Deed of Lease (Sub-Lease) vs. Deed of Assignment: What You Need to Know

Navigating property transactions in Nigeria can be complex, especially when it comes to understanding the different legal documents involved. Among the most commonly encountered documents are the Deed of Lease (or Sub-Lease) and the Deed of Assignment. While both serve to outline rights over property, they function quite differently. If you’re a prospective buyer, investor, or tenant, understanding these differences is key to making informed decisions. In this post, we’ll explore what sets a Deed of Lease apart from a Deed of Assignment and when each is appropriate.

TL;DR: A Deed of Lease grants temporary rights to use a property for a specific period, while a Deed of Assignment permanently transfers ownership of a property from one person to another. Knowing the difference is crucial for making informed decisions when dealing with property transactions.

What is a Deed of Lease (Sub-Lease)?

Imagine you want to live in or use a property for a specific period without owning it outright. This is where a Deed of Lease comes into play. It is a contract between a property owner (lessor) and a tenant (lessee), granting the tenant temporary rights to use the property for a set period.

• Key Features of a Deed of Lease:
  • Temporary Possession: The lessee gains the right to use the property for a defined period (e.g., 10, 20, or 99 years).
  • Payment of Rent: The lessee is obligated to pay rent and adhere to the conditions set out in the lease agreement.
  • Reversion of Property: After the lease period ends, the property rights revert to the original owner (lessor).
  • Rights and Restrictions: The lease may include specific restrictions on how the property can be used and outline the lessee’s rights and responsibilities.
• Sub-Lease:
  • A sub-lease occurs when the original lessee leases out the property to a third party. The sub-lessee gains similar rights as the original lessee but for a shorter duration or under different terms as agreed in the sub-lease agreement.

What is a Deed of Assignment?

On the other hand, a Deed of Assignment is used when you want to transfer ownership of a property completely. This legal document formalizes the permanent transfer of ownership rights from one party (the assignor) to another (the assignee). It’s common in outright sales where the buyer gains full rights to the property.

• Key Features of a Deed of Assignment:
  • Transfer of Ownership: The assignor transfers all rights, title, and interest in the property to the assignee.
  • Permanent Transfer: The property rights are transferred permanently unless stated otherwise.
  • Detailed Description: The deed must contain detailed information about the property, the parties involved, and the terms of the transfer.
  • Title Registration: To be legally recognized, the Deed of Assignment must be registered with the appropriate land registry.

Key Differences Between a Deed of Lease and a Deed of Assignment:

When to Use Each Document?

• Use a Deed of Lease (Sub-Lease) when:
  • You want to use a property temporarily.
  • You are not interested in full ownership.
  • You prefer a fixed-term agreement.
• Use a Deed of Assignment when:
  • You want permanent ownership of a property.
  • You intend to have full control over the property without reversion.

Conclusion: Choose Wisely Based on Your Needs:

Understanding the differences between these two types of property deeds is crucial in navigating the Nigerian real estate market. Whether you’re looking to lease a property for a few years or purchase it outright, choosing the right legal document ensures your rights are protected and helps avoid future disputes. Always consult with a property lawyer to ensure all legal requirements are met and your interests are safeguarded.