THE VALUE OF LANDED PROPERTY AND MORTGAGE IN NIGERIA
BY: GODWIN I. IMAKHAI ESQ
Property as it where, in general terms, may engender or yield varied meanings to different people depending from the perspective it is viewed. For us and for the purpose of this discussion, it will be viewed narrowly from the acute angle of landed property only.
Again, I intend to consider landed property in the wider sense and not in the narrow sense which most people normally refer to it. However, it is not unusual to hear people at different setting while relating on the issue or topic of landed property to simply say my land, our communal land without more. Yet, though we may in reality have private or communal land without prejudice to their historical antecedents, far and above the restricted sense of ordinary usage, it is not the main projection of this conversation after all.
Therefore, as we are treating landed property in the wider sense conjunctively, it includes developed and undeveloped land whether in the rural or urban area. I am convinced that understanding this can not pose any difficulty to this very important audience.
Essentially too, in numerous text-books, landed property may sometimes be qualified as real property, realty or regarded as corporeal property. Certainly I have no intention to unnecessarily challenge ourselves here with these references since I have adopted the simpler phrase-landed property already, I shall stick to it in discussing the topic proper.
To enable one do justice to the topic effectively, the discussion will be treated briefly under the following:
TYPES OF LAND/TITLE TO LAND
As I set to treat these two issues together, for the purpose and perfect understanding of their purports, I must as a matter of law have recourse to the Land Use Act of 1978 which for convenient sake will be referred to as LUA as my guiding light. Without exhibiting any misconception, I know that this audience is comprised of lawyers and non-lawyers, but the base-line is that we all here present are law-abiding people.
Having established the composition of the audience beyond any contestation, I therefore crave your indulgence and implore you to flow along with me as I desire to cite the relevant Sections of LUA even without the intention to bore you especially the non-lawyers but for the purpose of clarity alone. Section 34 of LUA vest title on person therefor entitled, with respect to land categorized into Urban area and therefore issued with certificate of occupancy pursuance to incidence of prior existing rights and otherwise recognized by the person’s Right of Occupancy. Whereas Section 36 LUA vest title on person therefor entitled, with respect to land categorized into non-Urban area and therefore issued with Customary (Certificate) of Occupancy pursuance to incidence of prior existing rights otherwise recognized by the person’s customary right.
In practice these days, without prejudice to prior and preluding rights, the most acceptable evidence of title to land is the certificate one possess in respect of any type of land in issue as exemplified by the case of SAVANNAH BANK NIG LTD Vs. AJILO1, where the Supreme Court held thus:
“Every holder of right of occupancy, whether statutory or otherwise, is regarded as having been granted the right by the Military Governor (State Governor) or Local Government, as the case may be, for the purpose of control and management of all land comprised in the state. Accordingly, every such holder, whether under Sections 5, 34 or 36 of the Land Use Act requires the prior consent of the Military Governor before he can transfer, mortgage or otherwise dispose of his interest in the right of occupancy.”
(words in the parenthesis supplied by me.)
Quite apart of the fact that some people in this audience, especially the non-lawyers may be a little bit agitated or unsettled by the appropriateness of saying that a right is to be granted by the Governor or Local Government for lawful transaction, they may quick to ask, why so ? After-all I paid for or bought the property in question. My dear friend, to say the very least, the consequence is quite dire to side-track the law.
Hear the Supreme Court once again in the same case of SAVANNAH BANK NIG LTD (Supra)2, where it stated thus:
“Any failure by a holder under Sections 34(2) or 36(2) of the Land Use Act to comply with the provisions of Section 22 would attract the full rigour of Section 26 and render a transaction or an instrument arising therefrom null and void. In otherwords, every holder of a right of occupancy, whether under Sections 5, 34 or 36 of the Land Use Act requires the prior consent of the Military Governor before he can transfer, mortgage, or otherwise dispose of his interest in the right of occupancy….”
My dearest audience, the reason behind these extensive quotations is to make us to be more conscious and diligent in our dealings so that we do not unconsciously find ourselves on the wrong side of the law by our actions and inactions.
HOW TO ACQUIRE LANDED PROPERTY
Landed property can be acquired in some of the following ways; out-right purchase, vide Auction Sale, Deed of gift, Will or intestacy, Legal Mortgage etc.
Briefly, landed property can be acquired by out-right purchase whereby a buyer pay-out money to the seller and the seller in turn issue the buyer a receipt for the transaction.
However, a purchase receipt may be evidence of sale of landed property, it does not operate to pass the Legal title in the property. At best, it could only vest the equitable right or interest in the property in the purchaser. See KACHALLA Vs. BANKI.3 The Legal title can only be vested on the purchaser after consent to assign had been obtained therefor. See Section 22 of LUA.
Purchase Vide Auction Sale
Landed property can be acquired vide auction sale pursuance to the judgment of the court or otherwise. What is crucial and imperative is the eternal vigilance of the purchaser purchasing landed property vide auction because of the costly risk involved.
For instance where there is non-compliance with Section 19, Auctioneers’ law in the sale of a mortgage property by auction, which requires that seven days notice be given after the notice of sale is pasted, the subsequent sale in breach of the section is rendered invalid.4 See FOJULE Vs. FED MORTGAGE BANK OF NIG.5 Under Auctioneers’ Laws of various states, landed property can be acquired under private treaty. Shockingly, inspite of the Auctioneers’ Laws enacted and operational at the state level there is any yet to be enacted at the federal level.
Deed of Gift
Another method of acquiring landed property is vide Deed of Gift otherwise regarded as gift inter vivos. It is given from one person to another and can be best referred to as donor or donee. It is a gift freely given by one person to another without any consideration, usually from parents to children and/or relatives.
Will or Intestacy
Another method of acquiring landed property is through Will or Intestacy. The property devolved on the beneficiaries or inheritors subsequent to the deceased person’s death. See Section 24 LUA.
S. 3(1) of the Wills Law Cap. 133 Laws of Western Region of Nigeria Vol. VI 1959 States:
“Subject to any customary law relating thereto, it shall be
lawful for every person to devise, bequeath or dispose of, by his Will, executed in a manner hereinafter required, all real estate and all personal estate which he shall be entitled to either at law or in equity…”
Also in Wills: Law And Practice.6 With respect to intestacy the landed property is acquired by devolution vide the machinery set in motion by the Administrator of the Estate of the deceased.7
In the two situations, the Probate Division of the Court is involved one way or the other to make the acquisition possible.
Landed property can also be acquired vide mortgage; banks as mortgagee can acquire the landed property of the mortgagor upon the crystallization of the loan advanced to the mortgagor as a customer who consequently failed to redeemed the equitable interest in the landed property. There can also be sale of the landed property through private treaty.
CONVEYANCING AND REGISTRATON OF TITLE.
It is very convenient to treat together conveyancing and registration of title because of the desirable result or comfort it affords landed property owners who almost always strive to accomplish a successful transaction by sheer circumspection, failure which, undesirable consequence may set-in.
Conveyance means a document which transfers an interest in property, generally immovable from one person to another. Under the property and conveyancing law 1959 of the Western State and Midwestern Nigeria, conveyance include mortgage, charge, lease, assent, vesting declaration, release and every other instrument but a will.8
In Nigeria, land Registration are basically governed by property and Conveyancing Law 1959 applicable in the then Western State and Midwestern State and Conveyancing Act 1881, applicable in the old Northern Region.
There are three types of land registration in conveyancing under land law in Nigeria which are: Registration of Instruments, Registration of Title and Registration of Encumbrances or Charges.9
Basically, Registration of landed property is done at the land Registry in the various land Registry that deals with land in the States and Federal Capital Development Authority and/or AGIS in Abuja as the case may be. There are some charges that may be registered with Corporate Affairs Commission (CAC).
Registration of Instrument:
Full copy of the deed must be filed with the original and the original is then returned, indorsed with a statement that it has been registered.
Registration of Title:
This is to confer on every purchaser a title guaranteed by the state.
Registration of Encumbrances:
This is a system whereby various registers are provided in which any person claiming to be entitled to certain encumbrances on any registered land should register his claim.10
Concerning the LUA, the purposes of Section 21 & 22 can never be achieved and transaction brought to a successful completion until the registration of the landed property is done.
It is also essential to determine the equity of first in time once a landed instrument is registered. In the case of JOLASUN Vs. BAMGBOYE11, Supreme Court stated as follows:
“The registrar of titles shall, in investigating
title with a view to first registration, accept
and act on legal evidence or evidence
ordinarily required by conveyances,
and if satisfied register accordingly”.
In all the scenarios mentioned hereinbefore, the document which is the conveyance or better still Deed of Mortgage, Deed of Release, Debenture etc. are the once registered with land Registry or CAC.
PURPOSE(S) TO WHICH LANDED PROPERTY CAN BE PUT TO
Landed property can be put to the following use(s):
1. Residential Purpose: This is self-explanatory.
2. For Economic benefit: To borrow and raise more money to finance business ventures by using the landed property as security, be it mortgage or otherwise.
3. For Leasing: For the purpose of rent collection which is a lucrative business on its own.
LANDED PROPERTY, BANKS & MORTGAGE
My inclination in this sub-topic is to treat specially Banks’ relationship to landed property vis-à-vis mortgage(s). Devoting a well deserved interest in Bank’s Mortgage(s) will surely be of immense significance to this important audience and a worthwhile exercise at that due to the prominent place it now occupies in the scheme of things in Nigeria economically even politically.
A lot of people here will be wondering why I say politically instead of limiting myself to just the economic aspect of mortgage alone. I persuade myself to repeat it again that politics now have a lot to do with mortgage because most of our politicians who nowadays see politics as business hide under whatever guise to obtain loans from the Banks and Mortgage their properties therefor.
I must confess that it is risky business but to many politicians it is a worthwhile risk after-all because the return or turn-over can come in hundred folds.
Coming back from the necessary digression after-all, I shall now titillate you with the business or economic aspect of mortgage which necessitate an Account-holder to use his/her landed property to obtain loan from the Bank as security and the ever willing Bank to accept the landed property upon certain condition.
In practice, the account-holder approach his/her Bank for loan, the bank request from the Account-holder a landed property, whether developed or undeveloped as security for the loan.
The bank either by itself or through its lawyer conducts search at the appropriate land Registry to ascertain title. This exercise is the very essence of the desirability of the registration I have dealt with somewhere in the foregone sub-topics or paragraphs. Once the genuineness of the title is established, the loan transaction can now be proceeded with fully.
And now it is a matter or preference as to what type of mortgage will be perfected which range from equitable mortgage to legal mortgage or even tripartite mortgage,
Equitable Mortgage: This is a situation whereby (let’s now graduate to the use of mortgages words i.e mortgagor and mortgagee) the mortgagor deposits his/her title documents to the landed property with the Bank and the Bank thereupon advanced money (loan) to the mortgagor which is to be repaid back within a stated or agreed time failure which the mortgagee can take the mortgagor to court and recover the money it has so advanced or sell the landed property upon the judgment of the court for the same purpose of recovery the money advanced.
Legal Mortgage: This has to do with outright mortgage which result in registering the legal mortgage at the appropriate Land Registry. In this situation default in repayment of the loan or exercising the right of redemption by the mortgagor after notice have been served on the mortgagor may lead to the selling of the landed property either by private treaty or Auction sell by the mortgagee who possess legal right on the landed property by virtue of the Deed of Mortgage.
Tripartite Mortgage: As the name goes, this is mortgage that involve three parties; one party giving out his/her landed property on behalf of another more especially a company with the bank. This possess similar characteristics with legal mortgage save that there is always the need to register the tripartite mortgage with CAC with respect to the fixed-asset which is usually the landed property.
1. (2001) FWLR (Pt. 75) page 513 at 571
2. Page 556
3. (2001) FWLR (Pt. 73) page 1 at pages 13-14
4. Auctioneers’ Laws of Northern Nigeria, 1963
5. (2001) FWLR (Pt. 36) page 893 at pages 903-904
6. Kole Abayomi page 250
7. Nigerian Law of Conveyancing-P.A. Oluyede page 24
8. Op. cit page 1
9. Ibid. page 248
10. Ibid pages 248-249
11. All FWLR (Pt. 595) page 203 at 217