Legal Aspects of Rent and Leasehold Transactions

This set of flashcards covers the definition of rent, types of rent (Rack, Ground, Premium), statutory regulations, rent review clauses, and legal precedents in leasehold transactions.

How is 'rent' defined in the context of tenancy?

Rent is the consideration paid by the tenants to the landlord.

Is rent a compulsory requirement in leasehold transactions?

No, rent is not a compulsory requirement in a leasehold transaction.

What case and statutory provision establish that rent is not compulsory in leaseholds?

The case of OSHO versus Foreign Finance Corporation and Section $2$ of the Property and Conveyancing Law.

What is Rack Rent?

Rack rent is rent paid in consideration of the property, also called economic rent, and is based on the full value of the property.

What is Ground Rent?

Ground rent is rent payable on bare land without considering the development of the property, usually paid to the state government.

Under what statutory provision is Ground Rent brought?

Section $5$ of the Land Use Act.

What is a 'Premium' in a leasehold context?

A premium is a lump sum paid in consideration for a reduced rent; it is also called a 'fine'.

What are the three main reasons why a premium is usually discouraged?

Statutory provisions, inflation (landlord ceases to benefit as time goes on), and tax payment implications.

How is rent collected in advance for more than $5$ years treated for tax purposes?

It is taxed as income under Section $3$ of the Property and Personal Income Tax Act.

Which law prohibits the payment of rent in excess of $1$ year from a tenant in Lagos?

Section $4$ of the Tenancy Laws of Lagos State $2011$.

What is the primary purpose of a rent review clause?

To allow the landlord to obtain the most value of his property and maximize profit and returns on investment.

List the factors discussed that should be considered when fixing rent.

Condition of the property, location of the property, available amenities, statutory provisions, use of the property, inflation, and tax implications.

What four elements must a rent review clause include?

($1$) Method of initiating the review (e.g., notice in writing), ($2$) time frame of the review, ($3$) method of calculating new rent, and ($4$) procedure for resolving disputes (e.g., ADR).

Where in a lease agreement might a rent review clause be inserted?

It may be inserted in the redendum or the redendum may refer to it in a schedule.

Why is a rent clause important in an agreement?

It acknowledges the tenancy relationship, ascertains rent payable method/period, and aids enforcement of parties' rights.

What information must be included in a rent clause?

The amount of rent due, the date of payment, and the period covered by the rent paid.

What is the sample draft language for a rent clause provided in the notes?

'Yielding or paying yearly rent of [dash] naira in advance. The said sum haven’t been paid before the execution of this lease.'

What is the legal assumption regarding the timing of rent payment if it is not expressly stated as being paid in advance?

It is assumed in law to be paid in arrears.

Which case establishes that rent is assumed to be paid in arrears if not stated otherwise?

GB Olivant versus Alakija.