Land transactions form a fundamental aspect of Nigeria’s real estate sector, contributing significantly to the nation’s economic development. Historical roots have shaped the present-day ownership of land and its usage in Nigeria which can be seen in the evolution from traditional communal landholding practices among indigenous communities to the establishment of land tenure systems during the era of British colonial rule. Presently, the most common methods by which land can be acquired are by purchase, inheritance, gift, grant from state authority, or customary grant.
This article aims to provide a comprehensive overview of the legal framework governing land transactions in Nigeria focusing on key aspects such as ownership, required documentation, acquisition, and registration.
Ownership of Land
The Land Use Act, 2004 (“LUA”) is the principal legislation governing land transactions in Nigeria. This legislation confers full ownership of all lands within a state upon the Governor of that State, who acts as a trustee for the benefit of the people. Consequently, private individuals and organizations are not allowed to assert absolute ownership over land: instead, they may only acquire the right to utilize and inhabit the land through legally recognized means such as statutory rights of occupancy, customary rights of occupancy, or other acknowledged interests, for a specific period.
There are several types of land transactions recognized in Nigeria which includes but are not limited to the Sale of Land, Leases and Tenancies, Mortgages and Charges, Gifts, Pledges, Licenses, Donation of Power, Assignments, Wills and Codicils, and Assents.
Documents required for Land Transactions
Land transactions necessitate various documents to ensure a valid transfer of ownership. While specific requirements may vary based on the State where the land is situated, the following are commonly essential for such transactions:
- Title documents e.g., Certificate of Occupancy/Deed of Assignment/Deed of Sublease/Deed of Mortgage/ Deed of Gift.
- Contract of Sale of Land.
- Survey plan showing the location, coordinates, and size of the land.
- Land Purchase Receipt.
- Letter of Consent from the family or community where the land is held under customary or family ownership.
- Power of Attorney where the seller is not the legal owner of the land but has been given authority to sell on behalf of the owner.
Acquisition of Land
The process of acquiring land involves various stages that are essential for facilitating a smooth transfer of land ownership between the vendor and purchaser. A Contract of Sale constitutes a legally binding agreement between a vendor and a purchaser of land, outlining the mutually agreed upon considerations, obligations, and other terms pertaining to the transfer of land ownership.
Typically, the sale of land involves five stages which are as follows:
- Pre-Contract Stage: These are inquiries raised by the Purchaser, directed either to the vendor or his solicitor prior to entering into a land transfer agreement. These inquiries are rooted in the vendor’s duty to disclose any hidden title defects that cannot be discerned through mere inspection, as opposed to patent defects, which the vendor is not obligated to reveal since they can be identified by the purchaser during an inspection. The primary objective of this stage is to obtain comprehensive information, enabling the purchaser to make an informed decision on the suitability of the land and whether to proceed with signing the requisite contract. Through the process of making inquiries about the land, information regarding existing encumbrances, unresolved disputes, easements, and restrictive covenants affecting the property to be acquired is revealed. Also, a physical inspection will eliminate constructive notice.
- Contract Stage: At this point, a binding contract is established between the parties. Land transactions entail two (2) types of interests which are legal interest i.e., actual ownership, and equitable interest, i.e., the right to use and enjoy the land. During this stage, the purchaser obtains an equitable interest in the property.
- Post-Contract Stage: The vendor is required to provide evidence of possessing a sound or good title signifying his ability to transfer what he has contracted to convey, after the contract exchange. To deduce such a title, the vendor must provide the purchaser with an abstract of the title and an epitome of the title. An abstract of the title is a summary document that outlines the history of ownership and any legal rights or claims related to the property while an epitome of the title is a concise version of the title deeds, showing the chain of ownership from the original grant or sale to the current owner. After the vendor has deduced the title, investigation or searches are to be made by the purchaser or the purchaser’s solicitor. The title search and investigation may be conducted at the relevant state Land Registry, Probate Registry, Corporate Affairs Commission (CAC), relevant state Court Registry, Federal Capital Development Authority (FCDA), Economic and Financial Crimes Commission (EFCC), and Independent and Corrupt Practices Commission (ICPC).
- Completion Stage: This is the stage where the contract of sale regarding the land in question is completed and the legal interest in the property is passed to the purchaser. Upon payment of the purchase price, the vendor issues a receipt of payment to the purchaser. The Deed of Assignment is thereafter prepared by the purchaser’s solicitor and delivered to the vendor for vetting and execution by both parties. Afterwards, the vendor hands over all original copies of the title documents of the property to the purchaser thereby conferring the entire title and equitable interest in the property to the purchaser. Once the deed of assignment is executed by the parties, the parties’ designations change from vendor and purchaser to Assignor and Assignee.
- Post Completion or Perfection of Title: The final stage is the perfection of the Assignee’s title by obtaining the consent of the governor of the state. The process is as follows:
- Governor’s consent: As all land in a state is vested in the Governor, the holder of a Statutory right of occupancy granted by the Governor must obtain the Governor’s consent before alienating his right of occupancy by way of assignment, mortgage, sublease, or otherwise. Section 26 of the LUA further provides that any transaction or any instrument which purports to confer or vest in any person any interest or right over land other than in accordance with the provisions of the LUA shall be null and void. Therefore, failure to obtain the Governor’s consent after the divesture of interest in land will make the transaction incomplete and voidable.
- Stamping of title document: After Governor’s consent has been obtained, stamping of the title documents must be done within thirty (30) days of execution of the requisite title documents i.e., Deed of Assignment, Deed of Gift, etc. The absence of proper stamping renders the document inadmissible as evidence of title and consequently, it will not be accepted for registration.
- Registration of title document: Registration of the title document is compulsory and must be done within sixty (60) days of execution of the instrument. Where an instrument is not registered, it loses priority against subsequent instruments that are registered. This is because registration not only serves as notice to the public, it also determines priority. On the other hand, non-registration indicates that the property is encumbered.
It is important to note that the contract of sale does not require the governor’s consent but may be stamped and its subsequent registration depends on whether it is deemed as a registrable instrument in the jurisdiction where the property is situated.
It is clear from the foregoing that, the validity and enforceability of land transactions depend on essential factors including conducting due diligence, meticulous documentation, and adherence to registration requirements. Due to the complexity of land transactions in Nigeria and excessive fraudulent practices, it is advisable to seek legal advice from a qualified and experienced lawyer to ensure that due diligence is conducted, and all legal requirements are met. It is important for all parties involved to be proactive in safeguarding their rights and interests to ensure a seamless transaction.
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