15 EVENTS THAT CAN TERMINATE A LEASE/TENANCY CONTRACT

Today, I will be writing on the various events that can lead to termination of a lease or tenancy contract in relation to land and property leasing as an aspect of estate agency practice.

Three things prompted me to write this particular post and they are; 

(1)   To assist all those aspiring to sit for and/or write the Nigerian Institution of Estate Surveyors and Valuers’ Professional Qualifying Examination stage 3 (PQE 3), as well as all students of estate management study and those practicing in the real estate and surveying profession.

(2)   To also enlighten and broaden the knowledge/understanding of everybody that has a particular relationship with land and landed properties either as a property owner/investor or tenant/occupant.

(3)    Most importantly, I want to reveal to tenanted occupants as well as landlords/property owners alike, the various ways by which a particular lease/tenancy contract can be terminated other than the usual and/or normal eviction notices which is always served on the occupant of such leased property whenever the lease/tenancy contract is to be terminated.

Before I continue with the write-up, let me briefly explain to you the meaning and distinction between a lease contract and tenancy contract as it relates to estate surveying and valuation practice in Nigeria even though they are both used interchangeably in the profession. 

Lease contract refers to the legal agreement whereby an owner – Lessor - of a property permits somebody else – Lessee – to use his/her property for a particular purpose and for a definite/stipulated period under certain terms and conditions as agreed by both parties in a lease agreement. 

Preparation of a lease contract/agreement between the lessor (Property owner/landlord) and lessee (tenant/occupant) is usually done by lawyers to the parties involved in the lease transaction as there are some legal terms in the lease document as well as general duties/obligations that will need to be explained to all the parties to the lease contact in other to guide and protect their interests during the lease period.

The length of a lease contract in relation to land and landed properties’ leasing transaction is usually from 3 years upwards.

Tenancy contract on its own part is described to mean the exclusive possession of occupation which a person – usually referred to as a tenant – enjoys on another person’s – landlord – property (residential or commercial property) based on an agreed rent paid to the landlord. 

Tenancy contract/agreement which spells out the duties and obligations of the tenant and landlord during the tenancy period can be prepared by the professional estate agent employed by the landlord/property owner of the tenanted property. 

In preparing the tenancy agreement/contract, the professional estate agent engaged by the property owner/landlord will partner with the legal department of his/her estate surveying and valuation firm in drafting such tenancy agreement/contract for the tenant and landlord.

The length of a tenancy contract in relation to land and property leasing ranges between 1year and 2years.

The following 15 circumstances are events that can terminate a lease and/or tenancy contract:

1.      Expiration of Lease or Tenancy Contract: A lease or tenancy contract can be terminated after the expiration of the lease/tenancy period and whereby the lessee/occupant of the leased/tenanted property decides not to renew his/her lease/tenancy with the property owner/lessor.

There are so many reasons why a lessee/tenant may not want to renew their tenancy/lease contract after its expiration, some of which they may voluntarily or involuntarily explain to the property owner/lessor.

Where this kind of event arises, the lease/tenancy contract between the property owner/lessor and the tenant/occupant expressly comes to an end.

2.      Surrender and Acceptance of Existing Lease/Tenancy Contract: Another circumstance that can terminate a lease/tenancy contract is a situation whereby the tenant/lessee surrenders (give up) his/her existing lease/tenancy yet to be expired to the landlord/lessor and the landlord/lessor upon receiving such notice accepts it from the tenant/lessee.

In this particular event, I want you to know that the tenant/lessee in question still has an unexpired lease/tenancy term on the leased/tenanted property but goes ahead to surrender his/her existing lease/tenancy contract with the landlord/lessor who in turn also accepts it.

The lease/tenancy contract will automatically come to an end once the landlord/lessor accepts the written notice of the tenant/lessee to surrender his/her existing lease/tenant contract.

3.      Breach of Lease/Tenancy Conditions/Terms: In the course of preparing a lease/tenancy agreement/contract, there are some certain duties and obligations to be observed and adhered to by both the landlord/lessor and tenant/lessee during the period of the lease/tenancy contract. A breach of any of these lease/tenancy agreement conditions on either part of the landlord/lessor or tenant/lessee may warrant the lease/tenancy contract been terminated.

This is why it is always important for both landlord/lessor and tenant/lessee in any lease/tenancy contractual relationship to always observe their obligations which serves as a condition for the lease/tenancy relationship they enjoys if they don’t want such to be terminated.

4.      Actual Eviction of Lessee/Tenant From The Leased/Tenanted Property: Another major event that can terminate a lease/tenancy contract between a landlord/lessor and tenant/lessee is actual eviction of the lessee/tenant from the leased/tenanted property.

Actual eviction of a lessee/tenant from a leased/tenanted property plays a critical role in terminating a lease/tenancy contract and one of the major reason for this, is that just mere serving of a Notice to Quit to a lessee/tenant on a leased/tenanted property may not in some cases be enough to terminate a lease/tenancy contract most especially when such lessee/tenant is a recalcitrant person.

A recalcitrant lessee/tenant served a Notice to Quit may still be occupying the leased/tenanted property for some months or even years after such notice to quit has been served on him/her and this act will make his/her lease/tenancy contract to still be running even without paying any form of rent until after such a tenant is finally evicted through a court order or other lawful means that the lease/tenancy contract will cease to exist.

5.      Destruction of The Leased/Tenanted Property: There are series of destructive events that can terminate a lease/tenancy contract between a landlord/lessor and tenant/lessee.

Some of these destructive events are; Fire Outbreak, Acts of war, Building collapse, and Force Majeure (landslide, ocean surge, earthquake, flooding, hurricane etc). A leased/tenanted contract will be terminated in a situation where any of these destructive events takes place.

While some of these destructive events are manmade, others may be uncontrollable by

human effort.

6.      Foreclosure of The Leased/Tenanted Property Through Mortgage: Another circumstance which can terminate a lease/tenancy contract between a landlord/lessor and tenant/lessee is a situation whereby the landlord/lessor used the leased/tenanted property as a collateral/instrument to secure a loan for mortgage purpose from a mortgage institution but defaults in paying back the loan at the stipulated period thereby forfeiting the leased/tenanted property to the mortgage institution through foreclosure.

Whenever a leased/tenanted property is foreclosed due to non-payment of loan received from a mortgage institution by the landlord/lessor who has used the subject property as collateral for a loan advancement, the lease/tenancy contract currently existing between him/herself and the tenant/lessee will be terminated because the mortgage institution will want to take possession of the leased/tenanted property used as collateral to secure the loan advancement through foreclosure.

7.      Frustration of Lessee/Tenant By The Landlord/Lessor: This is another situation where a lease/tenancy contract can be terminated. It may be a situation where the landlord/lessor tries everything possibly legal or not to evict the tenant/lessee without any success.

The landlord/lessor may then embark on different kinds of acts either to the tenant/lessee or on the leased/tenanted property so as to frustrate the tenant/lessee in quitting the leased/tenanted property.

Acts of frustration in other to terminate a lease/tenancy contract is in most scenarios usually carried out or embarked upon by the landlord/lessor who wants to forcefully evict the tenant/lessee because he/she wants to terminate the lease/tenancy contract between them.

8.      Notice To Quit: This is one of the most easiest scenario to terminate a lease/tenancy contract. It involves the landlord/lessor of the leased property writing a Notice To Quit to the tenant/lessee occupying the leased/tenanted property.

The notice to quit letter is usually written to the tenant/lessee some months prior to the expiration of the existing lease/tenancy contract by the professional estate agent/property manager to the landlord/lessor who has been given such instruction by the landlord/lessor.

The contents of the notice to quit letter will indicate the stipulated time frame which the tenant/lessee should give up possession of the leased/tenanted property after the expiration of the lease term or tenancy period, as well as the reasons why the tenant/lessee should quit the tenanted/leased property after its expiration.

The lease/tenancy contract will eventually be terminated the moment the tenant/lessee vacates the leased/tenanted property after the stipulated time frame given to do so in the notice to quit letter.

9.      Surrender And Renewal Of Existing Lease/Tenancy Contract: This is another scenario that can terminate a lease/tenancy contract between a landlord/lessor and tenant/lessee. It involves the tenant/lessee on the leased/tenanted property surrendering his/her unexpired lease term (unused years) to the landlord/lessor in other to immediately renew such lease/tenancy contract for a new one.

This refers to the situation whereby a tenant/lessee on a leased/tenanted property gives up his/her remaining lease term through termination of the existing lease/tenancy contract with the landlord/lessor and at the same time creating a new lease/tenancy contract on the same leased/tenanted property with the landlord but on improved terms and conditions.

Unlike surrender and acceptance of existing lease to terminate a lease/tenancy contract, surrender and renewal of existing lease/tenancy contract is instigated by the tenant/lessee to the landlord/lessor who is not under compulsion or force to accept the surrender notice and also grants a new lease/tenancy contractual agreement on improved terms and conditions with the lessee/tenant.

10.  Compulsory Acquisition of The Leased/Tenanted Property By Government: Government do acquire different classes of land and landed properties for various purposes which will be of great benefit to the generality of the citizens. If during the course of carrying out a compulsory acquisition exercise, some certain leased/tenanted properties are affected, the consequence of this is that the lease/tenancy contract between the landlord/lessor and tenant/lessee will be terminated.

The landlord/lessor of the leased/tenanted property may be compensated by government before, during or after completion of the compulsory acquisition exercise but this will not have any changes to the terminated lease/tenancy contract.

11.  Court Order:  This is another event that can terminate a lease/tenancy contract between a landlord/lessor and tenant/lessee.

In the case of a land dispute between two or more parties laying claims to the true ownership of a particular lot/portion of land where a leased/tenanted property is lying and situates.

If the party with whom the court grants its ruling in his/her favour is not the landlord/lessor of the leased/tenanted property, then the lease/tenancy contract will be terminated as the court will grant an order of possession to the party who won the case in court to take over the leased/tenanted property.

12.  Breach of Statutory Building Codes And Property Laws: This is another event that can terminate a lease/tenancy contract. It arises when a leased/tenanted property falls short of various applicable building codes and property laws as been stipulated and spelt out by the government and/or its agencies.

Action that can be taken by government or its agencies as a form of punishment may be to seal up the leased/tenanted property thereby terminating the lease/tenancy contact been enjoyed by the landlord/lessor and tenant/lessee.

13.  Renovation And Improvement Works: A lease/tenancy contract can be terminated when there is the need to carry out renovation and improvement woks on the leased/tenanted property by the landlord/lessor.

Think of a situation where the landlord/lessor of a leased/tenanted tenement property (Face Me; I Face You) decides to carry out renovation and improvement works on the said tenement property by converting same to units of mini-flats or two bedroom apartments.

When the event occurs, lease/tenancy contract currently enjoyed by tenant/lessee from the landlord/lessor will seize to continue.

14.  Property Demolition: Under this circumstance, there are so many ways which lease/tenancy contracts can be terminated.

Property demolition exercise for infrastructural development programmes that is been embarked upon by the various tiers of government can terminate lease/tenancy contracts.

15.  Total Wear And Tear (Obsolescence): Events which results in total wear and tear of a building components and its physical appearance can also terminate a lease/tenancy contract between the landlord/lessor and tenant/lessee occupying the leased/tenanted property.

The act of total obsolescence resulting in adverse wear and tear of a leased/tenanted property will terminate the lease/tenancy contract been enjoyed as the property becomes inhabitable for people.

A perfect example of this particular scenario is some residential properties (Jakande estate-type buildings) around Adeniji Adele area of Lagos Island, Lagos state which are totally obsolete and not suitable for human habitation again due to adverse effect of total wear and tear on them.

Hope I have been able to do meaningful justification to those reasons I said prompted me in writing this post.

Kindly drop your comments in the box below!

ABOUT THE AUTHOR

Adeniyi Akinjiyan is a Higher National Diploma (HND) holder of Estate Management from the prestigious Yaba College of Technology, Yaba, Lagos state, Nigeria. He possesses a Professional Practice Certificate in Estate Surveying and Valuation from the Nigerian Institution of Estate Surveyors and Valuers (NIESV).

He is the principal consultant of Aakient Consultants Ltd, a highly progressive and consolidated property and construction project management company, which is committed to providing the highest level of professional services in meeting clients’ real estate needs.

Feel free to contact him at: aakientconsultants@gmail.com