If you are a foreigner, and you wish to buy a property in Nigeria or you are an owner/promoter of a foreign-owned company and the company is looking to buy a property in Nigeria, this article is for you.
WHAT THE LAW SAYS ABOUT OWNERSHIP OF LAND IN NIGERIA IN GENERAL
The Land Use Act is the principal law governing land transactions in Nigeria.
In summary, under the Act, all lands in every 36 States of the Federation (except land vested in the Federal Government or its agencies) are held in the custody of the Governor of the State, and the latter is responsible for allocating all lands in all urban areas to both individuals and organizations resident within the State for residential, agricultural, commercial and other purposes. In the case of land in rural areas, similar powers are conferred on the Local Government.
What this means is that any person (including Nigerian citizens) who wishes to acquire land in Nigeria must obtain an allocation of a portion of land from the Government through a certificate of Occupancy. A certificate of occupancy vests ownership of land or property. A person who does not have a certificate of occupancy (C of O) technically does not have a right of ownership of the land.
Nigeria operates a leasehold system, where the government owns the land and leases it back to individuals for a period of 99 years.
CAN A FOREIGNER OWN LAND IN NIGERIA?
As regards ownership of land by foreigners, the law governing such transaction is Acquisition of Land by Alien Laws (ALAL), enacted by the Government of the various 36 States in Nigeria. For the purpose of this article, we would examine that of Lagos State. Please note, however, that the position of the law is applicable to other States.
Under the Acquisition of Land by Alien Laws of Lagos State, a foreigner (whether as an individual or as a foreign-owned entity) can own property in Nigeria provided the approval of the Governor is sought and obtained. The requirement of obtaining the approval of the Governor will not apply in a land transaction where the interest or right to be acquired is for a period of less than three years.
Should a foreigner who has obtained the approval of the Governor desire to sell or transfer ownership to another foreigner, such transaction must obtain the approval of the Governor.
Section 1 of the ALAL states;
“Except as provided by this law and any regulations and orders made under this law-
- An alien may not acquire any interest or right in or over land from a citizen of Nigeria unless the transaction under which the interest or right is acquired has been previously approved in writing by the Governor;
- Provided that where any such interest or right to be acquired by an alien is less than three (3) years (including any option for renewal) the provisions of this law will not apply; and
- Where such interest or right has been lawfully acquired by an alien, that interest or right will not be transferred, alienated, demised, or otherwise disposed of to any other alien, or be sold to any other alien under process of law, without prior approval in writing by the Governor of the transaction or sale, as the case may be…”
Section 8 of the ALAL defines an “Alien” as;
1. any person other than a citizen of Nigeria;
2. any company or association or body of persons corporate or unincorporated other than;
i. a body corporate (in which the majority of the shares are held by natives of Nigeria) established specifically by or under any Act or Law which empowers that body to acquire and hold land;
ii. a corporate body incorporated under the provisions of the Companies and Allied Matters Act- Part C-Incorporated Trustees or any other Act or Law containing general provisions for incorporation where the corporate body is composed solely of natives of Nigeria;
iii. a corporate body established under any Law of the State relating to local government or education and empowered by that Law to acquire and hold land;
iv. a co-operative society, the majority of the members of which are natives of Nigeria and which is registered under the provisions of any Law of the State relating to cooperative society;
v. a company or association or body of persons corporate or unincorporated which the Governor may by an order made under section 6(2) declare to be exempt from the provisions of this law”.
HOW TO BUY PROPERTY IN NIGERIA AS A FOREIGNER (STEP-BY-STEP GUIDE)
Now you know that you can purchase a property in Nigeria as a foreigner in an individual capacity or as a company, I’m sure your next question would be; what step should I follow when purchasing property in Nigeria?
In summary, below are the steps to follow when acquiring property as a foreigner;
1. Hire a competent lawyer or legal team; As a foreigner, there is a great chance that you may not be familiar with policies and regulations governing property transactions in another country such as Nigeria. It is therefore advisable that you seek the services of a lawyer(s) with the requisite experience for legal and property transactions within the country you wish to conduct the transaction.
2. Investigate the seller and the Property; Your lawyer could assist you with this service. The purpose of carrying out investigations is to ensure that you are doing business with the actual owner(s) of the property and that the physical surroundings of the property are to your satisfaction. A surveyor will assist with advising you on the survey plans if any and the physical aspect of the property.
3. Ensure proper documentation of the land transaction is carried out by your legal team; After investigations and negotiations have been carried out, the relevant legal documents addressing the interests of the parties concerned will be prepared by your lawyer.
4. Collect all original documents relating to the property and establish possession; After the agreement is signed and exchanged by both buyer and seller, ensure that all original documents relating to the property are handed over to you. Your lawyer will assist in ensuring this. In addition, if there is no building on the property, and you have no intention of commencing any project immediately, you must take active steps to establish possession of the property. It could be through erecting a fence etc.
5. Obtain the required approval of the Governor with respect to the transaction; As stated earlier, the only condition in which a foreigner may acquire property is when the consent of the Governor has been sought and obtained. Your lawyer will help you with the application process.
Purchasing properties in Nigeria as a foreigner that earns you peace of mind requires due diligence and compliance with relevant laws. That is why it is important that you are adequately informed and seek expert guidance about the legal requirements for doing so.
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