Ownership and possession of land in Nigeria today is governed by the Land Use Act 1978. This Act promulgated by the military government came into force on the 29th March, 1978 and consequently influenced and controls the systems of landholding in Nigeria. According to the doctrine of tenure, land is held by the Crown (government) either directly or indirectly. According to the doctrine of estates however, land is either held as freehold or leasehold (less than freehold). This paper will therefore examine the leasehold system of landholding under the land tenure system governed by the Land Use Act 1978 in Nigeria.
WHAT IS A LEASE?
A lease is an estate less than freehold. Where two persons enter a contract one with rights of ownership or possession regarded as landlord or lessor grants to another regarded as tenant or lessee for a term of years. The period for which the lease is granted is a term of years. It is characterized with certainty of term. The interest of the landlord is called revertionary interest. If the landlord is a lessee, what he grants is a sublease while the landlord is a sublessor and the revertion is a leasehold revertion. If a landlord holds a freehold interest, and he transfers the entirety of his interest, he has made an outright sale.
In other words, a leasehold estate is a system of landholding in which a lessee or a tenant holds real property by some form of title from a lessor or landlord. Leasehold is a form of property tenure where one party buys the right to occupy land or a building for a given length of time. As lease is a legal estate, leasehold estate can be bought and sold on the open market. A leasehold thus differs from a freehold where the ownership of a property is purchased outright and thereafter held for an indeterminate length of time, and also differs from a tenancy where a property is let on a periodic basis such as weekly or monthly. What this means is that you have a property that has been given to you to occupy for a given period of time which is being owned by some lord, governor or person.
THE LAND USE ACT
The Land Use Act which was enacted in 1978 is one of the most far reaching and controversial legislations in Nigeria. The Act vests in the Governor of a state, the ownership of the land in the state. It was enacted primarily to contribute to the stabilization of government projects mostly in urban areas and control the difficulties confronted by government when acquiring land for development purposes. The Land Use Act 1978 was also meant to address the uncoordinated and informal tenurial arrangement in the Southern States which was prone to litigation. Such tenurial arrangements also imposed impediments on modernization of the agricultural sector and was anachronistic.
The Land Use Act conferred Government with mandatory powers over land acquisition in Nigeria. Section 1 provides that from the commencement of the Land Use Act, all land comprised in the territory of each state in the Federation are vested in the Governor of the State and such Governor of that State and such land should be held in trust and administered for the use and common benefit of all Nigerians in accordance with the provisions of the Act. The previous owners, communities families or individuals by virtue of section 1 of the Land use Act are divested of the ownership of their land whether occupied or unoccupied.
“ Subject to the provisions of this Act, all land comprised in the territory of each State in the Federation are hereby 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 Nigerians in accordance with the provisions of this Act.” S1, Land Use Act 1978.
LEASES UNDER THE LAND USE ACT 1978
The Land Use Act 1978 in a way, converted all land in Nigeria into leasehold. Which means the government now has ownership rights over all land and will only grant possessory rights to lessees as the lessor and landowner. Thus the 1978 Land Use Act stripped ownership of land from individuals in a freehold or fee simple system that has been practiced way back by our forefathers till 1978 and vested all lands in the State in the hands of the Governor. So any landed property bought directly has to be granted through a certificate of Occupancy issued under the hands of the Governor of the state hereby making the buyer a tenant in that land to that governor for 99 years and renewable after 99 years. This process only works once the Certificate of Occupancy has been granted to that Land and from then onwards, the Governor knows that the buyer is a tenant on its land from the day the certificate of occupancy was issued in his name and the 99 years begins to count down slowly. In Law it is known as the “99 years Unexpired Residue clause”. For example, if A bought a land in the Year 2000 and was granted and issued a Certificate of Occupancy in his name in the year 2000 also, the 99 years starts to count and that land will not expire until the year 2099 where the whole process of renewal to get a new certificate of occupancy will arise in A’s name again. If in the year 2009, A now decided to sell that land to B, the certificate of occupancy in his name will no longer be 99 years for B but 99 years minus 9 years which means B has 90 more years to enjoy that property until renewal. If B now decides to sell that property in 2049 to C, C will only have 49 years unexpired residue to enjoy that land until renewal.
ESSENTIALS OF A VALID LEASE AS CORRELATING WITH THE PROVISIONS OF THE LAND USE ACT
Exclusive Possession: a lease confers on the lessee exclusive possession and a mere privilege to use the property. Accordingly, s14 and s15 of the Land Use Act states
(14) Subject to the other provision of this Act and of any laws relating to way leaves, to prospecting for minerals or mineral oils or to mining or to oil pipelines and subject to the terms and conditions of any contract made under section, the occupier shall have exclusive rights to the land the subject of the statutory right of occupancy against all persons other than the Governor.
(15) During the term of a statutory right of occupancy the holder –
(a) shall have the sole right to and absolute possession of all the improvements of the land;
(b) may, subject to the prior consent of the Governor, transferor, assign or mortgage any improvements on the land which have been effected pursuant to the terms and conditions of the certificate of occupancy relating to the land.
It is thus settled however, that a grantee of a Right of occupancy (whether actual or deemed) has exclusive right to the land and a statutory right of occupancy against all persons other than the Governor.
The Supreme Court in the case of Abioye vs. Yakubu said: “Rights of Occupancy bear resemblance to leasehold interests. They can be assigned. They can be mortgaged and they can be underlet or sublet.”
Certainty of Term: certainty of term is an essential feature of a valid lease. It means that the period for which the land is to be held by the lessee as granted by the lessor must be ascertainable. Accordingly, s8 provides
(8) Statutory right of occupancy granted under the provisions of section 5 (1) (a) of this Act shall be for a definite term and may be granted subject to the terms of any contract which may made by the Governor and the holder not being inconsistent with the provisions of this Act.
It is trite law that in the creation of a lease there must be certainty of term not only in terms of its commencement, duration but also its termination as was restated in United Bank Africa vs. Tejumola (1986) 4 NWLR (Pt. 38) this requirement of a lease has also been satisfied under the Act in respect of a holder of a Right of Occupancy, As a matter of fact, the Supreme Court in Savannah Bank Ltd vs. Ajilo said:
“in terms known to interests in land, the quantum of a… right of occupancy remains unclear. To the extent that it can only be granted for a specific term under S.8 Land Use Act, 1978, it has the resemblance of a lease.”
Certainty of Property: the property to be leased must be ascertainable as it is under the Land Use Act
Certainty of Parties: the parties are the lessor i.e is the governor and the lessee, the buyer of the land.
Certainty of Terms: the terms of the lease must be well stated clearly in the instrument creating the lease which here is the Certificate of Occupancy.
On the other hand, having compared a Right of Occupancy and Leasehold, it can be argued that the ease with which a right of Occupancy can be revoked by the Governor is suggestive of its not capable of being a lease. Under section 28 of the Act “it shall be lawful for the Military Governor to revoke a right of occupancy for overriding public interest.” The Right may also be revoked if the land is required “for public purpose” by Government. But then if the Right of Occupancy under the Act is not a lease at Common Law, what exactly is it? A Licence? It cannot be licence because it is an alienable, transferrable and transmissible interest in land. The Right of Occupancy is also not a Freehold interest since the holder has neither exclusive right of possession nor the absolute owner.
The Right of Occupancy has therefore been viewed a sui generic interest in land more appropriately called a statutory lease. This view appears to have been supported by Nigerian courts as the Court of Appeal in L.S.D.P.C vs. Foreign Finance Corporation (1987) 1.N.W.L.R. (pt50) 413 at 444. See also Osho vs. Foreign Finance Corporation (1991) 4. N.W.L.R. (pt184) 157 at197 held that:
“The right of occupancy is in nature a hybrid between a licence and a lease… on terms and conditions which upon breach by a right holder in subject to revocation by the governor”
Therefore, though the right of Occupancy under the Land Use Act does not meet the common law requirement for a lease, it can be described as a form of statutorily created lease peculiar to Nigeria alone. This is because the framers of the Act, as can be deduced, clearly intended the right to be in the nature of a lease out of which lesser interests could be created.
Amodu N.A on Efficiency Of Mortgage Transactions Under The Land Use Act: Myth Or Reality.
Dr K. Aina’s Class Notes
Taiwo E.A . The Nigerian Land Law. Published 2011. Ababa Press Ltd.
Lawyer Pls Help: Deed of Lease And Deed of Assignment-Properties- Nigeria http://www.nairaland.com/289462/lawyer-pls-deed-lease-deed
Land Law II Course Material, National Open University of Nigeria.
Land Use Act 1978.