Implied Covenants and Obligations in Leases: Legal Principles and Applications

Seth Doe 

Assisted by 

Sarah Asante , Philipa Hagan , Ewurama Mongson

IMPLIED COVENANTS AND OBLIGATIONS IN LEASES

Duties of the Lessor and the Lessee under Ghanaian Law

A lease is both a contract and a transfer of an interest in land. It is governed by the common law of contract and statute, particularly the Lands Act, 2020 (Act 1036). A lease transfers to the lessee the right of exclusive possession for a certain or ascertainable term in consideration of rent or other value.

A covenant is a binding undertaking, promise, pledge, or guarantee made by one party to another. Lease covenants regulate how land is granted, enjoyed, used, and returned. There are two types of covenants. These are express covenants and implied covenants. The former are stated in the lease while the latter arises by operation of law. 

This essay focuses on implied covenants imposed on both the lessor and the lessee.

IMPLIED COVENANTS BY THE TRANSFEROR (LESSOR)

The main statutory authority is section 50 of the Lands Act, 2020 (Act 1036). Although not all provisions apply strictly to leases, the core implied covenants under section 50(1) bind the original lessor, sublessor, or assignor.

A. Covenant of Right to Convey

The lessor impliedly covenants that they have full legal power and title to grant the lease in the manner expressed. This reflects the principle that one cannot transfer a greater interest than one possesses. If the lessor lacks title or authority, liability rests on the lessor.

In the case of Unilever Ghana Ltd v Kama Health Services, the vendor sold land to the plaintiff, but registration revealed that the paramount stool had not consented to the transaction. The court held that a vendor must disclose latent defects in title and must have the title they purport to convey at the time of contracting. While purchasers are expected to conduct due diligence, defective title remains the vendor’s responsibility unless the purchaser had notice of the defect.

B. Covenant for Quiet Enjoyment

The lessor impliedly covenants that the lessee shall enjoy the premises without disturbance by the lessor or persons claiming through the lessor.

This covenant protects possession, not against all the world, but against the lessor and those deriving title from the lessor.

In Wilkinson v Edusei (1963), the court held that once the lessor had valid title, there was no obligation to protect the lessee against third-party trespassers. The lessee must sue trespassers directly.

In Karam v Aschkar [1963] 1 GLR 138, the landlord demolished part of the premises while a subtenant was in occupation. The court held that a voluntary surrender by a head lessee does not extinguish a sublease. A landlord who re-enters while a subtenant remains in possession breaches the covenant for quiet enjoyment.

While in Perera v Vandiyar (1953) the court held that cutting off essential services such as electricity and gas amounted to a breach of quiet enjoyment, even without physical entry. Quiet enjoyment includes freedom from substantial interference with ordinary use.

C. Covenant of Freedom from Encumbrances

The lessor impliedly covenants that the leased interest is free from undisclosed encumbrances, except those expressly stated in the lease.

Under section 281 of Act 1036, encumbrances include mortgages, liens, charges, trusts for securing money, and other legal or equitable claims.

D. Covenant for Further Assurance

The lessor covenants that, upon request and at the cost of the lessee, they will execute all lawful acts necessary to perfect the lessee’s title. This obligation binds only the person who conveyed the interest.

E. Implied Covenants on Renewal

Sections 50(9) to 50(18) of Act 1036 imply renewal rights in specific situations, particularly for indigenes leasing bare land, Ghanaian citizens leasing bare land and leases of public land granted by the Republic.

Renewal is subject to the original terms, improvements made by the lessee, and agreement between the parties, with disputes referable to ADR under Act 798 and ultimately the courts.

IMPLIED COVENANTS BY THE TRANSFEREE (LESSEE)

The implied obligations of the lessee are contained in section 51 of the Lands Act, 2020, read with Part V of the Second Schedule.

A. Payment of Rent

The lessee must pay rent at the time and in the manner agreed. Failure entitles the lessor to seek recovery of possession through court proceedings.

B. Repair to Adjoining Premises

The lessee must permit the lessor and agents, upon reasonable notice, to enter the premises to carry out repairs to adjoining property, provided any damage caused is made good.

C. Alterations and Additions

The lessee must not erect new buildings or make alterations without the landlord’s written consent. Consent must not be unreasonably withheld where the alteration amounts to an improvement. In Lambert v Woolworth Ltd (1938), the court held that whether an alteration is an improvement is assessed from the tenant’s perspective. Where a landlord refuses consent without justification, the refusal may be unreasonable.

D. Injury to Walls and Timbers

The lessee must not cut or injure walls or timbers without prior written consent.

E. Assignment and Subletting

The lessee must not assign or sublet without the landlord’s consent, which must be exercised reasonably. For instance, in Barclays Bank v Thome (1973), the court held that where a lease does not restrict user or alterations, a tenant may reasonably adapt the premises for business purposes. A landlord must act prudently and in good faith when withholding consent.

F. Illegal or Immoral Use

The lessee must not use the premises for illegal or immoral purposes.

G. Nuisance or Annoyance

The lessee must not engage in activities that constitute a nuisance or cause annoyance to the landlord or neighbouring occupiers.

H. Yielding Up the Premises

At the end of the lease term, the lessee must return the premises, including fixtures, in good and tenantable repair, subject to fair wear and tear.

Implied covenants in leases serve to balance proprietary rights and contractual obligations between landlords and tenants. They protect the lessee’s possession and investment while ensuring responsible use of land. Ghanaian statutes and case law show that these covenants are grounded in fairness, reasonableness, and the preservation of public order and property rights.