What Happens To Tenants When Property Is Sold?

What Happens To Tenants When Property Is Sold? Daily Law Tips (Tip 749) by Onyekachi Umah, Esq., LL.M, ACIArb(UK)

Introduction:

There is always a panic in a rented property, once the landlord desires to sell the property. Most tenants in such circumstances, are not sure if their tenancy agreements will be terminated by the new purchasers/owners. Increase in rent; many tenants fear that the new owner may increase their rent. Also, some tenants pray that the new owner doesn’t just evict all existing tenants on the property. By the way, many purchasers of property with existing tenants, often force out existing tenants (by fraud and force), on the claims that they wish to renovate the property and without any compensation to the existing tenants. This work will reveals what should happens to tenants when a property is sold in line with the laws of Nigeria.

New Property Owner & Exiting Tenants:

Aside logic and moral, the most important tool in solving legal equations is LAW. Law here covers the written laws made by the legislature and the case laws made by courts in Nigeria through judgments of courts. So, to resolve this legal puzzle, “What Happens To Tenants When Property Is Sold?”, the judgments of the appellate courts in Nigeria will be considered.

The Court of Appeal has held that nothing happens to tenants when a property is sold. Tenants rights and powers are never affected by sell and purchase of their property. The contents of a tenancy agreement binds the landlord and any new purchaser and as such sell of property does not affect a tenant and his tenancy agreement.

Here are the actual words of the Court of Appeal;  “… the covenants therein (in a tenancy agreement) are binding not only on the landlord and tenant but also (any) person whom the property subsequently passes thereto. Undoubtedly, the terms ‘Landlord’ and ‘Tenant’ as couched in the tenancy agreement in question include ‘the successors-in-title and assigns’ of both the landlord and tenant, respectively.” SAULAWA, J.C.A in the case of Chaka v. Messrs. Aerobell (Nig.) Ltd. (2012) 12 N.WL.R. (Pt. 1314) p. 296 @ 320 CA.

This simply means that the moment a landlord sells his property, the new owner of the property takes over the property with the assets and liabilities in it, including the tenants in it. So, the tenancy agreements between a tenant and his landlord, will automatically be deemed to have been inherited by the new purchaser/owner of the property. Hence, the new owner of a property is bound by the existing tenancy agreements and relationships between tenants on the property and the former owner of the property. The new owner does not need to sign the existing tenancy agreement or be mentioned in it for the new owner to be bound. Rather, the new owner replaces the landlord in the tenancy agreement without any party, the moment the property is sold to the new owner.

Conclusion:

A tenancy agreement like most commercial contracts binds the parties to the agreement and any other person that may take over the place of any of the parties. So, a tenancy agreement binds a landlord and a tenant as well as all other persons that may takeover, inherit, purchase or step into the shoes of the landlord or tenant. So, a new purchaser of a property is bound by the tenancy agreement between tenants on the purchased property and the former landlord/seller. Such a new purchaser cannot terminate tenancy agreements, pursue away tenants or increase rent unless in line with the existing tenancy agreement between existing tenants and the former landlord.

Prospective purchasers of property are advised to always understand the agreement between sellers/landlords and their tenants, ahead of purchasing a property, because they most inherit and continue with such agreements. However, upon the expiration of an existing tenancy agreement, the new purchaser/landlord can then make a fresh tenancy agreement with the existing tenants.

My authorities, are:

1. Sections 1, 2, 3, 4, 5 and 6 of the Constitution of the Federal Republic of Nigeria, 1999.
2. Sections 1, 2, 4, 6, 7, 8, 9, 10, 13, 19 and 20 of the Recovery of Premises Act 1945, Laws of the Federation of Nigeria (ABUJA) and other similar tenancy laws across the states in Nigeria.
3. Judgment of the Court of Appeal in the case of Chaka v. Messrs. Aerobell (Nig.) Ltd. (2012) 12 N.WL.R. (Pt. 1314) pg. 296 at 320 CA.
4. Onyekachi Umah, “Punishments For Landlords and Tenants In Nigeria” (LearnNigerianLaws.com, 1 February 2021) <https://sabilaw.org/punishments-for-landlords-and-tenants-in-nigeria/> accessed 4 March 2021
5. Onyekachi Umah, “Why Tenant Should Accept Letters & Notices From Landlord” (LearnNigerianLaws.com, 20 January 2021) <https://sabilaw.org/why-tenant-should-accept-letters-notices-from-landlord/> accessed 31 January 2021.
6. Onyekachi Umah, “Tenants & Squatters Can Sue Landlords For Violation of Human Rights” (LearnNigerianaws.com, 18 September 2020) <https://sabilaw.org/tenants-squatters-can-sue-landlords-for-violation-of-human-rights/> accessed 19 January 2021.
7. Onyekachi Umah, “Should Landlord Stop Rent-Owing Tenants from Moving Out?” (LearnNigerianLaws.com, 26 August 2020) <https://sabilaw.org/should-landlord-stop-rent-owing-tenants-from-moving-out/> accessed 19 January 2021.
8. Onyekachi Umah, “Covid-19 and Landlords: Can Government Force Landlords not to Eject Tenants?” (LearnNigerianLaws.com, 15 April 2020) <https://sabilaw.org/covid-19-and-landlords-can-government-force-landlords-not-to-eject-tenants-daily-law-tips-tip-548-by-onyekachi-umah-esq-llm-aciarbuk/> accessed 19 January 2021.
9. Onyekachi Umah, “House Rent and COVID-19: Can Landlords Evict Tenants?” (LearnNigerianLaws.com, 7 April 2020) <https://sabilaw.org/house-rent-and-covid-19-can-landlords-evict-tenants-daily-law-tips-tip-542-by-onyekachi-umah-esq-llm-aciarbuk/> accessed 19 January 2021.
10. Onyekachi Umah, “Landlords Are Entitled To Rent Sum Even Where Notices To Quit Are Served On Tenants“ (LearnNigerianLaws.com, 23 October 2018) <https://sabilaw.org/daily-law-tips-by-onyekachi-umah-esq-tip-211-landlords-are-entitled-to-rent-sum-even-where-notices-to-quit-are-served-on-tenants/> accessed 19 January 2021.
11. Onyekachi Umah, “Rights of Tenants and Landlords in Nigeria” (LearnNigerianLaws.com, 2 September 2018) <https://sabilaw.org/rights-of-landlords-and-tenants-in-nigeria/> accessed 19 January 2021.
12. Onyekachi Umah, ““After A Property Occupied By Tenants Is Sold, Who Should Such Tenants Hold Responsibile?” (LearnNigerianLaws.com, 16 July 2018) <https://sabilaw.org/daily-law-tips-by-onyekachi-umah-esq-tip-142-after-a-property-occupied-by-tenants-is-sold-who-should-such-tenants-hold-responsibile/> accessed 19 January 2021
13. Onyekachi Umah, “Estate Surveyors and Valuers Cannot Prepare Tenancy/Land Documents” (LearnNigerianLaws.com, 30 November 2020) <https://sabilaw.org/estate-surveyors-and-valuers-cannot-prepare-tenancy-land-documents/> accessed 19 January 2021.
14. Onyekachi Umah, “How To Prove Payment of Rent and Who Must Prove It.” (LearnNigerianLaws.com, 1 October 2020) <https://sabilaw.org/how-to-prove-payment-of-rent-and-who-must-prove-it/> accessed 19 January 2021.
15. Onyekachi Umah, “Can a Landlord Increase Rent During Economic Hardship?” (LearnNigerianLaws.com, 8 September 2020) <https://sabilaw.org/can-a-landlord-increase-rent-during-economic-hardship/> accessed 19 January 2021.
16. Onyekachi Umah, “Should a Landlord Remove Roof of a Tenant For Failure to Pay Rent/Pack out?” (LearnNigerianLaws.com, 3 August 2020) <https://sabilaw.org/should-a-landlord-remove-roof-of-a-tenant-for-failure-to-pay-rent-pack-out-daily-law-tips-tip-624-by-onyekachi-umah-esq-ll-m-aciarbuk/> accessed 19 January 2021
17. Onyekachi Umah, “Should a Landlord Lock Gates/Doors of a Tenant for Failure to Pay Rent/Pack Out ?” (LearnNigerianLaws.com, 29 July 2020) <https://sabilaw.org/should-a-landlord-lock-gates-doors-of-a-tenant-for-failure-to-pay-rent-pack-out-daily-law-tips-tip-620-by-onyekachi-umah-esq-ll-m-aciarbuk/> accessed 19 January 2021.
18. Onyekachi Umah, “Should a Landlord Cut-off Tenant from Water/Electricity Supply for Failure to Pay Rent/Pack Out?” (LearnNigerianLaws.com, 17 July 2020)  <https://sabilaw.org/should-a-landlord-cut-off-tenant-from-water-electricity-supply-for-failure-to-pay-rent-pack-out-daily-law-tips-tip-612-by-onyekachi-umah-esq-ll-m-aciarbuk/> accessed 19 January 2021.
19. Onyekachi Umah, “Can a Landlord Increase Rent Without Consent of his Tenant?” (LearnNigerianLaws.com, 9 June 2020) <https://sabilaw.org/can-a-landlord-increase-rent-without-consent-of-his-tenant-daily-law-tips-tip-585-by-onyekachi-umah-esq-llm-aciarbuk/> accessed 19 January 2021.
20. Onyekachi Umah, “How To Legally Make Landlord Pay Back Or Deduct From Rent, Money Spent On His Property By Tenant” (LearnNigerianLaws.com, 9 November 2019) <https://sabilaw.org/how-to-legally-make-landlord-pay-back-or-deduct-from-rent-money-spent-on-his-property-by-tenant-daily-law-tips-tip-454-by-onyekachi-umah-esq-llm-aciarb-uk/> accessed 19 January 2021.
21. Onyekachi Umah, “The Making of a Hybrid Tenancy/Lease Agreement; a Guide for Lawyers and Landlords in Nigeria.” (LearnNigerianLaws.com, 6 July 2019) <https://sabilaw.org/the-making-of-a-hybrid-tenancy-lease-agreement-a-guide-for-lawyers-and-landlords-in-nigeria/> accessed 19 January 2021.
22. Onyekachi Umah, “Effect Of A Notice To Quit In Nigeria.” (LearnNigerianLaws.com, 3 August 2018) <https://sabilaw.org/daily-law-tips-by-onyekachi-umah-esq-tip-156-effect-of-a-notice-to-quit-in-nigeria/> accessed 19 January 2021.
23. Onyekachi Umah, “Rights of a Tenant In Nigeria.” (LearnNigerianLaws.com, 11 March 2016) <https://sabilaw.org/rights-of-a-tenant/> accessed 19 January 2021.
24. Onyekachi Umah, “Rights of a Landlord In Nigeria” (LearnNigerianLaws.com, 11 March 2016) <https://sabilaw.org/rights-of-a-landlord/> accessed 19 January 2021.

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