Differences between Deed of Lease and Deed of Assignment
Having an understanding of property documentation is essential for anyone who wants to be or is already a real estate investor. The Deed of Assignment and the Deed of Lease (also known as the Deed of Sub-Lease) are two important documents that Real Estate investors will encounter while purchasing land. So, what are they, and can they be used interchangeably?
While the Deed of Assignment is the more commonly used of the two documents in land transactions, a Deed of Lease can also be used depending on the nature of the seller’s title or interest or the scheme purchased from.
A Deed of Assignment transfers to you ALL OF THE SELLER’S RIGHTS TO THE LAND OR HOUSE. The buyer acquires FULL OWNERSHIP, subject solely to the provisions of the Land Use Act. A Deed of Lease [Sub-Lease], on the other hand, is a type of LONG RENT OR LEASE because the title finally reverts to the Seller [the Lessor].
From the enactment of the Land Use Act in 1978 through the middle 1980s, the use of Deed of Lease was highly common to transfer property, particularly government property, in the Ikoyi, Surulere, and Victoria Island axis. These properties were largely federal government lands and high-profile lands, and it was the first step into issuing certificates of occupancy to civilians for the first time.
The government was determined to inform the public that the Land Use Act was in effect and that all lands would be leased to the people from then on, with the government acting as the landlord. However, as time passed, due to the complexities of our property law system, which cannot ignore the issue of communal or family owned land, these deeds of lease ran into numerous issues because these lands did not regulate their documents to obtain a certificate of occupancy, but the land had to be transferred somehow, either to a family member after death, through a gift to another, or through an immediate sale to a person.
It gradually changed from a deed of lease to a deed of Assignment because an Assignment means “to transfer,” and it was from that deed of Assignment that all the important information needed to trace the history of the land could be derived, which is a very important document under the law to trace how the property transferred from Mr. A to Mr. B. It was widely accepted by the local communal institutions and families who lacked the expertise or intelligence to figure out the Land Use Act. Since then, the deed of assignment has been a very common and legal method of transferring property from A to B.
If you see a deed of lease today in relation to buying a property, it should be the old colonial properties from the 1950s to the 1980s, as they are no longer popular in property transfers nowadays.
Another way to look at it now is if you buy land, a house, or property directly from the government, and the government issues you a certificate of occupancy, the Deed of Lease will be in perfect order.
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