How Many Years Do You Have Left On That Land?

By Olusegun Adebayo, Esq

What one acquires in a land whose title document is a Certificate of Occupancy (C of O) is a term of years and/or an unexpired residue of the Lease. To say this in other terms, a Certificate of Occupancy evidences a statutory right of occupancy, considered a long lease of land from the Governor of the State for a period of 99 years. What this means is that if Mr. A, for instance, was issued a C of O over a property, Mr. A’s term of years over that property is for a period of 99 years. What Mr. A can subsequently transfer to another person is the remainder of his term of years.

If the above is clear, we can illustrate further, if Mr. A having spent a period of 25 years on the property transfers it to Mr. B, what is deemed transferred is the unexpired residue of his lease of 74 years. The right of Mr. B extinguishes after a period of 74 years.

At the expiration of the entire leasehold term of 99 years, it is expected that the land reverts to the Governor of the State who, by law, has the radical title to such land.

From the foregoing, one can easily allude to the fact that a C of O does not grant the holder an inextinguishable title or a perpetual right of ownership. It is a Leasehold subject to a term of years. There are, however, certain categories of land that grants the holder a free, unhampered and seemingly perpetual right of ownership. These, having their root of tile from ancestral and communal land tenure system, can be held for life by the holder and transferred to his offspring.

The nagging question then is: which should one better acquire; a Leasehold or a Freehold? While the foregoing set the pace for this discourse, it is, crucial, to anchor it in proper perspective.

Granted, the coming into force of the Land Use Act in 1978 is deemed to have consolidated all pre-existing land rights and vested same on the Governor of the State, who is considered a trustee of the land for the State. Indeed, the Act proclaimed its intendment 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…” This proclamation further found expression by virtue of Section 1 of the Act which reads as follows:

“Subject to the provisions of this Act, all land 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 provisions of this Act.”

The Law, however, also recognizes interests which were previously held before the regime of the Land Use Act. These were to be freely held as “deemed grant,” as if statutory right of occupancy has been granted over them. It is to this second category of land rights; we make reference to. Hence, the couched, loose term “freehold” for convenience of reference. This point is a derivative of Section 34 (2) of the Act, viz:

“Where the land is developed the land shall continue to be held by the person in whom it was vested immediately before the commencement of this Act as if the holder of the land was the holder of a statutory right of occupancy issued by the Governor under this Act.”

To completely get this out of the way, we can stretch the contention further by submitting that, so long as there is no government policy compelling the acquisition of statutory right of occupancy for pre-existing land rights, they coexist with the extant administration of land tenure system. The rights of these holders only extinguishes upon the grant of statutory right of occupancy over such land. It stands to reason, therefore, that they continue to enjoy unhampered right of ownership subject to the grant of statutory right of occupancy. This is the purport of Section 5 (2) of the Land Use Act, thus:

“Upon the grant of a statutory right of occupancy under the provisions of subsection (1) of this section all existing rights to the use and occupation of the land which is the subject of the statutory right of occupancy shall be extinguished.”

Such pre-existing rights do not cease to exist simply by the enactment of the Act. The notion that the enactment of the Land Use Act in 1978, extinguished all other pre-existing rights, is unfounded.

The Supreme Court’s pronouncement, in a recent decision, puts the issue beyond all controversy. In the case of Kolo V. Lawan (2018) 13 NWLR (Pt. 1637) 495 SC, the Court, per Ariwoola, JSC held quoting Ogunleye v. Oni (1990) 2 NSCC (pt. 11) 72 that:

“…the Land Use Act never set out to abolish all existing titles and rights to possession of land. Rather where such rights or titles relate to developed lands in urban areas, the possessor or owner of the right of title is deemed to be a statutory grantee of a right of occupancy under Section 34 (2) of the Act (Pp. 34-36, Paras. E-D) …Ordinarily, and there is no doubt, that an owner of land under the native law and custom is entitled to transfer his absolute interest in the land to another and grant exclusive possession of same.” (Pp. 17-28, Paras. D-F)

(emphasis supplied)

To the crux of this discourse, while it is certain that in the event of the compulsory acquisition of land with a Certificate of Occupancy by government for public purpose, the leaseholder is entitled to be paid compensation, the same cannot be said to holders of freehold titles. This being that the revocation is only as to the manifest right of occupancy (Section 28 of the Land Use Act). Where there is no right of occupancy from the government to be revoked, in reality, it may be an uphill, though not impossible task, for a freeholder to assert any claims. Judicial authorities exist which support the claims of deemed grantees to compensation. Nevertheless, it can be argued that he may have lost what he does not have in the first place.

A Leaseholder, on his own part, is liable to the payment of occupancy rent as may be determined by the government. Inherent in the powers of the Governor of the State to grant statutory right of occupancy is also the power to demand for rent. Section 5 (1) (c) put this beyond doubt: “It shall be lawful for the Governor in respect of land, whether or not in an urban area… to demand rental for any such land granted to any person.”

Besides, considering the bureaucracy, time and efforts in obtaining a Certificate of Occupancy, these lands are usually highly priced. Such land can be valued for as high as ten (10) times the prices of freeholds in the same locality. Although they give one guaranteed title, it is the opinion that after the expiration of the 99 years’ term, leaseholders will need to reapply to the Governor for their land rights to be revised (Although there is no factual support for this, since it has been less than 99 years from 1978, however, Section 5 (1) (d) of the Act empowers the Governor to revise rent payable by grantees). Of course, such would not be without some financial implications.

Which should one better to opt for, a Leasehold or Freehold property? This debate is a moot one.  Nevertheless, such decision should be taken only after considering these factors as highlighted above.

Olusegun Adebayo, Esq is an Associate Counsel in AOS Practice, LP, Lagos.

He can be reached via 08034334692 or aolusegun@aospractice.com.