Rent Increase Palava: Million Naira Question Landlords and Tenants Must Answer-Expert

CAN A LANDLORD INCREASE RENT WITHOUT CONSENT Of HIS TENANT? BY SINA OLOWOOKERE

Often, landlords unilaterally (without consulting tenants) increase rent and thereafter send “Notice of Rent Increment” to tenants. Such landlords consider tenants as inferior parties and as such, they (the landlords) do not need their (tenants) consent to increase rent. Tenants are dismissed by landlords with comments like; “… if he cannot pay, let him pack out….”, or, “… it is my house and I decide how much to charge as rent.”

Well, are you one of such landlords? If you are, you will do well by considering and pondering on  these pronouncements by some learned Justices of the Court of Appeal on the issue:

“The issue of rent between the landlord and tenant is a matter of agreement. The Agreement may be express or implied. The relationship between them too is a contractual one. And being a matter of contract its term cannot be altered by either party without the agreement of the other. See Udih v. Izedonmwem (supra). Unless the landlord and the tenant are ad idem a landlord’s unilateral decision to increase the amount of rent payable will be ineffective. A unilateral increase of rent is an offer or a proposal made by the landlord. Where as in this case the tenant refuses to pay the landlord the proposed rent, it is left for the landlord who stands to gain where the new rent is accepted by the tenant, to promptly take necessary steps as required by law to terminate the tenancy. Appellant’s (Tenant’s) refusal to pay increased rent is not in anyway tantamount to an obligation to pay the increased rent. Consequently where there is no agreement on an increase in rent the status quo ought to be maintained and this means that the agreed rent should therefore subsist. See Are v. Ipaye (1990) 2 NWLR (Pt. 132) P.298 at 313 G-H; Mba- Ezev-Okufo (1990) 2 NWLR (Pt.135) P.787 at 795 F-G.”Per GALADIMA ,J.S.C ( Pp. 18-20, para. B). Quotation is from the case of COBRA LTD & ORS v. OMOLE ESTATES & INVESTMENT LTD (2000) LPELR-6809(CA)

“… I am of the humble view that the matter of rent increment must be supported by an agreement to that effect. The landlord-tenant relationship and issue of rent payable by a tenant to a landlord being one of a contract, the landlord cannot unilaterally alter the terms of the agreement, to increase the rent. In Cobra Ltd vs. Omole Estate and Investment Ltd (2000) 1 NWLR (Pt. 655) 1, this Court per Galadima JCA (as he then was) following the decision in Udih vs. Izedonmwen (1990) 2 NWLR (Pt. 132) 357 at 366 has held that unless the landlord and the tenant are ad idem a landlord’s unilateral decision to increase the amount of rent payable is ineffective.” Per, AMINA AUDI WAMBAI ,J.C.A ( Pp. 35-36, paras. E-A ) Quotation is from the case of JOVINCO NIGERIA LTD & ANOR v. IBEOZIMAKO (2014) LPELR-23599(CA)

In summary, a landlord must consult with his tenant in seeking to increase rent unless there is an earlier agreement between both parties, authorizing the landlord to increase rent without the input/consent of his tenant. Where a tenant does not vacate a property after a unilateral increase of rent by landlord, a continued stay on the property by the tenant is not an acceptance of the unilaterally increased rent. A landlord should seek the consent of his tenant before increasing rent and where such is denied, the landlord can continue with the normal agreed rent or seek to legally evict the tenant in order to engage new and willing tenants. Simply, rent being part of tenancy agreement, cannot be forced on a tenant but must be agreed on by both landlord and tenant at all times.

Most times, landlords and their agents (quacks) think that tenants are subservient to them in the business of ‘rental investment’. One often convinces clients that the tenancy arrangements albeit landlord and tenant matters as a whole as concerned all elements one may think of without exception are simply contractual.

No one is superior to the other except in the matter of possession or reversion.

Otherwise they should sort things out as partners in progress at all times as far as the object of contract is concerned.

 These are the technical/professional thoughts in landlord /tenant relationships

As indicated in the analysis, unless it’s expressly stated that the landlord can unilaterally review the rent, such may be declared ultra vires and not enforceable.

I think the lease/tenancy agreement usually contains rent review clause within a specified period. It’s expected that negotiations for the exercise (rent review) would precede  final conclusion. After offer and counter offer…

The following clauses must always be in your terms and conditions of the tenancy agreement

1. Amount of rent payable yearly in figure and word’s

2. Review or revision  clause usually 3 or 4 years interval.

3. Percentage of the agreed rent to be  added on when revising the rent. 20, 25, 30 or 35% of the current rent. It is pertinent that 20 and 25% go with 3yeara revision while 30 and 35% go with 4years.

4. However,each tenancy period requires a fresh agreement. It is good to do so and to be more inclusive with specific clause such as *lease* rather than *tenancy* .

For instance, lease expires by effluxion of time while tenancy run year after years until determined by appropriate notices.

(By definition, effluxion of time is : Effluxion of time is the expiration of a lease term due to a natural passing of time rather than from a specific action or event. This phrase can also be used to indicate the conclusion or expiration of an agreement in simple writing when the conclusion or expiration occurs through a natural course of events.(www.law.cornell.edu/wex/effluxion_of_time) )

5. Again and in the lease agreement, it is better to grant a lease for a term certain like 3 years with a clause to surrender possession and that failure to do so will only require a 7 days notice which shall be conclusive.

In the new tenancy law of Lagos State, terms and conditions of a lease or tenancy agreements are followed to the letter and where there is no agreement,the position of law in the tenancy laws take precedent or is followed.

In the same tenancy law, two notices is required before assistance of court is sought.

Where lease agreement specify that lease is for a term certain and possession in case of failure only requires 7 days notice,such notice is recognised and a second notice will only requires another 7 days.

In this case or situation,it may not be mandatory to give 6 months notice before approaching court for assistance.

Above all, proper scrutiny of tenants before handing over of keys to tenant is most important as it makes management of tenant and the property easier.

It is also instructive to add that,the use of text message or social media to chat with tenants may need to be avoided as in few cases may be used against the landlord especially after quit notice had been issued,it is not too good to demand rent again via text for an instance.

But what happens where both parties don’t agree? The contract stands terminated. The tenant vacates after statutory notice, and the landlord is free to take new tenant (s) on fresh terms.

1. The Court of Appeal’s judgement in the case of JOVINCO NIGERIA LTD & ANOR v. IBEOZIMAKO (2014) LPELR-23599(CA)

2. The Court of Appeal’s judgement in the case of COBRA LTD & ORS v. OMOLE ESTATES & INVESTMENT LTD (2000) LPELR-6809(CA) or Cobra Ltd vs. Omole Estate and Investment Ltd (2000) 1 NWLR (Pt. 655) 1.

Happy new year, distinguished ladies and gentlemen.