Beyond Purchase Price: Why Title Verification is the True Bedrock of Real Estate Investment in Nigeria. (Part 1) By Olawale Fatunwase
The allure of Nigerian real estate is undeniable. For the diaspora Nigerian looking toward 2026, the market offers a tangible connection to home and a hedge against global economic uncertainty. Yet, the path to profitable ownership is littered with the wreckage of deals that went wrong—not because the location was poor or the price was wrong, but because the title was defective.
In Nigeria, the greatest risk in any property transaction is not the negotiation; it is the documentation. The manner in which a vendor acquired their title—whether through customary grant, statutory right of occupancy, or inheritance—determines the validity of what they are selling. For real estate agents and buyers alike, understanding these roots of title is not merely an academic exercise; it is the first and most important line of defence against litigation, financial loss, and the professional embarrassment that comes with facilitating a fraudulent transaction.
This article advocates for a paradigm shift among real estate professionals, particularly agents, who must evolve from mere intermediaries into informed gatekeepers. By understanding the strengths and limitations of each form of property ownership, practitioners can protect their clients’ investments and safeguard the integrity of their practice.
The Legal Framework: The Land Use Act as the Starting Point
To understand any title in Nigeria today, one must start with the Land Use Act of 1978. This revolutionary legislation fundamentally altered the landscape of land ownership. Before the Act, land in Southern Nigeria was largely governed by customary law, with individuals, families, and communities holding outright ownership . The Act changed this by vesting all land comprised in the territory of each State in the Federation in the Governor of that State.
Section 1 of the Act is the cornerstone provision: all land in a state is vested in the Governor, who holds it in trust and administers it for the use and common benefit of all Nigerians . Consequently, the highest interest a private individual can now hold is a “right of occupancy,” whether statutory or customary . This fundamental shift means that what many Nigerians colloquially call “ownership” is, in strict legal terms, a leasehold interest granted by the government for a statutory term, typically 99 years .
With this framework in mind, let us examine the specific roots of title a vendor may present.
1. Customary Right of Occupancy:
Nature and Origin
Prior to the Land Use Act, customary law was the dominant source of land title, particularly in Southern Nigeria. Communities, families, and individuals held land under diverse traditional systems . The Land Use Act did not abolish these interests; rather, it recognized them. Section 36(5) of the Act deems any land held by a person under customary law immediately before the commencement of the Act to be a customary right of occupancy.
Today, customary rights of occupancy are granted by Local Governments in respect of non-urban land, primarily for agricultural purposes . Evidence of such title often includes traditional history, grants from family heads, or long possession and enjoyment.
Validity and Limitations
While a customary right of occupancy is a valid and defensible interest, it carries significant limitations for modern conveyancing.
First, it is generally non-alienable without the consent of the appropriate authorities. A holder of a customary right of occupancy cannot assign or mortgage the land without the consent of the Governor or Local Government, depending on the location . Second, the documentation is often informal. A purchaser relying solely on a family receipt or a traditional history is walking on dangerous ground. The tension between customary claims and statutory requirements creates uncertainty and often deters investment, as formal registration and proof of title become complex .
For the buyer, a customary right of occupancy is merely a starting point. It must be converted into a statutory right of occupancy through the granting of a Certificate of Occupancy by the state government to be truly bankable and secure .
2. Certificate of Occupancy (Statutory Right of Occupancy):
Nature and Origin
The Certificate of Occupancy (C of O) is the gold standard of land documentation in Nigeria. It is the official document issued by the State Governor under Section 9 of the Land Use Act, evidencing a statutory right of occupancy . Section 5(1) empowers the Governor to grant such rights to any person for all purposes .
A C of O signifies that the holder has been formally allocated a piece of land by the government, and the document typically grants the land for a definite period, usually 99 years . It contains key details such as the holder’s name, a description of the land, and the purpose for which it may be used (residential, commercial, etc.).
Validity and Limitations
The strength of a C of O is that it provides exclusive ownership and can be used as collateral to obtain loans from financial institutions . It also serves as proof that the radical title has been formally granted, reducing the risk of multiple ownership claims.
However, even a C of O is not absolute. The holder must comply with the covenants and conditions contained within it, such as paying ground rent. Crucially, the Governor retains the power to revoke the right of occupancy for “overriding public interest” under Section 28 of the Act, provided compensation is paid . Furthermore, a C of O can be defective if it was acquired through fraud or if it covers land that was not validly acquired by the government in the first place. A critical area of confusion currently involves federal lands located within states; the Lagos State Government’s regularization policy, for instance, requires landowners with federal C of Os to also obtain state consent, creating uncertainty in the market.
3. Deed of Assignment:
Nature and Origin
A Deed of Assignment is the primary instrument used to transfer title from one person to another. It is the document that proves a purchaser has bought the land from the previous holder . In a typical transaction, after the vendor’s title (e.g., a C of O) is verified, a Deed of Assignment is executed to transfer the unexpired residue of the vendor’s right of occupancy to the purchaser.
A well-drafted Deed of Assignment must contain certain essential elements: the full names and addresses of the parties, a precise description of the property, the consideration (purchase price), and most importantly, a recital that explains the vendor’s root of title—how the vendor came to own the property in the first place .
Validity and Limitations
The Deed of Assignment itself is not the title; it is evidence of the transfer of title. Its validity depends entirely on the validity of the vendor’s root of title. A Deed of Assignment transferring land from someone who had no valid title to begin with is worthless.
Furthermore, for the assignment to be complete and effective, it must be perfected. This involves three critical steps: obtaining the consent of the Governor to the assignment (as required by Section 22 of the Land Use Act), stamping the deed at the Lands Registry, and finally registering it at the appropriate Lands Bureau . Until these steps are taken, the purchaser’s title is not fully protected against subsequent purchasers or claims. A common pitfall for buyers is assuming that paying the purchase price and holding a Deed of Assignment is enough; without the Governor’s consent and registration, the transaction remains inchoate.
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