Nigeria: Real Estate

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This country-specific Q&A provides an overview to real estate laws and regulations that may occur in Nigeria.

It will cover the most pertinent issues including ownership structures, restrictions, transfers, taxes and environmental contamination.

This Q&A is part of the global guide to Real Estate. For a full list of jurisdictional Q&As visit

  1. Overview

    There are several sources of land laws and regulations that set out the guiding principles for land ownership, acquisition and alienation in Nigeria. One of the main and the earliest sources is customary law, which is largely unwritten and varies from one community to another. It emanated from the usage and practices of the Nigerian people in their various communities and governed the indigenous system of land holding in Nigeria until the introduction of English law/statutes. The relevant customary law is recognised and implemented as binding land regulation provided it is not contrary to natural justice, equity and good conscience; and so long as it does not directly or indirectly contradict any applicable law that is currently in force. Due to its (flexible and unwritten) nature, it must be proven before the court as the acceptable law governing a land matter in the event of a dispute.

    Presently, the principal legislation that regulates land ownership, acquisition and alienation in Nigeria is the Land Use Act, chapter L5, Laws of the Federation of Nigeria (“LFN”) 2004 (the “LUA”), a federal law with nationwide application, which radically altered the land tenure system in Nigeria. A fundamental change introduced by the LUA is that with effect from 29th March 1978 (i.e. the commencement date of the LUA) title to real property in Nigeria ceased to be absolute or perpetual in nature. The LUA vests all land except land held by the Federal Government within the territory of each State of the Federation of Nigeria in the Governor of that state, thereby giving the Governor absolute title to land within his state. The Governor of each state holds the land in his state in trust for the people and administers it for the use and common benefit of all Nigerians. In the case of the Federal Capital Territory, Abuja, ownership of land is vested in the President of Nigeria (represented by the Minister of the Federal Capital Territory). Regarding land held by the Federal Government in various states of the federation (that are deemed to be federal land), the power to deal with those properties is vested in the Federal Government or the relevant ministry or agency.

  2. How is ownership of real estate proved?

    Proof of title under customary law may be established by witnesses and historical books attesting to the practice of the people in that locality or by judicial notice. The LUA, on the other hand, makes it lawful for the Governor upon granting a right of occupancy, to issue a Certificate of Occupancy (“C of O”) which evidences the existence of a right of occupancy over the piece of land described in the C of O. Title to land may also be evidenced by other agreement under which title is conveyed e.g. a deed of assignment or conveyance, deed of sublease, land certificate or deed of gift.

    The Federal Lands Registry (Miscellaneous Provisions) Act, chapter F15, LFN 2004 and the various Lands Instruments Registration Laws of the States in Nigeria make it mandatory for title instruments to be registered at the relevant Lands Registry. Registration of title to property in Nigeria is, however, not definitive proof of ownership.

  3. Are there any restrictions on who can own real estate?

    All Nigerians (including legal entities registered in Nigeria) with legal capacity can own real estate in Nigeria but a foreigner cannot own real estate except through a legal entity that is registered in Nigeria.

  4. What types of proprietary interests in real estate can be created?

    The LUA replaced all freehold interests in land with a “right of occupancy” – which is in the nature of a leasehold interest - and it is technically this right of occupancy that is the subject of any interest that may be created by any person in land in Nigeria. Any person who owned land before the enactment of the LUA (i.e. a person with freehold interests over land before 1978) is ‘deemed’ to be a grantee of a right of occupancy. The extent to which land can be owned in Nigeria, therefore, is restricted to the tenure of the right of occupancy held.

    The rights of occupancy that may be enjoyed by any person over land in Nigeria are a statutory right of occupancy and a customary right of occupancy. By section 5 of the LUA, the Governor of a State may, in respect of land, whether in an urban or rural area, grant statutory rights of occupancy to any person for all purposes, to grant easements appurtenant to statutory rights of occupancy, to demand rental for such land granted to any person, etc. In respect of land in rural areas, the Local Government (which is the third tier of Nigeria’s system of government) may lawfully grant customary rights of occupancy to any person for agricultural, residential and other purposes – provided that no single customary right of occupancy shall be granted in respect of an area of land in excess of 500 hectares if granted for agricultural purposes, or 5000 hectares if granted for grazing purposes, except with the consent of the State Governor.

    Although arguable, it is possible, in certain limited circumstances, to acquire what is seemingly a freehold interest from a land owner - except if it is otherwise specified in the transfer document(s). What this means is that although a person who initially had freehold title to a piece of land (i.e. before the enactment of the LUA) is deemed to be a grantee of the State Governor in respect of that land, the leasehold interest that is deemed to have been granted is not limited by a term of years. Consequently, a subsequent purchaser’s title to the property if simply perfected by obtaining consent of the transfer between the purchaser and the seller, will not be limited by a term of years unless the purchaser applies to the State Governor for issuance of a C of O. This is notwithstanding the fact that section 34 provides that a deemed grantee holds the land as though the right of occupancy was granted to him by the Governor under the LUA and, further, section 8 of the LUA provides that every right of occupancy granted by the Governor shall be for a definite term.

    The term of years granted by the Governor is usually set out in the body of a C of O, which could be any amount of years up to a maximum of 99 years but there is no law or regulation providing for a definite term for statutory grants by the Governor. Therefore, deemed grants appear to have an unlimited term unless a C of O is applied for from the Governor. In the case of land owners who possess a statutory right of occupancy, what a purchaser acquires is the residue of that seller’s leasehold interest in the land.

  5. Is ownership of real estate and the buildings on it separate?

    Ownership of buildings on real estate automatically follows ownership of the real estate unless otherwise specified by contract.

  6. What are common ownership structures for ownership of commercial real estate?

    It is increasingly the case that corporate entities (particularly limited liability companies) are used to acquire commercial real estate. One key reason for this practice is that ownership of a property can be transferred without triggering the requirement for Governor’s consent, since the equity in the company is being transferred instead of the property itself. This process is also faster and cheaper.

  7. What is the usual legal due diligence process that is undertaken when acquiring commercial real estate?

    The typical process involves a search on title to the property at the relevant Lands Registry that would cover issues relating to ownership of and any encumbrances over the property, as well as compliance or otherwise with obligations in the title document(s). The search is conducted by the purchaser’s counsel except in some states where the Registry restricts access to the property records and issues a Report to the applicant. Neither a standard form of reporting nor standard form of enquiry has been adopted for use in Nigeria. In terms of cost and timing, search fees range between =N=3000 and =N=20,000 (i.e. approximately USD9.77 – USD65.15), while the timing for completion of an official search process could take between 1 – 10 business days, depending on the process that is applicable to the relevant state / Lands Registry.

    Where the property has not been brought within the registration system, enquiries may be made via interviews with the relevant persons. Such as, family members, community leaders and neighbours to ascertain the vendor’s title to the property. It is usual for a seller of real estate to undertake to indemnify a purchaser against losses arising from a breach of warranty as to legal title of the seller.

  8. What legal issues (if any) cannot be covered by usual legal due diligence?

    In addition to title due diligence, it is important for the following confirmations to be made:

    1. Zoning restrictions: it is advisable for the buyer to confirm that the property can be used for the desired purpose. This can be ascertained at the relevant physical planning authority in the state that the property is located. While a title document such as a C of O may specify the use to which a property may be put, it is important to carry on additional enquiries to determine whether the planning authorities have made any changes to the zoning regulations that affect the property.
    2. Government Acquisition: In many states, it is difficult to determine whether title to a property has been revoked or whether the property falls within an area that the government has excised for specific use. It is advisable, therefore, for the relevant enquiries to be made to confirm that the title of the seller has not been compromised by any governmental action. This confirmation can be obtained from the Surveyor General of the relevant state in response to a formal request. In Lagos State, the response from the Surveyor General’s office to this enquiry is issued in the form of a Land Information Certificate.
  9. What is the usual process for transfer of commercial real estate?

    Upon conclusion of negotiations, the parties execute the transfer documents, which could include any of a deed of assignment, contract of sale, deed of sublease, deed of gift, power of attorney, etc. In many cases, the parties would have negotiated heads of terms (that may be binding or non-binding) prior to drafting of the transfer documents.

    A form of the transfer documents has not been prescribed but the terms in such documents are similar. The standard terms include a description of the property, purchase price, condition of the property, undertakings, representations, warranties and indemnities, conditions precedent and subsequent, terms for delivery of possession, dispute resolution rules, etc.

    After the contracts ae drafted, the next step is the perfection of title to the property. The LUA makes it unlawful for the holder of a statutory right of occupancy granted by the Governor to alienate his/its right of occupancy or any part thereof by assignment, mortgage, transfer of possession, sublease or otherwise howsoever without obtaining the consent of the Governor. In the case of federal land, consent of the relevant Minister should be obtained.

    In addition to consent of the Governor or Minister, the purchaser should pay stamp duties on the transfer document(s) and register such document(s) at the relevant lands registry. Completion of these steps i.e. obtaining Governor’s consent, payment of stamp duties and registration of the transfer document is what is referred to as perfection of the purchaser’s title to the property. The transfer process is further illustrated in the table below.

    Transaction Steps





    ·         Provision of information on the property that is required for title due diligence and any other necessary enquiries

    ·         Preparation of draft sale and purchase agreement

    ·         Negotiation of deed of assignment, sale and purchase agreement and other relevant transaction documents with buyer

    ·         Title Due diligence and enquiries

    ·         Physical inspection of the property to ascertain its condition and boundaries, enquiries to determine use of the Property and whether the property is free from government acquisition

    ·         Negotiation of deed of assignment, sale and purchase agreement and other relevant transaction documents with the Seller

    ·         No prescribed form of agreement but there are industry standard terms

    Signing to Closing

    ·         Satisfaction of any conditions to closing

    ·         Arrangement of purchase price funding (including any third-party debt)

    ·         Satisfaction of any conditions to closing



    ·         Repayment of any existing debt and discharge of mortgage (if any)

    ·         Execution of transfer agreement

    ·         Delivery of documents required from a seller for perfection of a purchaser’s title to the property, such as tax clearance certificates, evidence of payment of land rates, etc.

    ·         Execution of transfer agreements

    ·         Collection of documents required from a seller for perfection of a purchaser’s title to the property

    ·         Payment of purchase price



    Payment of capital gains tax (for transfer of the property)

    ·         Payment of administrative fee and submission of an application for consent of the Governor to the acquisition of title at the Ministry in charge of land administration.

    ·         Receipt of assessment notice of fees (such as consent fee, stamp duty, registration fees, ground rent and other transfer charges.

    ·         Endorsement of Governor’s consent on the transfer documents.

    ·         Delivery of the transfer documents to the relevant stamp duties office for stamping.

    ·         Registration of stamped transfer documents at the Lands Registry


  10. Is it common for commercial real estate transfers to be effected by way of share transfer as well as asset transfer?

    It is fairly common for transfers to be effected by share transfers but it is more common for the asset to be transferred instead. As mentioned above, share transfers are being used increasingly because of the timing and cost considerations.

  11. On the sale of interests in land does the benefit of any occupational leases and income automatically transfer?

    Yes, the benefit of any occupational leases and income automatically transfers unless otherwise specified. To formalise the transfers, however, it is important for the tenants to be notified and for the leases to be assigned to the new owner. The lease assignment document, if separate from the title transfer deed, should be stamped.

  12. What common rights, interests and burdens can be created or attach over real estate and how are these protected?

    Please describe common rights, interests and burdens that can be created or attached over real estate, e.g. easements, construction rights, rights of light, how such rights are created and how they can be protected e.g. can they be registered against real estate.

    Common rights, interests and burdens such as easements and cautions can be created over real estate in Nigeria but they are not mandatorily required to be registered at the Lands Registry. For example, easements are not required to be registered because they do not confer possessory interests on the grantee. A caution, on the other hand, is registrable upon an application to the relevant Lands Registry.

  13. Are split of legal and beneficial ownership of real estate (ie Trust structures) recognised?

    Split legal and beneficial ownership of real estate such as trust structures are recognised in Nigeria and capable of registration. While a third party may be able to deal with the registered legal owner of real estate without having to enquire about any beneficial ownership in some cases, it is advisable for enquiries to be made to determine whether there are any restrictions on the ability of the legal owner of the property to act by itself.

  14. What are the main taxes associated with commercial real estate ownership and transfer of commercial real estate?

    The main taxes associated with commercial real estate transactions are:

    • Consent fee: This is administrative fee for the grant of the Governor’s consent to the assignment, sublease or mortgage of property.
    • capital gains tax: This tax is charged on the gains obtained from the disposal of an asset.
    • stamp duty: this tax is payable to the tax authority for stamping of the transfer document(s). Qualifying documents can be stamped at either a flat rate or ad valorem rate.
    • registration fee: this is payable for registration of a transfer document at the relevant Lands Registry.
  15. What are common terms of commercial leases and are there regulatory controls on the terms of leases?

    Commercial leases are usually made in writing but while the terms may be standard with a few exceptions that are drafted to deal with peculiar circumstances, there is no prescribed form of leases. It is important, however, for the leases to be drafted in a manner that is binding and enforceable under Nigerian law. For instance, Section 3 of the Statute of Frauds 1677 and Section 79 of the Property and Conveyancing Law 1959 state that a lease for a term exceeding 3 years will not convey a legal estate immediately and directly to the tenant unless it is made by way of a deed. Irrespective of the term of the lease, however, the following elements of a lease must also be present to ensure the validity of the lease:

    • the parties to the lease must be identified;
    • the property subject to the lease must be clearly described, leaving no room for ambiguity;
    • the intentions of the parties must be clear, the agreement must be complete and words of demise must be present, leaving no ambiguity to its purport as a lease;
    • the rent payable must be specified; and
    • the duration of the lease, together with the commencement date and expiration date of such lease must be clearly stated.

    Fixed rent is the common basis for rent in Nigeria and increases are determined in several ways, including fixed increases, market-related rental increases and/or restrictions on the level of rent that can be charged as the increased rent.

    The standard terms of a lease agreement include terms on transfers and subletting, renewal rights, charges imposed on the premises, liability of the parties, insurance, alterations and additions, responsibility for damages, breaches, termination and dispute resolution mechanisms. Typically, transfers and subletting are restricted except in respect of affiliates / related companies, while in relation to insurance, repair of damage to the premises and payment of rates and charges, the responsibility is usually split between the parties. Landlords are usually responsible for insurance of the property, while tenants are required to insure their assets within the property. In some cases, however, especially in respect of long leases, a tenant could be required to insure the premises for the period of the lease. Charges relating to the use of the premises are the responsibility of tenants, while land use charges are payable by the landlords. There are cases where the landlord seeks to pass on all the charges to the tenant but in Lagos State, for instance, the Land Use Charge Law imposes the responsibility for payment of Land Use Charge on the landlord.

  16. How are use, planning and zoning restrictions on real estate regulated?

    State governments have the exclusive authority to make planning laws and regulations to govern and regulate physical planning and development of the state and to grant permits, licences or approvals for any construction or development within the state. No construction can be carried out on any land without obtaining a building approval or development permit and to do so, an applicant is required to submit a copy of the proposed building plan and structural drawings, as well as evidence of title to the property.

    In many states and especially in the urban areas, the government has established zoning regulations that specify the nature of developments that can be carried out in particular areas.

  17. Who can be liable for environmental contamination on real estate?

    The polluter is liable for such environmental contamination. Any party that is deemed to have aided such polluter could also be liable.

  18. Is expropriation of real estate possible?

    Yes. By virtue of section 28(1) of the LUA, it is lawful for the Governor of a State to revoke a right of occupancy on the basis of ‘overriding public interest’, which includes “the requirement of the land by the Government of the State or by a Local Government in the State, in either case for public purposes within the State, or the requirement of the land by the Government of the Federation for public purposes of the Federation”.

    The LUA makes it mandatory for legitimate holders of a right of occupancy to be compensated but the value of compensation is restricted to the value of the buildings or leasehold interest that existed during the year of the compulsory acquisition. The Supreme Court (Nigeria’s apex court) has also decided that “for a valid revocation of a right of occupancy, whether statutory or that of a deemed holder, section 29 of the Act [i.e. the LUA] makes the prior payment of compensation to the holder a sine qua non.” The implication of this judicial pronouncement is that until compensation has been paid to the title holder, the process for revocation of a right of occupancy is not complete.

    Section 28(4) of the LUA provides that compensation for revocation of a right of occupancy for overriding public interest shall be, as respects –

    “(a) the land, for an amount equal to the rent, if any, paid by the occupier during the year in which the right of occupancy was revoked;

    (b) buildings, installation or improvements thereon, for the amount of the replacement cost of the building, installation or improvement, that is to say, such cost as may be assessed on the basis of the prescribed method of assessment as determined by the appropriate officer less any depreciation, together with interest at the bank rate for delayed payment of compensation and in respect of any improvement in the nature of reclamation works, being such cost thereof as may be substantiated by documentary evidence and proof to the satisfaction of the appropriate officer;

    (c) crops on land apart from any building, installation or improvement thereon, for an amount equal to the value as prescribed and determined by the appropriate officer”

  19. Is it possible to create mortgages over real estate and how are these protected and enforced?

    It is possible to create mortgages over real estate. Where a property is used as security for a loan or other forms of security, the parties will execute a deed of legal mortgage in addition to the loan agreement. The security should be perfected in the same manner as we have described for an assignment of real estate.

    In the event of a default, the mortgagee will have the power to sell the secured property to recover the loan advanced. Such disposal, subject to perfection of the interests in the property, will be valid and enforceable. The process for enforcement of mortgages is straightforward but could be cumbersome if the rules have not been complied with.

  20. Are there material costs associated with the creation of mortgages over real estate?

    The cost of perfecting a mortgage differs from State to State but the perfection fees typically comprises consent fee, stamp duty and registration fee. A breakdown of the applicable fees in Lagos State are set out in the table below:



    Rate (%)


    Consent fee



    Stamp Duty



    Registration fee


    If the security is created over the property of a limited liability company, a separate charge of 1% of the mortgage sum will also be payable to the Corporate Affairs Commission (“CAC”, Nigeria’s companies’ registry), for registration of the security in the company’s records at the CAC.

  21. Is it possible to create a trust structure for mortgage security over real estate?

    Yes, mortgages be created in favour of a security trustee to hold in trust for a syndicate of lenders.

  22. What is the main legislation relating to commercial real estate ownership?

    The main legislation relating to ownership of real estate (whether commercial or residential) in Nigeria is the LUA, which we have discussed in response to questions 1 and 4 above. Other relevant legislation are the Nigerian Constitution, the Land Instruments Registration Laws of the various states in Nigeria and the English statutes of general application.