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March, 2002

Constitutionality Of Lagos State Sales Tax Law

Operating a democratic government in Nigeria have been very expensive. With dwindling revenues from the Federation Account to the State and Local Governments, most State Governments have again resorted to imposing various forms of levies and taxes in order to, at the minimum, settle their recurrent expenditures. The Lagos State Government has by its Sales Tax (Schedule of Amendment) Order, 2000 amended the schedule to the Sales Tax Law, Cap 175, Laws of Lagos State of Nigeria, 1994 ("the Law"). The commencement date for this Order is 2 nd November 2000 .

Brief History Of Sales Tax & VAT

A majority of the tax legislation in Nigeria have been adopted from tax legislation enacted in Britain . An appreciation of the history of tax legislation in Britain is therefore necessary for a greater appreciation of the tax legislation in Nigeria .

Sales Tax was introduced in Britain during the Second World War as a form of indirect tax on goods, to assist the British Treasury prosecute its war effort. This tax was replaced in Britain in the early 1970's by the Value Added Tax ("VAT") principally because the Sales Tax was very easy to evade, difficult to administer and more importantly, because the number of affected taxpayers were limited.

VAT was introduced into Nigerian legislation by the Value Added Tax Decree, 1993 ("VAT Act"). Interestingly, Section 41 of the VAT Act repealed the previously existing Sales Tax Decree, 1986.

VAT is imposed on the supply of all goods and services in Nigeria except goods and services specifically exempted in Schedule 1 of the VAT Act. The rate chargeable is 5% of the value of all goods or service. The exempted goods and services include medical and pharmaceutical products, basic food items, books and educational materials, baby products, locally manufactured fertilisers, all exports, plants and machinery utilised in the Export Processing Zone, etc.

VAT is administered, on behalf of the Federal Government of Nigeria ("FGN") by the Federal Board of Inland Revenue ("FBIR") as a sort of Trustee for the State Governments of the Federation. Under the VAT arrangement, all the States benefit collectively and equally to the tune of 50% of the entire Vat proceeds collected whilst the Local Governments share 35%. The 15% that is left is utilised to cover the cost of administering this tax regime.

Lagos State Sales Tax Law

The Law has as its commencement date, 19 th July 1982. The Law is principally a legislation authorising the Lagos State Government to impose the tax upon certain

goods and services rendered in Lagos State . The rate of the tax is also 5% of the classes of goods and services enumerated in Schedule 1 of the Law.

Taxable goods and services covered under this Law include beer, wine, liquor, spirits, cigarette and tobacco, jewels and jewelleries, electrical and electronic equipment, soft drinks, building materials, furniture and finishing products, sales and services in registered hotels, motels, catering establishments, restaurants (excluding drinks), etc.

The Taxing Agent under this Law is the "Seller or Supplier" who is defined in Section 13 of the Law to include “. a manufacturer , importer or distributor but does not include a retailer". The Italics and underlining are mine.

To comply with the fair hearing requirement of the Nigerian Constitution, the Law requires that any objection to an assessment under the Law must be made within 15 days of the service of the order by the Lagos State Board of Internal Revenue ("the Board").

Should the assessed party remain dissatisfied, he may appeal against the assessment to a Lagos High Court. This right of appeal is however subject to the Appellant paying into Court, within 7 days from the date of the filing of the Notice of Appeal, by way of security, a sum equal to the estimated assessed amount.

Contravention of the Law attracts a fine of =N=1,000 (One Thousand Naira) for a first offender and =N=2,000 (Two Thousand Naira) for any second or subsequent offences.

Constitutional Authority For Lagos State Sales Tax Law

The principal authority that has been canvassed as the constitutional basis of the Law is the fact that since the 1979 and 1999 constitutions do not confer exclusive jurisdiction over Sales Tax on the Federal Government, as it was under the 1960 and 1963 Nigerian Constitutions, it meant that it was a residual matter over which the State Governments could make laws.

Also, reliance has been placed on the Supreme Court decision delivered in 1984 in the matter of OGUN STATE v. ALHAJI ABERUAGBA [1984] SC 20 or [1997] 1 NRLR (Part 1) page 51 where the Supreme Court held, amongst others, that both the Federal and State Governments had the residual power to impose Sales Tax on any matter within their respective legislative competence.

The Supreme Court further held that only the Federal Government had the power to make Laws in respect of international trade and commerce and inter state trade and commerce whilst the State Government had the power to legislate on intra-state trade and commerce.

The Supreme Court held further in the above suit that Section 3 (1) of the Ogun State Sales Tax Law was unconstitutional as it sought to tax goods brought into Ogun State , which was a discriminatory tax against inter state or international trade and commerce. The taxes on petrol, diesel and petroleum products were equally held to be unconstitutional and void as these were items under the exclusive list to which the Federal Government had absolute control.

Comments On The Above Authorities

The first comment is that at the time the Supreme Court decided the Aberuagba's case, there was no VAT Act neither was there the Taxes and Levies (Approved List of Collection) Decree, No. 21, 1998 (“the Approved List Act”).

We concede that Section 1 of the Approved List Act, which expressly overrides Section 1(1) of the 1979 constitution and by implication the 1999 constitution (on the supremacy of the constitution), is invalid and unconstitutional to the extent of its inconsistency, the remaining sections of this Act remains an integral part of Nigerian Law by virtue of Section 315 of the 1999 Constitution.

The above Section of the 1999 Constitution provides that “subject to the provisions of this constitution, any existing Law shall have effect with such modification as may be necessary to bring it into conformity with the provisions of this Constitution and shall be deemed to be an Act of the National Assembly”. Italics and underlining are mine.

Also, there is no assurance that the implementation of the Law, in its present form, would not lead to double taxation, as the goods are also liable to tax under the VAT Act. It was held in the Second Street Properties' case, which is an American case, that “to constitute double taxation, the two taxes must be imposed on the same property, by the same governing body during the same period for the same taxing purpose”.

A brief comment on the Approved List Act is that the Act was promulgated by the military government at the time to harmonise and stem the taxes and levies that each tier of government was permitted to collect. In practice, this Act brought a lot of sanity and clarity to tax collection in Nigeria . As this Act is an existing Law under our Constitution, the items under the Lagos Law cannot be residual matters upon which the State can legislate.

Secondly, the definition of a Seller or Supplier under the Law to include a Manufacturer or Importer falls into the same error in the Aberuagba's case as it connotes that Lagos State can charge excise duty on goods manufactured within its territory by a Manufacturer and, import duty on goods imported by an Importer. This would be unconstitutional, as excise and import duties are items under the exclusive legislative list reserved for the Federal Government under the 1999 constitution.

Of equal concern is the requirement that an Appellant appealing against an assessment can only lodge a valid appeal if he deposits a sum equal to the amount charged as security for the appeal. This may not be constitutional as it might infringe on the Appellant's constitutional right and financial ability to prosecute the Appeal. Should this situation arise, it is suggested that the Appellant should challenge the Law itself instead of the assessment.

Conclusion

It is critical that all forms of double taxation must be discouraged, as they are another disincentive to the promotion of free private enterprise. The Lagos State Sales Tax Law should therefore be repealed.

Following from the above and in the interest of equity and fairness, the Federal Government should amend the VAT Act so that the distribution of its proceeds is based on derivation , the same way that its collection and charge is also based on residence. To continue with the current practice of equal distribution of proceeds between all the States and Local Governments, irrespective of the amount generated from each State, will only encourage multiple and or double taxation, unnecessary constitutional challenges, and political and economic tension between the States and the Federal Government.

Both the Federal and State Governments should also equip adequately the Federal and State Boards of Internal Revenue as this is the only way almost all the taxes due to all tiers of governments will be collected and available funds increased.

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 June, 2002

“Resource Control” Judgement – Attorney General of The Federation of Nig. V. Attorney Generls of 36 States

There arose a dispute between the Federal Government of Nigeria (“FGN”) and the eight littoral States of Akwa Ibom, Bayelsa, Cross Rivers, Delta, Lagos, Ogun, Ondo and Rivers State as to the seaward boundary of each of these littoral States (“the States”) in view of the fact that the determination of this issue would resolve whether or not these States were entitled to a minimum of 13% of all revenue accruing to the Federation Account on the basis of the derivation of natural resources from each of these littoral States.

It was the case of the FGN that the natural resources located within the continental shell of Nigeria are not derived from any of these States as their boundaries ends at the low water mark of the land surface of each of such littoral States. On the other divide, the case of the States, especially the littoral States, was that their territories extended beyond the low water mark, unto the territorial waters and also unto the continental shell and the exclusive economic zone. They therefore contended that natural resources from both offshore and onshore are derivable from the respective littoral States territory and in respect of which each State is entitled to “not less than 13%” allocation of all revenues derived from these natural resources.

The principal issue before the Supreme Court of Nigeria for resolution between the disputants was “A determination by this Honourable Court of the seaward boundary of a littoral State within the Federal Republic of Nigeria for the purpose of calculating the amount of revenue accruing to the Federation Account directly from natural resources derived from that State pursuant to the proviso to Section 163 (2) of the Constitution of the Federal Republic of Nigeria, 1999”. In simple English, this issue was what is the southern or seaward boundary of each of the eight littoral States.

Note that Section 162 (2) of the Constitution of the Federal Republic of Nigeria (“the 1999 Constitution”) empowers the National Assembly to determine the formular for distribution of funds in the federation account provided that not less than 13% of the revenue accruing to the Federation Account are paid directly to the State from which the natural resource is derived directly.

The Supreme Court in the leading Judgement of M.E. Ogundare, JSC held amongst others as follows: -

  1. That the Black's Law Dictionary defines natural resources as “any material in its natural state which when extracted has economic value.” The Supreme Court held that whilst natural resources like coal, natural gas, crude oil, potassium, etc fall within this definition, other items like ports, wharves, agricultural products, etc are not natural resources.
  2. That the southern boundaries of all the eight littoral defendant States must be the southern boundaries of the old Western and Eastern Regions as defined in Laws of Nigeria of 1954, i.e. the sea. This is also defined in Section 11 of the Nigeria Protectorate Order in Council, 1922 and of Lagos State as defined in the Colony of Nigeria (boundaries) Order in Council, 1013.
  3. On what was the boundary mark of the sea and the sea States, i.e. littoral States, the Supreme Court held that “if the boundary is with the sea, then, by logical reasoning, the sea cannot be part of the territory of any of the old regions ….” The case of the States that the boundary extended to the exclusive economic zone or the continental shell of Nigeria was therefore rejected as untenable on this ground.
  4. That the States as riparian owners, are entitled to the seaward extent of their land territory because at Common Law, all of the sea shore i.e. the seaward limit of their internal waters, belongs to the Crown.
  5. Finally held on the FGN's claim, that the seaward boundary of a littoral State for the purpose of calculating the amount of revenue accruing to the Federal Account directly from any natural resources derived from that State … is the low water mark of the surface thereof or … the seaward limits of the inland waters within that State for a State like Cross Rivers State that has a lot of Islands.

The littoral States in turn also filed Counter Claims against the Federal Government. A counter claim is similar to an independent action; the rules of our judicial system however allows it to be heard together with the main claim where the disputes between the parties are similar and so it would be more economical to hear the claim and counter-claim together.

On the littoral States counter claims, the Supreme Court held as follows: -

  1. That the Federal Capital Territory is not a State or a Local Government within a State as defined in the 1999 Constitution and accordingly, they were not qualified for distribution of moneys deriving from the Federation Account.
  2. That the 13% basis for computing the derivation to the States and upon which the States are counter claiming against the FGN could not be upheld by the Supreme Court as the 1999 Constitution gives the appropriate authority, in this case the President, pending a resolution by the National Assembly, a discretion on the percentage to apply provided that it is not less than 13%.
  3. That the FGN, as a trustee to the States of the Federation, was liable to render an account to all the States. To be entitled to an order of the Supreme Court compelling the FGN to render an account of all revenue deriving from all natural resources, the States must have firstly demanded for the accounts and the FGN after the demand or repeated demand has failed, refused or neglected to provide the accounts.
  4. That the FGN was constitutionally not empowered to deduct as a first charge from the Federation Account sums of money to service the country's external debts.
  5. That it was unconstitutional for the FGN to pay moneys directly to the Local Governments from the Federation Account to carter for primary education as by the 1999 constitution, the primary responsibility for this function is with the States and Local Governments.
  6. That it was constitutionally wrong for the FGN to charge the salaries, allowances and recurrent expenditure of the judiciary to the Federation Account in stead of the Consolidated Revenue Fund.
  7. That charging of the funding of the joint venture contracts and the Nigerian National Petroleum Corporation priority projects to the Federation account are inconsistent with the provisions of the 1999 Constitution and therefore invalid and unconstitutional.

The Supreme Court further held that the under listed policies of the FGN are unconstitutional:

  1. The exclusion of natural gas as a constituent part of derivation in computing natural resources.
  2. Non-payment to States of proceeds from the Capital Gains Tax and Stamp Duties tax revenues.
  3. Unilateral allocation of 1% of the revenue accruing to the Federation Account, to the benefit of the Federal Capital Territory , Abuja.
  4. The 1999 Constitution having come into force on May 29 th , 1999, the principle of derivation also came into force on the same date, i.e. May 29 th , 1999. The FGN is therefore obliged to comply forthwith with the Constitution from that date.

General Comments & Conclusion

Many commentators have argued that the issue for determination before the Supreme Court in this case was not about resource control but about the onshore/offshore dichotomy, particularly when it comes to the distribution of revenue accruing to the Federation Account. Retired Justice

of the Supreme Court of Nigeria, Karibi-Whyte, JSC ruled in an interlocutory decision before the final decision of the Supreme Court in this case that “I therefore am of the firm opinion that the Plaintiff's claim is limited and confined to the determination of the seaward boundary of littoral States. I so hold. Any other consideration will be preposterous and manifestly inconsistent with the fundamental principles of adjudication”.

There is a difference between derivation from natural resources on the one hand and the control of natural resources existing in a State, whether littoral or not, on the other. Derivation according to a legal commentator is “ … the recognition of a prior beneficial right that was subsequently expropriated. Thus, the principle of derivation is a form of compensation and/or reparation for an expropriated interest ….” Resource control on the other hand covers a much more wider sphere. Also, resource control is a politically sensitive matter.

The differences on whether the issue that was for determination was one of resource control or that of the dichotomy between onshore and offshore revenue would be avoided if a better appreciation of Nigeria 's adjudicative legal system is understood.

Under our adjudicative system, our courts are only permitted to adjudicate over legal issues, and not political or academic issues, properly brought before it. A misunderstanding of this fundamental function may have led to the confusion that presently exist. With more enlightenment, it is believed that greater understanding will prevail eventually.

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July, 2002

Land Use Charge Law No. 11 Of 2001 Of Lagos State

 

Introduction

The Land Use Charge Law, No. 11 of 2001 applicable to real/landed properties in Lagos State was passed into Law by the Lagos State Government with a commencement date of June 22, 2001 (“LUCL”). The main objective of this Law, as has been proffered repeatedly by the Lagos State Government, is to generate additional revenue needed to develop the state whose population is growing at an alarming rate without any corresponding increase and or improvement in its physical and social infrastructure.

The Land Use Charge Law is intended to be a SINGLE PROPERTY CHARGE which replaces all other State and Local Governments taxes on real property including taxes like tenement rates, ground rents and neighbourhood improvement charges. By the LUCL, once the Land Use Charge is imposed upon a property, the rates and charges, which were, hitherto payable under the old legislations, will no longer be applicable and due on the same property.

Operation of the Law

The Land Use Charge (“LUC”) is a charge imposed on the owner of the property. However, where the owner is not in possession of the property, the LUCL authorises the collecting authority to appoint the occupier, who is usually the tenant, to be assessed with and pay for the tax; the tenant is in turn authorised by the LUCL to offset such a payment, made under this Law, from monies that may be due from the tenant to the owner of the property. There is thus an indemnity in favour of the tenant/occupier against the owner. How this procedure would work in practice, especially in the light of the temperament of the Lagos landowner, is awaited.

The LUCL does not apply to all properties in Lagos State . Properties that are exempted from the operation of this law are government owed properties, and other properties used for public, religious and charitable activities. Note however that this exemption will only be granted where an application for exemption is made to the Commissioner for Finance, Lagos State .

Based on the controversy and the resistance that have followed the rates/percentages of assessment, the Lagos State Government have further reduced the rates payable under this Law as follows:

  1. Commercial Property used for residential purposes – 0.5% per annum of the assessed property value.
  2. Commercial property used for business purposes – 1.25% per annum of the assessed property value.
  3. Industrial premises used for manufacturing concerns – 0.5% per annum of the assessed property value.
  4. Owner-occupier residential property – 0.15% per annum of the assessed property value.
  5. Owner-occupier pensioner's property – exempted from Land Use Charge assessments but liable to whichever is applicable between tenement rate, ground rent or neighbourhood improvement charge.
  6. Family compounds – exempted from LUCL but liable to tenement rate at the last assessed amount with an increase of 25% of that amount.

A Chargee of a LUC is entitled to some rights under the LUCL, although these so-called rights have also been critised by some legal analysts. They include:

  1. The Chargee, on receipt of an assessment, can in writing make a formal complaint to the Commissioner for Finance that the assessment is too high and should be reduced or that the categorisation of the property under the LUCL is wrong.
  2. An Chargee also has the right to file an appeal against the assessment to the Assessment Appeal Tribunal on the precondition that the Chargee pays 50% of the amount assessed and the fees that would prescribed by the Appeal Tribunal for the filing of the appeal.

Also, there are various penalties for default under the LUCL. They include:

  1. Payment increases of up to 25%, 50% and 100% respectively where the Chargee delays payment for up to 75, 105 and 135 days from the date of it/his receipt of the assessment.
  2. Liability to incurring the appointment of a receiver over the property until all outstanding taxes, penalties and administrative charges are paid where payment is not received after 135 days after service of the assessment.
  3. Application to a superior Court by the Commissioner for Finance to recover the sum assessed and payable under the Law. Pending the determination of the suit, the Court can attach the earnings accruing from the property.
  4. Penalties of up to =N=100,000 (One Hundred Thousand Naira) or three months imprisonment for non-compliance with the LUCL, obstruction of authorised officials, damages to property identification plaques or incitement to other persons to refuse to pay the tax.

Collection of Charges

The Local Government Authority in the jurisdiction/locality where the property is located is the authorised collecting authority. In order for there to be compliance with the constitutional requirements on the division of powers between the State and the Local Governments, the Land Use Charge Law is predicated on the principle of mutual delegation of authority between the Lagos State Government and each of the Local Governments in the state. Whether a Local Government

Authority can delegate its constitutional power to State Government is a matter of various litigations in Lagos State presently. However, in the case of Knight, Frank & Rutley v. A.G of Kano State [1990] 4 NWLR (Pt 143) 210 the Nigerian Court of Appeal had expressed the view that it was not constitutional for a tier of government to delegate its constitutional powers to another tier. The Supreme Court affirmed this decision in [1998] 7 NWLR (Pt. 556) 1; [1998] 4 S.C. 251 .

Also, the question of whether payments made under this Law are tax deductible or not under the Companies Income Tax Act (“CITA”) and Personal Income Tax (“PIA”) remains a matter of much difference amongst practitioners.

Advantages and disadvantages of LUCL

Some of the advantages of the tax, according to its proponents, include:

  1. Prevention of multiplicity of taxes between the State and Local Governments in Lagos State.
  2. Reduction and or prevention of property tax evasion by ensuring that its administration, including its assessment and collection, are much easier.

Some of the LUCL disadvantages, according to its opponents include:

  1. The high rate of the tax would discourage property development and investment.
  2. With no new investment in the property sector, the housing requirements of the citizens residing in Lagos State and the rentals payable per annum are expected to worsen.
  3. The tax would further discourage mortgages and perfection of property/land titles. Presently, a purchaser of land in Lagos State has to contend with the following fees: (a) the total cost of the land; (b) 20% of the total cost of the land as legal and agency fees for securing the land; (c) 15% to 30% as consent fees; (d) stamp duties of about 3%; (e) capital gains tax of 10%; (f) registration fee of 1%; (g) legal fees for processing the consent or certificate of occupancy usually in the region of over 10%. The total of these percentages, which are percentages of the sum used to purchase the land, are over 60% of the total cost already paid by the purchaser to the vendor of the land.

Conclusion

An Auditor is a professional who provides customer related services. His main stock in trade is the trust and goodwill of his client which ought to protect at all times otherwise he will go out of business. Also, with the advent of democracy in Nigeria and globalisation world-wide, professionals, including Auditors, should exercise more care and diligence in the performance of their statutorily responsibility in order to avoid loss of trade or incur civil and criminal liability as a result of a breach of statutory duty.

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Overview of the Corrupt Practices & Other Related


Offences Act, 2002

Introduction

Cultural and institutionalised corruption remains the bane and a clog in the economic development of most third world countries including Nigeria . To combat this practice, the National Assembly enacted the Corrupt Practices and Other Related Offences Act, No. 5 of 2000 (“the Act”). The Act, in the main, prohibits bribery and corruption and prescribes punishment for those who fall foul to its provisions with either terms of imprisonment or monetary fines, or both imprisonment and fines.

Salient Provisions of the Act

The Act seeks to prohibit and prescribe punishments for corrupt practices and other related offences throughout the federation of Nigeria . The Act establishes the Independent Corrupt Practices and Other Related Offences Commission (“the Commission”). Also, the Act makes provision for the protection of anybody who gives information to the Commission in respect of any offence committed or likely to be committed by any person.

The Act makes it an offence for any person to ask for, receive or obtain any kind of property or benefit, or to give, confer or procure any anything, either for himself or for any other person, as an inducement or reward for doing, forbearing to do or having to do anything outside the ordinary cause. A majority of these offences carry terms of imprisonment of either seven (7) or five (5) years imprisonment.

Also, the failure to report any act of corruption or bribery is an offence under the Act, which carries a term of imprisonment of two (2) years or a fine or both.

A.G Of Ondo State V. A.G Of Fgn & 35 Ors (2002) 6 S.C (Pt. 1) Page 1

In this case, the government of Ondo State challenged the constitutionality of the Anti-Corruption Act on the ground that the National Assembly did not have the constitutional power to legislate on matters of bribery and corruption such that the Law will be applicable to citizens in Ondo State .

The Supreme Court held that with the exception of some sections of the Act, the Act was constitutional as the National Assembly was empowered by the 1999 constitution to make laws for the peace, order and good government of every person subject to the jurisdiction of Nigeria including the establishment by the Act, of the Independent Corrupt Practices and Other Related Offences Commission. Section 4 (2) and items 60 (a) and 67 of the exclusive legislative list of the 1999 constitution is the authority for this.

The Supreme Court further held that: the Act was applicable to both public and private individuals and corporations; that Section 26 (3) of the Act which requires the prosecution of an offence and delivery of judgement within ninety (90) working days was unconstitutional as it constituted a usurpation of the powers of the judiciary; that Section 35 of the Act, which empowers the Commission to arrest and detain suspects indefinitely, is unconstitutional as it violates the fundamental human rights provisions of the Constitution on personal liberty.

Mention must be made that the Plaintiff in this matter has further filed an application to the Supreme Court seeking for a review of this decision. While we await the outcome of this decision, we must say that it will be an uphill task, as the Supreme Court usually does not overturn its own decision unless special circumstances are shown and established.

Conclusion

Most unfortunately, this will not be the first legislation that has been made to discourage and combat corruption. The Military regime of General Gowon promulgated the Public Officers (Investigation of Assets) Decree, 1966; that of General Murtala Mohammed promulgated the Corrupt Practices Decree, 1975; under the civilian government of Shehu Shagari, there was the Code of Conduct Tribunal established under the 1979 constitution; that of General Babangida was the Corrupt Practices & Economic Crimes Decree; that of General Abacha was Indiscipline, Corrupt Practices and Economic Crimes (Prohibition) Decree, 1994; and now the above Act.

Since independence, there have been no reported decision(s) of a superior court of record in Nigeria where either a private or public officer have been arraigned and convicted of either bribery or of corruption. The above Act was enacted as an Act of the National Assembly in the year 2000 but the efficacy of the Act and the Commission established under it have not been felt as sufficient funds have not been provided to the Commission by the government for the Commission to function effectively.

However and in spite of the above discouraging observations, corporate organisations must in the spirit of good corporate governance and business sense, embrace anti-corruption and anti-bribery behaviours as with the perpetuate downturn in the economy, the politicians will be too pleased to turn this issue into an election issue and use some big corporations as an example. Recent corporate developments in the United States of America involving Enron, WorldCom, etc should also serve as a guide in the consideration of bribery and corruption issues.

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September, 2002

Property Acqusition: Working Checklist

 

Introduction

Economic development in Nigeria and the need to acquire landed property, have also given rise to an increase in disputes and litigation arsing from such acquisitions. Most of the time and rather unfortunately, professional advice is only solicited after “ .. the door of the stable had been closed and the horse had bolted”. This situation also occurs in some exceptional cases where professional advice was obtained. Further, not much assistance has been received from the government as the communal land tenure systems, where the land is cheaper, remains unorganised, prone to intrigues and in some cases, fraud.

Underneath is a checklist of steps that can be taken to prevent these disputes.

Checklist:

  1. On taking the decision to acquire land, consult a qualified and experienced Legal Practitioner. There is always one either in your company, family, church, mosque, neighbourhood, etc.
  2. Find out the name of the present Owner of the land or the name of the family that owns the land? It is critical that you establish physical contact with the Owner as soon as possible and before any payment is made for the property. This contact will also enable you to have a “feel” of the Owner and assist you in taking a decision as to whether or not, to continue with the transaction.

    The current practice of estate agents preventing an interested purchaser from meeting the Owner early in the negotiation, because of genuine concerns that they will not receive their commission, should be discouraged because when a dispute arises, the estate agent would neither assist to recompense the purchaser neither would he/she assume any form of responsibility or liability. The prospective purchaser should therefore establish some levels of guarantee that will assure the estate agent of his commission.
  3. Investigate the kind of title that the Owner of the land has; did the Owner acquire the land as a gift, by government allocation, by customary inheritance, by purchase, etc?
  4. How long has the Owner been in possession of the land and what structures are on the land to show that he had always been in possession? Has possession been disturbed or interrupted at any time by another interested party?
  5. Instruct a Legal Practitioner to conduct a land search on the property, if it is registered, with the State Lands Registry? If it is not registered with the Lands Registry and it is a community or family land, go to the head of the family and inquire if the land is available? Some traditional families now have family offices on the land that they are selling. Note that a Land Search may not be conclusive as there is a reported incident of a “switch” in the original title document at the Lands Registry when the initial land search was conducted (although this incident is still under investigation). This is why a physical search, which is also mentioned underneath, should be undertaken.
  6. The above land search should also establish whether the land is free from any form of government acquisition, registered mortgage(s), caveats, etc. Further, the issue of all outstanding fees and charges relating to the land should be established at this stage.
  7. Critical that you, with at least one Legal Practitioner, should undertake a physical and independent search on the property. Usually, there would be found pillars or beacons demarcating the plots from each other. We have discovered that mid Sunday afternoons are best suited for this exercise. Inquire from people inhabiting the adjourning properties who the owners of the land are; neighbours are always too willing to give this information.
  8. Explore if there are any litigation or court decisions relating to the land. Some states like Lagos State now have a Lands Division at the High Court. This should enhance a search for any litigation. Although this kind of search can be tasking as a result of the non-computerisation of the records in the Court Registries, and may also be inconclusive, it is a worthwhile exercise.
  9. Investigate from the local Town Planning authority in the area where the land is situated, what kind of physical development that is permitted on the land? For example, is it residential, commercial or both residential and commercial? Further, the Town Planning Authority issues to applicants, building approvals, which will also indicate whether the land is within government excision or free from any other encumbrance. Where there is an already prepared survey plan, an investigation of this plan at the Town Planning office will also assist in indicating the position of the property.
  10. Ensure that before actual payment is made for the land, as much documentation that would be required to change the ownership to the new one, are obtained from the original Owner. This would prevent further expenses having to be incurred in the form of a “signature fee” which may be demanded subsequently.

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