Part 15 of the National Land Code 1965 lays down the law in respect of Leases and Tenancies. In a nutshell, a lease is recognised as a term which exceeds 3 years and requires registration. Leases which are for a term lesser than 3 years are usually and commonly called Tenancies and do not require registration.
Whilst the minimum number of years required for a lease is 3, there is a maximum number of years for which a lease may be so granted. Where the lease is for the whole of any alienated land, the maximum number of years allowed is 99 years. If the lease relates to part of a land only, then the maximum number of years for which a lease may be granted is 30 years.
Every lease must be granted by an instrument in Form 15A. For tenancies, however, the Tenancy Agreement – duly executed and stamped suffices to show the intention and agreement between the Landlord and the Tenant.
Sometimes, parties may prefer to enter into Tenancy Agreements so that shorter terms are created which allows renegotiation of terms such as rental chargeable on a periodic basis. At the same time, the parties need not go through the hassles of having to register a lease should they prefer a longer term. On the other hand, Lease Agreements give the parties a certainty of their long term commitment with one another. The lessor knows that he will be expecting a steady flow of lease income for a long term and likewise, the lessee knows how much he needs to pay for the long term and is thus, able to plan his cashflow accordingly.