Governor’s Consent in Lagos Property Transactions: Legal Basis, Process and Pitfalls

1.1 INTRODUCTION.

Land is remains one of the most valuable and fundamental assets of human society and it is considered a prime investment avenue due to its high potential for value appreciation and its diverse economic utility. In societies across the globe ownership and transfer of land are subject to legal regulation that are designed to promote certainty and protect the interest of both the state and private parties. Before colonial rule, land tenure in Nigeria was governed by customary land tenancy system as land was owned communally by families, villages or tribe with their rights managed according to their individual customs. Family head or village chiefs often controlled land allocation in rural areas. This system emphasized the communal ownership of land with rights passed through generations often by inheritance. 

In Nigeria today the concept of Land Ownership is fundamentally changed by the Land Use Act 1978. The Act was intended to harmonize the fragmented land tenure system that had existed under customary law and statutory law while giving the government a central role in Land Administration. By the provision of Section 1 of the Land Use Act, 

                             All land in a state is vested in the governor of that state and shall be held in trust for the benefits of the citizens.

Under this framework, individuals and entities no longer “own” land in the absolute sense but are granted a right of occupancy. This means that what  Nigerian’s now enjoy is a right to occupy and use land not an absolute title and because all land is vested in the governor no holder of a right of occupancy can legally transfer mortgage lease or assign land without the Governor’s Consent. 

1.2 DEFINITION OF KEY TERMS.

1.2.1 Land 

According to Black's Law Dictionary, "land" refers to an immovable, three-dimensional area of the earth's surface, including the space both above and below that surface, along with everything permanently attached to it, whether naturally or artificially. This encompasses the ground, the subsoil, and structures like trees and buildings. Land law covers both tangible things you can touch (physical soil and buildings) and intangible rights (e.g right of way).land also include any building and any other thing attached to the earth or permanently fastened to anything so attached but does not include mineral.

1.2.2 RIGHT OF OCCUPANCY.

The Right of occupancy is a right granted by the government to a legal person to use and occupy land. This essentially gives the holder the right to use the land for a specified period, subject to certain conditions. It is the highest claim anyone can have in Nigeria over any land no other person but the government can have a better claim over a land than the holder of a right of occupancy in respect of that land

Types of Right of Occupancy

A Statutory Right of Occupancy is the right granted by the Governor of a state in respect to section 5(1)(a) of the Land Use Act over urban land or any other lands under the control of the Governor.

Customary Right of Occupancy on the other hand is the right granted by local governments under section 6(1)(a) of the Act for rural lands and they are usually governed by native and customary law.

1.2.3 CERTIFICATE OF OCCUPANCY.  

A Certificate of Occupancy commonly known as C of O is an official document issued by the government, serving as legal proof that an individual is the rightful owner of land in Nigeria. It is a presumption of title which could be rebutted by a better title which is established by another contending person over the same land. The government holds the authority to seize any plot of land or property lacking a Certificate of Occupancy at any given time, without compensating the owner. The Certificate of Occupancy stands as the pivotal document for property buyers and landowners and it serves as conclusive proof of ownership for the specified land or property.

1.2.4 GOVERNOR’S CONSENT.

This refers to the official approval given by the Governor of a state in Nigeria for any transaction involving land or property that already has a certificate of occupancy. It is legally required for the transfer sale or mortgage of land that has been previously titled.

In other words, the first person on a land is the only person or group of persons entitled to obtain a Certificate of Occupancy. Every subsequent buyer of that land must get a Governor’s consent. There can only be one (1) Owner of the Certificate of Occupancy on that Land and it will not be replicated for another person once the land has been sold or transferred to another person.

2.1 Legal Basics of Governor’s Consent.

The legal basics of Governor’s consent in Nigeria is found primarily in the Land Use Act 1978. This Act is the basics of land law in Nigeria and establishes the foundational principles for land ownership, administration, and transfer. It vests all land ownership in the state governors as trustees for their states, and any subsequent dealings or transfers of land after the initial issuance of a Certificate of Occupancy (C of O) require the Governor's explicit consent to be legally valid. This provision is the legal basis for the governor's control over land and the need for their consent for any land transaction. The Act further provides in Section 21 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. Section 22 provides 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, mortgage, transfer of possession, sublease or otherwise howsoever without the consent of the Governor first had and obtained. The sections protects the rights of individuals or entities who have been granted statutory rights of occupancy or customary rights of occupancy It also provides that once a right of occupancy is granted, it cannot be revoked except under circumstances specified by the Act. 

The LUA goes further by declaring that any alienation effected without the Governor’s consent is void (or of no effect). In practice this means that a conveyance, mortgage or other instrument executed without the prescribed consent will usually be treated as legally ineffective against the grantor’s interest in land 

This statutory rule has been relied on in several cases to invalidate transactions completed without consent. In the case of Savannah Bank Ltd v Ajilo, The respondents (Ajilo and anor) were owners of property in Lagos State,they executed a legal mortgage over the property in favour of the appellant bank (Savannah Bank of Nigeria Ltd) as security for a loan facility. When Ajilo defaulted on payment, the bank sought to sell the mortgaged property by auction. Ajilo sued to declare the mortgage deed and auction notice void on the grounds that under Section 22 of the Land Use Act, the consent of the Governor of Lagos State was required before such alienation could be validly executed and such consent had not been obtained. The trial court held that failure to obtain the Governor's consent rendered the mortgage deed and auction notice null and void, making the mortgage transaction illegal. The Court of Appeal affirmed this view, stating that any transfer, mortgage, or disposal of interest under a statutory right of occupancy requires the Governor’s consent. The Supreme Court further upheld this legal position, dismissing Savannah Bank's appeal and affirming that the absence of gubernatorial consent invalidates such transactions. 

This case has drawn criticism because it sometimes allows parties (often mortgagors) who have defaulted, to rely on the failure to obtain consent to evade their obligations, despite having benefited from the contract. Some courts and legal commentators debate whether equity should intervene to prevent mortgagors from benefiting from their own wrongdoing, but the strict statutory interpretation given by the Supreme Court in Savannah Bank v. Ajilo remains authoritative until any legislative amendment or Supreme Court overruling.

Also in Awojugbagbe Light Industries Ltd v. Chinukwe In that case the Appellant was granted a loan facility of  N215,000.00 on the 11th October, 1979 by the second Respondent to establish a nail factory. As security for the loan, in 1980 the Appellant’s Managing Director mortgaged his property at Ibadan to the second Respondent. The Governor’s consent was not obtained to the mortgage until 1985. As a result of the Appellant’s default, the mortgagee appointed the first Respondent as its receiver and the later took over the mortgaged property viet armis (by force and arms). The Appellant sued the Respondents for trespass to land and sought a declaration that the mortgage was void, not having complied with the consent provisions of the Land Use Act. The contention was that the Governor’s consent ought to have been obtained prior to the execution of the mortgage deed. Reliance was placed on section 22.The Supreme Court was unanimous in holding that notwithstanding the phrase “without the consent of the Governor first had and obtained”, parties can lawfully execute a deed of mortgage. So long as the understanding is that the Governor’s consent shall subsequently be obtained.

This case stands for the principle that Governor’s consent under the Land Use Act is mandatory for the alienation of statutory rights, but legal transactions and documents can be prepared before consent as long as consent is obtained and the deed takes effect after consent is granted. The decision is significant for bankers, mortgagors, and Nigerian property law practitioners in interpreting the timing and effects of Governor’s consent on mortgage transactions.

The principle was further consolidated in U.B.A. v. Ashimolowo, where it was held that a transaction executed without consent is null and void, conferring no enforceable rights. Collectively, these cases establish that Governor’s consent is not a routine step or a piece of paperwork that can be fixed later a but a mandatory legal requirement that that determines whether a land transaction is valid at all.

2.2 Property Transaction requiring Governor’s Consent 

Having established the statutory framework under the Land Use Act, it is important to examine the specific transaction that falls within the scope of the consent requirement. The Act does not impose a generic restriction on every dealing with land however limits the prohibition to certain acts of alienation. The Act requires the consent of the governor to any alienation of the right of occupancy. Alienation is the power of an owner of property to voluntarily transfer or dispose his interest in the property to another. Under Section 22 such Acts of alienation include

• Assignment: This refers to the legal process by which the original owner of a property transfers their interest or ownership rights in the land to another party. This is done through a legal document called the Deed of Assignment. The first owner or original owner owns the certificate of occupancy and further transfer to a new buyer is done through an assignment. A deed of assignment must include the Complete details of all parties involved in the transaction, the agreed purchase price, precise land measurements and description, an attached survey plan, signatures of all parties and witnesses, official stamps and seals

• Mortgage: A mortgage is an agreement between you and a lender that gives the lender the right to take your property if you don’t repay the money you’ve borrowed plus interest.

A mortgage transaction involving land under a Certificate of Occupancy (C of O) requires the Governor's Consent as mandated by the Land Use Act. This consent validate the mortgage and to allow the land to be used as collateral for securing a loan and also protects against fraudulent or illegal dealings.  Without this consent, the mortgage transaction is void and unenforceable, which can create complications for both the landowner (mortgagor) and the financial institution providing the loan (mortgagee) see Savannah Bank Ltd v Ajilo. The key elements of a mortgage deed are: The names of the parties that is the lender and the borrower, including intermediaries and guarantors, Deed description i.e the address, a recital which explains the document's purpose and why the parties are entering into the agreement, covenant for repayment i.e the loan terms, and the mortgage clause which is the rights and remedies in the event of a default.

• Transfer of Possession: It involves handing over control or custody of the land (or part of it) to another person, even though ownership (title) remains with the holder. The act of transferring physical control or occupation of the land is an alienation and therefore requires the Governor’s prior consent to be lawful.

• Sublease: a sublease is a legal arrangement by which a holder of a leasehold interest grants a lease of the land or a portion of it to another party for a term that is shorter than the unexpired portion of their own lease. Governor’s consent ensures proper oversight and prevents fraudulent or secret dealings it’s also the basics of the validity of such alienation under Nigerian land law. Sublease transactions requires Governor’s Consent if such property already has a certificate of occupancy.

• Power of attorney: Power of Attorney dealing with land may be filed at the registry but the Registrar shall not accept for registration any irrevocable power of Attorney on which the Governor’s consent has not been endorsed

2.3 Property Transaction where Governor’s Consent is not required

The governor’s consent is not required in the following transactions:

1. Equitable Mortgage: Section 22(a) of the Land Use Act provides that “Governor’s consent shall not be required to the creation of a legal mortgage over a statutory right of occupancy in favor of a person who an equitable mortgage over the right of occupancy has already been created with the consent of the Governor” This Section is quite confusing as sec 51 defined mortgage to includes a second and subsequent mortgage and equitable mortgage and sec 21 prohibits alienation by mortgage except with requisite consent or approval

2. Reconveyance or Release: Section 22(b) of the Act also provides “Consent shall not be required to the reconveyance or release by a mortgagee to a holder or occupier of a statutory right of occupancy which that holder or occupier has mortgaged to that mortgagee with the consent of the Governor”. This means that if a person redeems a loan or the mortgagee releases the mortgage back to the borrower, you need not seek the Governor’s consent again to reconvey the property to yourself. Once consent is given for the original mortgage it’s not necessary for the reversal or release see Owoniboys Tech Service Ldt. vs. U.B.N Plc

It is pertinent to note that the timing of the Governor’s Consent is immaterial provided that such consent is ultimately obtained. A holder of statutory right of occupancy is not prohibited by Section 22(1) of the Land Use Act from entering into a form of negotiation, which may end with an executed agreement for presentation to the governor for his necessary consent or approval. The position of the law is that consent of the governor for alienation is required at the time of perfection not the time of negotiation hence, parties to land transaction can commence performance or negotiation before obtaining governor’s consent but the contract will be incomplete until consent is obtained such as it’s seen in Awojugbagbe Light Industries Ltd vs. Chinukwe.

3.1 The Process of obtaining governor’s consent in Lagos 

The Governor’s Consent for Lagos State is applicable at the Lands Bureau, Block 13&14, The Secretariat, Alausa, Ikeja. Lagos State and it involves the following processes:

 1. Lodgment of Application: An applicant initiates the transaction by submitting a properly filled application form. An applicant is expected to submit an application with the appropriate supporting documents. An acknowledgment Letter and payment advice for the application are given to applicant, to confirm the initiation of the transaction as well as to confirm receipt of the application form and supporting documents. Note: the applicants will also receive an electronic copy of the same documents via the provided email address in the application form.

 2. Payment of Fees: Applicant proceeds to make the payment, submit payment receipts to the Lands Bureau administration officer, who checks to see if all required payment(s) have been made. If any payment is pending, the applicant is expected to pay it before processing can continue on the application

 3. Investigation: After payment(s) has been confirmed, the application is pushed through a series of internal reviews by the Lands Bureau “Registry Dept” (to validate the Past Transaction on the Property) and the Office of State Surveyor General (check the survey plan). Note: that transaction may be rejected at these stages.

4. Fee Assessment: Assessment is performed on the property to determine its value. An assessment report is prepared and based on this report, another payment advice is generated. Once signed, the payment advice is issued to the applicant for payment.

5. Assessment Payment: Applicant is notified and issued assessment (payment advice). Payments must be made before further processing of the transaction can continue. Simultaneously, the applicant is advised to process the Personal Income Tax Clearance, performed by the office of the Commissioner of Stamp Duty to establish applicant conformity to tax liabilities. This reduces the duration for transaction processing before Commissioner’s signing. It includes Consent Fee which is usually 1.5% of the assessed property value, Capital gain tax 0.5%, Stamp duties 0.5%, Registration fees 0.5%, neighborhood improvement charges etc.

6. Further Processing of Application: Application is then pushed to the generation of the Consent Certificate, is sent to various principal officers to review before it is sent to the Honorable Commissioner for signing.

7. Signing by Honorable Commissioner and Commissioner for Stamp Duty: The transaction is then pushed to the Honorable Commissioner for signing and Commissioner of Stamp Duties for subsequent signing after which the transaction is forwarded to the Registrar of Titles for registration.

8. Registration of the Consent Certificate: The Consent Certificate is registered and a copy is delivered to the Applicant after registration. The transaction ends at this point.

3.2 PRE-REQUISITE DOCUMENT.

 The following pre-requisite documents are mandatory and expected to be uploaded by the applicant(s):

    •   Identification Document i.e any of National ID Card, Drivers Licence, INEC Voters Card or International Passport (for Individual Applicant Only)

    •   Passport Photograph (for Individual Applicant Only)

    •   Certificate Of incorporation (for Business/Organisation Only)

    •   Particulars of Directors (for Business/Organisation Only)

    •   Deed Document (Deed of Assignment/Deed of Sublease/Deed of Gift/Deed of Partitioning)

    •   Survey Plan

    •   Form 1C (Application Form)

    •   CTC/Copy of Title

    •   Letter of Indemnity 

    •   Affidavit 

    •   News Paper Publication 

 Other non-mandatory documents include the following:

    •   Income Tax Clearance

    •   Site Direction Sketch

    •   Evidence of Lodgement of Record copy

3.3 CHALLENGES IN OBTAINING GOVERNOR’S CONSENT

1. Bureaucratic delay: The process of obtaining consent is notoriously slow often stretching over several months or even years. This frustrates the purpose of timely land transactions especially in commercial context where speed is needed. Most Governors are reluctant in granting Governor’s consent while in some situations, those who are at variance with the Governor’s political ideology and policies find it difficult or even impossible to obtain Governor’s consent. The process is frustrated by unnecessary delay of time since the Act makes no provision for time limit in which consent should be granted

2. High cost of consent fees: Several states have turned the requirement of Governor’s consent as a means of generating revenue for their state. Consent fees alongside other charges such as stamp duties and registration fees significantly increase the financial burden on applicants. This eventuality makes it hard for low-class or middle class earners to be landowners.

3. Cumbersome documentation and inadequate digitization: The consent procedure requires extensive document and verification which further slows down the process and sadly many states still rely on manual records for land transactions. This does not only prolong verification but also increases the risk of missing files and forgery  

4. Access inequality: individuals with political or financial influence often enjoy faster access to consent while ordinary citizens face prolonged delay. This shows the inadequacy in the fairness of the system.

5. Legal dispute: Disagreement often arise when one party fails to secure the Governor’s consent. Such dispute often ends in prolong litigation, loss of time and money.

4.1 Pitfall of the provision of Governor’s Consent.

1. Security risk: Most often, financial institutions are faced with the risk of losing their security when advances are made before obtaining consent on securities offered to customers. The case of Savannah Bank v Ajilo further revealed this precarious situation as bona fide purchasers who acts in good faith will lose their interest if consent is missing thus resulting in severe hardship for innocent parties particularly lenders.

2. Financial loss: Individuals seeking consent risks losing money if transaction are later invalidated. Payments made in investigation stage and stages before are not refunded after transactions are rejected.

3. Double consent problem: in transactions such as assignment, sublease or mortgages, parties sometimes assume that prior consent granted to an earlier transaction covers subsequent dealings. However each new transactions requires fresh consent and failure to secure it can render the deal defective.

4.2 RECOMMENDATION.

1. The consent provision should contain a clause which prevent a mortgagor or transferor from benefiting from failure to obtain consent, as in Savannah Bank v Ajilo. The consent provision should ensure that no party benefits from their own wrongdoing.

2. There should be an amendment of Section 22 of the Lua. The requirement of Governor’s Consent for every alienation of an interest in land is quite unnecessary. Reform could make consent necessary only for major dispositions (e.g., outright sale, mortgage of statutory right of occupancy), while excluding minor transactions like short leases and assignments.

3. The Act should prescribe a maximum time limit (e.g., 30–60 days) for processing Governor’s Consent applications, with legal consequences for undue delay.

4. State Governors should not to treat the grant of consent as a revenue-generating avenue for the state. Rather, the process should be approached as a mechanism for ensuring compliance with the Land Use Act. Accordingly, the imposition of exorbitant fees which is particularly prevalent in Lagos State should be curtailed.

5. Several mechanism should be put in place to curb corruption in land registries, This can be achieved through the full adoption of automated systems that minimise personal interaction between applicants and officials. This will reduce delay.

6. Finally it is important to seek the consent of a Lawyer before attempting to process mortgages or lease agreement as the procedure is technical and prone to mistakes. A lawyer will help with searches, deed preparation, proper filing and also making sure the documents are complete