Lagos State Tenancy Law 2011: Five years on
That housing is one major problem in Nigeria is not debatable. It is estimated that the country’s housing deficit ranges between 17 and 20 Million. This is one reason why government intervention through the instrumentality of legislation is crucial in regulating those (landlords), who have the wherewithal to build houses and those (tenants), who have to rent to meet this basic need of life. The most recent of such government intervention in this critical sector is the Lagos State Tenancy Law 2011, which came into force on August 24, 2011, after the assent of Mr. Babatunde Raji Fashola (SAN), the then Governor of Lagos State and the current minister of power, works and housing.
The Tenancy Bill, which received Mr. Fashola’s assent was introduced in 2009 after rigorous legislative procedures by the Lagos State House of Assembly and contributions by legal practitioners, the 2009 Bill became what is now referred to as the Tenancy Law 2011. I had the honour of reviewing the 2009 Bill with the erudite Chief Anthony Idigbe (SAN), when same was sent to his Chambers by the Lagos State House of Assembly for contributions. Some of the significant contributions (most of which now form part of the 2011 Law) we made to the Bill will be discussed in the course of this article.
Tenancy law is a very important piece of legislation that needs periodic interventions by government through housing policies and further legislative reviews. Its importance is underscored by the necessity of housing by a fast growing population unable to afford a house of their own; resulting in the growing number of shanties, shacks, slums and ‘under the bridge’ residences visible all around Lagos. How has the Lagos Tenancy Law fared in addressing the challenges and problems associated with housing and tenancies in Nigeria? I believe five (5) years is an adequate period for review and further intervention.
It is pertinent to identify few of the problems and challenges. In identifying the problems, I shall limit myself to the ones the 2011 law intended to solve by discussing the proposals in the 2009 Bill, which culminated into the 2011 law and some of our suggestions which form part of the 2011 law.
The major problem the 2009 Bill sought to address was the outrageous advance rent prevalent before the 2011 law. Landlords used to demand two or more years’ rent in advance from tenants. This brought untold hardship on the tenants. The 2009 Bill, in an attempt to stem the tide, proposed in Section 4(1) and (2) that demanding or receiving rent in excess of three (3) months shall be unlawful. We believed, whilst reviewing the Bill, this rent control proposal may be impracticable in view of the peculiarities of the Nigerian real estate industry and the near non-existent mass housing framework and programme by the three tiers of government. The three months’ proposal would have received lots of cheers from the tenants but that would have discouraged investments in housing from the major drivers (the private sector), who account for over 80 per cent of housing development in Nigeria. The said proposal was similar to what obtains in jurisdictions like South Africa and some other countries where rent payment is monthly or in some cases, a maximum of two months. To strike a balance, we advised the Lagos House of Assembly to make the maximum advance rent three months for a monthly tenant and a year for a yearly tenant. Section 4(1) of the 2011 Law, which now provides maximum advance rents of six (6) months for a monthly tenant and one (1) year for a yearly tenant was drafted in line with our advice. This reform has been widely accepted by the stakeholders and the compliance level is above 70 per cent.
Another rent control device employed in the 2011 law is contained in Section 37 of the Law, which seeks to curb unreasonable increase of rent by landlords. Section 37(1) enables a sitting tenant to apply to court for an Order, declaring that the increase in rent in respect of the tenancy is unreasonable. The factors the court is to consider in reaching a conclusion that rent increase is unreasonable are listed in Section 37(2) as follows: (a) the general level of rents in that locality or a similar locality for comparative analysis (b) evidence of witnesses of both the tenant and the landlord (c) any special circumstances relating to the premises in question or any other relevant matter. This section has not been effective and I am not aware that any case has been successfully resolved based on this section.
A prudent tenant faced with this sort of challenge would rather negotiate with his or her landlord than take benefit of this section, which may strain the relationship between the tenant and the landlord and may further lead to his untimely ejection from the premises. The intervention needed to solve this problem is not law really. The housing deficit must be tackled to promote competition. Competition will prove more effective in achieving the purpose of Section 37. Rents will continue to go up as long as the deficit persists – the demand for housing is far higher than the supply and this means the price will be on the rise. It is basic economic law that legislation cannot control. The governor under whose tenure this law was enacted is coincidentally the minister for housing. It is therefore expected that he will, in conjunction with the state governments and the private sector, formulate a policy framework to solve the problem economically.
Another significant problem the 2009 Bill sought to address was the technical and cumbersome procedure for the recovery of premises. This was made clear in the long title to the 2009 Bill, which provided as follows: “A Bill for a Law to regulate rights and obligations under tenancy agreements and the relationship between landlord and the tenant including the procedure for the recovery of premises and for connected purposes in Lagos State”. Rent control and procedure for recovery of premises have always been the two major problems in tenancy matters. The short titles of the previous laws (Recovery of Premises Law Cap 118 Laws of Lagos State and Rent Control and Recovery of Residential Premises Edict No. 6 of 1997) were indicative of these two problems. There were a myriad of issues associated with recovery of premises. Some of these are issues of jurisdiction, issuance and service of statutory notices, trial procedure and general delay in the disposal of tenancy cases.
An action for recovery of premises could be commenced in the Magistrates’ Court or the High Court. There was no clear guide in the previous laws as to which Court an action should be brought. There was also the distinction between residential and business premises for the purposes of jurisdiction. This led to a lot of forum shopping with its attendant consequences. The proposal of Section 2(3) of the 2009 Bill on jurisdiction reads: “Proceedings may be brought under this Law at the High Court or at the Magistrates’ Court in the division or the Magisterial District in which the subject matter given rise to the proceedings is located”. We noted that this proposal would encourage the forum shopping problem and suggested a redrafting of Section 2(3) to read that: “Proceedings may be brought at the High Court where the total claim of the landlord exceeds the jurisdictional limit of the Magistrates’ Court and to the Magistrates’ Court in other cases.” The territorial limit of Magistrates’ Court in civil matters is presently N10 million as provided by the Magistrates’ Court Law, 2009. Our suggestion was adopted in Section 2(3) of the 2011 Law and this has seriously put paid to the problem of forum shopping but other problems yet persist.
Trial procedure and delay in disposal of tenancy cases is one big problem that still persists. It is important to state that this is not largely due to the inadequacies of the 2011 law but mainly due to poor case management approach by Magistrates and mischievous legal practitioners, who have resisted the innovations in the 2011 law. These legal practitioners’ antics have thrived mainly because of some of the Magistrates, who are rather too technical and have refused to embrace purposive approach to the interpretation of 2011 law. Recovery of premises cases are not supposed to be complex matters that require a long time to dispense justice. The issues are narrow and the interests of the parties (landlord and tenants) are primarily that a landlord requires his premises and the tenant needs time to secure alternative premises. Why such cases more often than not take more than one year to conclude still beats the imagination of serious practitioners and litigants.
One major factor that may account for this is the lack of clear rules of procedure for the recovery of premises. I recall that the 2009 Bill desired a clear set of rules for the recovery of premises and thus proposed in Section 46 that: “The governor may, as required, make regulations for the procedure through which matters relating to the conduct of proceedings shall be carried out” . We saw a future problem with this proposal empowering the governor to make the regulations. The House of Assembly, we believed, made the proposal because the then governor was a lawyer and had the capacity to make such regulations. The section would have become ineffective now that we have an accountant as the governor. We therefore advised the House of Assembly to donate such power to the Chief Judge of the State and our advice was adopted in Section 46 of the 2011 Law. That power, however, is yet to be activated by the Chief Judge for five years now, since the operation of the law despite the urgent requirement of the exercise of the power.
It is unfortunate that the lack of clear rules for the past five years to regulate recovery of premises under the 2011 law has caused so much delay in the disposal of recovery of premises but such intervention by the Chief Judge is not too late. A Chinese proverb says that the best time to plant a tree was 20 years ago but the second best time is now. I, therefore call on the Chief Judge to intervene by way of robust Practice Directions and monitoring of the Magistrates’ handling of these cases, which are said to account for 60 per cent of the cases tried at the Magistrates’ Courts.
Lastly, the reforms we expect in the Practice Directions include: time-limit for the disposal of tenancy cases as is the case with election petition matters. Section 42 of the Magistrates’ Court Law provides a template for the Practice Directions in this regard. Section 42 provides that a Magistrate may adjourn from date of commencement of trial and during the proceedings for a period not exceeding fourteen (14) working days and in uncontested civil cases, not more than two adjournments and not more than four adjournments in contested cases. This provision should be improved upon in the Practice Directions and enforced to the latter. Also, the frontloading system should be made mandatory for both the Claimant and the Defendant. Trial by surprise or ambush should be eliminated. All witnesses should file witness statements and lawyers reduce their arguments to writing. The frontloading system should be extended to the Magistracy in other civil cases. All forms of technicalities should be eliminated.
A landlord’s agent or attorney should be able to file a recovery suit with a mere letter of authority. Insisting on providing a duly stamped Power of Attorney is rather too technical.
This should be abolished. Another undue technical practice unsupported by the Tenancy Law is the letter of authority usually demanded from a landlord as a condition precedent for the issuance of a notice to quit by the lawyer on behalf of the landlord. This is rather too technical and unnecessary. A document signed by a lawyer on behalf of a client impliedly carries with it the authority to settle that document. There are so many areas to be looked into in the reforms and we believe a stakeholders’ forum is urgently required to enable the Chief Judge make robust practice directions in this critical sector that touches on every person either as landlord or tenant or both.
Bello, a lawyer writes from Lagos.
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