24/07/2025
THE IMPACT OF THE LAND USE ACT OF 1978 ON REAL ESTATE DEVELOPMENT IN NIGERIA.
Moses Chukwuekuniemelu Ifechukwu, Esq.
LLB (Nig) BL.
Principal Partner : M.C IFECHUKWU & ASSOCIATES.
(LEX DOMUS CHAMBERS)
58 AWKA ROAD, ONITSHA, ANAMBRA STATE, NIGERIA.
[email protected]. +2347033029842.
ABSTRACT.
Land from time immemorial is too important to man that it's importance cannot be overemphasized. Land arguably represents two-fifth of the earth surface and it makes available the medium to which human activities are founded on.
As population of Nigeria increases geometrically, land appears to gradually become a scarce commodity. The Government of Nigeria in order to checkmate this scarce but very important commodity, enacted the Land Use Act (LUA) on the 29th day of March 1978 to streamline the ownership, control and management of land in Nigeria.
Many laws relating to land ownership and administration existed before the 29th day of March 1978 but could not provide lasting solution to the myriads of land problems in Nigeria, hence the need to have a better law governing lands across Nigeria. The land Use Act of 1978 vests all lands within each state in the Government/Governor of that State.
Section 1 of the LUA of 1978 provides;
"subject to the provision of this Act, all land comprised in the territory of each State in the Federation are 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".
Real Estate is simply defined as the land any permanent structures, like a home, or improvements attached to the land, whether natural or artificial. There are five main Categories of real estate and they are:
Residential, Commercial, Industrial, bare land and special use of land.
The LUA of 1978 being the extant law governing the ownership, management and control of land in Nigeria today has various impact on real estate in Nigeria. This article intends to bring to fore those impacts on real estate in Nigeria to the reading public.
INTRODUCTION:
The Ownership as well as the control of land in Nigeria has been vested in the Governor of each State in Nigeria by the LUA 1978 and that simply means that absolute ownership of land by individuals which existed before the enactment of the LUA has been abolished. See Section 2 of LUA 1978.
In Ogunleye V Oni (1990) 2 NWLR (Pt.135)745. The Supreme Court stated thus;
"The Land Use Act has brought about a radical change in the concept of land ownership in Nige
ria. It vests all land in a State in the Governor, to be held in trust and administered for use and common benefit of all Nigerians. It abolished freehold system of land ownership and replaced it with a system of leasehold by the grant of a right of occupancy, either Statutory or Customary".
Futhermore, the Supreme Court in the celebrated case of Nkwocha V. Governor of Anambra State (1984) 6SC 36, explained the scope, effect and the Constitutionality of the LUA of 1978. The Court in the above case held that the LUA is a valid and Constitutional law, and that it has fundamentally altered the structure of land ownership in Nigeria.
The Court equally established in the above case that the Governor of each State has legal authority over all land in his State under the LUA.
STATUTORY RIGHT OF OCCUPANCY AND THE CUSTOMARY RIGHT OF OCCUPANCY.
The LUA of 1978 in it's bid to abolish the absolute ownership of land by individuals and introduced two forms of occupancy rights and they are Statutory rights of occupancy and Customary rights of occupancy.
Section 5(1) LUA;
"It shall be lawful for the Governor in respect of land, whether or not in an urban area:
1. to grant Statutory rights of occupancy to any person for all purposes.
2. to grant easement, appurtenant to statutory right of occupancy.
3. to demand rental for any such land granted to any person".
Section 5(2) LUA;
"Upon the grant of Statutory right of occupancy under the provision of subsection (1) of this section, all existing rights to use and occupation of land which is the subject of statutory right of occupancy shall be extinguished.
LEGAL IMPLICATIONS OF THE ABOVE SECTION ARE:
(I) The Governor has the exclusive authority to grant Statutory rights of occupancy over land in his State. This applies to urban and non-urban lands, although Local Governments handle Customary rights in rural areas.
(II) Any pre-existing right or claim to the land ( such as family or commercial landholdings) becomes extinguished upon the grant of Statutory right of Occupancy.
(III) The Governor may impose or charge rent on land granted under statutory right of occupancy.
(IV) The Governor can grant easements, such as rights of way, to support the use of land under a right of occupancy.
See Savannah Bank V. Ajilo (1989) 1 NWLR (Pt.97) 305.
Dantsoho V. Mohammed (2003) 6NWLR (Pt.817) 457
Abioye V. Yakubu (1991) 5 NWLR (Pt.190) 130.
Section 6(1) LUA provides;
1. "It shall be lawful for a Local Government in respect of land not in Urban areas-
(I) to grant Customary rights of occupancy to any person or organisation for the use of land in the Local Government Area for agricultural, residential and other purposes;
(II) to enter upon, use and occupy for public purposes any land within the area of its jurisdiction, and for the purposes to revoke any Customary right of occupancy on such land".
Section 6(2) LUA;
The Local Government shall have power to grant a Customary right of occupancy to any person where the land in question is not in an urban area".
THE LEGAL IMPLICATIONS OF THE ABOVE SECTION ARE:
1. Local Governments have authority to grant Customary rights of occupancy in rural areas (non- urban land)
2. These rights are often based on traditional or communal landholding system.
3. Local Governments can revoke Customary rights for public purposes.
See Abioye V. Yakubu (supra).
THE IMPACTS OF LAND USE ACT 1978 ON REAL ESTATE DEVELOPMENT IN NIGERIA.
The LUA 1978 has had far-reaching and profound impacts on real estate development in Nigeria since being enacted on 29th of March 1978.
The intendment of the enactment of this law was to promote equitable land distribution and simplification of land tenures. However, in practical application, the LUA has introduced bothe positive and negative impacts / consequencies for real estate development in Nigeria.
HERE ARE SOME POSITIVE IMPACTS LUA ON REAL ESTATE DEVELOPMENT IN NIGERIA.
A. Uniform Land Administration System: The Land Use Act no doubt centralised land ownership under the State Governor thereby ensuring a uniform legal framework for land acquisition and documentation in the concerned State and the Federation at large. The above position made land administration more predictable and reduced land disputes to the bearest minimum.
Prior to the enactment of the Land Use Act, there existed fragmented Customary tenure System across Communities in the State and across the Federation. See Ogunleye V Oni (supra)
B. Accessibility of Land: The LUA eliminated the problem of multiple ownership under Customary law thereby making land more accessible to individuals and investors through Statutory right of occupancy.
C. Land Use Classification: The LUA categorised land within the State into urban and rural areas. This helps Planners and developers to target areas they needed for a particular purpose, such as residential, commercial and industrial use.
D. Government Oversight and Planning: The control of land by the Government allows for better planning, zoning and infrasture development which is critical to real estate growth.
E. Promotion of Mortgage Market: The grant of Certificate of occupancy by the Governor has made it easier for land to be used as collateral in mortgage financing.
The Land Use Act equally had a number of negative impacts on the development of Real Estate in Nigeria. Below are some of those negative impacts:
I. Bureaucratic delays and Corruption: The process of obtaining Governor's consent for land transactions in Nigeria is notoriously slow, expensive and bureaucratic. This simply deterr investors and developers.
II. Unclear Compensation for Expropriation of Land: The LUA in section 28 allows the Governor of a State to revoke land rights for public interest with compensation for improvements on the land in question. However, this compensation is often inadequate and most times delayed. This equally discourages investment in real estate.
III. Security of Tenure: The State retains the ownership right of all land within its territory while landholders only get leasehold right ( not freehold) and this is for a term of 99 years. This limits the confidence of foreign investors and developers given the fact that the Governor can revoke this leasehold right at will.
CONCLUSION.
The intendment of the drafters of the LUA 1978 was to reform land ownership, control and management of land. The Act intends to promote developments in real estate but the reverse appears to be the case in some instances.
The LUA is a double-edged sword in Nigeria' real estate sector, while it aimed to democratise land ownership and promote orderly development, it has often had the opposite effect on land due to corruption, unnecessary bureaucracy and legal ambiguity.
RECOMMENDATIONS.
1. Decentralisation of land Administration: The LUA in sections 1 & 5 vests all land in a State in the Governor and this created monopoly of power and unnecessary bureaucratic bottlenecks.
Land administration should be decentralised and checks and balances on the Governor by an established body introduced.
2. Amendment of S.22 of the LUA to enable the digitalisation of Governor's consent and registration processes through e-governance platform.
3. Timeline should be fixed within which the consent of the Governor should be granted or denied.
4. Compensation: The Section 28 of the LUA should be amended to introduce market value compensation as against what is currently obtainable. The payment of the compensation should be timely or the Government should make available alternative land for the concerned persons. Option of resettlement can be resorted to in appropriate cases.
5. Allow Licensed professionals (Surveyors, Lawyers, Estate Managers) to interface directly with the digital land registries that will be introduced into the Act.
6. Governments of different States should partner with genuine real estate developers for affordable housing schemes using Public Private Partnership.
