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Governor's consent

Why Governor’s Consent Hinders Real Estate Development In Nigeria

The Governor’s consent is a title document that establishes the consent of every Governor of the 36 states of the federation to all land transaction in the “said state”. Invariably, it is a means of perfecting the title on a land. Obtaining a Governor’s consent in Nigeria is a very herculean task. This article addresses the issue of the Governor’s consent as a hindrance to real estate development in Nigeria. 

The issue of getting a property can sometimes be very daunting if you have to think about the stress and many processes involved. First, you have to be sure what you’re buying is genuine and will not be sold to anyone else after your payment, except by you.

Then you have to obtain proper title if none existed before, or perfect the title it already has in your own favour.

The Land Use Act of 1978 puts all land in a State; town and rural area under the control of the Governor and Local Government Chairman respectively in trust for the people of the state.

Consequent upon this, section 22 of the Act then states that, “it shall not be lawful for the holder of a statutory Right of Occupancy granted by the Governor to alienate his Right of Occupancy or any part thereof by assignment, sublease etc without the prior consent of the Governor”

Simply put, even though a property has Certificate of Occupancy which makes the beneficiary the legal interest holder on the land for 99 years or the residue, if he decides to resell, mortgage or do anything with the property.
Since the land is held in trust by the state government, the Governor needs to approve to that transaction. Otherwise, the title that will pass is not perfected.

It is fairly certain that there would be very few people who have not been at the receiving end of the cumbersome process of obtaining Governor’s Consent in Nigeria.  The Land Use Act makes it a requirement that land transfers and land mortgages require consent otherwise the transaction is void.

But the process of obtaining such consent is truly herculean, tortuous and laborious. And unscrupulous vendors have tried to take advantage of this by attempting to go back on land transactions they concluded.

Happily our courts have seen through this, and in a rare display of justice have had to prevent injustice where vendors attempted to void land transactions on ground that consent, (which under the Act, they have a duty to obtain) was not obtained, or where consent comes after the transaction. even though a literal interpretation of the statute is that consent should precede the transaction, which is not practicable.

The point to be made here is that there are enough contradictions in the Land Use Act for the unscrupulous party to invoke to avoid their obligation under important land transactions.  This is why many Nigerians are calling for a complete overhaul of the Act, while some others have called for its abolishment.

The unvarnished truth is that the consent requirement compounds land transactions, and increases the investor’s financial exposure.

What, for instance, can be the possible justification for consent in respect of bank mortgages?

Under common law principles, the mortgagor possesses an equity of redemption such that a mortgage transaction is not contemplated in any way as alienation. Why then is a requirement for consent necessary?

While the above problems relate to the consent requirement and its arduous process, there are more fundamental challenges that the Land Use Act presents.  Before its introduction in 1978, at least in Southern Nigeria, persons were capable of absolute ownership of land, and the common instrument of transfer – Deed of Conveyance – was accepted as conferring title.

Unfortunately, under the Act, as pointed out, absolute ownership has been cancelled, and replaced with a mere right of occupancy. That is not all. It is settled today that the Certificate of Occupancy that is issued in favour of the person holding a right of occupancy does not confer title, does not create a right, but is merely evidence of title and presumes that one exists. This is just not preposterous!

The implications of the above are serious for commercial transactions. Most economic activities depend on two types of capital – their equity/shareholding capital, i.e. and loan capital, which is obtained from creditors.

In the very early times, the banker advanced his loan based on trust, and collaterals were very much de-emphasized.  These days, apart from being a fundamental banking practice, a number of our laws impose an obligation on the banker to obtain adequate collateral.

For real estate development transactions, invariably the banker looks at the subject’s land as collateral.  The transaction is however put at risk with the myriad of problems under the Land Use Act of 1978.

Governor’s consent, which really ought not be a condition because the transaction is not an outright alienation, is not readily obtainable, and when it is, it is at very heavy costs.  The original title documents here, the Certificate of Occupancy, which the banker carefully collects from the developer and places safely in his vault may turn out to be worthless.

This is very unacceptable, disturbing and it is a key constraint to the development of real estate in Nigeria.

 

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