Investing in real estate in Nigeria comes with immense opportunities, but understanding the legal framework governing land ownership is crucial for success. One of the most important laws guiding land transactions in Nigeria is the Land Use Act of 1978. Whether you are a seasoned investor or a first-time buyer, knowing how this Act affects property acquisition, ownership, and transfer will help you make informed investment decisions.
The Land Use Act: Key Highlights
The Land Use Act was enacted in 1978 to regulate land ownership and prevent land speculation. It vested all land within a state in the hands of the Governor, who holds it in trust for the people. The Act was designed to simplify land administration, promote equitable access to land, and curb disputes over land ownership.
Key provisions of the Act include:
– State Ownership of Land: The government owns all land and individuals can only acquire rights through Certificates of Occupancy (C of O).
– Governor’s Consent: Any transfer of land rights (sale, mortgage, lease, or assignment) requires the Governor’s approval.
– Customary Rights: Rural lands may be allocated by Local Governments for agricultural or other uses.
How the Land Use Act Affects Your Real Estate Investment
If you plan to invest in Nigerian real estate, here’s what you need to know:
1. You Don’t Own Land, You Own a Lease
Under the Act, individuals and companies do not outrightly own land; they hold it on lease for 99 years. After this period, the lease can be renewed at the discretion of the government.
2. Governor’s Consent is Mandatory for Transactions
Buying or selling land requires obtaining the Governor’s consent, which can sometimes be a lengthy process. Without this, your transaction is legally incomplete and may be challenged in court.
3. Importance of Certificate of Occupancy (C of O)
A C of O is the most recognized proof of land ownership. If you are acquiring property, ensure it has a valid C of O or you risk future ownership disputes.
4. Title Verification is Essential
Before purchasing any land, conduct due diligence to confirm its legal status. Work with real estate professionals or lawyers to verify the property’s title at the Lands Registry.
5. Government Can Revoke Land
The government has the right to revoke land ownership for reasons of public interest. If your land is needed for infrastructure projects or other developments, you may be compensated, but ownership can be lost.
6. Customary and Freehold Lands Still Exist
While all land is technically under government control, customary and freehold land systems still operate in some areas, particularly in rural communities. These require different documentation processes.
Issues with the Land Use Act
Despite its role in land administration, the Land Use Act presents several challenges for investors:
– Cumbersome land registration process, leading to delays.
– High cost of obtaining Governor’s consent, adding to transaction expenses.
– Uncertainty in land tenure, especially concerning lease renewals.
– Risk of land disputes, especially in areas with strong customary land claims.
The Land Use Act of 1978 remains a key law in Nigeria’s real estate sector. While it provides structure, investors must navigate its complexities to avoid pitfalls. Conducting thorough due diligence, securing proper documentation, and working with investment, legal, and real estate professionals can ensure a smooth investment journey.
At Babajide Okusaga & Co., we help investors make informed property decisions by providing expert guidance on land ownership, Agency, Investment, Management and Syndication.
Thinking of investing in Nigerian real estate? Reach out to us today!
Babajide Okusaga & Co are Chartered Surveyors and Real Estate Consultants with expertise in Agency, Investment, Management, and Syndication (AIMS). We are known for being client-focused and results-driven, aiming to connect clients with their specific real estate needs such as Investments, Sales, Letting, Joint Ventures, and Partnerships.
We dedicate time and energy to ensure clients’ satisfaction by helping them find the best-suited real estate solutions. Whether it’s leasing office space, financing a first home, purchasing a new factory, or managing an investment portfolio, Babajide Okusaga & Co caters to the considerations of corporate entities, individuals, and High Net Worth Individuals (HNIs).
Contact 02013423872 for Enquiries.
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