Governor’s Consent In Land Transactions: It’s Effect On Real Estate Development In Nigeria

The concept of Governor’s consent is an integral part of land transactions. It is one of the steps required to perfect title on land in Nigeria. The other steps are stamping and registration. This concept can be found in the Land Use Act 1978 which is one of the current major laws governing land transactions in Nigeria.

Governor’s consent simply refers to the approval of the Governor of every State of Nigeria of any transaction relating to land. Consent is often required for the perfection of any land transaction. This is because by section 1 of the Land Use Act, the Governor of each state is in control of all the land in the state, hence for any transaction, such as sale of land, mortgage or pledge over a land to be valid, the Governor must give consent.

Note that the Land Use Act specifically exempts land previously vested in the Federal Government from the control and management of the Governor (Section 49(1) of the Land Use Act). Also, by virtue of Section 50(2), the powers of the Governor shall be exercisable by the President or Head of State in respect of land comprised in the Federal Capital Territory or vested in the Federal Government in any State.

It is pertinent to note that by the provisions of the Land Use Act, a non-Nigerian cannot apply for the right of occupancy as the Governor of each State holds land for the use and benefits of Nigerians only.

From the foregoing, it is observed that since the Governor of each state holds land in trust for the common use and benefits of all, his consent ought to be sought and obtained before any land transaction is deemed perfected. Section 22 of the Land Use Act further buttresses this point. The section states thus: “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, subleases or otherwise without the consent of the Governor first had and obtained”.

With this power, the Governor has the right to grant consent to any transaction which it thinks has not contravened any law of the land and if the consent has been obtained fraudulently, the Governor is entitled to revoke such consent immediately. Also, where the Governor is of the view that the Holder of the Right of Occupancy had failed to abide by the terms of the Certificate of Occupancy, the Governor can revoke same.
In mortgage transactions, it is the duty of any person seeking to use his or her land as collateral, whether under customary right or statutory right, to seek the appropriate consent. That is to say that the mortgagor is vested with the responsibility of obtaining Governor’s consent. See Section 21 (a) and (b) of the Land Use Act.

Furthermore, Section 26 of the Land Use Act is of the effect that where the requisite consent is not obtained in a mortgage transaction, the transaction is null and void and has no legal backing. To this end, the requirement of Governor’s consent is critical and of great importance to mortgage transactions. In SAVANNAH BANK V. AJILO((1989) 1 NWLR (Pt. 97) pg. 305, the Respondent (Mr. Ajilo) mortgaged his land, which he acquired before the Land Use Act, to secure a loan from Savannah Bank. Being a legal mortgage, the appellant (Savannah Bank) who is the mortgagee decided to exercise its statutory power of sale when the mortgagor/respondent refused to pay the loan (In other words, the bank commenced steps to sell the land in order to recover its money).

The Respondent commenced an action to stop the sale of the land on the ground that Governor’s consent was not obtained. The Supreme Court held that for both actual grant and deemed grant, the consent of the Governor is needed and failure to obtain such consent renders the mortgage void. Commentators on this judgment have condemned the judgment on the ground that it was the mortgagor, who was supposed to obtain the consent, that instituted the action thereby benefiting from his wrong or inaction, which is against the legal principle that one should not be allowed by the law to benefit from his/her own wrong.

In UNION BANK OF NIG (PLC) V. AYODARE & SONS (NIG) LTD & ANR ((2007) 13 NWLR Pt. 1052 pg. 567), the first Respondent and the 2ndRespondent, its Managing Director, together took a loan from the 1st appellant bank (Union Bank). They tendered two landed properties and signed deeds of legal mortgage after obtaining consents of the “Ag. Chief Lands Officer, for Permanent Secretary and Director General, Kwara State Ministry of Lands and Housing.” The appellant bank demanded payment of the loans with interest thereupon without success from the Respondents, whereupon it employed the services of the 2nd appellant to sell the two landed properties subject of the mortgage.

The Respondents instituted an action at the High Court of Kwara State claiming that the deeds were not executed as required by law and that the consent secured by them was not granted by the appropriate authority as provided by the Land Use Act.

The trial court at the end of the proceeding dismissed their claims. Their appeal to the Court of Appeal was also dismissed. They appealed to the Supreme Court which held that the “Ag. Chief Lands Officer, for Permanent Secretary and Director General, Kwara State Ministry of Lands and Housing” was not the proper person to give consent as such power cannot be exercised by him. Again, Ayodare who knew that the Ag Chief Lands officer for the Permanent Secretary to Kwara State Land and Housing Ministry was not supposed to sign the consent, went ahead to secure the consent and at the end, based on the consent, he secured the loan, instituted the case, challenged the validity of the consent and succeeded.

This is a case for law reform as the legislature needs to look into the appropriateness and otherwise of someone who secured a defective document, to turn around and set up a case against the same document he procured.
However, no Governor’s consent is required for re-conveyance or release by the mortgagee which mortgage was created with Governor’s consent.

Furthermore, it is important to reiterate the importance of Governor’s consent in any transaction relating to sale of land. This is because a lot of people do not know the legal status of any sale that does not have Governor’s consent. It is a notorious fact that the Certificate of Occupancy in respect of a land is only granted to one person. This means that once the owner of a certificate of occupancy in respect of the said land is desirous of alienating(selling) his interest, the assignor(seller) is obligated to obtain the consent of the Governor to make the sale complete but this is not the case in practice.

In Practice, it is always the assignee (the buyer) that applies for the Governor’s consent in other to perfect his title in respect of such land. Where he is in possession of the Certificate of Occupancy and a Deed of Assignment was executed in his favor, if the land is resold to another person by the same assignor and that other person goes further ahead and obtains the necessary consent, he/she (the secondbuyer) shall be deemed to be the “owner” of the said land because in the eyes of the law, he has a complete transaction which is a perfect title.

REQUIREMENTS FOR OBTAINING GOVERNORS CONSENT.
1. Completed Form 1C: This must be signed by the purchaser and vendor that has a Gazette or Global C of O or a private C of O granted by the Governor.
2. A covering application letter by the Attorney of the applicant for Governor’s consent. This letter must encompass the necessary details of the Attorney.
3. A certified original copy of the Title document of the property.
4. Four copies of a Deed of Assignment, Deed of Sub-lease, Mortgage or Power of Attorney prepared by the applicant’s solicitor.
5. Chartable survey plan
6. Passport of the Assignee ( when it is for individual but when it is by a company ,the form C07 where you have the names and addresses of the directors )
7. Current tax clearance certificate of the parties involved in the transaction.
8. Evidence of payment of tenement rate or statement in lieu of this where property is underdeveloped.
9. The consent form will be stamped from the beginning to the end and upon completion of payment of the required fees, the Governor or his representatives such as the Commissioners will sign and date the consent form and stamp it with the official Seal.
10. The Land Bureau will assign a consent number to the document for reference purpose for life and it is with this consent number that the documents will be registered and recorded in their archive for future purposes.

All these documents are forwarded to the office of the Surveyor-General for charting. If there are no defects in the survey plan, a clean report is sent to the Land Bureau and a demand notice is issued to the applicant for the following fees which are percentages of the assessed value of the property. These fees are paid via bank draft in the name of Lagos State Government and receipts are issued.

*Consent Fees-8%
*Capital Gains tax-2%
*Stamp duty fee-2%
*Registration fee -3% 10

ADVANTAGES OF OBTAINING GOVERNOR’S CONSENT IN RESPECT OF A LAND.
1. Evidence of ownership
2. Higher property value
3. Security of title
4. Ease of transaction.
5. Rest of mind.

DISADVANTAGES OF THE REQUIREMENT OF GOVERNOR’S CONSENT IN LAND TRANSACTION.
1. Delay in land acquisition: it is pertinent to state that on the government website, it is stated that Governor’s consent can be obtained in 30 days but that has proven to be very untrue as it takes much longer in reality. To this end, where there is no time frame as to when the consent would be obtained and the land is needed urgently, the purpose of entering into the transaction would be defeated.

2. Unnecessary withholding of consent: Since it is at the discretion of the Governor to grant consent, he may decide to withhold consent and this would disrupt the transaction.

3. Frustration of the process by some of the Governor’s staff: Some of the staff of the Government are fond of requesting for gratification before they carry out their duties. A Governor’s consent that should cost N200, 000 naturally could end up costing N600, 000 due to kickbacks such as bribe. Furthermore, these officials are not meticulous in carrying out their duties as there are often cases of misplaced documents or a mix up in the documents of applicants.

4. Loss of interest in perfecting title: Due to the stress associated with obtaining Governor’s consent, so many people would prefer to just be in possession of their title as obtained from the original allotee.

THE EFFECT OF GOVERNOR’S CONSENT ON BUSINESSES.
It is the desire of every business owner to secure property especially for the purpose of running his business. To this end, most business owners are willing to invest in landed properties. However, where a business uses its property as collateral for mortgage purpose, such mortgage transaction must be approved by the Governor of the state. This means that the consent of the Governor must be first sought and obtained. In Nigeria today, it is often a very tedious process to obtain Governor’s consent and this might serve as a form of obstacle to a business owner who is in dire need of cash.

To this end, the requirement of Governor’s consent might affect a business owner negatively especially if he is in need of money. This could be a setback for development as the business owner who has no access to loan would not be able to contribute his own quota to the society.

Furthermore, investors would not be interested in investing in real estate. We acknowledge the fact that some of these land owners i.e Omoniles are fond of selling a parcel of land to more than one person and the only assurance one has that he has good title in a land is when he has perfected his title and we know that the process is strenuous. To this end, this requirement may discourage investors to buy land and this would be bad for the real estate business.

It is important to note the requirement of Governor’s consent is also of advantage to the business owner as it gives him the needed security after purchasing land for the business. This means that once a land has been purchased and title perfected, such land can be registered as the property of the business and same may be sold without any form of troubles.

We in Property Advisory Network are of the view that the procedure for the obtaining of the Governor’s consent is cumbersome and can discourage persons who want to invest in real estate business in Nigeria. We are of the view that once the Governor exercises his right of granting land, it should not be his business who and why the grantee alienates(transfers) the right. Registration of the titles (Certificate of Occupancy, Excision or whatever name it is called in the States of the Federation) with the Register of titles should suffice for whatever security the Governor’s consent seeks to achieve.

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