Everything you need to know about land titling in Nigeria

Everything you need to know about land titling in Nigeria

Everything you need to know about land titling in Nigeria

22nd April, 2022

4 minutes, 18 seconds read

In real estate sales transactions, documentation has been proven to be one of the discombobulating aspects for buyers in Nigeria. Land titles have remained a significant contributing factor to this bottle neck for years without end. The Nigerian legal system has seen an enormous number of cases on land disputes and fraud committed through manipulation of Land title documentation.  We have identified that one of major contributing factors is ignorance and not enough awareness on what constitutes proper and valid documentation in Nigeria. Our goal at BuyLetLive is to make your property acquisition journey easier and in this article we have provided some information on land ownership documentations within the Nigerian context. We will kickstart the conversation from the types of titles and their importance in terms of what the holder can do. For information purposes, the Land Use Act of 1978 provides the latest framework for land ownership in Nigeria and will be the most referenced document throughout this article.

Certificate of Occupancy (C of O)

One of the most criticized provisions of the Land Use Act is that it vests all land within the territory of each state in the State Governor, who is expected to hold it in trust and make it available to the citizens through the grant of a 99 years rights of occupancy. Technically, this means that every land holder in Nigeria is considered a leaseholder and a Certificate of Occupancy is a legal document issued by the government to convey occupancy rights to the person.

On any piece of land in Nigeria, only one Certificate of Occupancy can be granted. The implication of this is that when a property owner decides to sell, the Governor is not expected to issue another C of O on the same property. What is usually required is that the original title holder would secure the Governor's consent to sell. This consent document will then serve the purpose of transferring ownership to the new buyer and need to be documented with the state government authority.

Governor’s Consent

Because land is a property of the government, a transfer of such interest according to the Land Use Act is only permitted when the consent of the State Governor is sought and duly obtained. “Governor’s consent” is usually signed by the Governor as a proof that he has consented to the transfer of a right of occupancy on a landed property from one person to another. This document is very crucial and any title transfer that is not consented to by the Governor is considered invalid.

Deed of Assignment

A Deed of Assignment is a proof of transfer of title or the ownership in a property from one person to another. In this case, the original holder is known as the assignor, while the other party is known as the assignee. In Nigeria, where a party is buying from a holder of a certificate of occupancy, it is expected that the transaction should be followed with a deed of assignment. Deed of assignment is usually prepared by the buyer’s lawyer and then executed by both parties once properly vetted. Typically, a deed should contain information about the parties, and description of the subject property being sold. Additionally, a deed of assignment is only tenable in law if it has been duly registered with the consent of the Governor. Prior to the Land Use Act this was known as the Deed of Conveyance and some properties still have this title till date.

Registered Survey Plan

Every land is expected to have undergone a survey that will show the boundaries and geocode and its measurement, alongside other geoinformation. For a green parcel of land, especially if at the outskirts of town, this is usually the first document that developers offer to new subscribers before proper documentation is done and registered with the state. It is usually done by an estate surveyor and registered with the office of the Surveyor General in the state.

Deed of Mortgage

Real estate is one of the most tenable securities for loans all over the world. According to Allied Market Research, the global real estate loan market size was valued at $7,968 billion in 2020 and is projected to reach $23,121 billion by 2030. Typically, for every real estate secured credit, it is expected that the mortgagee (lender of a loan) should have an interest in the property. This additional interest would typically be conveyed through a Deed of Mortgagee and if the borrower of the loan defaults on loan payment, the holder of the document can take possession of the property. This document is usually prepared by a reputable lawyer and registered with the state. This is similar to the deed of Lease and/or Sublease that follows lease and sub-lease arrangements.

 Contract of Sale, Letter of Allocation, and Receipts of Payment

Contract of sale indicates that a property has been sold. It is a typical contract between the buyer and seller that documents the sales contract between the parties. The transaction can happen between an individual or company and the state or a private developer. Oftentimes, a contract of sale is followed by a letter of allocation that documents every detail of the subject property or plot. Payment receipt on the other hand shows the amount paid to the seller by the buyer, and authenticates that there was a monetary consideration for the sales transaction. It is noteworthy that these documents on their own are not legally tenable, and buyers are encouraged to properly document titles with the state after a land transaction.

For more information on the documentation process, requirements, fees and additional information please visit the state land registry. For properties in Lagos, you can check up more information here.

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17th May, 2022

4 minutes, 34 seconds read

Is the Nigerian Mortgage System really aiding home ownership?

All over the world, mortgage is known to be a viable method to owning a home, but several factors have made it difficult for most Nigerians to access mortgages. In developed countries, effective mortgage systems have aided many people to become homeowners but in Nigeria, there have not been many success stories recorded. We looked closely at mortgage models in Europe and America and found that a major enabler of their effective mortgage system is lower interest rates and longer repayment period.  

Two months ago, the U.S. Census Bureau announced a homeownership rate of 65.5% for the year 2021; and in England, the House of Commons stated that 65% of its population were homeowners as at the end of 2020. This is contained in its “Extending home ownership: Government initiatives” report. These countries have single digit Mortgage interest rates – 6% in the United States and about 4% in England. Kosovo, Romania, Hungary, Singapore and Croatia all have home ownership rates above 90% with mortgage interest rates falling below 5%.

These mortgage systems have proven to be very effective, giving opportunities to more  young people; millennials below age 30 to own homes. This is very important to note when you consider that generally, millennials all over the world are finding avenues to increase their incomes, encouraging the “gig economy”, innovations in tech and the benefits of remote work. In 2020, especially during the worldwide lockdowns, we read stories on Twitter about the increase in home ownership rates amongst millennials in countries like the US.

 When we looked at homeownership rates in Nigeria, we saw a sharp difference. According to the “Housing Snap Poll” data by NOIPolls (a Nigerian consultancy company) only 31% of Nigerians as at 2014 lived in their 'personal house' which they may have built, purchased or inherited. This has negatively impacted the purchasing power of the average Nigerian. While this is many years ago, it is arguably true that due to inflation and recession, more Nigerians are poorer today than they were in 2014, and this means that less people can afford to own houses.

But let's come back to the conversation. If mortgage systems have significantly aided homeownership in other climes, why is it different in Nigeria?

Reports say that “85% of people in Nigeria would consider a mortgage as an option for home ownership” but availability, affordability and access are a major problem. Interest rates typically from commercial mortgage providers range between 15% to 25% per annum and up to 30% in some situations. In a bid to provide some respite, FMBN Act 3 of 1992, established the National Housing Fund (NHF) with the sole aim of mobilizing funds for the provision of “affordable” residential houses for Nigerians. In its 5 years of operation, the NHF was only able to disburse to 5,938 beneficiaries. It is understandable that the NHF can only disburse as much as is available in the treasury, there is still a big gap to fill especially with the lingering housing deficit.

What are your thoughts on the issues of the Mortgage system in Nigeria? DO you have any stories or experiences with it? We would love to hear from you. Please send your comments/feedback to [email protected]  

Think we should keep this part for the next article and do more deep dive 

. The National Housing Fund, according to the Act is supposed to come as investments from –

 ·         Commercial banks/Merchant banks- 10% of their loan and advance portfolios

·         Insurance companies - 20% and 40% of Non-Life and Life insurance respectively

·         and contributions from the Federal Government.

 Unfortunately, these numbers fall short of expectations.

When we studied the income and mortgage data for Nigeria, combined with the typical loan requirements of the NHF and other providers within the country, we found that while mortgage is hard to access, millennials in Nigeria also have a much lower chance of homeownership compared to their counterparts in other countries. Steep interest rates, the method of credit rating and qualifying for a loan are major reasons.

The requirements for loan application by the NHF states that:

  1. The applicant must show proof of deducted monthly contributions remitted to FMBN promptly (At least 6 months contributions should be made).
  2. Passbook is expected to be updated by an employer and is transferable from one employment to the other.
  3. Yearly statement of cumulative contributions plus accrued interest. (The higher your contribution volume, the higher the probability of being considered).
  4. Apply through any accredited Primary Mortgage Bank(PMB).
  5. Applicants must provide satisfactory evidence of regular income.

 Looking closely at those requirements, the problems become clearer.

 Unemployment versus Employment in the new work culture

According to data from the Nigerian Bureau of Statistics, 13.9 million Nigerian youths were unemployed by the end of 2020. Unemployment and underemployment rates also form a combined 55.7%. 

This is not to make a case for granting mortgages to people without employment. When you dig into the Nigerian income data, you will see that most of the employed, especially millennials, are either self-employed, working freelance, in the informal sector or in startups where compliance to points a and b above is extremely low.

It is not only that employment and regularity of income as a requirement puts younger people at a disadvantage, the cumulative contribution yardstick (which naturally favors the older people who have worked longer) makes it even so much harder for Nigeria’s millennials to own a home through mortgages. This extent of being cut off hits deeper among the younger population who are mostly earning entry level salaries.                                                    

Overall, the problem is more structural and fixing it will need a policy focused shift. The guiding regulations are not adapted to current work trends and excludes the sect of those flourishing in other forms of employment like freelancing, start-up structures and such.  A number of lessons can be learned from Europe and America, and in our next article, we will be discussing how other countries have been able to secure mortgage inclusion for their young people.

Are there other innovative ways these issues can be fixed? We would love to hear from you. Please send your comments/feedback to [email protected] 

9th May, 2022

1 minute, 30 seconds read

Lagos Building Collapse - Another tragedy at Ago Palace Way Despite Structural Integrity Measures

Barely a week after a three-story build collapse that killed over ten people in the Ebute Meta area of Lagos state, another building collapsed in the Ago Palace way area of the state sadly leaving behind nothing for the occupants.

The unfortunate incident happened on the 7th of May, 2022 at Chris Agadi Street off Ago Palace way opposite AP Fueling Station.

 

Despite the Lagos State Structural Integrity Test, this menace continues to rock Lagos State and this is worrisome.

 

At the time of this report, the head of the Lagos State Emergency Management Agency(LASEMA), Olufemi Oke-Osanyintolu confirmed in a statement that no casualty was recorded.

He said; “On arrival, information gathered from the residents revealed that the building gave signs several hours before the building collapsed. Fortunately, nobody was trapped as all the occupants evacuated the area when the signs began 2 hours before the collapse. A headcount of occupants was carried out to ensure no occupants were missing and the remains of the building were cordoned off. The operation was concluded at about 5:23 a.m.” The statement read.

 

Taking learnings from this incident, we believe some questions need to be answered especially in educating the public in managing similar situations. 

What should be done when a building gives signs of collapsing?

Who should be notified and what safety measures should be taken to avoid casualties?

 

The agency added that the site will be handed over to the Lagos State Building Control Agency (LASBCA) and the Ministry of Physical Planning for further investigation.


While the government and its agencies are making moves on this issue, the big question still looms, “Which building is next to collapse?” “Is this becoming a new normal that we should get used to?”


In addition to the intervention from the Aside the government, real estate practitioners must take lessons rapidly on ensuring and maintaining the structural integrity of buildings. Should there be a nationwide structural integrity certification drive? Do practitioners need to involve an extra layer of testing structural integrity? We must begin to answer these lingering questions.