Nigeria: Unexhausted Improvements Vis-À-Vis Unexhausted Economic Interest In Land Subject Of Compulsory Acquisition: A Case Of Deliberate Legislative Discrimination

Last Updated: 9 May 2016
Article by Benedict Oregbemhe

Introduction:

The basic reason for payment of compensation for compulsory acquisition of private property for overriding public purpose is to restore a party, who has been deprived of ownership and enjoyment of property, to an economic position that approximates the status occupied prior to the acquisition. Compensation is thus payable based on the "principle of equivalence". The "principle of equivalence" simply means the right of a land holder to be put, so far as money can do it, in the same position as if the land had not been taken from him.2 In other words, he gains a money value not less than the loss imposed on him in the public interest but not greater than the loss suffered. It is in line with this principle that section 44 of the Constitution of the Federal Republic of Nigeria 19993 (as amended) ("the 1999 Constitution") provides that no immovable property or any interest in or any right over an immovable property shall be compulsorily acquired for overriding public purpose without prompt payment of compensation.

The right of people to freely acquire, use and dispose of property is the foundation not only of prosperity but of freedom itself.4 This right to own and acquire immovable property anywhere in Nigeria is an inalienable right of all Nigerians. In view of the above, payment of compensation upon public acquisition of land or revocation is a constitutional right and not a privilege.

Deliberate Legislative Discrimination between Unexhausted Improvements and Unexhausted Economic Interest in Land Subject of Compulsory Acquisition

Section 28 of the Land Use Act5 ("the Act") provides that:

"If a right of occupancy is revoked for the cause set out in paragraph (b) of subsection (2) of section 28 or (c) of subsection (3) of the same section, the holder and the occupier shall be entitled to compensation for the value at the date of revocation of their unexhausted improvements." (Emphasis added)

The import of section 28 of the Act is to the effect that compensation for compulsory acquisition of private property for public purpose is only payable for "unexhausted improvements" made on the land by the land holder or occupier. Conversely, a holder or occupier of an "unimproved" or "undeveloped" land is not, under the Act, entitled to any compensation for the compulsory acquisition of his land for public purpose. Therefore, it means that compensation is payable not for the bare land but for the "unexhausted improvements" made on the land by the holder or occupier. It is the labour or efforts expended on the land that qualifies for compensation when the land is compulsorily acquired for public purpose.

It should be noted that the philosophical basis for non-payment of compensation for "unimproved" land buttresses the fact that ownership of all lands in Nigeria is vested in the Governor of each State who holds same in trust for the benefits of all Nigerians and upon compulsory acquisition of such lands, the government only takes back what originally belongs to it.6 The same school of thought believes that if no labour or effort is expended on the land, the government need not pay compensation to the land holder or occupier of the land.

Under section 29(4)(a) of the Act, the holder or occupier of an "unimproved" land, compulsorily acquired for public purpose is only entitled to an amount equal to the rent, if any, paid by the holder or occupier during the year in which the right of occupancy was revoked.

On the other hand, if the holder or occupier fails to pay the ground rent during the year the right of occupancy was revoked, the holder or occupier is not entitled to compensation and if the holder or occupier is in arrears of ground rent, he is still under a duty to pay the ground rent as revocation of right of occupancy does not extinguish any debt due to the government under or in respect of such right of occupancy.7

Criticisms of the Legislative Discrimination between "Unexhausted Improvements" and "Unexhausted Economic Interest"

Land is the greatest asset of man and a means of wealth creation. Land is indispensable to human and economic development. It is the most vital resource without which no meaningful societal development can be made. Land is a man's free gift of nature but acquired at a great cost, expense and labour. Land acquisition and purchase in Nigeria is expensive and problematic coupled with the bureaucratic bottle-neck involved in perfection of title.

The purchase and acquisition of land in Nigeria and Lagos in particular is a costly venture. A prospective purchaser of land expends money on searches to determine if the land is free from government acquisition and if the land is free from any encumbrances, he also spends money on land evaluation, agency and legal/solicitor's fees. In the case of a swampy land, a large sum of money is expended on sand-filling the land. Money is also expended on clearing, surveying, preparing plans and drawings/designs and securing Town Planning Approvals. A considerable sum is also expended on land charting, land information certificate and obtaining governor's consent to land transactions.

Granted that the Act vests ownership of lands on the Governor of each State of the Federation, it is submitted that holders or occupiers of "unimproved" lands ought not to be deprived of compensation in the event of compulsory acquisition. Land holding being a means of wealth creation and the best form of investment, coupled with the pivotal role that lands play in the social economy of a nation, the real economic value of an "unimproved" land ought to be the yardstick for measuring payment of compensation. It is submitted that depriving a land holder of compensation on the excuse that the land is not "improved" upon, despite the huge costs incurred in the acquisition and purchase of land in Nigeria, is (to say the least), unjust and punitive.

Sections 43 and 44 of the 1999 Constitution vis-à-vis non-compensation for "unexhausted" Economic Interest in lands, Subject of Compulsory Acquisition

Section 43 of the 1999 Constitution grants to every Nigerian, the right to acquire and own immovable property anywhere in Nigeria whilst section 44 provides that:

"No movable property or any interest in an immovable property shall be taken possession of compulsorily and no right over or interest in any such property shall be acquired compulsorily in any part of Nigeria except in the manner and for the purpose prescribed by a law that, among other things-

(a)requires the prompt payment of compensation therefor..."

Sequel to this constitutional provision, there is no distinction made by the 1999 Constitution, between "improved"/"developed" and "unimproved"/"undeveloped" immovable property in Nigeria. The 1999 Constitution used the phrases (i) "any interest in an immovable property", (ii) "no right over or interest in any such property shall be acquired compulsorily" and (iii) "prompt payment of compensation therefor." Based on the words as used in these sections of the Constitution, a holder of an "unimproved" or "undeveloped" land ought to be entitled to compensation on the basis that the holder possesses a modicum of interest or right over the immovable property subject of compulsory acquisition.

A cursory look at section 44 of the 1999 Constitution will show that once there is an interest or right over a property compulsorily acquired for public purpose, the holder becomes automatically entitled to a prompt payment of compensation. It is submitted that once the governor issues a certificate of occupancy upon perfection of title, the holder named therein acquires an interest or right over the said property covered by the certificate of occupancy. It is this interest or right as evidenced by the certificate of occupancy that section 44 of the 1999 Constitution seeks to protect from deprivation without compensation.

Section 44 of the 1999 Constitution does not seek to protect the "improvements" or "developments" on the land but the right holder's interest in or right over the immovable property, no matter how minute or small that interest or right may be. In view of the constitutional provisions, it is submitted most respectfully that restricting the right to receive compensation on the basis of "unexhausted improvements" is grossly inconsistent with and a violation of section 44 of the 1999 Constitution. It is our considered opinion that the improvements on the land should attract additional compensation to the value of the land at the time of acquisition for public purpose.

In conclusion, we advocate that based on sections 43 and 44 of the 1999 Constitution, compensation ought to be paid to a land holder once his interest in or right over the property is taken away, interfered with, or extinguished by way of compulsory acquisition for overriding public purpose. Consequently, the provisions of sections 28 and 29 (4)(a) of the Act amount to legislative discrimination against economic interests in or right over immovable property in Nigeria, expressly guaranteed by the 1999 Constitution.

Footnotes

1 Benedict Oregbemhe, LL.M (Unilag), BL (Nig. Law Sch.), LL.B (Uniben). Senior Associate at SPA Ajibade & Co., Lagos, Nigeria.

2 http://www.fao.org/3/a-i0506e.pdf , accessed on 8/3/16

3 Cap. C23 LFN 2004

4 "Property Rights and the Constitution": Cato Handbook for Policy Makers, Cato Institute, 7th ed., available at http://object.cato.org/sites/cato.org/files/serials/files/cato-handbook-policymakers/2009/9/hb111-34.pdf , accessed 21/2/16

5 Cap. L5 LFN 2004

6 Section 1 of the Act

7 Section 32 of the Act

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.