By way of clarification, so that one can appreciate the trajectory of the analysis made herein, the title of this work can in other words be regarded as ‘the mortgage of land in Nigeria under the regime of the Land Use Act’ or ‘How the Land Use Act regulates mortgage of Land in Nigeria’. The Land Use Act and Mortgage of land in Nigeria is a wide topic. Hence, to enable you appreciate this topic better, it will be discussed in two different parts. we will be discussing the first part below.
Ownership of Land Under the Land Use Act.
What Can Be Mortgaged Under the Land Use Act.
Mortgage of Land under the Land Use Act: The How.
- Conceptual Analysis.
The Land use Act, 1978 is a primary legislation with regards to the administration and management of Land in the various territories of Nigeria; while Mortgage is the conveyance of land or an assignment of chattels as security for the payment of a debt or the discharge of some other obligation for which it is given. The land Use Act has therefore regulated, administered and managed how the land within the territories of Nigeria is to be used as a security for mortgage.
The focus of this work is therefore on: the land used for mortgage in Nigeria, the regulation of mortgage transaction and its attendant complexities. All within the framework of the Land Use Act.
- General Introduction.
The ownership and use of land in Nigeria has gone through a chequered history and the Nigerian legal regime has responded to the challenges in various ways. Land used to be held strategically as a family asset for several reasons including the fact that the land houses the family and therein is where the ancestors are buried. It is also recognized by the court that land belong to the living, the dead and the yet unborn. In the same vein, the court in Amodu Tijani v. Secretary, Southern Nigeria advanced that land under customary tenure belongs not to the individual but to the community or family which the head of such family or community holds in trust for the rest of the member.
The holding by the court and the approach by the family and community towards land promoted ‘land holding’ rather than ‘land use’. With what is obtainable world-over in terms of development, it is undisputable that the value of land goes far beyond family heritage and that value can only be appreciated within a limited time because land is a definite item that is a subject of recession owing to the ocean surge occasioned by the depletion of the ozone layer and consequent melting of the ice-bergs in the polar region. Also, the world population continues to increase while the quantity of land continues in reduction. That is not to say land was not used in an appreciable manner by the traditional Nigerians for farming and cultivation was carried on quite prosperously. In fact, land was used as a security for the borrowing of money under the system of pledge. In other cases, land can be borrowed, used and returned as well.
The above nevertheless, by the time economic development blossomed beyond the scope of the traditional land holding system and the need for more governmental projects to be executed arose, the practice of land holding started to erode and land became an object that played a key role in business development as the Nigerian economy grew.
In relation to the economy and social infrastructure, the Land use Act (The Act) was enacted to regulate land holding in a way that land can also be economically used after a series of varying land tenure systems in various parts of the country. The Land Use Act brought a unified regime of land use across the nation setting aside all other existing systems.
With regards to the economy, a company is empowered upon incorporation to borrow money to do business and mortgage any of its asset including land as security for such loan. The Companies and Allied Matter Act provides thus:
A company may borrow money for the purpose of its business or objects and may mortgage or charge its undertaking, property and uncalled capital, or any part thereof, and issue debentures, debenture stock and other securities whether outright or as security for any debt, liability or obligation of the company or of any third party.
The Land Use Act was promulgated to regulate this concept of mortgage of land along with other concepts with a supposed intent of achieving efficiency. How efficient this has been in the about thirty-nine years of the Act in relation to mortgage transaction in Nigeria is the question this work has set out to expose. We set out to consider the procedures and complexities that has manifested in practice from the theoretical provisions of the Act and the solutions that can correct such complexities.
- Ownership of Land Under the Land Use Act.
There is no question as to the fact that land can be used as security for loan, what is questionable is who owns the land that is used as security. The question is pertinent because the Land Use Act changed the concept of ownership of land in Nigeria with the provision of section 1 which provides thus:
Subject to the provisions of this Act, all lands 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 provision of this Act.
The effect of the above provision would ordinarily seem that the initial owners of lands in Nigeria have been divested of ownership. A mass of academic energy have been expended on the issue of who owns land now in Nigeria as the position of the Act which says that the governor holds all the land ‘in trust’ presupposes that the citizens are the owners while the governor is a mere trustee. This position can be challenged on the basis that the trustee is in law the legal owner while the citizens are by extension the equitable owners. Another position was taken by Olawoye who maintained that the term ‘vest’ suggests the vesting of ownership which is to the effect that all previous owners have been divested of the ownership of their land and these include communities, families or individuals. Another position is that the above section grants the governor radical title to the lands in every state subject to the provision of the Act. Abugu noted that this latter position suggests that there are other titles which may be less than radical which may be in other persons.
Without an attempt to particularly pitch a tent with any of the divides, one can say that the controversy was created because the Act failed to properly define the nature of interest which a citizen is entitled to upon the enactment of the Act. The Land use Act referred to the nature of interest as Right of Occupancy which is for a determinable period and this makes it distinct from freehold and seem like a lease though not exactly a lease. The right of Occupancy however confers exclusive right to the land to the holder against all persons except the governor himself. The act provides that:
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.
It can be deduced from the above that the conferment of a Right of Occupancy is a form of ownership in itself though less in character, form and incidence when compared to that of the absolute, maximal, allodial or radical ownership vested in the governor.
Having said that, The right of occupancy may be statutory or customary on one hand, and may further be express or deemed, the express is for new applicants while deemed is for persons already in occupation of the land at the time of coming to force of the Act. The court in Ogunleye v Oni noted that:
The Land Use Act never set out to abolish all existing titles and rights to possession of land. Rather, when such right or titles relate to developed lands in urban areas, the possessor or owner of that right or title is deemed to be a statutory grantee of a right of occupancy under section 34 (2) of the Act. Where it is non-urban land, the holder or owner under customary law or otherwise is deemed to be a deemed grantee of a right of occupancy by the appropriate local government under section 36 (2)
This means from 1978, the nature of interest one can own in land is either statutory right of occupancy which is granted expressly or deemed in respect of land in urban areas of the country or customary right of occupancy which is granted expressly or deemed in respect of land in rural areas of Nigeria.
- What Can Be Mortgaged Under the Land Use Act.
Having said the above, the land to be used for Mortgage under the Land use Act must by necessary implication be covered by a right of occupancy which, as said earlier, must be for a determinable period. While this seem plain in theory, in practice, the populace have found more solace and comfort in granting a mortgage upon the presentation of a Certificate of occupancy which by the provision of the Act is mere evidence of title. Section 9 of the Act provides as follows:
(1) It shall be lawful for the Governor–
(a) when granting a statutory right of occupancy to any personal or
- b) when any person is in occupation of land under a customary right of occupancy and applies in the prescribed manner; or
(c) when any person is entitled to a statutory right of occupancy, to issue a certificate under his hand in evidence of such right of occupancy.
The effect of the above is that the right of occupancy is the main title of document while the certificate of occupancy is the mere evidence. In Ogunleye v Oni, the Supreme Court noted that
A certificate of occupancy issued on the Land use Act, it must be stressed, cannot be said to be conclusive evidence of any interest or valid title to land in favour of the grantee; it is only prima facie evidence of such right, interest or title without more and may in appropriate circumstances be effectively challenged and rendered invalid, null and void.
That being said, the proliferation of the certificate of occupancy as the main title document is at an all time high. It is the practice for transactions even in sale of land to be predicated on certificate of occupancy. Abugu noted rightly that the fact that the certificate of occupancy is issued contemporaneously with a right of occupancy does not justify its arrogation to the status of a right of occupancy and condemns the prevailing rat-race for the certificate almost in preference to the right of occupancy. In practice also, financial institutions have placed a higher value on the said certificate of occupancy preferring it to the letter of allocation or Right of occupancy or conveyance as a sufficient title document for the purposes of loan or security mortgage. It is not to say that the certificate is entirely insignificant because, although a person who is a deemed grantee does not necessarily have to apply for a certificate of occupancy since the law simply says ‘may’, however, where he needs to obtain a loan, using that property as security, he would need his certificate to evidence his right of occupancy. Where it is an express grant and the land is undeveloped, the certificate is also important to amplify his title, however, where it is developed and it is the holder who is in occupation, it is unnecessary to insist on the Certificate of Occupancy.
- Mortgage of Land under the Land Use Act: The How.
The Land Use Act did not define mortgage nor land. While land was defined by the Interpretation Act as “land and everything attached to the earth and all chattels”. mortgage is defined by Omotola as a non-possessory proprietary security interest in which ownership interest in secured property is transferred by the debtor to the creditor in support of the performance of an obligation owed to the creditor. This means that the debtor (also known as mortgagor) transfers certain non-possessory ownership rights in his land to the creditor (also known as mortgagee, usually a bank) as collateral (security), to be held and re-transferred back dependent on the fulfillment of an obligation owed to the creditor (usually the payment of principal sum and interest).
There is no gainsaying that definitions in law are never adequate, hence, the above are working definitions but the crux of the matter is that the Land Use Act has made specific provision in relation to mortgage by way of procedure through which the back and forth transfer will occur. For ease of reference, the Act provides that:
- It shall not be lawful for any customary right of occupancy or any part thereof to be alienated by assignment, mortgage, transfer of possession, sublease or otherwise howsoever –
(a) Without the consent of the Governor in cases where the property is to be sold by or under the order of any court under the provisions of the applicable Sheriffs and Civil Process Law; or
(b) in other cases without the approval of the appropriate Local Government.
- 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, mortgage, transfer of possession, sublease or otherwise howsoever without the consent of the Governor first had and obtained:
(1) Provided that the consent of the Governor-
(a) shall not be required to the creation of a legal mortgage over a statutory right of occupancy in favour of a person in whose favour an equitable mortgage over the right of occupancy has already been created with the consent of the Governor:
(b) shall not be required to the reconveyance or release by a mortgage to a holder or occupier of a statutory right of occupancy which that holder or occupier has mortgaged and that mortgage with the consent of the Governor:
(c) to the renewal of a sub-lease shall not be presumed by reason only of his having consented to the grant of a sub-lease containing an option to renew the same.
(2) The Governor when giving his consent to an assignment mortgage or sub-lease may require the holder of a statutory right of occupancy to submit an instrument executed in evidence of the assignment, mortgage or sub-lease and the holder shall when so required deliver the said instrument to the Governor in order that the consent given by the Governor under subsection (1) may be signified by endorsement thereon.
The operative word in the above provision is ‘alienation’ which is same as transfer or conveyance. The law intends to strictly monitor how land moves from one person to another. In the case of mortgage as against sale, the movement of the land is conditional in the sense that the owner of the mortgage property becomes divested of the right to dispose of the property until he has secured a release of it from the mortgagee. While in sale, the conveyance is total, out and out or permanent. Legal mortgage is one of the transactions required to be created by deed and signed sealed and delivered. Aside from these, the transaction according to the above provisions must be consented to by the governor in case of states and the minister of FCT in case of the Federal Capital Territory, Abuja having being delegated to so do by the president of the Federation.
The above provision also noted that some conveyance do not require the consent of the governor including the re-conveyance back to the mortgagor. This is quite reasonable to cut out expenses, however, a wise mortgagor should ensure that a proper deed of release is nevertheless executed and where possible get it registered so as to remove the blemish from the property for any subsequent prospective buyer.
The Act actually envisaged efficiency with the movement of property, however in practice, it is not so smooth as various transactions have over the years manifested the lacunas and inefficiencies of the law relating to mortgage under the thirty nine years regime of the Land Use Act.
 Cap L.5, Laws of Federation of Nigeria, 2004
 The long title of the Act states that it is “An Act to Vest all Land compromised in the territory of each State (except land vested in the Federal government or its agencies) solely in the Governor of the State , who would hold such Land in trust for the people and would henceforth be responsible for allocation of land in all urban areas to individuals resident in the State and to organisations for residential, agriculture, commercial and other purposes while similar powers will with respect to non urban areas are conferred on Local Governments.”
 Santley v. Wilde  2 Ch. 474. another definition is that Mortgage is a form of security created by contract, conferring an interest in property defeasible upon performing the condition of paying a given sum of money, with or without interest or performing some other obligation see. Tyler, E. L. G. Fisher and Lightwood’s Law of Mortgage, (London: Butterworths, 1988), p. 4
 From days of owning land through first settlement and conquest to days of the system of Dualism where the traditional land holding system existed side by side with the received English land tenure system and then the paternalism system predominant in the Northern part of the country. See Abugu, U. Land Use and Reform in Nigeria: Law and Practice. Immaculate Prints, Abuja. 2012. pp. 3-18.
 A statement made by a chief of Ijebu-ode and cited in Adejumo V Ayantegbe (1989) 3 NWLR (pt. 110) p.417 SC
  AC 339.
 Lord Haldane noted that the term trust is not per se in the English sense of trust
 Abugu, U. Land Use and Reform in Nigeria: Law and Practice. Immaculate Prints, Abuja. 2012. P.3
 See Oluyede, P.A.O. Modern Nigerian Land Law. Evans Brothers(Nigerian Publishers) Ltd. Ibadan, 1989. pp.114-123
 Op cit. note 1.
 Op cit note 8. pp 3-18
 Cap C20. Laws of Federation of Nigeria, 2004
 Ibid. section 166.
 Oretuyi, S.A. Public Take-over of Land, Federal and State Government Right over Land: The Conflict. Cited in Omotola J.A. (ed) The Land Use Act.
 Olawoye, C.O. Statutory shaping of Land Law and Land Administration up to the Land Use Act cited in omotola J.A. (ed) The Land Use Act. In Abugu, op cit note 8.
 Op. cit note 8. P.20
 Section 5 and 6
 Section 8
 Section 14
 Statutory is for land in urban areas while customary is for land not in urban area.
  2 NWLR (Pt 135) 745.
 Op.cit note 8. P.86
 Ibid. P.87
 Section 3
 Omotola, J. The Law of Secured Credit. (2006) Evans Brothers Nigeria Ltd.
 Bank of the North Limited v. Bello  7 NWLR (Pt. 664) 2442.
 Dadem, Y.Y. Property Law Practice in Nigeria, Jos University Press, Jos 2nd Edition, 2012.
 Constitution of Federal Republic of Nigeria 1999 (as amended) Section 302
Written by: Ganiyu Ajibola Bello. LL.B, BL. DRS. LL.M