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Mortgages Under the Rights of Occupancy System in Nigeria
Published online by Cambridge University Press: 28 July 2009
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The Land Use Act, 1978 (hereinafter referred to, where the context admits, as “the Act”) introduced a uniform State ownership of land otherwise known as the Rights of Occupancy System in Nigeria. Section 1 of the Act vests all land within the territory of each State in the Federation in the Governor of the State to hold upon trust for the use and common benefit of all Nigerians. Section 5 empowers the Governor in respect of land whether or not in an urban area to grant a Statutory Right of Occupancy to any person for all purposes, while Section 6 empowers the Local Government, where appropriate, in respect of land in a non-urban area to grant a Customary Right of Occupancy to any person. By Sections 34 and 36 former owners of land become deemed holders of rights of occupancy into which their former ownership rights have been transformed by operation of law.
The Act continues to attract comments from learned writers as to its effect on various aspects of property law. However, it would appear that not many writers have focused particularly on the effect of the Act on the law of mortgages. This is not to say that the subject is not important, nor that the Act has not significantly affected the law and practice of mortgages. The object of this article is to fill this vacuum.
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References
1 Formerly the Land Use Decree No. 6, 1978 but now Act by virtue of the Adaptation of Laws (Redesignation of Decrees etc.) Order, 1980.
2 The Rights of Occupancy System is not entirely new to Nigeria. The system obtained in the Northern States (11 States at present) of Nigeria by virtue of the Land Tenure Law, 1962.
3 See, Omotola, J. A., Essays on the Land Use Act, 1978, Lagos 1980Google Scholar; The Land Use Act, Report of a National Workshop, edited by Omotola, J. A., Lagos 1982Google Scholar (hereinafter cited as “The Report of a National Workshop”); Allott, A. N.: “The Land Use Decree, 1978: A Comment” (1978) J.A.L. 22, 2 p. 156Google Scholar; Ezejiofor, G.: “The Land Use Decree: A Critical Review” (1977) 2 Nig.J.Rev. 1Google Scholar; Omotola, J. A.: “Compensation Provisions of the Land Use Decree” (1980) 16 Nig.Bar.J. 32Google Scholar; “The Land Use Act Staggers” (1985) 4 Journal of Private and Property Law 1; “Does the Land Use Act Expropriate?”—Special Comment by the Editor-in-Chief, Journal of Private and Property Law in (1985) 3 J.P.P.L. 1.
4 Santley v. Wilde (1899) 2 Ch. 474Google Scholar. See also, Francis, , Mortgages and Securities in all States of Australia, Butterworths, 1964, p. 67.Google Scholar
5 Section 34(4).
6 Section 22(1). See Section 21 for a mortgage of a customary right of occupancy; for a mortgage of improvements on land, see section 15(b).
7 Section 22(2).
8 Section 48.
9 Property and Conveyancing Law, Cap. 100 (Western Nigeria); Cap. 129 (Bendel State); Conveyancing and Law of Property Act 1881 etc.
10 The Land Use Act, Report of a National Workshop, Lagos 1982, p. 84Google Scholar. The true nature of a right of occupancy is still the subject of controversy today. For instance, Ezejiofor in (1977) 2 Nig.J.Rev. 1 argues that it is in substance a lease, relying on Majiyagbe v. Attorney-General (1957) N.R.N.L.R. 158Google Scholar, while Omotola in Essays on the Land Use Act 1978 holds a contrary view relying on Premchand Nathu & Co Ltd. v. Land Officer (1963) A.C. 117, a decision of the Privy Council.Google Scholar
11 Sections5, 6, 34, 36 and 39(1)(a).
12 Sections 21 and 22.
13 Section 22(l)(a). It is obvious from this proviso that equitable mortgages also require consent for their creation: see further discussion, infra.
14 Section 22(1 )(b).
15 Section 34(7).
16 Contra, Prof. Kasumu, A. B. at p. 94 of The Report of a National Workshop.Google Scholar
17 Section 34(5) and (6) deals with undeveloped land.
18 See, Adeniji, O.: “The Land Use Act 1978—Mortgaging a Right of Occupancy” at p. 87 of The Report of a National Workshop. This article written by a bank employee only dealt with the practical issue of a right of occupancy as a subject of mortgage by banks.Google Scholar
19 Megarry, and Wade, , The Law of Real Property, 4th edition, London, 1975, p. 887Google Scholar; Thompson v. Salah, (1972) 1 All E.R. 530 at 533Google Scholar; Emmet on Title, 6th edition, p. 864.Google Scholar
20 The Report of a National Workshop, pp. 20–21.Google Scholar
21 Section 36(3) and (4).
22 The ban on alienation under section 36 seems to be motivated by the desire to preserve land for agricultural purposes. But do mortgages of land really hinder agriculture? Is the provision of credit not as much important for agricultural development as the availability of land?
23 This section relates to alienation by way of subleases and sub-underleases.
24 See the discussion on section 34(5) and (6) for another case of confiscation of undeveloped land in excess of half a hectare, infra.
25 Imprisonment for one year or a fine of 
5,000.00.
26 Solanke v. Abed (1962) 1 All N.L.R. 230Google Scholar; Barclays Bank v. Akande (1961) 4 All N.L.R. 820Google Scholar; Martial v. Molade (1930) 9 N.L.R. 53Google Scholar; Chidiak v. Coker (1954) 14 W.A.C.A. 506Google Scholar and Maxwell on Interpretation of Statutes, 10th edition, p. 212.Google Scholar
27 Majiyagbe v. Attorney-General (1957) N.R.N.L.R. 158Google Scholar. However, this is not true of a deemed right of occupancy which has no definite term—S. 34 & 36.
28 Theodorou v. Bloom (1964) 3 All E.R. 399Google Scholar; Alakija v.John Holt (1973) L.L.R. 27.Google Scholar
29 The Queen v. The Minister of Land and Survey ex parte the Bank of the North Ltd. (1963) N.N.L.R. 58Google Scholar; Are v. Adisa (1967) N.M.L.R. 304.Google Scholar
30 Omotola, J. A.: “The mortgagee's power of sale: A hammer or an illusion?” (1982) 18 Nig Bar.J. 104. The article deals only with the power of sale.Google Scholar
31 Ibid. at p. 119.
32 This seems to be a more convincing premise than the analogy drawn by Omotola (n. 30 above) from section 22(1 )(c) regarding a sublease with renewal clause, for the simple reason that such analogy may be defeated by the maxim expressio unius est exclusio alterius. Section 22(1 )(c) says: “Provided that the consent of the Military Governor to the renewal of a sublease shall not be presumed by reason only of his having consented to the grant of a sub-lease containing an option to renew the same.”
33 “The Question of Consent to Alienation—Effect on Development” in the Report of a National Workshop, at p. 94.Google Scholar
34 Ibid.
35 See n. 19.
36 Only four States—Cap. 100 Laws of Western Nigeria 1959 applicable in Oyo, Ogun and Ondo States and Cap. 129, Vol. 5 1976 Laws of Bendel State applicable only in Bendel State. S. 108–110 of the Laws provide for mortgage by way of a legal charge.
37 See the article cited in n.30. Omotola did not disclose the name of the person who mooted the argument.
38 S. 22 provides: “It shall not be lawful for the holder of a statutory right of occupancy granted by the Military Governor to alienate his right of occupancy or any part thereof… without the consent of the Military Governor”.
39 Omolaja Adeniji, in the article cited in n. 18, especially at p. 91. Emphasis added.
40 Omotola at p. 120 of the article cited in n. 31. Heath v. Pugh (1881) 6 Q.B.D. 345 at 360Google Scholar; Cater v. Wake (1877) 4 Ch.D. 605 at 606.Google Scholar
41 See n. 36 supra.
42 Ibid. Section 111 (2) of the Laws.
43 James v. James (1873) L.R. 16 Eq. 153Google Scholar; Blockhouse v. Chalton (1878) 8 Ch.D. 444.Google Scholar
44 J., Per Warrington in Re Farnol Eades Irvine & Co. Ltd. (1915) 1 Ch. 22 at p. 24.Google Scholar
45 There are other remedies of the mortgagee which are not relevant for discussion in this article, e.g. taking possession. The latter is not attractive to the mortgagee because of the strict rules of accountability when the mortgagee takes possession; see Megarry, and Wade, , op. cit. pp. 914–915.Google Scholar
46 See n. 24.
47 Section 47(1).
48 Indeed, all existing rights in land are preserved by sections 34 and 36.
49 “The revocation of a right of occupancy shall be signified under the hand of a public officer duly authorised in that behalf by the Military Governor and notice thereof shall be given to the holder.”—section 28(6).
50 This includes the requirement of the land by the Federal Government or the State Government or the Local Government etc.: section 28(1).
51 Ereku v. The Military Governor of Mid-West (1974) 10 S.C. 59Google Scholar. But where the existing rightsholder is in breach of the provisions of the Act and his right is revoked as a punitive measure under s. 28, the Governor will not be breaching this principle if he should grant the right to another person.
52 (1985) 2 N.W.L.R. Part 8, 528 at p. 540.Google Scholar
53a a Sections 28(2)(a), (3)(d), 5(a)-(c).
53 (1970) E.A. 177 (Newbold and Law, JJA., with Duffus, V.P. dissenting.)Google Scholar
54 The mortgagee's right to sue the mortgagor upon debt on his personal covenant may not provide a sufficient remedy.
55 (1975) 6 S.C. 1.
56 Conveyancing and Law of Property Act, 1881. This is a statute of general application in Nigeria.
57 (1969) 1 AUN.L.R. 118.Google Scholar
58 Sections 29 and 50 read together.
59 The mortgagee does not often take possession because of the strict rules of accountability: see n. 45.
60 Section 47(2).