Why do I need a Deed of Assignment, Governor’s consent and registration of title, since the property I’m buying has a Certificate of Occupancy already?
I often come across questions like this from purchasers of landed properties.
1. Certificate of Occupancy
The Certificate of Occupancy is the originating formal tittle for land ownership in Nigeria. Before the enactment of the Land Use Act, Land Certificates were issued. This does not mean that the law does not recognise traditional land title ownership like customary titles or ownership of land whose titles are not yet formalised, which fall under what is called deemed right of occupancy, in which case the holder can apply for a grant of Certificate of Occupancy.
However, once a Certificate of Occupancy is granted, it is a formal and conclusive proof of ownership except where the government discovers it was issued in error, or based on deceit, fraud or misinformation. Similarly, in the case a rival claimant successfully challenges the grant of a Certificate of Occupancy in court, then the Court would order the withdrawal and cancellation of the Certificate of Occupancy and direct that it be granted to the rightful party.
The Certificate of Occupancy identifies the land, its size and dimensions with a survey plan, it states the statutory limits of the tenure granted, the purpose of use i.e residential, commercial or mixed use, land charges payable annually, other terms of the grant and of course names the person or corporation to whom the title is granted. When issued, a copy is given to the holder while additional copies are retained and kept in the land registry, the archive and also currently stored electronically in Lagos State. The Lagos State Certificate of Occupancy now carries a bar code.
The Certificate of Occupancy is in no way connected to the identity of subsequent purchasers, even though the law anticipates them. When you purchase a property, it is insufficient to collect the original Certificate of Occupancy and hold on to it as proof of ownership because that might indicate a mere title deposit by the holder to create an equitable charge. Where a large parcel covered by a single Certificate of Occupancy is partitioned and sold to several buyers, the Certificate of Occupancy cannot be handed over to any one of the buyers.
The only way the interest and identity of a buyer of the whole or portion of land covered by a Certificate of Occupancy can be tied to the interest granted in the Certificate of Occupancy is to have a Deed of Assignment or Deed of Sub lease as the case may be executed in his or her favour with the recitals indicating the Certificate of Occupancy as the originating document and root of title. The Deed will also identify the Assignee, the nature of interest granted, the consideration and other rights and obligations transferred to him.
The Certificate of Occupancy cannot be issued twice on the same property. If the Certificate of Occupancy is lost, the holder after obtaining a police report, swearing to an affidavit and placing a public notice in required newspapers obtains a Certificate of loss to which he then attaches a certified true copy of the lost Certificate of Occupancy. In other words, if you lose the original of your Certificate of Occupancy, a counterpart is not issued in replacement to you.
If the holder of a Certificate of Occupancy transfers his interest, the buyer cannot ask the government for a new Certificate of Occupancy over the land holding to be reissued in his name as new holder. the process is done through the execution of a Deed of Assignment which formally transfers the title.
2. The Land Use Act
The Land Use Act provides that the holder of a Certificate of Occupancy can transfer or assign his interest in the Certificate of Occupancy to a third party subject to the governor’s consent. An agreement transferring interest in Land must be written. This is why lawyers prepare Deed of Assignment, Deed of Partition or Deed of Sub-lease to transfer interests in land. Those captions are not as important as the wordings of the transfer. If a document is captioned ‘Deed of Assignment’ it can be an Assignment of a ‘sub lease’ in which case, you would also get a sub-lease because you cannot get a better title than your assignor. If a document is captioned ‘Deed of Assignment’ and the transfer is made subject to a day or a seven-day reversion, the agreement is a leasehold and the whole title would revert to the ‘assignor’ a day or seven days to the end of the original term contained in the Certificate of Occupancy.
3. Governor’s Consent and Registration
While the law allows the holder of a Certificate of Occupancy to transfer his or her interest in land, the new owner is required to submit the document for governor’s consent and registration at the State land registry. The process of registration will initial or link the Deed of Assignment to the original Certificate of Occupancy in such a way that the transaction becomes a notice visible to the public through official search, hence the same interest cannot be surreptitiously transferred to another unsuspecting but diligent party. This is why searches are conducted on properties before the exchange of consideration.
The importance of registration cannot be overemphasised because it also ‘orders priorities’. This means if the holder of a Certificate of Occupancy sells his land first to ‘A’ and fraudulently sells the same land next to ‘B’ at a future date without notice to ‘B’ of ‘A’s existing interest (particularly if ‘A’ has not taken possession, this is why possession is also important), if ‘B’ without notice purchases and registers his interest, ahead of ‘A’, his title is good against the whole world and takes priority over ‘A’s tittle even though ‘A’ was the first purchaser. ‘A’s tittle is not good against the whole world but is only good against the seller from whom he is entitled to recover the purchase price. Priority is given to ‘B’ as a purchaser without notice whose interest is already registered.
The fees payable for consent and registration are based on percentages of consideration paid. The higher the consideration, the more you cough out to the government. People often put nominal values as consideration. The Government being aware of this currently (at least in Lagos) has fixed values for every type of property, location specific, even if a lower consideration is declared, the government value is applied. However, if the declared consideration is higher than the government’s official value, the government would abandon its own value estimate and apply the higher sum declared.