What lease means
A lease hands over possession, not just permission.
When a landlord grants a lease, the tenant gets the right to exclude everybody from the property for the length of the term, including the landlord, subject to whatever rights of entry the lease reserves. That is what makes it an interest in the land rather than a service.
Three things define it. A defined property. A defined term with a beginning and an end. And rent, or some other consideration.
The word is used loosely in Nigeria, and lease, tenancy and rent agreement are often treated as interchangeable. In strict usage a lease is the longer arrangement, typically years rather than months, and it is usually the document you will find for commercial premises, for land taken for development and for a right of occupancy granted by a state.
How it is used
You meet leases in commercial property more than anywhere else. A shop in a plaza, an office floor, a warehouse, a filling station site, farmland taken for a season, a billboard position.
A lease worth having deals with more than rent. It should set out the term and any renewal option, the rent and how and when it is reviewed, what the premises may be used for, who repairs what, whether the tenant may alter the property, whether subletting or assignment is allowed, the service charge and what it covers, insurance, and what happens on default.
Stamping and registration matter for longer leases. A lease of three years or more generally needs to be registered at the state lands registry to be fully effective against third parties, and stamp duty is assessed on the rent and term. Skipping this is common and it is the reason many Nigerian commercial tenants discover their position is weaker than they assumed.
Key features
- Grants exclusive possession for a fixed term
- Creates an interest in the property, capable of being assigned or sublet if permitted
- Rent, review mechanism and repair obligations are the commercial heart of it
- Longer leases attract stamp duty and generally require registration
- Ends by expiry of the term, by agreed break, by surrender or by forfeiture for breach
- A sublease can be granted out of it, but never for longer than the head lease
How this works in Nigeria
The Land Use Act shapes everything. The state holds land, and what a private party actually holds is a right of occupancy, so a long lease is in practice a grant carved out of that right. Where a lease is long enough to amount to an alienation of the right of occupancy, the Governor's consent is required, and a lease granted without it can be attacked.
Rent practice is also distinctly Nigerian. Annual rent paid in advance is normal, and two or three years in advance is common for commercial premises in Lagos, which puts a serious working capital demand on a tenant.
Recovery of premises is governed by state legislation, and Lagos has its own tenancy law with prescribed notice periods depending on the type of tenancy. A landlord who takes matters into their own hands, changing locks or removing a roof, is acting unlawfully however far in arrears the tenant is.
Lease vs tenancy vs licence
The labels are used loosely, but the legal difference is real.
A licence is bare permission to be somewhere. No exclusive possession, no interest in the land, and it can generally be revoked. A desk in a shared workspace is a licence.
A tenancy gives exclusive possession, usually for a shorter and often periodic term, monthly or yearly. Most residential arrangements in Nigeria are tenancies, and the state tenancy laws govern how they are ended.
A lease gives exclusive possession for a longer fixed term, is more likely to be registered, and is the usual form for commercial property and for land taken for development.
The label on the document does not decide which one you have. Courts look at what was actually granted. Give somebody exclusive possession for a term at a rent and you have granted a tenancy or a lease, whatever you called the paper.
Limits and risks
A lease binds you for the term. That is its strength and its risk. A business that signs a five year lease and closes in year two still owes rent for the balance unless the lease provides a break or the landlord agrees to a surrender.
Rent review clauses are where money quietly moves. An upward only review tied to market rent can raise the cost sharply at each review, and tenants who did not read the mechanism find out at the worst moment.
Repair obligations are the other trap. A full repairing obligation can leave a tenant liable for the state of a building they did not damage, and dilapidation claims at the end of a term are a real cost.
And an unregistered long lease is a weak lease. It may still bind the landlord who granted it, but it can fail against a purchaser of the property who had no notice of it.
Worth knowing
Read the rent review and the repair clauses before the rent figure. A tenant who negotiates hard on the headline rent and ignores an upward only review with a full repairing obligation has usually lost more than they saved.
Questions people ask
What is the difference between a lease and a tenancy?
Both give exclusive possession. A lease is typically the longer fixed term arrangement, often used for commercial property and more likely to be registered. A tenancy is usually shorter or periodic, and most residential arrangements in Nigeria are tenancies.
What is the difference between a lease and a licence?
A lease grants exclusive possession and creates an interest in the property. A licence is only permission to be there, gives no exclusive possession, and can generally be revoked. Courts look at what was actually granted rather than the title on the document.
Does a lease need to be registered in Nigeria?
Leases of three years or more generally need to be stamped and registered at the state lands registry to be fully effective against third parties. An unregistered long lease can fail against a later purchaser of the property.
Do I need Governor's consent for a lease?
Where the lease amounts to an alienation of the right of occupancy under the Land Use Act, yes. Longer leases in particular should be checked, because a lease granted without the required consent can be challenged.
Can a tenant sublet under a lease?
Only if the lease allows it, and many require the landlord's written consent first. Subletting without permission is a breach and can give the landlord grounds to forfeit the lease.
What happens when a lease expires?
Possession returns to the landlord unless the lease is renewed or a new one is granted. Where a tenant stays on and the landlord accepts rent, a periodic tenancy can arise, so both sides should document what was agreed.