An Overview Of Nigeria's Land Use Amendment Bill

Article by Dr. Adeoye Adefulu & Nnamdi

Esionye

Background

The promulgation of the Land Use Decree (later the Land Use

Act1 (the "Act")) in 1978, brought about the

vesting of exclusive powers over land comprised in the territory of

any given State in the Governor of the State2. The

effect was that radical ownership of land was vested in the

Governor and private persons were only entitled to a leasehold

interest through a right of occupancy. The Act further requires

that the consent of the Governor, has to be obtained prior to any

method of alienation of property by the holder of a right of

occupancy3. The effect of this was that any assignment

of interests or mortgages required the consent of the Governor to

be legally enforceable.

The Land Use (Amendment) Bill (the "Amendment"), is

currently being deliberated upon by the National Assembly. The Bill

seeks to review the exclusive powers of the Governor in relation to

the alienation/parting of possession with property. This paper

reviews the provisions of the Bill and its potential effect on land

ownership in Nigeria.

Removal of Requirement for Governor's Consent

Sections 21-22 of the Act prohibits the alienation of either a

customary right of occupancy or a statutory right of occupancy via

an assignment, mortgage, transfer of possession, sublease, or

otherwise without the consent of the Governor. The above stated

provisions have resulted in a plethora of issues relating to

transfer of property transactions. Firstly, the process of

obtaining the Governor's consent is costly, in Lagos State, for

example, it costs up to 15% of the deemed value of the property.

Further, even though there have been improvements to the process it

still takes a long time to obtain the consent, which significantly

delays the completion of commercial transactions. Additionally, the

requirement to seek the Governor's consent for mortgage

transactions has also proved to be an impediment in the

introduction of financial tools such as mortgage backed

securitisation, which requires an element of certainty in terms of

the rights to the underlying securities in the mortgages to be

securitised.

As a result of the above stated issues, the Amendment has been

proposed to alleviate the burdens currently faced by investors in

the real estate market and to provide property investment

incentives. The primary amendments to the Act can be found in

sections 5 & 6 of the Bill.

Section 5 of the Bill provides for the amendment of Section...