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Understanding Real Estate Laws and Practices


Before engaging in real estate investments of any kind, it is important that you make yourself aware of the various laws and practices that govern the real estate in Nigeria and in the specific state you are interested in. There are many laws that govern how people acquire property and what they can do with the property that they own. In Nigeria, many laws exist to regulate the real estate sector both at Federal and State Levels. Land Use Act and Capital Gains Tax constitutes laws at the federal level which governs and regulate real estate practice in Nigeria. At the state level, there are also a variety of laws governing the real estate industry, but for the purpose of this piece we will focus on Lagos State, being the most commercially viable in Nigeria.

Land Use Act 1978

The Land Use Act refers to an act to vest all land in the territory of each State (except land vested in the Federal government or its agencies) solely in the Governor of the State who holds such land in trust for the people and is responsible for allocation of land in all urban areas to individuals resident in the State and to organisations for residential, agriculture, commercial and other purposes. In layman terms, it essentially means that all land in Nigeria belongs to the government, and that the government only leases the land to individuals or corporate bodies as appropriate for a period of 99 years. In essence, no land-owner can sell, lease, assign or transfer land without first seeking and getting the consent of the Governor. Any land transaction in this regard without the consent of the Governor will be null and void.

Capital Gains Tax Act

This is a piece of legislation that states the value of tax charged on proceeds accruing to any person (Companies Inclusive) on the disposal or sale of assets. Presently the rate is set at 10%. It is applied to gains made from properties sold in Nigeria and the diaspora whose proceeds are brought into the country. The capital gains tax was enacted by the federal government of Nigeria in 1967.

Urban and Regional Planning and Development Law of Lagos 2010

The law governs the administration of physical planning, urban development and building control in Lagos State. Real estate developers/Private builders are required by law to have obtained all necessary permits prior to the commencement of any construction in the state. In the absence of this, and failure to obtain the necessary permits could possibly lead to the issuance of Contravention Notice; Stop Work Order; Quit Notice; Seal-up Notice; Regularization Notice, Demolition Notice and in most cases fines up to the tune of N500,000 or community services.

Lagos State Property Protection Law 2016

Following the continuing menace of “omo onile” in Nigeria, Lagos state government in a statutory response created the Lagos State Property Law in 2016 to address the intimidation posed by the Land Grabbers (Omo Onile).

The Law prohibits four conducts in relation to land in Lagos State: forceful entry to landed properties; illegal occupation of landed properties; violence in relation to landed properties; and fraudulent conducts in relation to landed properties. In addition, selling land or landed properties without authority of the owner is also a punishment offence under the law.

Land Use Charge 2018

The Land Use Charge law was embedded to consolidate all property and land-based charges in Lagos State and makes provisions for levying and collecting land use charge in respect of properties in Lagos state. The law came to force on 8th February 2018, and it repealed the 2001 version. It is a form of property tax and all owners of properties in Lagos are expected to pay it, apart from the properties or owners that are exempted which includes religious organisations/educations, Public cemeteries, educational institutions, private and public libraries, properties used by Obas and those exempted by the State Governor.

Under the old Land Use Charge Law 2001, the person liable to pay Land Use Charge was the owner of the property. However, that scenario has changed now as liability to pay may exclusively or jointly fall on the owner on the one hand and occupiers such as lessees or tenants.


Your Rights as A Property Owner

As a property owner in Nigeria, you have certain rights and freedoms to do what you want with your property and it is important you understand these rights so you do not fall victim to fraudulent persons or agencies. The rights to land properties in Nigeria may be proprietary, possessory or may relate to lesser interests and they include:

● Rights of Occupancy: This refers to the right granted to a holder to occupy land for a period of up to 99 years as evidenced by a certificate of occupancy.

● Right of way/Easement: Is a property right which confers a non-possessory interest to use real property in the possession of another person for a stated purpose. In Layman terms, it is a legal right of passage over another’s property.

● Right to assignment/Leasehold: Land owners are at liberty to either assign the unexpired residue of their existing interest or grant a sublease for a limited number of years.

So before any sharp agent from a state or federal agency visits you and issues you a charge for subletting or leasing your property to another person or business, get yourself acquainted with your rights. Better yet, get a lawyer to explain your rights to you regarding your property.

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