There are various laws that govern real estate in Nigeria, from federal based laws to state-based laws. The main laws are the Constitution of the Federal Republic of Nigeria 1999 (as amended), the Land Use Act 1978 Cap L5, LFN 2004, and real estate is also governed by the laws of the state where the land is situated and this law differs from state to state. For example in Lagos State, the laws that govern real estate are the Land Registration Law of Lagos State Cap L41, 2015 and the Land Use Charge Law 2018.
The laws that govern real estate includes but not limited to these enunciated below are;
The Constitution of the Federal Republic of Nigeria 1999 (as amended)- the Constitution guarantees the right of every Nigerian to own and acquire real estate in any part of the country. Section 43 of the Constitution provides that “subject to the provisions of this Constitution, every citizen of Nigeria shall have the right to acquire and own immovable property anywhere in Nigeria”.
The Land Use Act 1978 Cap L5, LFN 2004- this Act relates to the ownership and control of land in Nigeria. It also enhances the principle of leasehold in which land is vested in the governor of the state, to be held in trust for the benefit of Nigerians within the state, as provided in Section 1 that “all lands comprised in the territory of each state in the Federation are 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 Nigerian in accordance with the provisions of the Act”. By the provision of this section, it becomes unlawful to transfer interest in land without the consent of the governor of the state where the land is located, as provided under Section 22 of the Land Use Act. Every landowner becomes a lessee to the state government within a specified period of time. Although all land in a state is vested in the governor of the State, in terms of registration of land ownership, each state adopts its own laws to administer and regulate the use of land in the state.
Rent Control and Recovery of Premises Act Cap 544 1990– every state has its own laws for recovery of residential premises given to tenants. It was created to safeguard the activities of landlords and tenants. the provisos of this Act provides steps to be adhered to by landlords in evicting their tenants from his building, as it frowns against any unjust actions taken by landlords to get rid of unwanted tenants without following the appropriate procedures.
Nigerian Urban and Regional Planning Act 2004– the Act governs the establishment and management of regional and urban planning, formulates policies on the types and level of physical development plans, promotes the co-ordination among state and local government in the preparation and implementation of urban and regional plans. The Act also provides for an avenue for laying complaints and grievances against actions such as demolitions.
The Stamp Duties Act LFN 2004– the Act regulates stamp duties imposed on land transaction instruments and the rate of tax to be paid is dependent on the type of property and value of the land transaction. Stamp duty is usually charged either ad valorem where the duty to be paid is the percentage of the consideration on the land transaction instrument or a fixed sum which is irrespective of the consideration on the land instrument. Duty on land within the control of the state is payable to the State Inland Revenue Service and should be carried out within 30 days of execution of documents.
Recently a new policy was introduced that to reduce the disputes that arise in real estate transactions and to generate more revenues, the Federal Inland Revenue Service (FIRS) announced that stamp duties will be paid on house rent and Certificate of Occupancy in line with its new adhesive duty, so as to make them legally binding on all parties involved in the transaction.
Conveyancing Act 1881– the Act is English Statue of General Applicable which governs all conveyancing and property transactions in the Northern and Eastern parts of Nigeria and a part of Lagos. The Act in Section 2 defines property to include real and personal property, any estate or interest in any property, real or personal, any debt, anything in action, any other right or interest.
Property and Conveyancing Law (PCL) 1959– this estate law is applicable in the Western region of Nigeria. It provides that no sale of land shall be enforced except there is a note of memorandum in writing which contains the terms of the sale and subsequently signed by the persons to be charged. The law also laws emphasis on the importance of land transaction instruments to be by deed as Section 67(1) of the law provides “that all conveyances of land or interest in land for the purpose of creating any legal estate are void unless they are made by deed”. This Act governs ownership of properties in Ogun, Oyo, Ondo, Osun, Ekiti, and some parts of Lagos State.
Land Registration Law of Lagos State Cap L41, 2015– the Land Registration Law of Lagos State mandates any holder of a land instrument to register it within a period of sixty (60) days of obtaining the governor’s consent, as the real estate laws require for any transaction or instrument that confers, vest, transfers, limits, charges or extinguishes any interest or right in a property to be registered. This provision is made in the Lagos State Lands Registration Law, Section 62 (1) whichprovides that “the mode of transfer of an interest in land, sub-lease or mortgage must be by deed, such transfers shall be deemed to be complete only after the deeds have been registered at the Land Registry”. However, the transfer of an equitable interest in the land is obtained upon execution of transfer documents such as a deed of assignment, deed of lease, etc, by the parties. Legal title to the land is transferred upon the completion of the registration process such as obtaining governor’s consent, payment of stamp duties, and registering the land instrument with the land registry.
Acquisition of Lands by Aliens Law- this law is applicable to foreigners who are desirous of acquiring real estate within Nigeria, and it makes provisions for the procedure and requirements to be followed by foreigners in the acquisition of land in Nigeria. The law lays emphasis on foreigner’s obtaining the governor’s consent before the acquisition of land and also serves as a prerequisite of selling land to either foreigners or Nigerians.
Registration of Titles Law 2004- this Act is applicable in some parts of Lagos State which includes Victoria Island, Ikoyi, Lagos Island, and others and it requires titles to land to be registered as first or subsequent registrations. Registration serves the purpose of ensuring that title has been registered and investigated by the Registrar of titles so that land purchasers can rely on the registration to determine that a land vendor has the right of title to sell.
Administration of Estate Laws of States– in relation to real estate, this law regulates the administration of the estate of a deceased person who dies intestate (without leaving a will) and testate (with a will).
Tenancy Law of Lagos State 2011- by virtue of the provisions of this law, collection of rents beyond a period of two (2) years are prohibited except in areas such as Apapa, Victoria Island, Ikeja GRA, and Ikoyi. This law provides for tenancy and recovery of premises in Lagos State.
Tenement Rate Laws of Nigeria– by the provisions of this law, taxes are imposed by the local government on landed properties for the sole purpose of generating revenue at the local level. This law is also applicable in all states within Nigeria.
Capital Gains Tax Act (CGTA)- in relation to real estate, the CGTA makes provisions for taxes that are chargeable on the profit of proceeds derived from the disposal or sale of assets and also on properties sold outside Nigeria but the profits are brought into Nigeria, as real estate is an asset. The Act operates at the federal and state level and the rate of this tax is 10% on each disposal or sale.
Conclusion
The above-highlighted laws are just some of the various laws that have a direct impact on real estate transactions in Nigeria; there are other real estate laws that regulate land transactions. The Constitution and the Land Use Act are the major laws that regulate real estate while the rest are subsidiary legislations.