Commercial Properties: How Does the Land Use Act Affect Land Title Registration for Commercial Properties?

Commercial Properties: How Does the Land Use Act Affect Land Title Registration for Commercial Properties?

Introduction

Commercial real estate forms a vital component of Nigeria’s economic development. From office spaces and shopping complexes to hotels, warehouses, petrol stations, and event centers, commercial properties drive commerce, investment, and urban infrastructure. However, the legality of ownership and use of these properties hinges on proper land title registration.

The Land Use Act of 1978, a foundational law governing land administration in Nigeria, has far-reaching implications on how land titles—especially for commercial purposes—are acquired, documented, and transferred. This Act not only regulates land ownership but also determines how and under what conditions land titles can be registered for commercial ventures.

In this article, we examine how the Land Use Act affects the registration of land titles for commercial properties in Nigeria, analyzing its legal framework, requirements, processes, challenges, and practical implications for investors, businesses, and property developers.

Overview of the Land Use Act, 1978

The Land Use Act was introduced in 1978 to unify Nigeria’s complex and fragmented land tenure system. It vests all land in each state in the hands of the State Governor, to be held in trust for the people. The Act centralized land control, abolishing the freehold system and replacing it with rights of occupancy.

Key Provisions:

• All land is owned by the government and allocated through statutory or customary rights of occupancy.

• Private individuals and businesses can only hold land through Governor-granted rights.

• All land transactions—including transfer, mortgage, or lease—require Governor’s Consent.

• The government can revoke land rights for overriding public interest with compensation.

What Are Commercial Properties?

Commercial properties refer to real estate used for business or profit-generating purposes, including:

• Shops and retail centers

• Hotels and resorts

• Warehouses and distribution hubs

• Fuel stations

• Factories

• Office buildings

• Restaurants and fast-food outlets

These properties are subject to stricter regulations, higher land use charges, and more complex title registration procedures than residential properties.

How the Land Use Act Affects Commercial Land Title Registration

1. Ownership Vests in the Governor

Under Section 1 of the Land Use Act:

“All land comprised in the territory of each state in the Federation are hereby vested in the Governor of that state…”

This means that no private individual or company can claim absolute ownership of commercial land. Rather, commercial property rights are held through a Statutory Right of Occupancy (R of O), granted by the Governor. This provision fundamentally affects:

• Title validity

• Leasehold tenure (usually 99 years)

• Access to registered rights

2. Certificate of Occupancy (C of O) Requirement

To register a title over commercial property, the landowner or buyer must obtain a Certificate of Occupancy, which:

• Confers legal recognition to land use

• Is valid for up to 99 years

• Specifies “commercial” as the approved land use

• Is required for access to funding, government approval, and court protection

Implication:

No commercial development is legally recognized without a valid C of O, making the document a precondition for legal security.

3. Land Use Classification and Conversion

The Land Use Act divides land into zones and uses:

• Residential

• Agricultural

• Commercial

• Industrial

When registering land titles for commercial use, it must be:

• Allocated originally as commercial, or

• Converted from another use (e.g., residential) through a formal Land Use Conversion Application

Conversion involves:

• Government inspection and verification

• Payment of conversion fee

• Updating the title to reflect the new use

Failure to convert land before using it commercially is a violation of the Land Use Act and may result in:

• Demolition

• Revocation of rights

• Refusal of building plan approvals

4. Governor’s Consent Requirement (Section 22)

The Act stipulates that no holder of a Right of Occupancy can:

• Assign

• Mortgage

• Lease

• Transfer possession

Without the prior consent of the Governor.

This provision applies directly to commercial land because such transactions—often involving high-value assets—are frequent in commercial practice.

Effect:

• Every sale or lease of commercial property must obtain Governor’s Consent before it can be registered.

• Without this consent, the transaction is legally void and cannot be enforced in court.

5. Leasehold Nature of Tenure

Under the Act, commercial land is held on a leasehold basis, typically for 99 years (renewable). This affects:

• Long-term planning

• Investment valuation

• Property rights

Some Governors may grant shorter leases (e.g., 50 years) for special economic zones or urban redevelopment.

6. Land Premium and Ground Rent

Land allocated for commercial purposes attracts higher financial obligations than residential land.

Charges include:

• Land premium (one-time payment for new allocations)

• Annual ground rent

• Consent fees

• Capital gains tax (if applicable)

Non-payment of any of these can result in revocation of the C of O or denial of registration.

7. Survey Plan and Land Registry Requirement

The land title registration process for commercial properties requires:

• A survey plan certified by the Surveyor-General

• Proper demarcation of boundaries

• Registration at the State Land Registry

• Filing and issuance of title number and plan number

Surveyors must also specify the purpose of use on the plan, which must match the approved classification.

Land Title Registration Process for Commercial Properties

1. Land Allocation or Purchase

   • From government or private owner with an existing title

2. Engage a Licensed Surveyor

   • Prepare and lodge survey plan

3. Apply for Certificate of Occupancy

   • Submit application with documents, photos, tax clearance, company documents

4. Obtain Governor’s Consent (if title is being transferred)

5. Pay Applicable Fees

   • Premium, consent fee, registration charges, capital gains tax

6. Title Registration at Lands Registry

   • Finalizes and legally records ownership

Common Challenges in Registering Commercial Titles under the Act

Case Studies and Real-Life Scenarios

1. Title Denial for Non-Conversion

A company in Lagos built a warehouse on land registered as residential. Upon seeking expansion approval, the planning authority demanded land-use conversion. Delays in compliance halted operations for 9 months and cost the company millions.

2. Multiple Allotments of Commercial Plots

In some states, land allocated for commercial use has been sold to multiple parties due to corrupt practices or poor documentation, creating prolonged legal battles.

The Role of Legal Professionals in Commercial Title Registration

Lawyers play an essential role in:

• Title verification and due diligence

• Drafting Deeds of Assignment and Leases

• Applying for Governor’s Consent

• Resolving title disputes

• Registering title documents

They ensure all steps comply with the Land Use Act and protect investors from future land litigation.

The Role of Government in Facilitating Registration

Governments must:

• Simplify registration processes

• Digitize land records and registries

• Standardize fees and timelines

• Eliminate discretionary decision-making

• Train land officers on commercial registration procedures

Recommendations for Businesses and Investors

1. Always verify land classification before purchasing or leasing

2. Apply for conversion if changing land use

3. Obtain Governor’s Consent before any title transfer

4. Hire a licensed surveyor and legal practitioner

5. Pay all statutory fees (including ground rent) promptly

6. Register all title documents to secure legal interest

Conclusion

The Land Use Act plays a defining role in how commercial property rights are created, transferred, and registered in Nigeria. While it provides a framework for public control and equitable land access, it also presents complex regulatory barriers for investors and developers.

Understanding the Act’s requirements—especially on land use classification, title documentation, Governor’s consent, and leasehold tenure—is key to ensuring that commercial properties are secure, legally compliant, and protected from disputes.

Contact Us

At Chaman Law Firm, we assist clients across Nigeria in securing, registering, and regularizing commercial property titles in full compliance with the Land Use Act and state-specific land regulations.

Let our expert legal team handle your title process—from verification and documentation to Governor’s consent and registration.

📞Phone:  08065553671, 08096888818

✉ Email: chamanlawfirm@gmail.com

📍 Address: 115, Obafemi Awolowo Way, Allen Junction, Ikeja, Lagos, Nigeria

🌍Click here to learn more about Chaman Law Firm

Your Right, We Protect.

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