2009 
An Overview of the Land Use 
Amendment Bill 

Odujinrin &
Adefulu
Church House
st
1 Floor
29, Marina, Lagos
 By Nnamdi Esionye

1. BACKGROUND

The promulgation of the Land Use Decree (later the Land Use Act 1 (the
“Act”)) in 1978, brought about the vesting of exclusive powers over land
comprised in the territory of any given State in the Governor of the State 2.
The effect was that radical ownership of land was vested in the Governor and
private persons were only entitled to a leasehold interest through a right of
occupancy. The Act further requires that the cons ent of the Governor, has to
be obtained prior to any method of alienation of property by the holder of a
right of occupancy 3. The effect of this was that any assignment of interests
or mortgages required the consent of the Governor to be legally enforceable.

The Land Use (Amendment) Bill (the “Amendment”), is currently being

deliberated upon by the National Assembly. The Bill seeks to review the
exclusive powers of the Governor in relation to the alienation/parting of
possession with property. This paper reviews the provisions of the Bill and its
potential effect on land ownership in Nigeria.

2. REMOVAL OF REQUIREMENT FOR GOVERNOR’S CONSENT

Sections 21-22 of the Act, prohibits the alienation of either a customary right
of occupancy or a statutory right of occupancy via an assignment, mortgage,

1
La ws o f the Fe de ra tion of Nig e ria Cha p te r. L 5
2
S. 2 L an d Use Ac t
3
S. 21 a n d 2 2 Lan d U s e Ac t

An Overview of the Land Use Amendment Bill Page 2

 transfer of possession, sublease, or otherwise without the consent of the
Governor. The above stated provisions have resulted in a plethora of issues
relating to transfer of property transactions. Firstly, the process of obtaining
the Governor’s consent is costly, in Lagos State, for example, it costs up to
15% of the deemed value of the property. Further, even though there have
been improvements to the process it still takes a long time to obtain the
consent, which significantly delays the completion of commercial
transactions. Additionally, the requirement to seek the Governor’s consent for
mortgage transactions has also proved to be an impediment in the
introduction of financial tools such as mortgage backed securitisation, which
requires an element of certainty in terms of the rights to the underlying
securities in the mortgages to be securitised.

As a result of the above stated issues, the Amendment has been proposed to
alleviate the burdens currently faced by investors in the real estate market
and to provide property investment incentives. The primary amendments to
the Act can be found in sections 5 & 6 of the Bill.

Section 5 of the Bill provides for the amendment of Section 21 of the Act by
deleting all words after “assignment” and the inclusion of a sub section
stating “the right of a holder of a customary right of occupancy to alienate
such right by mortgage is hereby recognized”. The effect is that holders of a
Customary Right of Occupancy will now be empowered to alienate their rights
by way of a mortgage, transfer of possession, or sub-lease without requiring
the approval/consent of the Governor. However, it should be noted that any
alienation by way of an assignment will still require the consent of the
Governor prior to the assignment.

Similarly, section 6 of the Bill provides for the Amendment of Section 22 (1)
and (2) of the Act by deleting the words “mortgage, transfer of possession,

An Overview of the Land Use Amendment Bill Page 3

 sub lease, or otherwise” immediately after the word “assignment”; the
deletion of the proviso after sub section (1); and the creation of a new sub
section (3) stating “the consent of the Governor shall not be required for the
creation of a mortgage or sub lease under this section. Therefore, like the
holder of a customary right of occupancy, a statutory holder may alienate his
rights by mortgage, transfer of possession, or sub-lease without requiring the
consent of the Governor.

Consequentially, the proposed amendments to the Act also remove the

powers of the Governor to impose a penalty for the failure of a holder of a
statutory right of occupancy to obtain its consent prior to the alienation of a
property by way of mortgage, transfer of possession, sub-lease, or by
bequest 4 and also the powers of the Governor to revoke a right of occupancy
where the holder of said right alienates the property by way of assignment,
mortgage, transfer of possession, sub-lease, or otherwise contrary to the
provisions of the Act or without the requisite Governor’s consent or approval 5.

3. THE REQUIREMENT OF CONSENT OF HOLDER OF A STATUTORY

RIGHT OF OCCUPANCY TO A SUB-UNDERLEASE

Section 7 of the Bill introduces new provisions to replace the current section
23 of the Act as follows:

A sub-lessee of a statutory right of occupancy may, with the approval

of the holder of the statutory right of occupancy, demise by way
of sub-underlease to another person, the land comprised in the
sublease held by him or any other portion of the land.

4
S. 5( 1 f) La n d Us e A ct
5
S. 28 La nd U s e A ct

An Overview of the Land Use Amendment Bill Page 4

 Under the current provisions of section 23 of the Act, the cons ent and
approval of the Governor is required prior to the sub-underlease of a right of
occupancy. Whilst we agree that it is now necessary to remove this
requirement from the Act, in view of the other amendments proposed, the
substitution of Governor’s consent with the consent of the holder of the
statutory right of occupancy may cause other problems. Firstly, it may lead to
the imposition of “signing or consent fees” by holders of the statutory rights
of occupancy. The current draft of the Bill does not appear to anticipate the
emergence of these fees and as such does not regulate it. This could
therefore lead to significant costs in the completion of property transactions.
Additionally, it may also lead to significant delays. It is our strong view that
that section 23 as a whole should be deleted. Parties to individual
transactions may choose the option of retaining such consent as a contractual
requirement and not a statutory requirement.

4. CONCLUSION

The proposed Bill seeks to restrict the requirement of the Governor’s consent
to solely alienation via an assignment or sale.

In light of the above, should the Act be amended as is proposed, the holder
of a right of occupancy will have a statutory avenue for avoiding the
requirement of Governor’s consent when of alienating his right to a third
party. It should be noted that a holder of a right of occupancy, seeking to
transfer title her/his right may do so by way of an assignment or sublease.
The major difference between an assignment and a sublease is the
reversionary interest reserved by the transferor, when transferring via a

An Overview of the Land Use Amendment Bill Page 5

 sublease. Thus, a person transferring her/his title via a sublease will be
achieving the same goal as when transferred via an assignment.

Also, a holder of a right of occupancy seeking to enter into a legal mortgage,

or seeking to bequest her/his property to a third party will no longer require
obtaining the Governor’s consent prior to s/he entering into such a
transaction.

The proposed amendment is a welcome development, due to the fact that it

will encourage alienation transactions as well as reduce the difficulties
currently being faced by persons seeking to transfer title, but are hindered
from effectively and timeously achieving their aim, as a result of the
cumbersome and expensive process of obtaining the Governor’s consent.

We hope you find the information contained herein useful. This Note
is for general purposes and guidance only and should not be regarded
as legal or professional advice. Any questions, comments or
clarifications may be directed to:

Odujinrin & Adefulu

29, Marina

Lagos enquiries@odujinrinadefulu.com

mobile: +2348022240888

An Overview of the Land Use Amendment Bill Page 6