Laws Governing Real Estate Practice in Nigeria & What Every Realtor Should Know About the New Lagos Land Use Charge Law

Mr. Ramos making during his lecture.

Real estate practice in Nigeria is governed by a number of laws both at the Federal and State Levels. Apart from the Land Use Act and the Capital Gains Tax Act that are federal enactment regulating real estate practice in Nigeria, almost other laws governing real estate practice in Nigeria are state laws— which differ from one state to the other. Lagos State, because of its commercial versatility, remains the leading state in term of commercial activities. Owing to this fact, Lagos State has a number of laws governing real estate practice, some of which have been adopted by some of the other states. For the purpose of this paper, the salient points in ten (10) of the most important laws in Lagos State governing real estate practice are below highlighted and explained.

1. Land Use Act 1978

a. This is about the most popular law governing real estate practice in Nigeria. It was first enacted by the Federal Government in 1978, but Lagos State has since domesticated it and enacted its own Land Use Act (Cap L60, Laws of Lagos State 2003).

b. The most significant thing about the law is that it vests all the land in each state in Nigeria in the Governor of the State to hold in trust. As a trustee to all the land, the Governor becomes the overlord while the original exclusive owners technically become tenants.

c. The Supreme Court in Nkwocha v. The Governor of Anambra (1984) 6 S.C. 362 has said that “the tenor of the Act as a single piece of legislation, is the nationalisation of land in the country by the vesting of its ownership in the State, leaving the private individual with an interest in land which is a mere right of occupancy…”

d. The law converted and reduced the fee simple (exclusive ownership of land) of the original exclusive owners to right of occupancy (often for a period of 99 years) which is often evidenced by the Certificate of Occupancy.

e. Since the commencement of the law, no land-owner can sell, lease, assign or transfer his/her land without first seeking and getting the consent of the Governor. Any land transaction in this regard without the consent of the Governor will be null and void.

2. Urban and Regional Planning and Development Law of Lagos 2010

a. This law provides for the administration of physical planning, urban development, urban regeneration and building control in Lagos state and for all connected purposes.

b. The law assigns the overall administration and responsibilities of planning and development in Lagos State in the hands of Lagos State Ministry of Urban and Regional Planning. These administration and responsibilities are to be carried out through three agencies in the Ministry: (i) Lagos State Planning Permit Authority (PPA); (ii) Lagos State Building Control Agency (BCA); and (iii) Lagos State Urban Renewal Agency (URA).

c. The PPA is responsible for giving permits for any form of physical development on land in Lagos State. Developers and builders are mandated to obtain permits first before commencing any construction on land in any Lagos State. The BCA is responsible for ensuring compliance with building control regulations. It has powers to remove illegal and non-conforming buildings. The URA monitors and identifies areas in Lagos State qualified for upgrading, and it advises the State on redevelopment or renewal programmes accordingly.

d. Failure to obtain requisite permit before development or failure to comply with approved standard may lead to issuance of (i) Contravention Notice; (ii) Stop Work Order; (iii) Quit Notice; (iv) Seal-up Notice; (v) Regularization Notice; and (vi) Demolition Notice

e. The law also have criminal sanctions which may be payment of fines of up to N500,000 or one month community services, or both.

3. Lagos State Property Protection Law 2016

a. This law is a statutory response to the menace of the omo-onile (land grabbers) in Lagos State. It majorly prohibits four conducts in relation to land in Lagos State: (i) forceful entry to landed properties; (ii) illegal occupation of landed properties; (iii) violent in relation to landed properties; and (iv) fraudulent conducts in relation to landed properties.

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b. Some parts of the law have retrospective effects. For example, people that have forcefully obtained the land of other people had only three (3) months grace from the commencement of the law to vacate the land, otherwise they will be deemed to have committed an offence punishable by ten (10) years imprisonment.

c. Then law also punishes trespassers and encroachers who, having been asked to vacate the land, remain in possession. Selling land or landed properties without authority of the owner is also a punishment offence under the law. Acts (by the omo-onile or touts) such as demanding money from the owner or purchaser of the land before allowing them to carry out construction on the land are now punishable with imprisonment.

d. For real estate practitioners (such as lawyers and estate agents) who facilitate land transactions between parties, knowing that such transaction contravene the law or any other law(s), they will be criminally liable for aiding and abetting commission of offence.

4. Land Use Charge Law 2018

a. This law is said to consolidate all property and land based charges in Lagos State and makes provisions for levying and collecting land use charge in respect of properties in Lagos state. The law came to force on 8th February 2018, and it repealed the 2001 version.

b. The land use charge is a form of property tax and all the properties or owners of properties in Lagos are expected to pay it, apart from the properties or owners that are exempted. The properties that are exempted are: (i) properties belonging to religious organization and used exclusively as a place of worship or religious education; (ii) properties used as public cemeteries and burial grounds; (iii) properties used as registered educational institutions; (iv) properties used public or private libraries; (v) properties used as palaces of recognized Obas and Chiefs; and (vi) properties specifically exempted by the Governor of Lagos State.

c. Under the old Land Use Charge Law 2001, the person liable to pay Land Use Charge was the owner of the property. This means that occupiers of the property such as lessors, sub-lessors, lessees, tenants, licensees and trespassers were not liable to pay. This position has changed under the Land Use Charge 2018 where liability to pay may exclusively or jointly fall on the owner on the one hand and occupiers such as lessees, tenants or trespassers on the other hand, depending on a given situation.

d. The law comes with different classifications of properties with different rates attached to the classification.
1. Residential property exclusively occupied by the owner 0.076% of the market value of the property
2. Residential property occupied jointly by the owner and third parties; 0.256% of the market value of the property
3. Residential property without owner in occupation (i.e occupied only by third parties) 0.76% of the market value of the property
4. Residential property occupied by a pensioner Exempted
5. Commercial property (used by occupier for business purposes) 0.76% of the market value of the property
6. Industrial property of manufacturing concerns 0.256% of the market value of the property
7. Vacant property and open empty land 0.076% of the market value of the property
8. Lagos State Government properties.

e. The law gives 40% general relief to all the liable people under the law which is automatically deducted from what is assessed as payable. It also recognizes specific reliefs as follows:

1. Pensioner (owner occupied) 100% 60 years and above
2. Aged persons (owner occupied) 10% 70 years and above
3. Age of property 10% 25 years and above
4. Person with disability (owner occupied) 10% ……
5. Long possession by owner 5% 12 years and above
6 Federal and other States Government 20% Non-revenue generating
7. Partial relief for organizations 20% Non-profit making
8. Payment within 15 days of demand 15% …….

f. Due the outcries by the general public on the aggravation of chargeable rates in the law, the Lagos State House of Assembly is presently reviewing the law.

5. Tenancy Law of Lagos State 2011

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a. This law focuses mainly on three things: (i) to regulate the rights and obligations under tenancy agreements; (ii) to regulate the relationship between landlords and tenants; and (iii) to make provisions for recovery of premises.

b. The law applies to the whole of Lagos, except (i) Apapa; (ii) Ikeja GRA; (iii) Ikoyi; and (iv) Victoria Island. What this means is that property negotiations and transactions in relation to properties in these four areas can be done without compliance with and outside the provisions of the law.

c. Whether or not tenancy agreements are drafted by parties, the law already deems that once a land owner gives premises to a person for consideration, a tenancy exists between them even if it is not in writing.

d. The law respects the freedom of contract between the parties and allows them to specifically decide and agree on the terms of their tenancy agreement. If, however, they fail to agree on those terms, the provisions of the law in relation to those terms will prevail on them and they will apply. A good example is the length of the tenancy.

e. Lease agreements will arguably come under the regulation of the law. This is because a lease practically has the facsimile of a tenancy, and the law recognizes a fixed tenancy which is on all fours with a lease. This is also in line with the provisions of the Registered Land Law of Lagos State CAP R1 that recognizes periodic tenancies as leases.

6. Capital Gains Tax Act

a. This Act was first enacted by the Federal Government in 1967, but Lagos State has since domesticated it and enacted its own Capital Gains Tax Act (Cap C1, Laws of Lagos State 2003). The law creates a type of tax known as capital gains tax. The tax is charged on gains accruing to any person (company inclusive) on disposal or sale of assets.

b. Under the law, what is defined as ‘assets’ is wide. Assets include real property, incorporeal properties (such as shares, stocks and debentures), currency (other than Nigerian currency) and all other forms of property. This applies to both gains made from the properties sold in Nigeria and properties sold outside Nigeria whose proceeds are brought into Nigeria.

c. Gains made from disposal of sale, lease, transfer, an assignment, a compulsory acquisition or any disposition any form of property are chargeable under the law at the rate of 10%.

d. A chargeable gain is reached by deducting the allowable deductions from the consideration received for the disposal of the assets. Allowable deductions consist of money or money’s worth given by a person (or on the person’s behalf) wholly, exclusively and necessarily to acquire the asset, together with the incidental costs of disposing the asset.

7. Registration of Titles Law of 1935

a. This law provided generally for registration of interests and titles in land, with the exception of mining leases and leases granted under the provisions of the Minerals Act or Petroleum Act. It clarified instances where registration was compulsory and instances where registration is permitted but not compulsory.

b. Registration was compulsory if it involves: (i) exclusive ownership of land; (ii) a lease of a term not less than 40 years; and (iii) assignment of a lease of a term not less than 40 years.

c. Registration was permitted if it involves: (i) registering power of sale whether in law or equity; and (ii) a lease of a term not less than 5 years.

d. Other interests that may be registered under the law included certificates of occupancy, leasehold interests, mortgages, charges, power of attorney, easement and profits a prendre.

e. A registered owner of a land could transfer it. But the transfer would not be complete until the transferee had been registered as the new owner. Until the registration was complete, the transferor of the land would remain the owner of the land.

f. This law has now been repealed by the Land Registration Law 2015 (discussed below). It is included in this paper for historical purpose.

8. Registered Land Law 1965

a. This law regulated registration of land and titles (such as ownership, lease, charge, easement, partitions and judgments), and gave the Governor of Lagos State powers to prescribe adjudication areas in the State where interests or rights in land may be settled without necessarily going to court.

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b. Once a matter on interests or rights in land had been taken to an adjudication section under this law, an action could not be commenced in court again unless and until the consent of the adjudication officer was sought in writing.

c. The law treated periodic tenancies as leases. Leases for a term of 5 years (or more) and periodic tenancies (i.e leases without specific duration and with no provision for giving of notice to determine) were registrable under the law.

d. The owner had an obligation to apply to the Registrar of Lands for cancellation of the registration of lease where the lease had been determined by effluxion of time, by lawful re-entry or by happening of an event of determination.

e. This law has now been repealed by the Land Registration Law 2015 (discussed below). It is included in this paper for historical purpose.

9. Land Development (Provisions for Roads) Law

a. This law makes provisions for necessary reservations of land (by landowners) for roads where the land is sold off in lots to different persons. The law applies more to large expanse of land used as housing estate and which is always sold in lots to different people.

b. The owner of land has a duty (before selling his land in lots) to inform and transmit to the Ministry of Works and Transport four copies of identical survey plan showing the position of the land and the parts of the land (if any) where he intends to reserve for roads.

c. Where the plans have been approved by the Ministry, the owner of the land will be permitted to demarcate the land for roads to the satisfaction of the Ministry. Failure to comply before selling the land in lots is a criminal offence.

d. In addition, any land sold by the owner which the Ministry has directed to be reserved for roads will be null and void.

10. Land Registration Law 2015

a. This law is now the most comprehensive law in Lagos State because it came as a consolidated enactment that replaced some of the existing land related laws, that is: (i) the Registered Land Law (discussed above); (ii) the Registration of Titles Law (discussed above); (iii) the Land Instrument Registration Law; and (iv) Electronic Documents Management Systems Law.

b. The law retains sub substantially all the points discussed above under the Registered Land Law and the Registration of Titles Law.

c. The law establishes the Land Information Management System (LIMS) for archival of documents, online searches, online payments, certification of documents and licence for users. The LIMS can only be used by licensed users. Registration of all land documents through the LIMS has been made mandatory. Searches can be conducted through the LIMS and letter of accreditation may be issued through the LIMS.

d. The makes it mandatory for every document that has interest in or title to land to be registered. For documents that require Governor’s consent, the consent must be secure first before registration, and it has to be registered within 60 days after the consent of the Governor is secured.

e. The following documents are mandatorily registrable under the law: (i) sub-lease for a term of 5 years and above (requires Governor’s consent); (ii) mortgage transactions; (iii) long possession of land through uninterrupted adverse possession (12 years against individuals & 20 years against the state); (iv) power of attorney dealing with land; and (v) judgment of court.

f. However, any person has power to assign or is entitled in law or equity to any land MAY apply to be registered.

g. Deed of assent or Vesting Deed from an executor(s) does not need Governor’s consent. Generally, succession to land under a will or through intestacy does not require registration neither does it need Governor’s consent under the law.

Lecture delivered by Bolaji Ramos (  at the RealtorsRefresher Course organized by Tope Babade and Co. on 7th April, 2018


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