7 New Strategies For Lagos Landlords To Avoid Hassles in Real Estate Transactions

Introduction

The bustling city of Lagos offers a wealth of opportunities for investors, particularly in real estate.

For instance, the real estate market in Nigeria is anticipated to achieve a value of US$2.26tn in 2024. You can get more information about it here.

This guide delves into the best practices that Lagos Landlords can use in avoiding real estate transaction hassles in Lagos State giving you the opportunity to make right and informed decisions for your investment.

Understanding Cash Flow vs. Capital Appreciation:

Before diving into the right practices, let’s establish the two primary ways to generate returns from your Lagos real estate.

Cash Flow: This refers to the steady stream of rental income you receive from Tenants/Lessees occupying your property. This is a reliable source of income, offering a predictable return on your investment. You are equally at liberty to generate cash flow from tenancy or lease transactions.

Capital Appreciation: This focuses on the long-term increase in your property’s value. Over time, Lagos’s thriving economy steadily leads to a rise in property prices, allowing you to sell at a significant profit.

Understanding Tenancy vs. Lease Agreements In Nigeria

One important thing you must understand about tenancy and lease agreements is that both tenancy and lease agreements serve as legal contracts between you (Landlord/Lessor) and your Tenant/Lessee.

However, they differ in terms of duration, flexibility, and legal implications:

Leases and tenancies both refer to formal agreements where someone (the Tenant) gets to use property owned by someone else (Landlord) for a set period in exchange for payment (rent). However, there’s a key difference in duration:

Leases are typically for longer periods, often 2 years or more. The owner of the property is usually referred to as the Lessor while the person who will be using the property for a set period in exchange for payment (rent) is the Lessee.

Tenancies are usually for shorter durations such as a year or 2 with the option of a renewal. The owner of the property is usually referred to as the Landlord while the person who will be using the property for a set period in exchange for payment (rent) is the Tenant.

Making Informed Decisions: Factors to Consider

The ideal agreement for your Lagos property depends on several factors:

Tenant/Lessee Profile: You must consider the type of Tenant/Lessee you’re looking for in Lagos. You may want to screen the Tenant/Lessee. You want to be able to make sure that the Tenants/Lessees can discharge their obligations without you going through any hassles.

Landlord Profile: You want to ensure that as a Landlord in Lagos, your properties are in good tenantable condition. You on the other hand have to make sure that you provide a good habitable premises for your Tenants/Lessees.

Market Conditions: It is advisable for you to conduct research on the current market trends in Lagos. You may want to ask yourself some important questions like “Is the demand for commercial or industrial space high enough to secure short-term Tenants? Or would a longer lease attract a more reliable Lessee willing and ready to pay a premium?”

What To Do as a Lagos Landlord

Once you’ve gotten a Tenant/Lessee, you must conduct screening on the Tenant/Lessee. The reason for this is to discover the Tenant/Lessee’s capability of paying the rent and maintaining the property.

After you have certified the Tenant/Lessee capable of paying the rent and maintaining the property, then you can proceed to negotiate the terms of the tenancy/Lease agreement and then get a real estate Lawyer involved who will draft a tenancy/lease agreement for both you and the Tenant/Lessee.

It is after then that you can accept payment for the rental or lease of the property. After collecting payment, you and the Tenant/Lessee can review and then sign the agreement. Also note that your witness and the Tenant/Lessee’s Witness and Guarantors must also sign the agreement.

Fees Requirements

As a Lagos Landlord, you must note that it is not only the rental fees that your Tenant/Lessee pays. Your Tenant or Lessee must bear in mind that he will also pay caution fee and legal fees.

In a real estate transaction, a caution fee, is the amount the Tenant/Lessee must pay upfront or with the rental fees when renting an apartment and is usually refundable only when the Tenant/Lessee was able to keep the property in good tenantable condition.

In light of this, it is important to ensure that there is a tenancy/lease agreement drafted to expressly state the rights and obligations of both you and the Tenant/Lessee.

Security for your Rental Income

Aside payment of fees from the Tenant/Lessee, as a form of security, you must make sure your Tenant or Lessee provides Guarantors. This is essential for the sake of adding an extra layer of financial security to the agreement. A Guarantor is usually a person with good credit and income who agrees to cover the rent if the Tenant/Lessee defaults in paying their rent.

By having a Guarantor in place as a Landlord, you have peace of mind knowing you have someone to back up the rent payments if needed.

The Value of Legal Guidance: Charis Legal Stands By You

Engaging a reputable real estate Lawyer like Charis Legal Practice in Lagos for your residential, commercial and industrial properties ensures you secure a legally sound agreement that protects your interests. Here’s how we can help you:

Expert Drafting: We meticulously draft tenancy or lease agreements that clearly define the rights and responsibilities of both parties, minimizing potential disputes and legal issues down the line.

Meticulous Screening: Our team screens the Tenants/Lessees, ensuring they are financially capable and committed to responsible property maintenance.

Streamlined Process: We guide you through every step of the process, from screening the Tenant/Lessee, drafting and reviewing agreements to facilitating a smooth handover of the property.

See more: The Role of Property Lawyers in Real Estate Transactions

Investing in Peace of Mind: The Charis Legal Advantage

By partnering with Charis Legal, you discover the full potential of your Lagos real estate investment. Not only do we ensure you have legally sound agreements in place, but we also alleviate the stress and complexities associated with the process.

Our services are available for properties in Lagos and Oyo state with a minimum annual rental value of 5 Million Naira.

In addition, we charge a 10% of the rental value as legal fees.

For example, If the rental value for a lease or tenancy transaction is N10,000,000 (Ten Million Naira), then our legal fees will be N1,000,000 (One Million Naira).

Ready to Secure Your Investment and Generate Passive Income?

Ready to protect your interests as a Lagos Landlord? Contact Charis Legal Practice today!

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