ARTICLE
2 October 2024

How To Draft A Legally Binding Lease Agreement In Nigeria

TT
The Trusted Advisors

Contributor

Trusted Advisors is a full serviced law firm founded to provide cutting edge and tailor-made legal solutions to clients. It's strategic position, as well as an enviable network of alliances, has given undoubtedly benefits to our clients. We stand as a single-window service provider dealing with all kinds of matters across the country under one umbrella.
A lease agreement in Nigeria is a legally binding contract between a landlord and a tenant that outlines the terms and conditions for renting property.
Nigeria Real Estate and Construction

A lease agreement in Nigeria is a legally binding contract between a landlord and a tenant that outlines the terms and conditions for renting property. Drafting a legally sound lease agreement is essential to protect both parties' rights and prevent future disputes. This article provides a comprehensive guide to drafting a legally binding lease agreement in Nigeria, covering key elements, legal requirements, and steps to ensure enforceability.

Why Is a Lease Agreement Important?

A lease agreement protects both the landlord and the tenant by clearly outlining their obligations. Without a legally binding lease, misunderstandings and disputes can arise, leading to potential losses or legal action.

Key Elements of a Legally Binding Lease Agreement

To ensure a lease agreement is enforceable in Nigeria, it must contain the following elements:

1. Parties Involved

Clearly state the full names and addresses of both the landlord and tenant. This ensures that there's no ambiguity about who is responsible for fulfilling the terms of the contract. In case of a corporate tenant, the name and registered address of the company should be included.

2. Property Description

A detailed description of the leased property is crucial. This should include the address, type of property (e.g., residential or commercial), and specific boundaries or features of the property. For example: "Flat 2, Block B, Emerald Apartments, located at 45B Admiralty Road, Lekki Phase 1, Lagos."

3. Lease Duration

Specify the term of the lease, whether it's fixed-term (e.g., 1 or 2 years) or periodic (e.g., month-to-month). For fixed-term leases, the start and end dates should be included.

4. Rent Payment Details

The amount of rent, due dates, payment method, and any grace period for late payments should be clearly stated. For instance, "The tenant shall pay an annual rent of ₦1,200,000, due in two equal installments on the 1st of January and the 1st of July."

5. Security Deposit

State the amount of the security deposit and the conditions for its return. According to Nigerian law, landlords are required to return the security deposit minus any deductions for repairs or unpaid rent after the lease ends.

6. Responsibilities for Repairs and Maintenance

Outline who is responsible for repairs—typically, tenants are responsible for minor repairs, while the landlord handles major repairs. For example, "The tenant is responsible for fixing any damage they cause, but the landlord will repair major plumbing or electrical faults."

7. Subletting and Assignment

Clearly state whether subletting or assigning the lease to another party is permitted. Many landlords in Nigeria prohibit subletting without prior written consent.

8. Termination and Notice Requirements

Define the conditions under which the lease can be terminated early and the notice period required for termination. In Nigeria, the standard notice period for tenants is typically one month for monthly rentals or three months for yearly rentals, unless otherwise agreed.

9. Dispute Resolution Mechanism

While most leases overlook this, it's wise to include a clause that stipulates how disputes should be resolved. A popular option is arbitration or mediation before resorting to litigation. This clause can save both parties time and money.

Legal Requirements for Lease Agreements in Nigeria

  1. Comply with the Tenancy Laws: Each Nigerian state has specific tenancy laws governing landlord-tenant relationships. For instance, Lagos State operates under the Tenancy Law of Lagos State, 2011, which sets out rules for rent increases, eviction, and the rights of landlords and tenants.
  2. Stamp Duty: A lease agreement is not considered legally binding until it has been stamped by the Nigerian Inland Revenue Service (NIRS). Failure to stamp the agreement can make it inadmissible in court should a dispute arise.
  3. Governor's Consent: If the lease term exceeds three years, it's mandatory to obtain the Governor's consent, as stipulated by the Land Use Act. Without this consent, the lease may be deemed invalid.

Common Pitfalls to Avoid

Many landlords and tenants make the mistake of drafting informal lease agreements without legal backing. This can lead to issues such as unenforceable clauses, lack of clarity, and loopholes that allow parties to violate the terms of the agreement without facing legal consequences. Always consult a lawyer to ensure the lease complies with Nigerian law and protects your interests.

Example of a Simple Lease Agreement

This Lease Agreement is made on the [insert date] between [Landlord's Name] of [Landlord's Address] and [Tenant's Name] of [Tenant's Address].

The Landlord agrees to lease the property located at [Property Address] to the Tenant under the following terms:

  1. Lease Term: [Start Date] to [End Date].
  2. Rent: ₦[amount] per annum, payable in [number] installments.
  3. Security Deposit: ₦[amount], refundable at the end of the lease.
  4. Tenant shall maintain the property in good condition and make repairs as necessary.

Both parties agree to the terms outlined above.

Protecting Yourself as a Landlord or Tenant

For landlords, it's important to include clauses that protect your property from potential damages and ensure prompt payment. For tenants, the lease agreement should clearly state your right to peaceful enjoyment of the property, without interference from the landlord, as protected by Nigerian law.

People Also Ask

What makes a lease agreement legally binding in Nigeria?

A lease agreement is legally binding in Nigeria when it meets key requirements such as clarity on rent, property description, lease term, and responsibilities of both parties. Additionally, the agreement must be signed, stamped with the appropriate stamp duties, and in some cases, registered.

Can I sublet my rented apartment in Nigeria?

Yes, but only if your lease agreement permits subletting. Many Nigerian landlords require tenants to seek written permission before subletting.

What is the standard notice period for ending a lease in Nigeria?

For monthly rentals, a one-month notice is usually required, while for yearly rentals, the notice period is typically three months, unless otherwise specified in the lease agreement.

How do I register a lease agreement in Nigeria?

Lease agreements for terms exceeding three years must be registered with the appropriate state government, and Governor's consent must be obtained. For shorter leases, stamping the agreement with NIRS is usually sufficient.

Conclusion

Drafting a legally binding lease agreement in Nigeria requires careful attention to the details. By including the key elements and complying with local tenancy laws, both landlords and tenants can protect their interests and minimize disputes. Whether you're leasing a property for personal use or as an investment, a well-drafted lease agreement is crucial for smooth and hassle-free property management.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More