A LEASE/DRAFTING A LEASE: Commencement; (date, parties, recitals, testatum “WHEREBY” or “IT IS AGREED AS FOLLOWS”, parcel clause “ALL THAT”, Habendum “to hold unto”, Reddendum “Yielding and paying”, Testimonium “In witness of which”, Schedule, Execution “SIGNED, SEALED AND DELIVERED”, Attestation (IN THE PRESENCE OF)
– Action for injunction.
– Action for Damages
– Action for specific performance.
– Action to recover rent money, outgoings money
– Action in distress (i.e seizure of property to satisfy rent)
– Action for forfeiture and re-entry (where contained in the lease.
IDENTIFY AND DISCUSS ETHICAL ISSUES THAT MAY ARISE IN A LEASE TRANSACTION: Competence in drafting, negotiating, inspecting documents, etc. (16). Duty not to mix client’s money (23), not to frank document not prepared by him.