Land Use Act: Effects, Controversies, and Implications for Real Estate
All over the world, Land is important in production and it is also seen as veritable tool for development and growing the economy. In Nigeria, the control, management, and allocation of land is governed by the Land Use Act of 1978 (formerly called the Land Use Decree).The act vests the ownership of all land within each state in the Governor of that state, who holds it in a trust for the benefit of all Nigerians.
Over the years, there have been several calls by different groups including the Nigerian Institution of Estate Surveyors and Valuers (NIESV), a body of all the Estate Surveyors and Valuers in the country to repeal the land use act from the Nigeria legal system in order to eliminate all obstacles that impede smooth application and documentation of land titles as well as land allocations.
But what is it about this act that makes it have so many controversies? In this guide we’ll be taking a look at the provisions of the 1978 Land use act and how it impacts the Nigerian real estate sector.
What is the Land Use Act
The Land use act was promulgated by General Obasanjo on 29th of March 1978. The act is divided into eight parts with fifty-one sections. It addresses four critical challenges stemming from the former land tenure systems in Nigeria:
- The issue of lack of uniformity in the laws governing land-use and ownership
- uncontrolled speculation in urban land;
- Equal legal access to land rights by Nigerians;
- Rural land fragmentation caused by either the application of traditional principles of inheritance or population growth and the resulting pressure on land.
Key Provisions of the land use act
1.Control and Management of land
The act designates that land in urban areas falls under the control and management of the Governor of each state. Conversely, land in non-urban areas is managed by the Local Government within the respective jurisdiction of the land.
There is also the Land use and allocation committee in each state, which advises the Governor on land management, resettlement due to revocation of rights of occupancy, and disputes related to compensation for improvements on land.
2.Principles of Land Tenure, Powers of Governor, Local Governments, and Rights of Occupiers
The Land Use Act grants powers to both the Governor and Local Governments in relation to land ownership and use of land.
The Governor has the authority to grant statutory rights of occupancy for various purposes, demand rental payments, revise rents, and impose penal rents for non-compliance with occupancy terms.
Local Governments have the authority to grant customary rights of occupancy for agricultural, residential, and other purposes in non-urban areas. Although there are limitations such as restrictions on the size of land granted for agricultural or grazing purpose.
Restriction of Rights of Persons Under 21
The Land use act makes it illegal for the Governor to grant statutory right of occupancy to anybody under the age of 21. Exceptions are made for cases where a guardian or trustee is appointed for the underage individual.
Certificate of Occupancy
The Governor issues certificate of occupancy as evidence of land rights. These certificates are granted when a statutory right of occupancy is awarded or when land is occupied under a customary right of occupancy.
Power of Governor to Grant Rent-Free or Reduced Rent Occupancies
The Governor has the authority to grant statutory rights of occupancy without rental charges or at a reduced rate if it serves the public interest.
In cases where occupancy terms are breached, the Governor can impose penal rents. These rents are payable for a specified period and can be revised based on the duration of the breach. Penal rents are in addition to regular rents and are recoverable as such.
4.Alienation and Surrender of Rights of Occupancy
Alienation of land rights, including assignment, mortgage, or sublease, requires the consent of the Governor or the approval of the relevant Local Government and customary law.
5. Revocation of Rights of Occupancy and Compensation
The Governor can revoke rights of occupancy for overriding public interest, which includes instances of land alienation against the provisions of the act, land requirement for public purposes, and more. Compensation varies depending on the reason for revocation and can cover the value of unexhausted improvements and other considerations.
6. Transitional and Other Related Provisions
For land already vested in individuals before the enactment of the act, the act sets guidelines for the continuation of ownership and the issuance of certificates of occupancy.
7.Jurisdiction of High Court and Other Courts
The Land use act designates the High Court as the exclusive jurisdiction for proceedings related to land ownership and compensation. It also provides provisions for cases initiated before the enactment of the act.
Prohibition of Unauthorized Use of Land
This section states that, except as allowed by Section 34 of the Act, no person in an urban area can erect structures, enclose land, cultivate, or perform actions on land without a lawful right of occupancy or permission from the Governor.
Penalties for Unauthorized Use
Individuals who violate the above prohibition are deemed to commit an offense. Penalties can include the removal of structures and fines. Offenders are required to remove unauthorized structures within a specified time and restore the land to its previous condition.
Service of Notices
The Land use act also provides the proper methods for serving notices. These include delivering notices directly, leaving them at the recipient’s place of abode, sending registered letters, delivering to corporate entities’ representatives, or posting on the premises in the case of unknown recipients.
Delegation of Powers
This section empowers the Governor to delegate the powers granted by the Act to the State Commissioner, subject to specified conditions. This delegation allows the State Commissioner to exercise certain powers on behalf of the Governor.
Power to Make Regulations
The National Council of States is authorized to create regulations for effective implementation of the Act.This includes transfer of occupancy rights, terms of special contracts, grant of certificates of occupancy, temporary rights of occupancy, and compensation assessment. The Governor can also make regulations concerning licenses, permits, rent revision procedures, fees, and required forms.
Effect of Land use act on Nigerian Real Estate
While the aim of the Land use act is to make land accessible to more Nigerians than before, most of the lands in prime locations across the country are still being acquired by the wealthy few who can afford to buy them. In addition, the country’s economic challenges and rising living costs has placed Nigerians in a precarious position, such that people who have land by inheritance, transfer of ownership, family or communal allotments are more likely to sell it to fulfill immediate needs.
Political interference in practically all public issues and institutions has further complicated the situation. As a result, there are instances where incumbent Governors have refused to provide certificates of occupancy to people who disagree with their political stance or have revoked them from political opponents.
Land has become so expensive and is still expected to increase in the country’s leading and second tier cities. Unlike before, you could buy a piece of land from either the community, an individual or from even a real estate company and register the title at the Land Registry. Once it is registered, it becomes a bankable document. It is no longer the case; you pay the usual fee and take the document and survey plan to the government who will then issue you a certificate of occupancy. At the end of it all, it is just double payment, and the C of O is a document that one waits for ages for.
The Act made the land acquisition a big problem. The land use act acknowledges that the people are the true owners of the land but gives the power to hold in trust to the Governor of a state. In other words, the people cannot have access to land without the Government. The only document that proves the land is truly yours is Certificate of Occupancy, or Governors Consent. Getting either of these documents could take ages in many states.