Real Estate From the Lens of the Nigerian Juris Corpus

Abstract

The article discusses the various legislations that regulate real estate in Nigeria. It highlights the key laws, such as the Constitution of the Federal Republic of Nigeria 1999, the Land Use Act 1978, the Nigerian Urban and Regional
Planning Act 2017, the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 1995, and the Companies and Allied Matters Act 2020. These laws govern different aspects of real estate, including the acquisition and ownership of land, the process of obtaining rights of occupancy, the involvement of minors in land transactions, and the regulation of foreign exchange transactions related to real estate investments. The article also mentions that the Nigerian Urban and Regional Planning Act 2017 empowers the federal government to formulate national policies for urban and regional planning, which significantly impact the real estate sector. Additionally, the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 1995 regulates the inflow of foreign funds for real estate investments in Nigeria, ensuring transparency and compliance with the law.

Introduction

The real estate sector in Nigeria is governed by a complex web of federal and state-level legislations. Before diving into the nitty-gritty of real estate it is necessary that the meaning of real estate be considered. Real estate simply means real property that includes land and anything permanently attached to it or built on it, whether natural or man-made.

There are five main categories of real estate which include residential, commercial, industrial, raw land, and special use.

The laws and regulations play a crucial role in shaping the operations, rights, and obligations of various stakeholders involved in the real estate industry. Understanding the legal and regulatory framework surrounding real estate in Nigeria is essential for investors, developers, and property owners to navigate the market effectively and mitigate potential risks.

This article aims to provide an overview of the key legislations that regulate the real estate sector in Nigeria. It will examine the purpose and scope of these laws, highlighting both the benefits and challenges they present for real estate

investment and development. By analyzing the current legal landscape, this article will offer insights that can inform strategic decision-making and guide stakeholders in aligning their practices with the evolving regulatory environment.

Legislations Regulating Real Estate in Nigeria

Legislations are the architects that design the operations of a particular facet, which seeks to be regulated. To wit, are several laws enacted to ensure proper regulation of the various fields of practice, including the aspect of real estate in Nigeria. Real Estate is regulated by federal statutes such as

1. Constitution of the Federal Republic of Nigeria 1999 [as amended],
2. Land Use Act 1978,
3. Nigerian Urban and Regional Planning Act 2017,
4. Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 1995,
5. Companies and Allied Matters Act 2020

And for the various states in the Federation includes

1. Land Instrument Registration laws of the various states,
2. Wills Laws of the various states
3. Administration of Estate Laws of the various states
4. Registration of Titles law of the various states
5. Land Registration laws of the various states
6. Rent Control and Recovery of Premises Laws of the various states The Federal Legislations will be explained below:

The Constitution of the Federal Republic of Nigeria 1999 [as amended]

This is the grund norm of the Nigerian legislations which makes it the supreme law of the land and as such any law that is incompatible with the provisions of the constitution shall to the extent of its inconsistency be void.¹) The law further grants constitutional right to the citizens of Nigeria to acquire and own immovable property anywhere in Nigeria.² A breach of this constitutional right amounts to legal action on the individual or organization except where it is within the ambit of the instances/circumstances created by the law for the property to be compulsorily acquired.³

Land Use Act 1978

This is the principal law enacted to regulate ownership of the real estate in Nigeria. By the provisions of the Act, the power to control and administer all land situated within a geographical area of a state is vested in the State Governor for the benefit of the citizens.⁴

For the Federal Capital Territory it is the Minister of FCT that acts as the governor on behalf of the President for the state. The governor is vested with power to grant statutory right of occupancy⁵ in land whether urban or non-urban areas as a right of ownership for individuals and corporate bodies to hold and use the land for a limited-term, and such grant is evidenced by the issuance of certificates of occupancy.⁶

While the Local government are vested with the power to grant customary right of occupancy⁷ in respect of land in non-urban areas. The Governor is vested with power to designate parts of the State as urban and non-urban areas for various purposes.

Individuals who intend to alienate their interest in land through an assignment, sublease, or mortgage cannot otherwise do so without the prior consent of the Governor of the state where the property is situate,⁸ or where the individual is under the age of 21 years.⁹

Companies and Allied Matters Act 2020

This law encourages companies and businesses to acquire and own real estate in Nigeria.¹⁰ As it is not limited to individuals or foreigners alone but companies as they are legal entities who are different from its members and directors.¹¹

Nigerian Urban and Regional Planning Act 2017

This provides for the Federal government to be responsible for the formulation of national policies for urban and regional planning and development in Nigeria.¹² These policies created pursuant to the Act has a major impact in Real Estate in Nigeria. This Act is establishes certain bodies for the purpose of initiation, preparation and implementation of physical development plans in the Federal, State and Local government areas.¹³

Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 1995

The Act regulates foreign exchange transactions in Nigeria for the benefit of the citizens and also for the benefit of foreign investors to ensure transparency and compliance with the provisions of the law.¹⁴ The major link between real estate investment and this Act is in the regulating of funds imported into Nigeria for the purpose of investing into Nigerian real estate.¹⁵

It further ensures that there is a proper compliance with the requirements of the law in relation with the repatriation of funds from the authorized dealers by the Central Bank of Nigeria.¹⁶

Challenges Associated From the Laws Regulating Real Estate Investment in Nigeria

These various laws elucidate the challenges relative to it in relation to real estate investment in Nigeria. They include:

Land Use Act (1978):

1. Risk of government revocation: The power to control and administer all land situated within a geographical area of a state is vested in the State Governor⁴ who can revoke rights of occupancy of an individual, potentially leading to loss of investment¹⁷ when such revocation is not in accordance with the law or reasons for compulsory acquisition is not on legal ground it results in injustice and a depravity of the right of such individuals.

2. Grant of rights of occupancy: The process of obtaining rights of occupancy can be complex and time-consuming.¹³

3. A Minor under the LUA: The Governor cannot grant statutory right of occupancy or consent to assign statutory right of occupancy to a person under the age of 21 years, except a guardian or trustee is appointed on his behalf.¹⁸ However, if the right devolves upon him upon the death of the holder, he will be deemed to be of full age, without any need for guardian or trustee.

4. Non-Nigerian / Foreigner: A non-Nigerian cannot be granted right of occupancy nor can a right of occupancy be granted to him except with the consent of the National Council of State.¹⁹ An alien has been defined²⁰ as to include a company in which the majority of shareholders are foreigners. By the Acquisition of Lands by Aliens Law of Lagos State, a foreigner may acquire land in the state; however such acquisition is subject to the approval of the governor of the state.²¹ The consent may not be needed where the interest is for a period less than a year, However, where the foreigner in question is a woman who is married to a Nigerian Man she can automatically obtain a right of occupancy by virtue of having a citizenship by registration.²²)

Nigerian Urban and Regional Planning Act (2017)

Every individual intending to build must go for an investigation and the approval of the development permit at the Central Development to ensure that such plans is in line with the provided urban town planning development scheme else no matter how beneficial the investment may be it will be rejected. This Act provides the grounds for which a development permit may be rejected from an individual.²³

• The plan is not in accordance with the approved plan
• In the opinion of the Central Development the development is likely to have a major impact in upon the environment, facilities or inhabitants of the communities
• In the opinion of the Central Development the development is likely to cause nuisance to the inhabitants of the communities

Foreign Exchange (Monitoring and Miscellaneous Provisions) Act (1995):

1. Currency fluctuations: Currency fluctuations can impact the value of investments rendering the value of the property of lower value once compared with other currency exchanges rates and as such creating uncertainty.¹⁴
2. Risk of repatriation of funds: Foreign Investors intending to carry out investment into Nigeria may face certain challenges repatriating their funds due to currency restrictions or other regulatory hurdles.²⁴
3. Regulatory risks: Investors may face regulatory risks due to non-compliance with the Act provisions which may result in the complete lost on the investment owned.²⁵

Benefits/derivatives From the Laws Regulating Real Estate Investment in Nigeria

These various laws elucidate the benefits derived in relation to real estate investment in Nigeria. They include:

Land Use Act (1978):

1. Vesting of land in the State: Ensures that land is held in trust for the benefit of all Nigerians, promoting equitable access to land.⁴
2. Grant of rights of occupancy: Provides a framework for granting rights of occupancy, ensuring that both citizens and investors have a secure tenure over their land.¹³
3. Revocation of rights of occupancy: Allows the government to revoke rights of occupancy in cases of non-compliance, ensuring that land is used for its intended purpose and not for illegal purposes.¹⁷

Nigerian Urban and Regional Planning Act (2017):

The Act provides innumerable benefits to developers [citizens] who are eligible to own property in Nigeria such as

1. Right to apply for a development permit: Every developer has the legal right to apply for a development permit from the Central Development which is subject to been approved or rejected when It is not in compliance with the Act²⁶
2. Appeal against revocation of a development permit: Where there is a revocation of development permit on certain grounds which are not consistent with the provision of the laws as to a legal reason for revocation²⁷. The dissatisfied developer can appeal against such revocation.
3. Compensation for revocation: Where the revocation of the development permit is for the overriding interest of public or in accordance with the provisions of the Act. A compensation is made payable to the developer in the instance.

Foreign Exchange (Monitoring and Miscellaneous Provisions) Act (1995):

1. Foreign exchange transactions: Regulates foreign exchange transactions, ensuring that they are conducted in a transparent and accountable manner.¹⁴
2. Enforcement: There is an establishment of a framework for enforcing the provisions of the Act, where there are violations in that regards.²⁵

Strategies to Remedy the Challenges Associated From the Laws Regulating Real Estate Investment in Nigeria

1. Work with Trusted Professionals: Navigating the real estate market in Nigeria can be complex, with varying regulations, processes, and market conditions. To avoid costly mistakes, it’s crucial to work with trusted professionals, including real estate agents, lawyers, and property managers. A local real estate agent can provide valuable insights into the area, while a lawyer ensures that all property transactions comply with Nigerian laws. Additionally, professional property managers can help you handle tenants, collect rent, and maintain the property.

2. Understand Legal and Regulatory Requirements: The legal and regulatory framework surrounding real estate in Nigeria can be complex, particularly regarding land ownership, titles,, registration and taxes. Ensuring that your property has proper title documents, such as a Certificate of Occupancy (C of O) and is not in any contravention with the provisions of the law or with any encumbrances is crucial to avoiding disputes and losses in the future. Make sure to:
Verify the land title and ownership.
Stay updated on changes to tax laws or government policies that may benefit or affect your investment.

Conclusion

The real estate sector in Nigeria is governed by a complex legal and regulatory framework that encompasses various federal and state-level legislations. These laws and regulations play a crucial role in shaping the operations, rights, and obligations of stakeholders involved in the real estate industry. Understanding this legal landscape is essential for investors, developers, and property owners to navigate the market effectively and mitigate potential risks.

The key legislations discussed in the context include the Land Use Act, the Nigerian Urban and Regional Planning Act, and the Companies and Allied Matters Act. These laws address critical aspects such as land ownership, title documentation, development permits, and the ability of companies to acquire and own real estate in Nigeria.

The context highlights the importance of complying with the legal and regulatory requirements to avoid disputes and losses in the future. It emphasizes the need for stakeholders to work with trusted professionals, such as real estate agents, lawyers, and property managers, to ensure that their property transactions and investments align with the evolving regulatory environment.

Overall, the conclusion underscores the complexity of the real estate legal framework in Nigeria and the necessity for stakeholders to stay informed and proactive in navigating the sector’s regulatory landscape.

Recommendations

1. Consider amending the Land Use Act: The report suggests that the legal age for owning property or venturing into real estate should be lowered from 21 years to 18 years, in line with the Constitution of the Federal Republic of Nigeria 1999 (as amended) Section 29(4). Advocating for such amendments can help address challenges faced by younger investors.

2. Work with trusted professionals: Engage experienced real estate agents, lawyers, and property managers who have in-depth knowledge of the local laws and regulations. They can provide valuable guidance to avoid costly mistakes.

3. Understand legal and regulatory requirements: Thoroughly research and comply with the various laws and regulations governing real estate in Nigeria, such as the Land Use Act, the Nigerian Urban and Regional Planning Act, and the relevant state-level laws. Ensure proper land title documentation and stay updated on any changes to tax laws or government policies.

4. Verify land title and ownership: Carefully verify the land title and ownership status to avoid disputes and losses in the future. Confirm that the property has a valid Certificate of Occupancy (C of O) and is not subject to any encumbrances.

5. Stay informed about regulatory changes: Continuously monitor and stay updated on any changes or updates to the legal and regulatory framework governing the real estate sector in Nigeria. This will enable you to adapt your strategies and comply with the evolving requirements.

6. Seek professional advice: Consult with experienced real estate lawyers, tax specialists, and other relevant professionals to ensure that your real estate investments and transactions are in full compliance with the applicable laws and regulations.

The adherence to these recommendations can create a conducive atmosphere for real estate investors and stakeholders in Nigeria, effectively mitigating risks and maximizing the potential of the real estate investments.

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1. CFRN 1999[as amended], S.1(3 [↩]
2. Ibid, S. 43 [↩]
3. Ibid, S. 44 [↩]
4. Land Use Act 1978, S. 1 [↩] [↩] [↩]
5. Land Use Act 1978,S. 5(1 [↩]
6. Ibid, S. 9 [↩]
7. Ibid, S. 6 [↩]
8. Ibid, S. 22 [↩]
9. Ibid, S. 7 [↩]
10. CAMA 2020, S. 20 [↩]
11. Salomon v Salomon[1897] Ac 22 [↩]
12. Nigerian Urban and Regional Planning Act, S. 2 [↩]
13. Ibid, S. 5 [↩] [↩] [↩]
14. Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 1995, S. 3 [↩] [↩] [↩]
15. Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 1995, S.22 [↩]
16. Ibid, S.23 [↩]
17. Ibid, S. 28 [↩] [↩]
18. Ibid, S.7 [↩]
19. Ibid, S. 46 [↩]
20. Acquisition of lands by Aliens Law of Lagos State, S. 8 [↩]
21. Ibid, S. 1 [↩]
22. CFRN 1999[as amended], S. 26(2 [↩]
23. Nigerian Urban and Regional Planning Act, S. 31 [↩]
24. Ibid, S. 10 [↩]
25. Ibid, S. 15 [↩] [↩]
26. Nigerian Urban and Regional Planning Act, S. 30, 31 [↩]
27. Ibid, S. 40 [↩]