The Lagos state Real Estate Regulatory Authority Law 2022, was signed into law on the 7th day of February 2022 by the executive governor of Lagos State, Mr Babajide Sanw0-Olu. The Law was enacted with the intent to amongst other things; regulate real estate transactions in Lagos state by protecting the interest of individuals in the state through the checkmating of the unscrupulous activities of some fraudulent real estate practitioners who prior to this time have engaged in activities which are detrimental to the interests of the citizenry in the state.
In its bid to systematically restructure the real estate industry in the state, the Law establishes the Lagos state Real Estate Regulatory Authority to oversee such transactions in the state in view of effective regulation. The Law also has provisions relating to foreigners engaged in Real estate transactions in the state. Furthermore, it also seeks to give a sense of clarity to terms relevant in real estate transactions which were previously not well defined in any extant law and as such created a lacuna.
This article aims to explore some salient innovations introduced to the real estate sector in the state effected by the enactment of the Lagos state Real Estate Regulatory Authority Law 2022.
SALIENT INNOVATIONS TO THE LAGOS STATE REAL ESTATE SECTOR
- ESTABLISMENT OF THE LAGOS STATE REAL ESTATE REGULATORY AUTHORITY (LASRERA)
The Law establishes the Lagos state Real Estate Regulatory Authority which is a corporate entity with a major mandate to regulate real estate transactions in Nigeria. The Law[i] establishes a governing body which is headed by a chairman and is made up of registered professionals who in addition to other things; advise the executive governor on matters relating to real estate activities.
- PROPER ACCREDITATION OF REAL ESTATE PRACTITIONERS
The Law provides for the eligibility of an individual to be a real estate practitioner in Lagos state. The Law provides[ii] that such an individual must:
- Be a Nigerian;
- Must possess a valid work permit, for non-Nigerians;
- Must be eighteen (18) years and over;
- Possess a Lagos State Residents Registration Agency (LASRRA) number;
- Have an ascertained business premises or office within the state;
- Possess a minimum educational qualification of WAEC, GCE or NECO;
- Have a proper transaction recording system and operate a separate account for clients;
- Possess tax clearance certificate for three (3) years preceding the date of registration;
- Register at least a business name with the corporate affairs commission.
Corporate bodies can also register to be real estate practitioners by:
- Being registered with the corporate affairs commission;
- Have proper transaction recording system and operate a separate account for clients;
- Ensuring that one of the directors in the company possesses all the conditions stipulated in subsection (2) of section 26 of the law;
- Ensuring all non-Nigerian directors have valid work permits and comply with all laws in respect of foreigners in the country;
- Possess tax clearance certificate for three (3) years preceding the date of registration.
- PROVISION ON FOREIGN INVESTMENT IN REAL ESTATE TRANSACTIONS
The Law now requires every foreigner desirous of engaging in real estate activities in the state, to first of all seek the permission of the Executive Governor of the state through the Lagos state Real Estate Regulatory Authority[iii]. The Law further provides that such investment in land by a foreigner shall not exceed a stipulated time frame of twenty-five (25) years including any option to renew[iv]. This permission which may be granted to foreigners in respect to real estate transactions in Lagos state is however subject to the provisions of the Lagos State Acquisition of Land by Aliens (ALA) Law and all other relevant law in that regard.
By way of commentary, it is instructive to pay close attention to how this provision of the Law will be enforced as it would appear that this provision does violate the provisions of the Land Use Act which allows permitted foreigners to be granted a right of occupancy for a period of 99 years. It is however expected that this conflict will be resolved in favour of the Land Use Act as Section 48 of the Act emphasises the superiority of the Act over land-related legislations at the state level.
- IDENTIFICATION AND COMPILATION OF ABANDONED BUILDINGS/ STRUCTURES
The Law places a responsibility on the Lagos state Real Estate Regulatory Authority to identify and compile a list of all abandoned buildings or structures within the state and forward same to the relevant ministries, departments and agencies for necessary action[v]. The Law further stipulate what qualifies as abandoned building/structure to mean the following buildings:
- Buildings not developed due to lack of funds
- Buildings which constitute a nuisance
- Buildings which are safety risks
- Buildings which contribute to environmental degradation
- Buildings used as a ground for perpetrating crimes[vi]
- DISPUTE RESOLUTION MECHANISM
The Lagos state Real Estate Regulatory Authority is empowered by the Law to mediate in disputes which arise in the course of carrying out real estate transactions in Lagos[vii]. The governing board of the Authority is saddled with the responsibility to set up a committee of inquiry constituting of five (5) members. The committee shall be charged with the main duty of hearing and determining reports of misconduct, complaints and petitions from the general public.
- PRE-ACTION NOTICE
The Law provides that the Authority be served with a pre-action notice at least one (1) month prior to the commencement of the action of a claimant against the Authority or its Chief Executive Officer acting in such a capacity. By virtue of Section 44 (2) of the Law, the notice shall include: the cause of action, particulars of claim, name and place of abode of the intending claimant and the claims/reliefs sought.
- DEFINITION OF TERMINOLOGIES
Section 1 of the Law gives an all-encompassing definition and clarification to certain terms used in real estate transactions, so as not to leave lacunas and avoid potential disputes which may arise in real estate transactions through the use of these terminologies. Such terminologies include: “Abandoned building or structure” clearly defined to mean an existing unoccupied building in a state of disrepair which is left in such condition for a period of up to five (5) years or building which is under construction but on which work has ceased for up to five (5) years. In light of the foregoing, there is no dispute as to what constitutes an Abandoned building or structure. The importance of this clarification comes to light in instance where the owner fails to act on such property, the Authority issues recommendations to the appropriate authority on the revocation of the Right of occupancy.
CONCLUSION
The introduction of the Lagos state Real Estate Regulatory Authority Law 2022 is a welcome development and a positive step in the right direction as it is expected that with this enactment, the unscrupulous activities on fraudulent real estate practitioners will be reduced to its barest minimum. This will in turn boost investor’s confidence in the sector thereby creating an expected surge in real estate investments in the state. Although, there have been criticisms of certain provisions of the Law, it is expected that with its continued usage more of these problematic provisions will be brought to the fore in view of future amendments in order to achieve a near perfect legislation for the benefit of every Lagosian.
[i]. Section 3 of the Lagos state Real Estate Regulatory Authority Law, 2022
[ii]. Section 26 (2) of the Law
[iii]. Section 28 (1) of the Law
[iv]. Section 28 (2) of the Law
[v]. Section 37 (1) of the Law
[vi]. Section 38 (1) of the Law
[vii]. Section 7 (a)-(c) of the Law