Land is one of nature's most invaluable gifts to man. It is scarce and finite and as such, transactions involving land are regarded as significant investments requiring the utmost due diligence and careful consideration.
Acquisition of land and interests in land is one of the most common property law transactions, also known as 'conveyancing'. Conveyancing is the process of transferring interests or title in land from one party to another. Due to the country's multi-cultural, ethnic, and religious diversity, Nigeria operates a pluralized legal system, especially in the real estate sector, where the conveyancing process is governed by various legislations depending on the relevant jurisdiction. Jurisdiction in property law is determined by the nature of the transaction, title to land, location of the land, and personal laws applicable to the title holder.
For the purpose of this article, we will focus on property transactions in Lagos State, the procedure for perfection of title, and the challenges posed by the applicable land registration regime.
I. Legal Framework Governing Property Transactions in Lagos State
The sources of laws applicable to property transactions can be categorized under four (4) classes:
1. Local legislations: The major legislations include:
a. The 1999 Constitution
b. The Land Use Act, 1978
c. Stamp Duties Act
d. Property and Conveyancing Law
e. Registration of Titles Law
f. Wills Law
g. Administration of Estates Laws
h. Companies and Allied Matters Act
i. Land Instrument Preparation Laws
j. Town Planning Laws, et al.
2. Received English Law: The received laws comprise the English Common Law, the Principles of Equity and the Statutes of General Application that were in force in England on or before January 1, 1900. Major examples include the Statute of Frauds Act 1677, the Conveyancing Act of 1881, and the Wills Act of 1837.
3. Judicial Precedents: These are decisions of the courts and judgments delivered in respect of disputes arising from property transactions. The High Court has original exclusive jurisdiction over land matters1 depending on the subject matter and nature of reliefs sought. The decisions are binding on parties as the courts derive their judicial powers from the Constitution. Appeals in this regard may lie to a higher court, for instance from the High Court to the Court of Appeal and from the Court of Appeal to the Supreme Court, which is the apex court exercising final jurisdiction over matters before it.
4. Customary Laws: The principles of customary law apply to land and title holders subject to native law and custom, or tenets of the Islamic faith and the transactions related thereto.
Read also: How to perfect your title on a property in Nigeria.
II.Importance of Registration for Security of Title
The Land Use Act vests the ownership and control of all land in Nigeria in the Governors of the federating States for the benefit of all Nigerians.2 The Act expressly prohibits the alienation of interests in land done without the consent of the Governor first had and obtained.3 It further provides that any transaction or any instrument which purports to alienate any interest or right over land other than in accordance with the provisions of the Act shall be null and void.4
The purport of the above-mentioned provisions is to the effect that where there is alienation of interests in land either by way of mortgage, sale, or sublease or otherwise without prior consent of the Governor, such alienation will be rendered null and void.5 Obtaining the Governor's consent in land-related transactions is one of the three stages of title registration, i.e., Consent, Stamping, and Registration.
Title registration is a product of statute. The Land Use Act is the primary legislation governing land administration and title registration in Nigeria. Being a federation, States in Nigeria have passed subsidiary laws and regulations for the purpose of registration of title to land in their respective state. In this regard, the Lands Registration Law, 2015, is in force in Lagos State.
Title/land registration plays an important role in mitigating the risks associated with property transactions and ensuring the security of title. Registration guarantees title to property. Although registration creates a right, title, or interest in land in favour of the title holder, it is important to note that it does not cure defects in title or ownership.6 It is merely a viable way of preventing conflict regarding ownership and it makes buying and selling of land much easier. Registration also helps a purchaser to discover from inspection of the register whether the vendor has the power to sell and whether the property is encumbered.
III.Requisite Steps for Registration and Security of Title
1. Pre-Contract Inquiries and Due Diligence
Due diligence, in property transactions, is the process of verifying the title of the vendor as asserted by them and investigating the property to be purchased to reveal any defects.
Due diligence is as much about conducting a thorough investigation of the property and knowing where to search. Searches are commonly conducted in the following places:
a. Lands Registry: This is the most common place to conduct search over a registered property or property subject to a statutory right of occupancy. A thorough search of the register will reveal the nature of the title or interest and the holder of such title or interest in respect of the property.
b. Probate Registry: The registry keeps records of Wills and other testamentary instruments. It also grants probate and letters of administration and keeps records of the same. Where the property to be purchased is subject to any bequest by Will or intestacy, it is imperative to conduct a search at the probate to reveal whether probate or a letter of administration has been granted and to ascertain who the beneficiaries, executors, or administrators are.
c. Corporate Affairs Commission (CAC): Where the owner of the property is a corporate body, a search at the CAC registry is vital to verify the status of the corporation and the identity of its directors or trustees. It is also important to ensure that the prescribed resolution authorising the transaction was duly passed.
d. Family/Communal land: Where a family or communal land is to be sold or transferred, interview must be conducted with the head and other principal members of the family or community to verify the history of title to the land including the mode of acquisition of title, the direct descendants of the founder and the branches of family emanating therefrom. It is also advisable to inquire from the principal members of the family or community and owners of adjoining lands whether the seller is entitled to sell the property to be purchased and whether there exists any customary encumbrance against their right to sell.
e. Court Search: A search at the Court's registry will reveal the existence of pending litigations, subsisting orders or judgments in respect of the property in issue.
f. Charting at the OSSG: Charting of the coordinates of the survey plan at the Office of the State Surveyor General to ascertain the exact location of the land and also to ensure that it is not under government acquisition or commitment.
g. Physical Inspection: Where a purchaser fails to conduct a preliminary inspection of the physical state of the property, they will be bound to take the property with its patent defects, thus, it is imperative to physically visit and inspect the property to be purchased. A physical inspection of the property will reveal the general current condition of the property and any damage caused by natural conditions or fair wear and tear.
2. Post-Completion Steps
Post-completion steps are the requisite steps for perfection of title and registration at the Lands Registry. There are three steps taken in the perfection of title in land transactions in Nigeria – obtaining the Governor's consent, stamping of the registrable instruments, and registration. Registration is done at the Lands Registry of the relevant State upon application by the parties. Often time it is the purchaser/assignee who submits their conveyancing instruments for registration. The procedure for perfection is mostly the same in the different States of the Federation, however, it may differ in a few details. The procedure applicable in Lagos State is summarised below –
· CONSENT: Upon the issuance of a consent clearance letter by the Internal Revenue unit of the Registry, evidencing the payment of the consent fee, capital gains tax, personal income tax and other statutory fees to be assessed at this stage; the application for consent together with the deed is forwarded to the office of the Permanent Secretary, Ministry of Lands for onward dispatch to the designated commissioner to sign the consent portion of the instrument of conveyance.
· STAMPING: After the Governor's consent has been obtained, the stamp duty and registration fee payable in respect of the property would be assessed and a notice issued to the applicant/assignee. Upon payment of these assessed fees, the deed/conveyancing instrument is stamped accordingly.
· REGISTRATION: The original and counterpart of the duly executed and stamped deed are forwarded to the Deed Registrar for registration. The Deed Registrar then registers it in the Register of Deeds on a particular volume, page and number. See an example of an entry below for reference:
"No. 41 at Page 41 in Volume 2010B"
The original copy of the duly stamped, signed, and registered deed is handed over to the Assignee, while a counterpart is kept at the registry.
IV.Challenges of the Extant Title Registration Framework
There are many issues and challenges bedevilling the land registration systems in Nigeria. These challenges are often due to a number of factors, including a lack of public awareness, high cost of registration, corruption issues, lack of manpower, irregularities in records and documentation, a procedure fraught with bureaucratic bottlenecks, and the duration for registration is unnecessarily protracted. With the adoption of a digitized record system by the Lagos Lands' Registry known as the Aumentum Land Administration Automation process – a digitised process that allows the automation of land records management, as well as facilitate the registration of property transactions in a more chronological, controlled and transparent manner – new challenges have come to the fore. In addition to the existing issues, inadequate digital infrastructure, lack of technical know-how, epileptic power supply, and incessant internet network failure have further complicated the perfection process.
V.Summary & Conclusion
The real estate sector in Nigeria operates under multiple laws, procedures, and regulations largely due to the federal system of government in place, and the application of these laws varies from state to state. Furthermore, the onerous and capital-intensive nature of title verification, land acquisition and the perfection process in Nigeria makes for a peculiar situation requiring special skills and knowledge to navigate. In addition, by operation of statute, it is mandatory to engage a legal practitioner to prepare land documents in Nigeria.7 Hence, persons or corporations looking to acquire, transfer, or alienate interests in landed properties are advised to work with experienced legal professionals who are knowledgeable and conversant with the specific laws, procedures, and regulations applicable in the state where the property is located.
Footnotes
1 Section 39 Land Use Act, 1978
2 Section 1 Land Use Act, 1978 expressly provides that "subject to the provision of this Act, all land comprised in the territory of each State in the Federation is hereby vested in the Governor of that State and such land shall be held in trust and administered for the use and common benefit of all Nigerians in accordance with the provision of this Act."
3 Section 22 Land Use Act, 1978
4 Section 26 Supra
5 Polaris Bank Ltd & Ors. v Oladipo (2020) LCN/15366(CA)
6 See KEENLINE INVESTMENT LTD & ANOR v. PATERSON ZOCHONIS INDUSTRIES PLC & ORS (2021) LPELR-54933(CA). See also Onagoruwa v. Akinremi (2001) 13 NWLR (pt.721) 38
7 Section 22 (1) (d) of the Legal Practitioners Act; See also Land Instrument Preparation Laws
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.
