In recent months, we have observed increased enforcement activity by various State Governments, particularly within the Federal Capital Territory (FCT), Abuja, aimed at recovering unpaid Ground Rent from landholders. While each case turns on its unique facts, this update addresses some of the frequently asked questions (FAQs) we encounter in our advisory work.l for land owners, tenants and occupiers in Abuja as well as some states of the federation.
1. What is Ground Rent?
Under the Land Use Act, “rent” refers to a government-imposed annual payment required of a holder of a statutory right of occupancy. It is distinct from commercial rent paid by a tenant under a private lease or tenancy agreement. Ground Rent is a public law obligation payable to the government, not to a private landlord.
2. What is Penal Ground Rent?
Penal Ground Rent is an additional monetary charge imposed on a right holder who fails to develop or improve land in accordance with the terms of the Certificate of Occupancy. A Governor (or the President, in the case of Abuja) may impose this penalty as a precursor to revoking the statutory right of occupancy.
3. Who Has the Legal Authority to Impose Ground Rent?
In the States, the Governor is vested with the legal authority to impose Ground Rent pursuant to the Land Use Act.
In Abuja, this power resides in the President, who typically delegates the function to the Minister of the Federal Capital Territory (FCT).
4. Can the Government Revoke a Statutory Right of Occupancy for Non-Payment of Ground Rent?
Yes. The Governor (or the President/FCT Minister in Abuja) has the legal power to revoke a statutory right of occupancy for failure to pay Ground Rent. However, the exercise of this power must conform to both substantive and procedural safeguards. Nigerian courts have declared such revocations unlawful where due process is not followed. Notably, no compensation is payable where revocation is due to non-payment of Ground Rent.
5. Does Revocation Extinguish Outstanding Ground Rent Liabilities?
No. The revocation of a statutory right of occupancy does not extinguish any existing liabilities. A landholder remains liable for all outstanding Ground Rent accrued up to the date of revocation.
6. Whose Responsibility is to pay Ground Rent?
By law, the holder of a statutory right of occupancy is liable to pay ground rent. However, in practice, the obligation to pay Ground Rent is often a contractual matter to be negotiated by private parties. Although, Lagos State has attempted to stipulate some rules regarding responsibility for payment of ground rent, tenants can expect that Landlords will seek to contractually transfer the costs of Ground Rent to tenants.
Balogun Harold insights are shared for general informational purposes only and does not constitute legal advice. For tailored guidance, please contact our Real Estate Lawyers at bhlegalsupport@balogunharold.com
