Why landlords, renters need tenancy agreement in property transaction | Prestige Real Estate News

By Chuka Uroko

In Nigeria, demand for housing is high on account of the country’s growing population and fast-paced urbanization. The country’s housing demand-supply gap is wide at 20 million, according to United Nations estimates. Home ownership level is very low at 25 percent of the 200 million population.

Nigeria ranks among the countries of the world with very expensive housing market. It is a country where a large proportion of its population lives below poverty line, meaning that housing affordability is a huge challenge.

Because housing is one of the most important requirements for human survival, a sizeable percentage of the Nigerian population are renters. A Pison Housing Company report on ‘The State of Real Estate Market in Nigeria’ estimates that 80 percent of Nigerians lives in rented accommodation.

“For the reason that many people not only in Nigeria, but also other parts of the world are tenants, renting or leasing has become one of the most popular real estate transactions in the world. Consequently, if you need to rent a property in Nigeria or elsewhere, it is important to have an executed tenancy agreement,” Gloria Nwosu, a Senior Partner at Ubosi Eleh+ Co, said.

Nwosu, who spoke on ‘Importance of Tenancy Agreement in a Property Lease Transaction’ at a Webinar hosted by her company as part of their monthly ‘Real Estate Market Insights,’ noted that tenancy agreement is important because it provides protection for both landlords and tenants and expands on both stated and implied rights of both parties.

She explained that tenancy agreement is an agreement between a landlord and a tenant which spells out the rights and obligations of a landlord and a tenant while renting a property. The agreement tells a tenant his rights, the amount he is paying, when the rent period begins and when it elapses.

In major cities of Nigeria, especially Lagos and Abuja, where the rental market is very active, many tenants take the rent agreement for granted, often times not even asking for the document to know the content.

But Nwosu said it is not advisable for a tenant to pay for a house and move in without knowing his rights, pointing out that the tenancy agreement defines the relationship between both parties so that they will know what the property is being used for and when each part is breaching the law.

“Some schools of thought say tenancy agreement is not mandatory. But I am telling you that it is mandatory because, without it, you will not know your right. The landlord can visit you any time and asks you to pack out of the property which should not happen.

The fact that agreement does not exist in a tenancy relationship does not mean that the landlord and the tenant have no rights in the tenancy. Each landlord and tenant has what is called implied right in all tenancy relationship whether or not tenancy agreement exists,” she said.

Continuing, she advised, “if you are a landlord about to rent out a property , or you are a tenant about to rent a property, it is advisable that you insist on having a tenancy agreement.”

As a guide and for clarity purposes, Nwosu highlighted some of the important contents of a tenancy agreement such as the name and address of both landlord and tenant; the start and end dates of the tenancy; the rental price; any deposit retained by the landlord such as caution, maintenance, security and refundable deposit which is given back to the tenant when he returns the property to the landlord in a good and tenantable condition.

She revealed that in any tenancy relationship, there are obligations of both the landlord and tenant, explaining that there are certain repairs that are carried out by the landlord or the tenant. All internal repairs are usually carried out by the tenant while all external and structural repairs are done by the landlord.

With the obligations comes the rights of each part to the agreement and these Nwosu listed as the right to live in the property undisturbed; the right to live in the property in already good repair; the right to information about the tenancy, and protection from unlawful eviction.

She advised that a tenant should ensure he reads in detail what is contained in the agreement before signing, adding, “it is advisable to approach a lawyer to interpret your agreement before you sign.”

Nwosu stressed that the landlord has the power to determine the time in which he would put the tenant on notice to repossess his property and that happens when the tenant is in default of any of the agreement terms or where there is failure to pay rent as at when due.

On the part of the tenant, she said that the tenancy agreement helps to protect him or her from unlawful eviction, noting that, in Nigeria today, given what is happening in the economy, most landlords want to increase their rent and the rate of increase is beyond explanation.

“If you are a tenant who has a well spelt out agreement, say five years, and the rate of increase is clearly spelt out in the agreement, the landlord cannot wake up and say he collected below market rate last year and so, and asks the tenant to move. This is not done because it is not in the agreement.

It is after the period of the agreement has elapsed that he will eject you and that is if you are not willing to accept his rate of increase. If the tenancy is to be terminated, it will be clearly stated in the agreement, that is, if it is going to be quarterly or yearly notice. The tenant has to be notified,” she said.

According to her, in this agreement, the mode in which the tenancy is to be terminated should be stated. This could be a written notice served periodically via email or pasted on the wall, or orally stated.

The agreement gives the landlord the opportunity to state the way and manner in which he prefers the rented the property to be used. For instance, a landlord may prohibit the tenant from assigning, subletting or even lodging another person in the property or he might prohibit using the property for commercial purposes if it is rented for residential.

Some people rent properties and change them to other purposes, especially in Lagos today where shortlet apartments are reigning and so, everybody is renting properties for short let. Most times, they don’t let the landlord know that they have this intention. When this kind of situation arises, the landlord has the right to terminate the agreement automatically.

The landlord under an agreement also has the right to decide who stays in his property. For instance, a landlord has the right to say he does not want a particular tribe, a single lady, or a family of six or seven to stay in his property for fear of running down the property or some other reasons.

The parties can jointly agree on what would amount to a breach of the agreement which can be a reason for dissolving the tenancy. When a tenant is going into agreement with the landlord, it is always important to agree on what would be grounds for dissolving the tenancy. For instance, if the tenant and the landlord agree that the tenant must not conduct any illegal activity in the premises, it must be clearly stated in the agreement so that if the tenant is caught doing that, that can be a ground to terminate the tenancy.

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