LEGAL CONSIDERATIONS OF REAL ESTATE TOKENISATION IN LAGOS
Introduction
Real estate is one of the most lucrative sectors in Nigeria, with property values in parts of Lagos appreciating by as much as 10% annually. Yet, the sector remains plagued by bureaucratic inefficiencies, lack of transparency, and widespread fraud. In a bid to combat these prevalent issues, the Lagos State Government has announced plans to tokenise real estate assets. This initiative aims to improve transparency, curb fraud, and broaden access to land ownership through digital tokens and fractionalised interests.
This initiative builds upon earlier reforms such as the development of the Electronic Geographic Information System (E-GIS) portal, which has digitised key land administration processes including title searches, land applications, and Governor's consent. Together, these reforms reflect a strategic push by the Lagos State Government to modernise land governance and address long-standing inefficiencies and fraud within the property market.
However, while the initiative is commendable in its ambition and potential benefits, it raises some key points of interest. This article examines the key legal and regulatory considerations arising from the Lagos State tokenisation initiative.
1. The Legal Status of Tokenised Land
Tokenisation refers to the process of converting rights to a physical asset such as land or property into a digital token that can be stored, transferred, or traded on a blockchain. These tokens may reflect full or fractional interests and can be transferred via smart contracts.
However, under the Land Use Act 1978 (LUA), all land in each state is vested in the Governor, who may grant rights of occupancy subject to consent and registration requirements. A valid transfer of an interest in land must be evidenced by registered instruments such as Certificates of Occupancy or Deeds of Assignment, duly recorded at the appropriate land registry.
Current Nigerian law does not recognise digital tokens as valid instruments for proving title or transferring proprietary interests in land. Governor's consent and formal registration remain mandatory, and the LUA does not accommodate tokenised instruments as substitutes for traditional title documents.
As a result, such tokens may, at best, reflect beneficial or contractual interests, but not confer enforceable legal ownership. Until legislative reform formally integrates digital tokens into Nigeria's land law framework, tokenised real estate will remain largely symbolic and lack the capacity to confer legal title.
2. Blockchain as a Tool for Fraud Prevention
Land fraud remains one of the biggest issues in Nigeria's property sector. Incidents such as multiple sales of the same parcel, forged documents, impersonation, and disputes over unregistered interests are frequent and often lead to prolonged litigation.
Blockchain technology, if effectively integrated with state land registries, offers significant potential to address these issues. It enables the creation of tamper-proof and timestamped records of title and transaction history, making document forgery and unauthorised alterations exceedingly difficult. Blockchain also supports real-time verification of property records, allowing prospective buyers, financial institutions, and regulators to confirm ownership status without relying solely on manual registry checks.
When combined with automated smart contracts that enforce agreed transaction terms, blockchain can significantly reduce risks in land transactions, deter fraud, and foster greater confidence in Nigeria's real estate market.
3. Regulatory Treatment of Tokens and Virtual Assets
The Investments and Securities Act (ISA) 2025 establishes a new legal foundation for the regulation of digital and virtual assets in Nigeria. Under the Act, virtual tokens may be classified as securities, bringing them within the regulatory oversight of the Securities and Exchange Commission (SEC).
The SEC is authorised to regulate Virtual Asset Service Providers. Platforms offering tokenised real estate must comply with applicable requirements, including disclosure obligations, Know-Your-Customer (KYC) protocols, Anti-Money Laundering (AML) measures, and investor protection standards.
A crucial distinction must be made between the legal treatment of tokenised interests under property law and under securities regulation. While tokenised assets may not confer legal title to land under the LUA, they may still be treated as securities under the ISA if they represent economic interests in real estate.
As a result, tokenised real estate may be subject to investment regulation, even though it is not yet recognised as a valid form of land ownership.
4. Smart Contracts and Legal Enforceability
Smart contracts are code-based agreements that automatically execute once predefined conditions are met. In the context of tokenised real estate, they may be used to transfer fractional interests upon verification of payment, thereby reducing transaction costs, delays, and the risk of default.
The legal enforceability of smart contracts under Nigerian law however, remains unresolved. Unlike traditional contracts, smart contracts are typically formed without written terms, signatures, or explicit provisions for dispute resolution. This raises doubts about whether they meet the legal requirements for valid contracts, particularly in high-value real estate transactions.
Core elements such as offer, acceptance, consideration, and the intention to create legal relations may be difficult to establish where the agreement exists only in code. Furthermore, Nigerian courts and statutes have not yet recognised smart contracts as enforceable, nor is there legal precedent or guidance confirming that automated transactions satisfy the formalities required under Nigerian contract law.
5. Coordination Across Legal and Regulatory Sectors
Tokenisation intersects with several regulatory sectors, including land administration, financial regulation, data protection, and digital infrastructure. Effective implementation will require deliberate coordination among key stakeholders. The Lagos State Lands Bureau and the Office of the Surveyor-General must work closely with the National Information Technology Development Agency and the Ministry of Science and Technology to ensure technical alignment and policy cohesion. Similarly, the Nigerian Data Protection Commission will need to address data protection risks associated with blockchain deployments, particularly under the Nigerian Data Protection Act 2023. The SEC must also play a central role in clarifying how tokenised assets are classified and regulated within the securities market.
At present, there is no unified legal framework that governs tokenised real estate. This gap results in uncertainty about whether tokenised land assets should be treated as securities, commodities, or property, and raises questions about how they interact with existing property registration laws and land use regulations.
Conclusion
The tokenisation of real estate represents a significant opportunity for Lagos State and the broader Nigerian economy. It has the potential to improve transparency, expand access to land ownership, and drive both foreign and local investments into the economy. Technology startups can build solutions around smart contract management, property trading platforms, and digital land registries while investors, both local and foreign, can enjoy new attractive investment options such as fractionalised ownership and digital property trading.
A coordinated policy approach involving legislators, regulators, and the judiciary will be essential to ensure that innovation is underpinned by enforceable rights, legal protections, and a reliable legal and regulatory framework.
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.
