Realtor training 101: Legal Aspects of Real Estate in Nigeria

The laws regulating real estate in Nigeria can be classified into federal based laws and state-based laws. At the federal level are laws that govern the country as a whole. There are also regional laws governing some sections of the country. Some of the federal and regional laws are discussed below.

1. The 1999 Constitution of the Federal Republic of Nigeria: Section 43 of the 1999 Constitution provides s follows “Subject to the provisions of this Constitution, every citizen of Nigeria shall have the right to acquire and own immovable property anywhere in Nigeria.” Pursuant to this provision, the right of every Nigeria, either individual or cooperation is guaranteed.
2. Land use Act of 1978. The Land Use Act changed the arrangement of land ownership before 1978 upon its coming into being. Prior to this law, land used to be owned by families or communities. After the coming into being of this law, lands in the urban areas were vested in state governments and the lands in the rural areas of the country became vested in the local government. The freehold systems of the past were abolished by this Land Use Act and replaced with a leasehold. Every landowner invariably became a lessee to the state government for a specific period of time. The law also provided that the state and local government have the duty of issuing a statutory right of occupancy to lands. The words ” statutory right of occupancy ” shows that the land is not outrightly owned by the person but that it will expire after a period of time certain. The law further provides that land cannot be sold or alienated in any way by the holder of a statutory right of occupancy without the consent of the governor first sought and obtained and there is a penalty for anyone who breaches this provision of the law. Consequently, it will be unlawful for any person whose interest in the property has been vested by virtue of a Deed of Assignment or Deed of Conveyance to decline to obtain the consent of a governor of the state where the property is located
3. Nigerian Urban and Regional Planning Act: This act governs the management of urban and regional planning in Nigeria. It also takes care of complaints and grievances on issues like the demolition of houses and the likes.
4. Rent control and Recovery of Premises Act: This Act provides steps to be followed by landlords in evicting tenants from his building. The law is strictly against self-help in the eviction of tenants and the landlord must follow the required procedure set down by the law in achieving this.
5. Stamp Duty Act: The stamp duty act provides for several instances where a land transaction would involve the payment of stamp duty. It makes provision for the calculation of stamp duty based on the type of property and the amount of money involved in a transaction.
6. Capital Gains Tax Act: This Act operates at the federal level and states like Lagos State. This Act provides for a tax that is chargeable upon the disposal or sale of and assets. In the Act, real estate is defined to be one of the assets. The tax is charged on the profits on the proceeds of assets that are sold and also properties sold outside Nigeria but the proceeds brought into Nigeria. This is at the rate of 10 percent on each disposal. The procedure for calculating this tax is also provided for in the laws.
7. Conveyancing Act 1881: This Act governs conveyancing and property transactions in both the Northern and Southern parts of Nigeria save for a few states exempted. The Conveyancing Act is one of the oldest real estate laws in operation in Nigeria.
8. Property and Conveyancing Laws (PCL): The PCL essentially governs the transfer and general property transactions in the western part of Nigeria. This law is currently domesticated in all western states of Nigeria and it governs the acquisition of properties in the following states- Ogun, Oyo, Ondo, Osun, Ekiti, and some parts of Lagos.

STATE LAWS GOVERNING PROPERTIES

Apart from the Land Use Act, each state also enacts various laws regulating real estates. In Lagos State, the following laws governing properties:

1. The Acquisition of Lands by Aliens Law: This law makes provisions for foreigners who want to obtain lands within Nigeria and the process and requirements to be followed by an alien in acquiring lands within Nigeria. Under this law, aliens are also required to obtain the governor’s consent in order to obtain land within Nigeria. The alien cannot also alienate the land in any form whether to a fellow alien or to a Nigerian citizen without obtaining the governor’s consent as well.
2. Land Use Charge Law: This law provides a compilation of all land and property-related based rates in Lagos.
3. Tenancy Law of Lagos State 2011:This law makes provisions for the tenancy and recovery of premises in Lagos State. The law prohibits collection of rents beyond a period of two years save for only four areas in Lagos State to wit: Apapa, Ikeja GRA, Ikoyi and Victoria Island. The law allows for freedom of contract between landlords and tenants such as issues of the length of tenancy but if some issues or all are not provided for, then the provisions of this law will prevail. The law will also apply to lease agreements as they are similar to tenancy agreements
4. The Lagos State Property Protection Law: This law provides protection from the acts of “omo oniles” (land grabbers in Lagos State), as this is a serious issue affecting property owners in Lagos. It prevents the illegal occupation of lands, forceful entry into lands, violence in relation to lands and fraud conducted as regards landed properties. This law also contains some retrospective provisions, protecting people against acts carried out against them even before the law came into being. There are sanctions attached to the breach of the provisions of this law such as imprisonment and payment of a fine. The law also sanctions trespassers and encroachers who remain in possession of land even after they have been told to vacate such lands. Legal practitioners and real estate agents can also be sanctioned if they are involved in any illegal land transactions and be charged for the criminal offense of aiding and abetting.
5. Tenement Rate Laws of Nigeria: These taxes are levied on landed properties by local governments, in order to raise income for the local government. This law was established to collect taxes from people who have already built their properties. Tenement rates laws exist in all states within Nigeria.
6. Land Instrument Registration Law: The Land Instruments Registration Law of Lagos State mandates the registration of any document affecting land in Lagos State at the Lands Registry. Non-registration of such any document that requires registration implies the document is void. This law together with the Land Use Act regulates the procedure for registering properties in Lagos.
7. Registration of Titles Law: This law governs the conveyancing and registration of property titles in some parts of Lagos State. These areas include Ikoyi, Victoria Island, Lagos Island, Surulere, and others.

REAL ESTATE DOCUMENTATION

There are various land documents in Lagos relevant to buying a house in Lagos Nigeria. Buying a house in Nigeria is an important activity, therefore, any individual, company or entity that intends to purchase or sell landed properties must understand and be in full knowledge of the types of documents that govern land transactions in Nigeria.

Essentially, land documents in Nigeria are categorized into six recognized title documents in Nigeria and these will be examined below individually.

Certificate of Occupancy- a Certificate of Occupancy or C of O as it is popularly called is an officially recognized and most popular land document evidencing the right of title to land. It is an important land document to a landowner or a purchaser of land. The C of O also usually contains the usage of the land either for residential, commercial or mixed development purposes. It is issued by the State Government to landowners and property buyers as proof of ownership of land and it leases the land under which it is issued to the applicant for a definite period of 99years. Section 5(1) of the Land Use Act states that “it shall be lawful for the Governor in respect of land whether or not in an urban area to grant the statutory right of ownership to any person for all purposes.

Section 9 of the Act goes further to state that it shall be lawful for the Governor when a person is entitled to a statutory right of occupancy; to issue a certificate under his hand in evidence of such right of occupancy. Such a Certificate is called a Certificate of Occupancy.

There are benefits of having a Certificate of Occupancy and some of the benefits are that it grants the bearer of the name in the land document the exclusive ownership of the land; it can be accepted as a form of security or collateral to obtain loans from the bank or other financial institutions and it prevents a claim of multiple ownership.

The Certificate of Occupancy can be obtained from the state government in which the land is situated, and the requirements differ from state to state.

Deed of Assignment- This is an important land document which is a widely acceptable land document that shows that ownership interest in land has been transferred to another. upon the completion of a land transaction between a buyer and a seller of land, a Deed of Assignment is drafted and executed in favor of the Assignee to evidence the transfer of the unexpired residue of the land by the Assignor to the Assignee.

In a land transaction, the land purchaser owes himself the right to demand and be given a Deed of Assignment. Where a Deed of Assignment is executed in favor of the purchaser, it evidences that legal interest on the land has been passed to the purchaser and this is a valid root of title of ownership of the land.

The Deed of Assignment contains the following important contents to be looked out for by a land purchaser;

• The name, address, and status of the parties to the land transaction;
• The date in which ownership of the land was transferred to the land purchaser;
• It must contain the full description of the land, location, survey no (if any).
• It must contain the clause that shows the breakdown of how the seller of the land gained possession of the land and also helps to trace the history of how the preset seller gained possession of the land. For example, if the land was acquired by a certificate of Occupancy, or it is a family land passed from generation to generation, then such information must be expressly stated in the Deed of Assignment.
• The consideration, which is the agreed purchase price for which the land is being sold to the purchaser.
• Other terms and conditions of the land transaction to be agreed on by parties.
• The capacity of the seller as the beneficial owner of the land must be duly stated.
• Particulars such as the name, address, occupation, and signature of witnesses to the land transaction must be expressly stated.
• Finally, it must be duly signed, sealed, and delivered.

Where a Deed of Assignment has been executed on behalf of the purchaser, the purchaser of the land can perfect his newly acquired title to the land by executing the following acts;

• Obtaining the Governor’s consent in the State where the land is situated.
• Stamping the Deed of Assignment at the Land’s Registry.
• Registering the Deed of Assignment at the Lands Bureau Department of the Land’s Registry.

Deed of Lease- a Deed of Lease is another essential land document in Nigeria that creates an interest in land for a fixed period for consideration of rent. In a Deed of Lease, the unexpired residue in the land is not given to the purchaser because the Lessor (Seller) still enjoys a reversionary interest in the land. This simply means that after the expiration of the period in which the owner of the land leases the interest in the land to another, the ownership of the land reverts to the owner.

A Deed of Lease is an important land document, which must be duly signed and delivered to indicate that a commercial land transaction has been executed between a leaseholder to a third party. The most important factor that must exist in a Deed of Lease is the certainty of time. Thus, the lease must have a beginning date and an end date; it cannot be left to the caprice of the parties to the land transaction.

Just like the contents to be evidenced in a Deed of Assignment, a Deed of Lease, also, must contain the following;

• The commencement date of the lease of the land;
• The parties to the lease of land transaction, note that the parties must be legal persons capable of being sued and can sue in turn;
• The full description of the leased land property;
• The term certain of which the lease will exist. It can be for a duration of 10, 20, 50 years depending on the time agreed by parties to the land transaction;
• The rent consideration clause of the leased land transaction is paid by the purchaser (Lessee) to the seller (Lessor).
• Other terms and conditions of the lease transaction to be agreed upon by parties.
• The capacity of the seller (Lessor) as the beneficial owner of the land must be duly stated.
• Particulars such as the name, address, occupation, and signature of witnesses to the land transaction must be expressly stated.
• Finally, it must be duly signed, sealed, and delivered.

Deed of Sub-Lease- It is important to state that a leaseholder in a land lease transaction can sub-lease his or her unexpired lease term to a third party. When such land transaction occurs, a Deed of Sub-Lease is issued to the third party. This simply means that where a landowner leases his land to a purchaser (Lessee) for a fixed term of 20 years, for example, the Lessee can sub-lease the land for a period within the same twenty years to a sub-lease and at the end of the transaction, the reversionary interest in the land goes back to the original owner of the land. Although, it is important to state that land cannot be sub-leased without the consent of the owner of the land.

Deed of Mortgage- this form of land document in Nigeria is used to show that land has been used as a security or collateral for the performance of an obligation. A Deed of Mortgage transfers the legal interest of land to another as a security, but that interest ceases once the obligation has been redeemed. The Mortgagor using his land as security is still the owner of the land, while the land is only held in custody by the Mortgagee.

Survey Plan- A Survey Plan is a land document used to shows the true ownership status of land in Nigeria. The survey plan shows the boundary measurement and coordinates of a parcel of land, giving an exact measurement and full description of the land. The Survey Plan can also help to reveal whether the land to be transacted is under any government acquisition or not.

A survey plan is regulated by the office of the Surveyor-General of the State where the land is located. A property can be sold to a buyer with only the survey plan as the evidence of ownership in the land, where this occurs, the buyer must conduct a due diligence search at the office of the Surveyor-General to authenticate the true ownership of the survey plan before purchasing the land. The buyer owes himself the duty of ensuring that his ownership in the land purchased is perfectly secured by perfecting his title at the appropriate government Land Register in the State where the land is located.

The above-mentioned land documents are a summary of the most recognized and important documents in a property transaction. To buy a house in Nigeria, one needs to understand and know that he or she must acquire a good title to the property purchased. Acquiring a good title in the property goes beyond paying the purchase price for the land.

Finally, the documents listed above are non-exhaustive, as there are still other documents that may apply to a land transaction depending on the circumstances of the property to be purchased. For instance, where the owner of any property to be sold is deceased, it is important to obtain a grant of probate or letter of administration before such property can be transferred.