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Legal Alert Legality of Estate Agency Regulatory Law
 
In this Issue:
1. Legal Alert for March, 2009 – The Legality of Estate Agency Regulatory Law of Lagos State.
2. Subscribe & Unsubscribe to Legal Alerts.
3. Disclaimer Notice.
Legal Alert for March, 2009 – The Legality of the Estate Agency Regulatory Law of Lagos State.
Estate Agency Regulation
The practice of estate agency in Nigeria was for a long time an all comers affair as it was unregulated. Expatriate estate surveyors and valuers provided the services in this sector during the pre-independence period. In the post independence era, Nigerian trained estate surveyors and valuers provided the services of estate agency in addition to their regularly licenced surveying and valuation services.
However, Continuing increase in population and unemployment while the available housing demand continue to outstrip the housing supply, and wanton criminal abuses became more common in post-independent Nigeria with the result that the housing market is undeveloped due largely to inefficient legislation, short term funding for long term housing investment and gross unprofessional and unregulated estate agency practices.
The Lagos State Government has, in an effort to curb the above mentioned unprofessional practices in the estate agency market, enacted the Lagos State Estate Agency Regulatory Authority Law. This Law came into effect on 18th May 2007.
The quiet reaction to this Law by most real estate practitioners and stakeholders, on becoming aware of the Law, is to question the constitutionality of this Law as some of them have always practiced real estate agency under the belief that their professional training and licence permitted them to undertake estate agency services as an ancillary service.
This Legal Alert is therefore meant to consider the key aspects of the Lagos State Estate Agency Regulatory Authority Law 2007, and to also examine the legality or constitutionality of this Law.
The Estate Agency Regulatory Authority
The Lagos State Estate Agency Regulatory Authority is established by the Lagos State Estate Agency Regulatory Authority Law. Membership of its governing council is required to be drawn from a wide spectrum of experts among whom are: - a registered estate surveyor and valuer, a legal practitioner, a registered Architect, a registered Engineer, a registered Town Planner, a registered Quantity Surveyor, a professional Accountant or economist, a Social Scientist, and a representative from the estate agency community who must be a member of the Estate, Rent & Commission Agents Association.
The Estate Agency Regulatory Authority has amongst its various functions the preparation of rules and regulations for the practice of estate agency in Lagos State, identification of persons eligible to be licenced as estate agents in Lagos State, issuance and renewal of estate agents practicing licences, maintenance of a register for all licenced estate agents, monitoring, investigating and sanctioning of both licenced and unlicensed estate agents in Lagos State, ensuring compliance with all property or property related taxes, fees or charges, organising continuing educational programmes on best estate agency practices in Lagos State, etc.
The Estate Agency Regulatory Authority has the power to make regulations, from time to time, for the purpose of carrying into effect the provisions of the Estate Agency Regulatory Authority Law.
Licensing Requirements for Estate Agents
The conditions precedent that a prospective or existing estate agent must satisfy before he, or her, or it can be granted a licence to practice estate agency business in Lagos State include:-
a. He must be a citizen of Nigeria, either by birth or by naturalisation.
b. Must be at least 18 years old, for an individual.
c. Must have a minimum educational qualification of secondary school leaving certificate or show proof of sufficient experience in estate agency practice.
d. Must show evidence of registration of the estate agency business under the Companies & Allied Matters Act. In the case of a corporate body making the application, evidence that one of its Directors is a Nigerian citizen and a member of a recognised professional body is mandatory.
e. May be a member of the Nigerian Institution of Estate Surveyors & Valuers, or any other professionally recognised body, or any registered association of estate/rent/commission agents.
Estate Agency Registration Fees
The licensing fees for registering an estate agency practice in Lagos State, which also forms a revenue source for the estate agency regulatory authority is/include the sale of estate agency registration application forms at a minimum sum of N5,000 (Five Thousand Naira) for each application form; licensing fees at a minimum of N5,000 (Five Thousand Naira) for each individual or corporate body; renewal of license fees for individuals is the minimum sum of N2,500 (Two Thousand Five Hundred Naira) while for corporate bodies, the renewal licensing fee is a minimum of N5,000 (Five Thousand Naira).
Code of Conduct for Estate Agents
The primary objective of this Law is to provide all estate agents in Lagos State with a regulatory code of conduct that guides and protects the practice of estate agency in Lagos State. The following code of conduct is therefore prescribed under this Law for all estate agents:-
i. An estate agent shall not carry on the business of estate agency in Lagos State unless he or she is licenced by the Lagos State Estate Agency & Property Development Monitoring Authority.
ii. An estate agent must have an ascertainable office or business premises in Lagos State.
iii. An estate agent must be registered with the Corporate Affairs Commission as a legal entity.
iv. An estate agent must maintain a separate and dedicated client account in addition to keeping proper records of all his or her estate business transactions.
v. An estate agent must not act for two principals on opposite sides in the same property transaction.
vi. An estate agent must be paid his professional agency fees by his principal only; the practice of collecting agency fees from both a prospective tenant and Landlord or a prospective purchaser and seller is now unlawful.
vii. An estate agent must remit all income collected by him or her to his or her principal within fourteen (14) days of such a collection unless otherwise formally instructed not to do so by his or her principal.
viii. An estate agent must provide receipts for all moneys collected on behalf of his principal.
ix. An estate agent must declare any personal interest that he or she may have in a property.
x. An estate agent must ensure that the prospective tenant or purchaser takes physical possession of the property in question within ten (10) days of the client making payment for the property.
xi. An estate agent must ensure that his client performs all the client obligations to the government under all existing laws including the deduction and remittance of all real property taxes or charges.
xii. An estate agent must refund the rent paid by any prospective tenant in the event of a failure to deliver up physical possession of the premises within fourteen (14) days of the payment of the rent for the property. Any delay or non refund after the required 14 days shall attract interest at the prevailing bank rates.
Regulated Agency & Legal Fees
Estate agency abuses are presently more prevalent in the areas of arbitrary, exorbitant and extortational fees charged as agency fees or commission. This Law therefore requires that all estate agents in Lagos State must not charge agency or commission fees in excess of 10% of the total rent collected on any tenancy or lease transaction.
In the case of the sale or purchase of land and buildings, the maximum agency or commission fees permitted is 15% of the total proceeds of the sale.
The total authorised fees or commission, as stated above, must not be exceeded by any estate agent irrespective of whether there are more than one agent acting for the party concerned.
Estate agents are barred from preparing legal documents relating to any real estate transaction undertaken by them on behalf of their clients. All real property agreements must be prepared by a Legal Practitioner whose fees must not exceed 12.5% of the total consideration of the transaction.
Registration of Property Developers
All property developers in Lagos State are required by this Law to be licenced by the Estate Agency Regulatory Authority before they can carry on or continue to carry on business in Lagos State as property developers.
Contravention of Estate Agency Regulatory Law
The failure of an estate agent or property developer to obtain a practising licence as required by this Law is an offence, and where the agent is found guilty of this offence, he is liable to a fine of N10,000 (Ten Thousand Naira) in the case of an individual and N50,000 (Fifty Thousand Naira) in the case of a company.
Other failure or non compliance deterrents under this examined Law attract on conviction a fine of N25,000 (Twenty Five Thousand Naira) only or a term of imprisonment of three (3) months. Where the offence continues to be committed, a fine of N10,000 (Ten Thousand Naira) for each day that the offence continues to be committed shall be imposed. For corporate bodies, the fine for contravention is N50,000 (Fifty Thousand Naira) for the initial infringement and N25,000 (Twenty Five Thousand Naira) for each day that the offence continues to be committed.
Institution of Legal Actions Against Estate Agency Authority
The provisions of the statutes of limitation are expressly made applicable to any legal action that may be instituted against the Estate Agency Regulatory Authority.
A one month pre-action written notice of intention to commence legal action against the estate agency regulatory authority is mandatory for an intending claimant or his authorised representative before any legal action can be properly instituted against this regulatory agency. The pre-action notice must state the name and place of abode of the intending claimant or his agent, the grievance or complaint and the relief sought if the action is to be deemed to have been properly instituted when it is.
Legality of the Estate Agency Law
Section 4(7)(a)(b) and (c) and Section 5(2)(a) and (b) of the 1999 Constitution of the Federal Republic of Nigeria empowers the government of a State to make laws for the peace, order and good governance of such a State in respect of any matter that is not included in the exclusive legislative list, and on all matters included in the concurrent legislative list.
In Part II, item 18 of the Concurrent Legislative List of the 1999 Constitution, a State House of Assembly is empowered to make laws for that State in respect of the industrial, commercial or agricultural development of such a State.
The Estate Agency Regulatory Authority Law is therefore a validly and constitutionally enacted legislation to regulate the practice of estate agency which in turn will advance the commercial development of Lagos State.
Estate Surveyors & Valuers, & Legal Practitioners In Estate Agency Practice
Estate Surveyors & Valuers in Nigeria are regulated by the Estate Surveyors & Valuers Registration Board of Nigeria. Section 2 of the Estate Surveyors & Valuers (Registration) Act, Cap E13, Laws of the Federal Republic of Nigeria, 2004 enumerates the functions of this Board. It is however difficult to interpret the functions of estate agency into that of "... estate surveying and valuation" as described in Section 19 of the Estate Surveyors & Valuers (Registration) Act.
Based on the legal observation in the last preceding paragraph, it is recommended that Estate Surveyors & Valuers, with Legal Practitioners and other related professionals who also practice as estate agents in Lagos State should seek registration under the Lagos State Estate Agency Regulatory Authority Law, if the intend to continue to lawfully practice estate agency business in Lagos State. Should a contrary intention exist to the latter view, judicial interpretation should be urgently sought by these practitioners to remove any ambiguity that they might claim to exist under this Law.
Soft Comments – Estate Agency Law
Membership of the Board of Directors of the Estate Agency Regulatory Authority is unwieldy, and subject to abuse through political patronage by an executive Governor who may not share the philosophy of this legislation with the originators of the legislation.
The requirement of Section 27(5) forbidding an estate agent to act for both sides of a transaction may be unenforceable in an undeveloped and under-supplied real property market. The requirement could be amended to require the estate agent to act in the best fiduciary interest of all persons that it represents where it is difficult for him not to represent all the parties.
Provisions requiring an estate agent to ensure that physical possession of a property is delivered within fourteen days of payment for a property or the provision compelling an estate agent to ensure that his principal tenant/landlord or purchaser/seller comply with his tax obligations negates the time honoured principle that an agent, as a representative of a known principal, cannot be held liable for the actions or omissions of his principal. A review and amendment of these and other similar provisions is therefore strongly recommended.
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You are equally permitted to terminate your subscription by sending to us a one line email with the words "Unsubscribe - Legal Alerts" and your electronic address would be removed from our list. In the future, you can return to our mailing list by visiting our web site www.oseroghoassociates.com to subscribe for the Legal Alerts.
DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm.
Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
Legal Alert February Rent Control (Amendment) Law
 
In this Issue:
1. Legal News – Repeal of Rent Control & Recovery of Residential Premises Law, 1997 cap. R6, Laws of Lagos State and the Rent Control & Recovery of Residential Premises (Amendment) Law, 2004.
2. Legal Alert for February, 2009 – Lagos State Rent Control Law (With Amendment) 2007.
3. Subscribe & Unsubscribe to Legal Alerts.
4. Disclaimer Notice.
Legal News: "Repeal" of 2003 & 2004 Rent Control & Recovery of Residential Premises Law
Our attention has been drawn to the "repeal" of the Rent Control and Recovery of Residential Premises Law. The recipient(s) who drew our attention to this development also raised the question of whether or not a debtor-tenant whose tenancy had expired by effluxion of time was entitled to receive service of any notice to quit. The Supreme Court decision in ODUTOLA v. PAPERSACK was referred to in this regard.
The Nigerian Supreme Court held in the matter of ODUTOLA v. PAPERSACK & ANOR (2006) 11 -12 S.C 60 @ 66 that a tenant at will – i.e. a tenant without a tenancy or with one with a tenancy that has expired - occupies the estate of the landlord at the pleasure or happiness of the landlord. The tenant at will can however be ejected subject to proper notice to quit emanating from the landlord. It was further held that by Section 15 (1)(a) of the Rent Control and Recovery of Residential Premises Law of Lagos State Cap. 167, Laws of Lagos State, a tenancy at will or a weekly tenant is only entitled to a week's notice to quit.
The Supreme Court finally also held that mesne profit is the sum due to a landlord from the time his tenant ceases to hold the premises as a statutory tenant to the time such a tenant gives up possession. And that from the moment a tenancy comes to an end by effusion of time, the tenant thereupon becomes a tenant at will by continuing or remaining in possession of the property without the consent of the landlord.
Legal Alert: February, 2009 – Lagos State Rent Tribunals (Abolition and Transfer of Functions) Law, 2007
The Rent Tribunals (Abolition and Transfer of Functions) Law ("Rent Tribunals Abolition Law"), which is more commonly referred to as The Rent Control Law (With Amendment) 2007, was enacted to amend the Rent Control & Recovery of Residential Premises Law (the principal Law) by abolishing all Rent Tribunals in Lagos State, and transferring all their functions, powers and jurisdiction to Magistrates Courts or the appropriate High Courts.
The effect of the above abolition and transfer of the functions of Rent Tribunals in Lagos State is that the provisions of the Rent Control and Recovery of Residential Premises Law Cap. R6 2003, and the Rent Control and Recovery of Residential Premises (Amendment) Law, 2004 have been repealed by Section 5 of the 2007 Rent Tribunals Abolition Law.
Sections 1, 2, 3 and 4 of the Rent Tribunals Abolition Law, 2007 are the saving provisions for the Rent Control and Recovery of Residential Premises Law, 1997 which is now the applicable Law in the areas of rent control and the recovery of residential premises in Lagos State.
Section 1 of the Rent Tribunals Abolition Law 2007 is the section that has transferred all the powers, functions and jurisdiction formerly exercised by the Rent Tribunals to the appropriate Magistrates or High Courts in Lagos State.
Sections 2 and 3 of the Rent Tribunals Abolition Law are the sections transferring the employment of judicial officers under the Rent Tribunals regime to that of the appropriate grade of Magistrate in the Judicial Service Commission of Lagos State.
Section 4 of the Rent Tribunals Abolition Law authorises the continued hearing of part–heard matters by the Rent Tribunals provided that such matters are concluded within three months of the commencement of this Law. Part heard matters that are not concluded within three months are required to be transferred to the proper Magistrates or the High Courts for final determination.
Conclusion
It is not the intendment of the Rent Tribunals Abolition Law, 2007 to repeal the entire 1997 Rent Control & Recovery of Residential Premises Law of Lagos State.
It is therefore the current position of the Law that Rent Tribunals in Lagos State have been abolished. Their functions, powers and jurisdictions have been however been transferred to the appropriate Magistrates or High Courts in Lagos State for continuing adjudication. The applicable Law to rent control and recovery of residential premises matters in Lagos State remains the saved sections of the 1997 Rent Control and Recovery of Residential Premises Law.
Special mention must be made of the fact that the Rent Tribunals Abolition Law is not drafted as exhaustively as it should be, to remove the present confusion amongst practitioners and stakeholders as to what Law presently regulates rent control and recovery of residential premises in Lagos State. It is therefore expected that time wasting preliminary objections will be filed at the Courts on this area of the Law. The Lagos State House of Assembly would do well to effect further improvements on this legislation any time the opportunity presents itself in order to save time and cost to the Courts and the parties.
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This Alert and others produced by us are provided without any charge to you. You can always subscribe to it, on behalf of other interested persons from whom you have their permission, by sending to us a one line e-mail with the words "Subscribe – Legal Alerts" followed by the desired email address.
You are equally permitted to terminate your subscription by sending to us a one line email with the words "Unsubscribe - Legal Alerts" and your electronic address would be removed from our list. In the future, you can return to our mailing list by visiting our web site www.oseroghoassociates.com to subscribe for the Legal Alerts.
DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm.
Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
Legal Alert Foreign Investments Benefits & Guarantees
 
In this Issue:
1. Legal Alert for January, 2009 – Foreign Investments in Nigeria - Benefits, Guarantees & Regulations.
2. Subscribe & Unsubscribe to Legal Alerts.
3. Disclaimer Notice.
Legal Alert for January, 2009 – Foreign Investments in Nigeria - Benefits, Guarantees & Regulations
Introduction & Regulatory Authority
The Nigerian Investment Promotion Commission ("NIPC") is the primary regulatory agency established by the Nigerian Investment Promotion Commission Act, 1995 (as amended) to serve as a one-stop government approval agency to promote, encourage, co-ordinate, monitor and provide necessary assistance and guidance for the establishment of enterprises in Nigeria.
NIPC is further obligated by the NIPC Law to do away with all previously recognised delays associated with the granting of necessary approvals for the establishment of new businesses by foreign entrepreneurial entities in Nigeria.
Other regulatory agencies that a foreign investor would have to liaise with when making an investment in Nigeria include the Corporate Affairs Commission ("CAC"), the National Office for Technology Acquisition & Transfer ("NOTAP"), the Ministry of Internal Affairs with the Nigerian Immigration Service, the Central Bank of Nigeria and an appointed local Bank for importation of the investment capital and the repatriation of profits, capital, etc; the Securities & Exchange Commission ("SEC") and the Nigerian Stock Exchange ("NSE") for investments in public quoted companies.
A further important function of NIPC is the legal duty to register and keep the records of all enterprises to which the NIPC Law is applicable.
Incentives, Benefits & Guarantees
The Nigerian Government, like other governments in the world, have put in place a number of incentives and guarantees to encourage foreign investments in Nigeria. Some of these incentives include the following: -
1. Liberation of ownership. Foreign investors in Nigeria can now own 100% of the shares of any Nigerian company provided such a company is not engaged in any of the restricted business of producing arms and ammunitions, narcotic and psychotropic substances, military and para-military wears and accoutrement.
2. Free repatriation of profits. All foreign investors are allowed the free repatriation of their profits or dividend income provided that the repatriation is effected through a licenced Nigerian authorised dealer in freely convertible currency.
3. Legal Guarantees against expropriation or nationalisation. The NIPC Law itself guarantees that no enterprise shall be nationalised or expropriated by any government in Nigeria nor shall a business owner be compelled by law or by government to surrender his equity or company to any person. Where however an enterprise is required to be nationalised for overriding public interest, fair and adequate compensation must be paid in respect of such acquisition. This is in marked contrast to the nationalisation exercises of the late 1970s.
4. Investment Promotion & Protection Agreements. In addition to the investment guarantees in the NIPC Law, the Nigerian government continues, as a further guarantee against expropriation or nationalisation or in the event of a war or a revolution, to execute bilateral investment promotion and protection agreements ("IPPAs") with countries whose nationals do business in Nigeria. Some of the countries that have executed IPPAs with the Nigerian government include France, the United Kingdom ("UK"), Netherlands, Romania, Switzerland, Spain and South Africa. Negotiations with the United States of America, Belgium, Sweden and the Russian Federation are at various stages of conclusion.
5. Double Taxation Treaties. Nigeria has signed double taxation agreements, which function in the form of "tax credits", with the UK, France, Netherlands, Belgium, Pakistan, Canada, Czech Republic, Philippines, Romania and South Africa. Negotiations on similar agreements with countries like Turkey, Russia, India and South Korea are at various stages of finalisation. Tax concession by the Nigeria government to her treaty partners is the rate of 7.5% on dividends, interest, rent and royalties earned by foreign companies in Nigeria against their ultimate tax obligation in their country of registration.
6. R & D Tax Relief. There are tax reliefs for research and development activities carried out in Nigeria in connection with the business of every foreign registered entity in Nigeria. 120% of all expenses on research and development ("R & D") are tax deductible. Where the R & D is on local raw materials, 140% of the expenses on R & D are tax deductible. Long term expenses on R & D which are of a capital nature are written off against the profits of the enterprise undertaking the R & D. The results of all R & D in Nigeria are patentable and protected under Nigerian intellectual property law.
7. Pioneer status and tax holiday. Companies with pioneer Status are granted tax holidays of between five to seven years for new, innovative or specialised enterprises, or sometime for locating their industries in economically disadvantaged local areas.
8. Tax concession of 2% for five years for industrial establishments that have in-plant training facilities. There are also tax concessions for industries that have high labour and capital ratio. Industries that encourage local fabrication could be granted 10% tax concession for a period of five years.
9. A 100% tax holiday for seven years for industries that are situated in economically disadvantaged local areas and provide majority of the infrastructure required in such local areas.
10. Industries that attain minimum levels of local raw materials sourcing and utilisation are entitled to a 20% tax credit.
NIPC Registration Checklist
To ensure the utilisation of some or all of the benefits and guarantees mentioned above, it is recommended that a foreign company registers its business activities in Nigeria with NIPC. We are providing you with a working checklist of some of the documentation that should accompany such an application for registration with NIPC: -
i. Formal application letter to the Executive Secretary, NIPC.
ii. Duly completed NIPC registration form.
iii. Copy of Applicant company certificate of incorporation. Applicants are required to have a minimum share capital of N10Million before they can apply for registration.
iv. Certified true copies of the particulars of directors (form CAC 7) and shareholders (form CAC 2).
v. Certified true copies of Memorandum and Articles of Association of the Applicant company.
vi. Copy of the treasury receipt for stamp duties paid on the authorised share capital of the company.
vii. Copy of Applicant's tax clearance certificate.
viii. Copy of Applicant's capital importation certificate.
ix. Copy of joint venture agreement where the company is not owned 100% by the foreign shareholder.
x. Copy of feasibility report and project implementation program of the company for the proposed business.
xi. Copy of Lease of Sub-Lease Agreement evidencing the Applicant's commitment to acquire business premises for the expatriate company's operations in Nigeria.
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This Alert and others produced by us are provided without any charge to you. You can always subscribe to it, on behalf of other interested persons from whom you have their permission, by sending to us a one line e-mail with the words "Subscribe – Legal Alerts" followed by the desired email address.
You are equally permitted to terminate your subscription by sending to us a one line email with the words "Unsubscribe - Legal Alerts" and your electronic address would be removed from our list. In the future, you can return to our mailing list by visiting our web site www.oseroghoassociates.com to subscribe for the Legal Alerts.
DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm.
Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
Legal Alert – November 2010 – Land Instruments Registration – Part 2
 
In this Issue:-
1. Legal Alert for November 2010 – Land Instruments Registration Law, Part 2
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3. Disclaimer Notice
Legal Alert – November 2010 – Land Instruments Registration Law – Part 2
Introduction
In Part One of our Legal Alert, "Land Instruments – Survey Plan & Survey Law", we emphasised the significance of preparing and registering all Survey Plans to land. In this Part Two of this Legal Alert, we will be examining the origin of land registration with the present applicable legislations on the subject.
Registration of Titles Law
The Registration of Titles Law of Lagos State requires that any first voluntary transfer of any right or interest in land or in any landed property, including all leases or assignments, for a consideration that is in money/cash, or is a combination of money and some other consideration in kind, for a term of forty (40) or more years is void if an application for registration is not submitted within a period of two months from the date of the commencement of the land transfer agreement.
A Grantee of any interest in land, as referred to above, is allowed to apply to a Court of Law for extension of time within which he or she could apply for the registration of his or her interest in land at the Land Registry. Where however such an application for extension of time is not made and granted, the unregistered land instrument will be deemed null and void, of no effect whatsoever.
Equally significant is the requirement that every charge or encumbrance relating to any land must also be registered. Charges against the assets of incorporated companies in Nigeria must equally be registered at the Corporate Affairs Commission in compliance with Section 197 of the Companies & Allied Matters Act. The effect of non-registration is that such a land instrument will be declared null and void against the liquidator and any secured creditor of such a company.
Land Instruments Registration Law
After the first registration of any interest regarding any land, in accordance with the provisions of the Registration of Titles Law, subsequent transfers or registration of interest must be undertaken under the Land Instruments Registration Law.
A land instrument is described by the Land Instruments Registration Law to be a document affecting any interest in land where one party confers, transfers, limits, charges or extinguishes his or her interest in such a property/land, in favour of another party. Where any of the described event herein occurs, such instrument must be registered otherwise it will be deemed to be null and void, of no effect whatsoever.
A land Instrument can however only be registered if it has attached and accompanying it a Survey Plan of the land duly signed by a licensed Land Surveyor. Also, no Land Instrument requiring Governor's consent under the provisions of the Land Use Act will be accepted for registration unless and until the consent of the Governor of the relevant State is obtained and endorsed on the Land Instrument. Subject to the Registrar of Titles extending the time for making a registration application upon good cause being shown, any Land Instrument that is endorsed by the Governor of a State with his consent but which Instrument is not registered within a period of six months (twelve months in some instances), will be held to be null and void, of no effect whatsoever.
Where one of the parties to a land transaction is an illiterate, such an illiterate must endorse his mark or thumb print on the land instrument in the presence of a Magistrate or a Justice of the peace. Failure to obtain this statutory endorsement on the land instrument invalidates the land instrument.
Miscellaneous
The Registrar of Titles is authorised, upon the making of the proper application and the payment of the relevant fees, to furnish certified true copies of any entry on a registered Land Instrument registered at the Land Registry. Any certified copy of a registered Land Instrument is admissible in evidence in civil proceedings without any further or other proof required in a Court of Law.
Also, every judgement of a Court of Law affecting any interest in land, with a certified true copy of the Map or Survey Plan of the land concerned, must be transmitted by the Registrar of the Court that delivered such a judgement to the Registrar for Titles who shall on receipt of these documents register the judgement with the accompanying Survey Plan against the legal title to such land that the judgement affects. This process serves as a further notice of the judgement to members of the public.
Effect of Registration
The registration of a Land Instrument does not however cure it of any defect in the Instrument neither does it confer on the Instrument any validity which the Instrument would not have otherwise had but for its registration. However, any Land Instrument that is registered, without any inherent defect in the Instrument, takes priority over and against other unregistered land instruments affecting the same land, from the date of the first registration of the registered Land Instrument.
A second effect of a registered Land Instrument is that it can be pleaded and tendered in evidence; whereas, an unregistered instrument must not be pleaded or given in evidence except where the relief sought is an equitable one coupled with possession that some consideration was provided for.
Case Law
There are a plethora of decisions of superior Courts of record where substantial justice was sought to be done in the face of the strict legislations regulating the acquisition and transfer of landed property in Nigeria. In Savannah Bank v. Ajilo (1989), the Supreme Court considered the revolutionary effect of the provision of the Land Use Act and held that any alienation of any interest in land, in Nigeria, will be null and void except the consent of the Governor is obtained. This provision, the Supreme Court observed, will have a suffocating effect on the commercialisation and growth of the real estate industry in Nigeria.
In another matter, Akinduro v. Alaya (2007), the Supreme Court held that an unregistered land instrument must not be pleaded as it is inadmissible. Where it is wrongly pleaded and admitted in evidence, it will be expunged. But in the matter of Nsiegbe v. Mgbemena (2007) the Supreme Court held that a purchaser of land or a lessee in active possession of land by virtue of an unregistered land instrument acquires a equitable interest in the land which equitable interest can only be defeated by another purchaser for value without notice of the prior unregistered equity, i.e. equitable interest coupled with active possession. Decisions like this one are however based strictly on the facts presented to the Court. There are therefore more of the exception than the general rule.
Conclusion
The inability of the Nigerian government to heed numerous representations, both judicial and non-judicial, on the necessity to amend or abrogate the Land Use Act continues to inhibit the ability of this vital sector of the Nigerian economic attracting large local and foreign investments. Also, the cumbersome nature and costs of registering Land Instruments in Nigeria discourages registration which exposes the parties to a plethora of protracted court cases that span decades to resolve.
A stimulus package which does not obtain the amendment of the legislations regulating real estate businesses in Nigeria will not be a wholesome package intended to develop the Nigerian economy. Pending the resolution of the legal and structural environment for the real estate market in Nigeria, investors will be better served by exercising caution and undertaking extensive due diligence before they exchange land instruments in return for valuable consideration.
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This Alert and others produced by us are provided without any charge to you. You can always subscribe to it, on behalf of other interested persons from whom you have their permission, by sending to us a one line e-mail with the words "Subscribe – Legal Alerts" followed by the desired email address.
You are equally free to terminate your subscription by sending to us a one line email with the words "Unsubscribe - Legal Alerts" and your electronic address would be removed from our list. In the future, you can return to our mailing list by visiting our web site www.oseroghoassociates.com to subscribe for the Legal Alerts.
DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm. Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
Legal Alert – December 2010 – Minority Shareholders' Rights
 
In this Issue:-
1. Legal Alert for December 2010 – Minority Shareholders' Rights
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3. Disclaimer Notice
Legal Alert – December 2010 – Minority Shareholders' Rights
Introduction
The global economic crises have again highlighted the dereliction in the responsibilities of the shareholders of companies, who as owners and not spectators of their companies, should properly oversee the governance and management of their companies. And to in proper instances, assert their legal rights to protect their shares/investments in these companies.
The position of the minority shareholders is usually more precarious as a result of the narrow understanding of the general legal rule that allows only a company, through its majority shareholders, to assert the legal rights of such a company. This rule, commonly known as the rule in Foss v. Harbottle, is intended to avoid multiplicity of law suits and also to protect our courts of law from interfering in the internal affairs of a company. However, and sometime, the injury to the company is caused by the majority shareholders or their appointed Directors to which situation the law has created exceptions to this general rule.
Minority Shareholders Rights
Section 81 of the Companies & Allied Matters Act ascribes to every member of an incorporated company, who has fully paid for his or her shares, a right to attend all the shareholders' meetings of such a company; and to speak and vote at such shareholders meetings. The mode of proving membership of a company is by the possession of a share certificate and the tendering of a certified true copy of the register of members should such a matter go to litigation. See the decision in Oriji v. Dorji Textile Mills Limited (2009) 12 SC (Part III) 101 @ 108, 112-113.
All the members of a company also have the right to receive copies of the Memorandum and Articles of Association of the company as they do further have the right to receive and comment on the audited accounts of the company.
The minority shareholders of a company also have the right to bring derivative actions, in the name of the company, where the wrongdoers are the controlling directors of the company, who have being entrusted with the control and management of the company, and who have done any of the following:-
a) Entered into any transaction which is illegal or ultra vires the Memorandum and Articles of Association of the company;
b) Committed a fraud on either the company or on the minority shareholders despite repeated notice to refrain or remedy such complained of actions;
c) Derived or is/are deriving a profit or benefit or profited from their negligence and or breach of duty of care;
d) Have by their actions or inactions or omissions infringed upon the individual rights of the minority shareholders;
e) Are conducting the affairs of the company in an unfair, prejudicial and oppressive manner.
Judicial decisions on this matter, for your study, include the decisions in William v. William (1995-1996) ALL NLR 283 @ 294-302; Yalaju-Amaju v. A.R.E.C (1990) 6 SC 157 @ 175-176.
Conclusion
The plethora of judicial authorities with the provisions of the Companies & Allied Matters Act are available to all shareholders, including the minority shareholders, to protect their investment rights. Shareholders should therefore avail themselves of these provisions to avoid more catastrophic losses in the future.
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