UNDERSTANDING PROPERTY OWNERSHIP: FREEHOLD AND LEASEHOLD

UNDERSTANDING PROPERTY OWNERSHIP: FREEHOLD AND LEASEHOLD

Freehold and leasehold are two major forms of land ownership or land tenure in Nigeria. Therefore, it is essential to understand the difference between them, especially those dealing with real estate, investment, or land transactions in Nigeria. Below, we will have a few discussions on both forms of land ownership.

Freehold

Freehold is the permanent and absolute ownership of land or property. The owner has the right to use the land for any lawful purpose and can transfer it, sell it, or bequeath it as desired. The title from such ownership is nearly absolute, unless on rare occasions. But recently in Nigeria, true freehold ownership is uncommon because of the Land Use Act of 1978, which vested all land titles to the state government, making them custodians of all lands within their states. As such, freehold is mostly historical, many so-called "freehold" titles today are actually governed under leasehold principles but might still be informally called freehold. Customary land (especially in rural areas) may still operate under freehold-like systems, especially if not formalized.

Features of Freehold:

  • Ownership has no fixed period or duration, it is mostly indefinite.
  • The holder can sell, lease, mortgage, or pass the land to heirs. The holder can do whatever they deem fit.
  • The landowner pays no rent to the government, except for minor fees like land use charges.

Leasehold

Leasehold means the ownership of the land is for a fixed period. The right to use a property or land for a specific period is granted by the government (usually 99 years) under a Certificate of Occupancy (C of O). For Instance, If you buy land in Lagos and obtain a Certificate of Occupancy, what you mostly have is a leasehold title for up to 99 years, after that duration, the title is reversed back to the government. Lands in urban and commercial areas typically fall under leasehold governed by a C of O.

Features of Leasehold:

  • Ownership is for a fixed term (mostly 99 years).
  • After expiration, the lease can be renewed or revoked by the government.
  • The leaseholder must pay a tax called ground rent to the government
  • Need approval for transferring ownership and such approval is called governor’s consent

DIFFERENCE BETWEEN FREEHOLD AND LEASEHOLD

  1. Freehold ownership is indefinite while leasehold is fixed for a period.
  2. The government's role is minimal in freehold, unlike leasehold where the land is held in trust.
  3. The title of ownership does not require renewal in freehold while in leasehold, renewal is expected after the expiration of the assigned period.
  4. Consent from the government is required for title to be transferred of title in leasehold while in freehold, there are no such restrictions.

Conclusively, lands in Nigeria have different forms of ownership and findings are encouraged before any land transaction. Always verify the title of land before purchasing leasehold titles require due diligence regarding the tenure left. Finally, legal professional services are important during land transactions.

Disclaimer:

This article provides general information and is not intended to replace professional legal advice. Consult a qualified professional from Notre Dame Estates Ltd at 08033056627 for professional and  personalized guidance.


 

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