Grasping how land lease agreements work can be tasking. Are you a landowner? Are you looking into leasing land in the future? You need to understand how a land lease works. This article contains an overview of the key things you should know about land leases in Nigeria.

What is a Lease?

A lease is a contractual agreement between two parties: the lessor (owner) and the lessee. The lessor grants the lessee exclusive rights to possess a specific asset, a vehicle, equipment, land, or household appliances, over an agreed period and conditions, in return for specified periodic rental or lease payments.

What Is A Land Lease?

A land lease in Nigeria refers to leasing a plot of land for a long-term period to a tenant who builds on that property for a purpose. According to Section 1 of the Land Use Act of 1978, the law vests the ownership of all land in the country to the State Government and that power is held by the Governor. Under the Act, the nature of interests in real property is leasehold for terms not exceeding 99 years. This means the buyers can only lease land and they apply for a renewal after the lease expires. The two parties sign a land lease agreement to seal the transaction.

What Is a Land Lease Agreement?

The land lease agreement is a contract that allows a landowner (landlord) to rent their land to another person or company (tenant). The tenant may use the land for multiple uses ranging from agricultural to residential or commercial purposes. This agreement outlines all contractual duties and regulations. Subsequently, the lessee remits rent to the landlord periodically. Failure to fulfill rent obligations grants the landowner the authority to evict the lessee.

A land lease should include the following important things:

• Rights of the landlord
• Rights of the tenant
• Financing conditions
• Fees
• Default conditions
• Title insurance
• Use provisions
• Terms of the lease

What Is The Length Of a Lease in Nigeria?

Usually, there are no limits to the length of the term that parties can agree and fix for a commercial lease if the grant does not exceed the term that the landlord holds under the head lease. A landlord can, therefore, lease the entirety of the term held under its proprietary title deed or for a lesser period of one year or even months, subject to the conditions and covenants agreed by the parties and provisions of the head lease. Under the Land Use Act which covers the whole of Nigeria, the law does not differentiate between a Commercial, Residential, or Mixed Development Lease. The nature of interests in real property after 1978 is leasehold for terms not exceeding 99 years.

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