LEASEHOLD INTERESTS
NATURE OF A LEASES
1.0 INTRODUCTION.
2.0 OBJECTIVE
TERM OF YEARS IN LEASES
PERPETUALLY RENEWABLE LEASES
ESSENTIALS OF A TERM OF LEASES
RIGHT OF EXCLUSIVE POSSESSION
DEFINITE PERIOD
5.0 CLASSIFICATION OF LEASES
6.0 CREATION OF LEASES
DOCTRINE OF WALSH V LONSDALE
EFFECT OF THE DOCTRINE OF WALSH V LONSDALE
TERMINATION OF TENANCIES
8.0 IMPACT OF LAND USE ACT 1978 ON LEASES
9.0 CONCLUSION
10.0 SUMMARY
11.0 TUTOR MARKED ASSIGNMENT
12.0 SUGGESTED FURTHER READING
LEASEHOLD INTERESTS
NATURE OF A LEASE
INTRODUCTION.
A leasehold interest is an interest in land conveyed by a rightful possessor of real property for use and occupation of another in consideration for rent paid. The term granted could be for life, for a fixed period or a period to be determined at will. A leasehold is capable of subsisting as a legal estate but it must be created in a manner required by law or it is classified as an equitable interest.
OBJECTIVE
The objective of this unit is to review with the students some of the terminologies utilized in conveyance of interest in land which forms part of the general usage in relation to use and occupation of land with a view to inculcating a better appreciation the legal implications of the interest conveyed.
TERM OF YEARS IN LEASES
A term of years or a lease may be for a year, years , year to year or it could be perpetually renewable. It could also be for a life or lives. It is usually couched as:
“To Oziengbe during the life of Ehimemen and Otue” or
“To Itohan for 99 years if Izobo shall so long live” or
“To Nwayo for 30 years until Nwayo marries”
In National Bank of Nigeria Ltd v Companies Frassinet (1948) 19 NLR 4, the court held that the words “the lessor agrees to let and the lessee agrees to take” are sufficient to create a lease once it indicates the intention to give possession for a determinable time.
A term of years arises and the relationship of landlord and tenant is created whenever one person called the landlord or lessor grants to another called the tenant or leassee, the right to the exclusive possession of a piece of land for a definite period.
A term of years absolute means a term that is to last for a certain fixed period even though it may be liable to come to an end before the expiration of that period by the service of a notice to quit. The re-entry of the landlord, operation or provision for lesser on redemption as in the case of a mortgage term. It includes a term for less than a year, a year, years or tenancy from year as is the common practice in agricultural leases.
A term of years absolute constitute a legal estate irrespective of the fact that it does not entitle the tenant to enter into immediate possession but is supposed to commence at a future date such a lease is referred to as a reversionary lease.
PERPETUALLY RENEWABLE LEASES
There is no time limit to the renewing of leases. However under the Land Use Act, the maximum period that may be granted is 99 years subject to renewal. It is the nearest approach to a perpetual lease.
ESSENTIALS OF A TERM OF LEASES
For a term of years to arise and for the relationship of landlord and tenant to be created, there must be in existence the relationship of landlord and tenant and possessory rights on a definite land for a period of time must be conferred on the tenant or lessee while the landlord retains the reversion.
RIGHT OF EXCLUSIVE POSSESSION
It is essential for the subsistence of a valid lease, that the lessee shall acquire the right of possession to the exclusion of the lessor.
The distinguishing factor in this regard between a licence and a lease lies in the fact that a lease imports the grant of exclusive possession while a licence does not.
In Wilson v Tavener (1875) L.R 10 P.C 402 a defendant agreed in writing to permit the plaintiff to erect a boarding on the forecourt of a cottage and to allow him the use of a gable end of another house for a bill posting and advertising station at a yearly rent payable quarterly. It was held that since the plaintiff had no exclusive occupation of any piece of land, it was not a tenancy from year to year but a licence which was revocable at will on the service of a reasonable notice
In Mobil Oil (Nigeria) Ltd v Johnson (1961) All NLR 83 A entered into an agreement with M & Co Limited that A should operate one of their petrol service station at a standard set by the company and on a remuneration based on rebate and commission. A was to employ staff subject to the company’s approval but was to be responsible for their pay. It was further provided in the agreement that “the station will be given to you with the firm understanding that upon receipt of thirty days” notice. Following a disagreement between the parties the company took possession of the premises A instituted proceeding against the company for unlawful entry. The court held that A had no lease but only a licence since A had not been given any definite term of occupancy. The agreement merely provided for its termination upon notice. The court further held that A was not entitled to damages for trespass but since the notice he received was short of seven days, A was entitled to loss of earnings for those seven days.
In Akpiri v West African Airways Corporations (1955) 14 WACA 195 where the appellant was employed by the Respondent and given a house to live in on payment of a moderate rent. On the determination of appointment he was asked to quit. He claimed he was a tenant and not a licensee. His claim was upheld.
However, in Diocessan Synod of Lagos v Dedeke (1958) N.R.N.L.R 77, it was held that a vicar had only a service occupancy and not a service tenancy of the vicarage and that he could therefore be ejected when his service was terminated.
DEFINITE PERIOD
To constitute a valid lease, there must be certainty of term granted in other words, the term granted must have a definite or certain beginning and a certain ending.
Where a lease is dependent on the happening of an uncertain event it is valid and becomes absolute and enforceable on the occurrence of the event specified e.g. A lease to begin “ when the house becomes vacant “
CLASSIFICATION OF LEASES
Leases can be classified as follows:
- Reversionary lease: A lease which is supposed to commence at a future date e.g where a lease was made in 1996 to commence in 2026
- Lease of a reversion: Andrew grants a lease to Adesuwa from 2008 to 2012. The later is a lease of Adesuwa’s reversion and constitutes a valid lease
- Periodic tenancy: This is a tenancy from e.g. week to week, month to month or year to year. It is perpetually renewable until terminated by the issuance of a notice of determination of the tenancy.
- Tenancy at will: it arises when a person allows another on his land in the understanding that he may leave at any time or be asked to leave at any time it also arise where a lesee of al land belonging to another authorizes a third party to occupy the land at his will or pleasure .
- A tenancy at sufferance: It arises where a person continues in occupation of land after the expiration of his lease without his landlord’s consent
CREATION OF LEASES.
A lease may be made either by
- an express grant or
- an agreement for a lease
EXPRESS GRANT
In an express grant, the lessor or lessee must agree on all the terms of the transaction, there must be sufficient memorandum in writing or an act of part performance.
What constitutes sufficient part performance is dependent on the perculiar circumstance of each case.
In Rawlinson v Ames (1925) Ch 96 the Defendant and the Plaintiff orally agreed to take a lease of a flat. The Plaintiff requested that some alterations to be made to the flat and the Defendant made frequent visits to the flat while the alteration was been made and suggested additional alterations which was made by the Plaintiff. The Defendant subsequently repudiated the contract relying on the absence of a written memorandum. It was held that the alterations made constituted sufficient acts of part performance by the Plaintiff.
A lease for more than 3 years is at law unenforceable unless it is evidenced in writing but in equity such a lease could be treated as an agreement for a lease which is enforceable by an action for specific performance.
DOCTRINE OF WALSH V LONSDALE
Where a tenant takes possession of a land under an oral agreement for more than three years, acquires an enforceable right to call for the execution of a deed in favour of the tenant. As far as his rights and liabilities are concerned, he is held to in the same position as if he had a deed of lease.
In Walsh v Lonsdale (1882) 21 Ch.D 9 the Defendant agreed to grant the plaintiff a lease of a mill for 7 years at an agreed rent. The lease was also to contain such stipulation in an earlier lease at a fixed rent made payable yearly in advance. The plaintiff was let in to possession and paid rent quarterly not in advance, for two years and a half. The Defendant then demanded one year’s rent in advance and put in a distress. The Plaintiff instituted proceedings for damages for illegal distress, injunction and specific performance. It was held that the Plaintiff’s held an interest similar to the position of a grantee of a lease and under the terms of a lease, failure to pay a year’s rent in advance on demand would have earned a distress.
EFFECT OF THE DOCTRINE OF WALSH V LONSDALE
The effect of the decision in Walsh v Lonsdale is that agreement for a lease is as good as a lease however a lease by deed is more advantageous that an agreement for a lease in the following respects.
- The principle in Walsh v Lonsdale is inapplicable where equity will not grant specific performance of the agreement
- Whereas a lease is enforceable against the whole world, a mere agreement for a lease confers only an equitable interest which is unenforceable against a bonafide purchaser for value of the legal estate. The doctrine of Walsh v Lonsdale is ineffective against third parties’ rights
- A deed of lease constitutes a conveyance while an agreement for a lease does not.
TERMINATION OF TENANCIES
A lease may be terminated in any of the following manner
- By surrender of the lease to the landlord in the manner it was granted e.g. if the lease was granted by deed, it should be surrendered in like manner
- By effluxion of time. On the extinguishment of the lease, the landlord is automatically entitled to the reversionary manner interest
- By the merger of the lease and reversionary interest in the same person which could be either the landlord or the tenant
- By service of a valid notice to quit on the tenant by the landlord
IMPACT OF LAND USE ACT ON LEASES
The land use act did not significantly impact on leases. It provided that all existing laws relating to interest in land or transfer of title in land shall have effect subject to such modifications as will bring the agreements into conformity with the provisions of the act. See section 48 of the Land Use Act.
The only provisions of the Land Use Act which affects leases is the provisions earlier discussed which mandates the consent of the Governor of the state in which the land is located to be first had and obtained before any transaction relating to land can be validly embarked on. This evidently includes leases.
CONCLUSION.
An agreement for a lease is not equal to a lease. Between the contracting parties, an agreement for a lease may be as good as a lease but an equitable right is not the same as a legal right.
SUMMARY
- A leasehold interest is an interest in land conveyed by one person to another to use and enjoy his land for definite period.
- A lease may be for a year, years or could be perpetually renewal.
- To qualify as a lease the tenant must be granted exclusive possession of the land for a definite period
- Leases can be classified into reversionary lease, lease at will and periodic tenancy
- Leases are created by an agreement for a lease or express grant.
- A written lease exceeding 3 years confers an equitable term pursuant to the doctrine of Walsh v Lonsdale provided it is evidenced by sufficient memorandum
- The effect of Walsh v Lonsdale is that agreement for a lease is as good as a lease
- Lease are determinable either by effluxion of time, surrender of the lease, merger of the lease and the reversionary interest in the same person or service of a valid notice to quit on the tenant or lessee
TUTOR MARKED ASSIGNMENT
- The effect of the decision in Walsh v Lonsdale is that agreement for a lease is as good as a lease. Do you agree?
- Discuss the various modes of terminating a lease
SUGGESTED FURTHER READING /REFERENCES
NIKI TOBI cases and materials on Nigerian Land Law (Lagos: Mabrochi book 2007)
Emeka Chianu Law of Landlord and Tenant, cases and comments 2nd Edn,(Benin City: Nigeria Printer Publication, 2006)