This refers to Land or interest in Land.
A Will is not a conveyance because it is testamentary in nature
Any land which is without a certificate of occupancy requires a Deed of Conveyance. Where there is a Certificate of Occupancy, a Deed of Assignment will be required.
A Will does not transfer interest in land but it is a document affecting interest in land. An assent however transfers the interest in land to the Beneficiaries.
Doesn't the Court prepare this?
For Exams - we would distinguish it from mortgages.
Exam Tip - The Parties, Means of Effecting Transaction, Type of Transaction, Nature and Subject Matter determines the proper laws to apply in a given scenario.
Exam Tip - These laws can be used in every transaction. When identifying land transactions for any scenario, always list these laws after listing the specific laws.
Where an instrument seeks to transfer interest in Land, it must be drafted by a Legal Practitioner.
Illustration - X sold his house to Y for four million but only 2 million was paid to X. X decides to pass the legal interest to Y upon the payment of the balance of 2 million within a specified date. It is only when B pays the balance that he obtains the legal interest in the house - Beeseley v. hallywood Estates Ltd.
Reasons why a Deed may be left Undated. Q1(8) April 1998
To avoid risk of paying penalty if the deed is not stamped within 30 days - Anuku v.Standard Bank.
Deed is presumed to bear the date of execution
Exam Tip - when you are asked to draft the commencement and you are not sure, draft the full introductory parts.
Section 58(2). Conveyancing Act 1881 deems covenants to be made with the covenantee and his successors in title and those deriving interest under him or her.
In drafting, always indicate the status of the parties. Note also that if you use OF THE ONE PART, it goes with OF THE OTHER PART. If you use OF THE FIRST PART, it goes with OF THE SECOND PART
CHIOMA DOES NOT PRAY ROSARY
if a defect in title is mentioned in a recital, a remedy for it should also be stated.
if it is - THIS DEED OF ASSIGNMENT IS, then a recital will be inserted. If it is - THIS DEED OF ASSIGNMENT made this ..., then there would be no recital.
Use "Background" or "Recital" in the exam.
Q4(b)(i) April 1998
Exam Hint - A recital cannot be less than two clauses.
It is in the operative part that the interest is actually transferred from the grantor to the grantee or from the lessor to the lessee. It is the engine room of a deed.
TUNDE COOKED RICE CAKES WITH POWDERED HONEY
It was held that if it is not signed, it must retain its status as a worthless document
This is because the presumption of sealing under Section 159. Evidence Act does not apply to companies and corporations. See Containers Nig. Ltd v. Niglasco Ltd
for a blind person use READ ALOUD/ FOR DEAF AND DUMB USE sign language by a sign language instructor. For a Foreigner, it should be attested to before a notary public.
TUNDE SPAT EGG AT GABBIES FACE
Na wa for Tunde sha…
A married woman can donate or be a donee regardless of whether she is an infant or not. See Section 146. PCL
this is in contrast to 'agency' where the principal can appoint a lunatic or insane person to be his agent.
Note the position of infants, bankrupts, unincorporated entities, insane. A married woman can donate or be a donee regardless of whether she is an infant or not
Note the following
Even where the donor gave it for a longer period of 12 months, the period of irrevocability will still be read as 12 months since it was given without any consideration.
In the above instance, to revoke a Power of Attorney must be with the consent of the Donee.
If the donor dies, it will not affect the Donee's powers to bind the donor for the period of time stated in the Power of Attorney. Section 143 & 144. P & CL, Section 8 & 9. Conveyancing Act, Lababedi vs. Odulana
Applicable Laws
Statute of Fraud 1677
Law Reform (Contract) Act
Conveyancing Act, 1882
Property and Conveyancing Law
Registration of Titles Law
Land Use Act, 1978.
Contract for Sale of Land (CFSOL) note the following:
CFSOL is the first stage the in the process of transferring interest and title to land for a valuable consideration.
Ordinary rules of general law of contract applies. Common law, equity, customary law and statute.
The initial document is the CFSOL, while the final document is the Deed of Assignment or RTL Form 7 in Registration Districts.
Once the CFSOL is executed, the purchaser acquires equitable title. See Iragunim v. RSHDPA
When asked to list laws applicable to conveyancing practice, instead of writing: customary law applicable in various places, write customary law of the particular place mentioned in the scenario
There are three broad stages - Contract, Completion and Post Completion stage.
This stage involves negotiations and pre-contract enquiries. Pre-contract enquiries are important for the following reasons:
to discover patent defects
to ascertain the suitability of the property for the purposes of the purchaser
it is important for the purposes of negotiation. it equips the purchaser with enough information to determine his manner of negotiation.
to ascertain the physical condition of the property
To compare with provisions of town planning regulations
The contract becomes binding at the contract stage and the death of either of the parties does not affect the contract. The buyer acquires an equitable interest at this point and risk passes to the purchaser. The vendor becomes qualified trustee but retains possession depending on agreement between the parties
The vendor has a lien on the property for the unpaid balance.
This stage involves three things:
the vendor will deduce title
the purchaser will investigate the title (investigation)
writing of search report by purchaser's solicitor
here, parties draft the final document for the transfer of legal interest to purchaser i.e. deed of assignment or deed of transfer depending on where the property is situate
Contract of sale of Land is a first step in the process of transferring interest and title in land for valuable consideration. The existence and validity of a contract for sale of land depend upon ordinary rules of contract. The parties must have capacities; there must be an offer, an acceptance, a consideration and intention to enter into a legally binding relationship. It is also subject to general contractual principles i.e. waiver and estoppel. Munro vs. Premier Associates Ltd (2000) 8 P & CR 437 Chancery.
The requirements for a valid contract were stated in these cases.
Illustration
John has concluded orally with James for the sale of Blackacre at the price of N10,000. It was further agreed that John should fence Blackacre, which he has done. James is no longer interested in the transaction and he contends that the contract is not evidenced in writing.
The legal consequence of this transaction is that the oral contract for the sale of Blackacre is in breach of the Statute of Fraud. It is unenforceable though not void. But because John has performed obligations under the oral contract, which may amount to part performance, the Court of equity may, in its discretion, compel James to specifically perform his obligations under the contract.
In International Textile Industries (Nig.) Ltd. vs. Aderemi (1999) 8 NWLR (pt 614) 268, the Court held that sufficient evidence of part performance takes a contract of sale of land out of the purview of the statute of fraud. This is because, when a party to a contract has been induced or allowed by the other to alter his position upon the faith of the contract e.g. by taking possession of land and expending money in building or other acts, it would be fraud if the other party is allowed to set up the legal invalidity of the contract on the faith of which he had induced or allowed the person contracting with him to act and expend his money.
It is called an open contact because all the other relevant terms and conditions which will give business efficacy to a contract for sale of land are left open, to be implied by statutes, common law, equity and by conveyancing practice and customs e.g. it is implied that the vendor must show a good title within reasonable time and execute a conveyance to the purchaser on payment of purchase price. In an open contact it is implied by law that the vendor shall prove his title to thirty (30) years by virtue of Section 70. P & CL and 40 years under the CA.
It was held in the case of Auerbach vs. Nelson that a receipt was a sufficient memorandum under the Statute of Fraud as the date, price and parties were apparent on the face of it. Where land is sold and receipt is issued, equitable interest passes and it can be enforced by specific performance. See Osagie v. Oyeyinka.
The contract need not necessarily be in a particular form and a written evidence of it is sufficient. Re Holland (1902) 2ch 360. The note or memorandum must be signed by the party to be bound. This is to prevent fraud and perjury and to make it impossible for a contract for sale of land to be alleged on only oral testimony of witnesses who may simply be perjuring.
parties may create a contract that is partly formal and partly open
Effect of deposit clause:
It shows commitment to complete the contract on the part of the purchaser
Binds the vendor to the contract unless purchaser defaults
Secures purchaser's money if the contract is repudiated by vendor
Shows that the transaction is not void.
It is advised that parties avert their minds to the prevailing CBN interest rates.
Fixtures refer to anything, apart from land, in such a manner as to form part of the land while chattels are personal properties which may be used in furnishing the house and which may not be regarded as part of the property because they are detachable from the property.
In the absence of any express agreement in the contract to the contrary, fixtures are deemed part of the land and shall pass to the purchaser with the property without any further act on the part of the vendor. Section 6(1). Conveyancing Act, 1881 & Section 87(1). P & CL.
The parties should therefore indicate the items the vendor intends to sell with the property. To reduce the stamp duty payable by the purchaser, chattels may be assessed and the price paid by the purchaser separately. The vendor shall also issue a separate receipt to the purchaser for such chattels.
It is also possible to convey fixtures in separate agreement from the conveyance. This will amount to a Bill of Sale. Bills of Sale are generally to be registered within 7 days of execution. A chattel, on the other hand, is transferable by mere delivery and need not be by deed. Chattel attract fixed stamp duty and is not assessed ad valorem. Hence, if you are selling an auditorium, it does not have to be with the chattels (chairs, tables, lighting, etc.). So, it is possible to remove the cost of chattels from the cost of the property so that you would have reduced the amount of money you will pay at the Stamp Duties Office. Chattels can be transferred by separate agreement from the transfer of real property because this will reduce the amount of ad valorem duty that will be paid.
Section 67. Insurance Act states that a person interested can request the insurer to use the money to reinstate the property instead of paying premium.
Note the limitations on the right of a purchaser to request for documents relating to title which are beyond the stipulated timeframe for deducing title.
In the event that the vendor defaults, he is to pay the money over to the purchaser. Where the purchaser defaults, he is to pay the money over to the vendor.
The vendor covenants that the title in the property has not been made defective by the act(s) of himself, his predecessors in title or one claiming through him or on his behalf. The covenant is, therefore, breached if the property conveyed is subject to any defect in title which is not expressly excluded from the conveyance, provided that the defect was caused by a person within the qualification of the covenant.
Where it later turns out that the vendor had no title at all, he may not be held liable under this covenant as the purchaser ought to have discovered the vendor's lack of title during his investigation of title. See the case of Thackeray v. Woods (1865) 13 WLR 996.
In Adesina v. Otunba (1947) 19 NMLR 13, it was held that the vendor was not in breach of this covenant as the third party who claimed the land after it had been conveyed to the purchaser was not claiming through the vendor.
A set of circumstances may constitute breach of quiet enjoyment. For example, physical disturbance of the purchaser on the property would constitute a breach of his quiet enjoyment. Note that noise alone cannot constitute a breach of this covenant. See the case of Jekins vs. Jackson (1888) 40 CH. D 71. The breach contemplated is one caused by the vendor or anybody claiming through him or on his behalf. The vendor cannot be liable for breach of this covenant as a result of acts of any stranger unknown to the vendor.
The term "that the lease is valid and subsisting" means that all the rents and covenants contained in the lease on the part of the lessee, that is, the vendor, to be paid, observed and performed have been so paid, observed and performed up to the time of conveyance. The vendor will be in breach of the covenant that the lease is still subsisting if, in fact, the head lease had been terminated.
He will be in breach of the covenant that he has performed his obligations under the head lease if he is in arrears of rent or the property is in a state of disrepair and so on.
It is the physical exchange of the contract with the payment of deposit
Duties of Vendor's Solicitor
He obtains all the facts in respect of the property's title and physical state from the vendor i.e. the address of the property, nature of title, price, deposit, fixtures and fittings, easement, restrictive covenant to which it is subject, insurance, completion date etc.
The vendor's solicitor could act as an agent of the vendor or a stakeholder when it comes to keeping the deposit paid by the purchaser.
Duties of the Purchaser's Solicitor
The solicitor must ensure his client gets a good title.
He should take full instructions in writing.
He should obtain the particulars of the purchaser, vendor and the property, etc. and must have a check-list of terms to be negotiated and agreed upon and is to ensure all contractual restrictions are complied with. It is his duty to ensure title to the property is sound
Contractual Restrictions in a Contract for Sale of Land
Consent provisions e.g. Section 22. Land Use Act. Requirement not to part with possession without consent of Governor or any authorities are obtained.
Restriction on title with respect to an encumbered title e.g. mortgage or charge of any sort.
Family property
Planning restrictions e.g. industrial area, residential area, business district
Compulsory acquisition of land whether global or restricted.
He must ensure with the aid of a surveyor, architect and other professionals that the land does not contravene planning laws e.g. infrastructural layout, roads metro-lines, sewage etc. ensure all permissions and approvals were obtained.
That all laws as to acquisition of land are complied with e.g. state land laws of each state, acquisition of land by alien law of the relevant state etc.
Ensure that the physical condition of the property meets the buyers' expectations.
The purchaser, being the equitable owner, must complete the transaction even if the property is razed by fire or acquired by state before completion. Hillington Estate Co vs. Stonefield Estate Ltd (1952) 2 ch. 627.
A contract entered into by a sane person remains valid and binding if it is made during lucid intervals. Where it is made outside his lucid intervals, it will be void.
The particulars are:
Particulars of the parties: vendor and purchaser
Particulars of the property
Nature of vendor's title
Capacity of the vendor
Amount of consideration (purchase price)
Particulars of deposit, if any
Particulars of fixtures, fittings and chattels
Proposed completion date of the contract
Particulars of other special conditions of sale
Particulars of the witnesses.
The code is PP- NCA- 5 Ps OR PP-NCA-PPPPP… welcome to NASA.
The Supreme Court of Nigeria has stated and continues to restate the five (5) ways by which title or ownership of land could be proved. This is the principle held in Kojo II vs. Bonsie (1957) 1 WLR 1223 and reaffirmed in Idundun vs. Okumagba (1976) 9-10 SC 227 (1976) INMLR 200 as follows:
By traditional evidence
By the production of document of title duly authenticated and executed.
By acts of possession extending over a sufficient length of time numerous and positive enough to warrant the inference of ownership.
By Acts of long possession and enjoyment
Proof of possession of connected or adjacent land in circumstances rendering it probable that the owner of such connected or adjacent would, in addition be the owner of the land in dispute.
A party who successfully proves any of these five (5) ways is entitled to the ownership of the land. Elegushi vs. Oseni (2005) 1211 JSC, Mogaji vs. Cadbury (Nig.) Ltd. (1985) 2 NWLR (pt 7) 393, Ezeoke vs. Nwagbo (1988) NWLR (pt 72) 616.
Our main concern is the second method of proving title i.e. production of documents which will constitute proof/evidence of title
where any document that relates to the title is missing or lost, the vendor may give a CTC of such missing document with a statutory declaration of loss.
In Abia state, the period of deducing is 30 years. Section 70(1). Abia State Law of Property.
It would seem this rule does not apply to sale of land subject to customary law.
Examples of Overriding Interests
1. Easements;
2. Rights, privileges and appurtenances appertaining or reputed to appertain to any other land, demised, occupied, or enjoyed, or enjoyed with any other land, or reputed or known as part or parcel of or appurtenant to any other land;
3. Rights of entry, search, user and other rights and reservations incidental to or required for the purpose of giving full effect to the enjoyment of rights to mines, minerals and mineral oils;
4. Any permit to survey or oil pipeline license granted under the Oil Pipelines Act;
5. Leases or agreements for leases for any term less than five years where there is actual occupation under the lease or agreement;
6. Any public highway;
7. Any tax or rate for the time being declared by law to be a charge on land or houses;
8. Rights acquired or in process of being acquired under the limitation law;
9. The rights of every person in possession or actual occupation of the land to which he may be entitled in right of such possession or occupation, save where inquiry is made of such person and the rights are not disclosed.
Note that the abstract of title should be in a letter head and should be dated and signed.
Disadvantages of Abstract/Epitome
- Possibilities of making error in preparing the abstract
- Preparing abstracts take a longer period than photocopying
Once you look at an abstract/epitome of title, you raise requisitions on every suspicious detail. If any sign of death, ask if there was a Will or no Will, Letters of Administration, probate, assent etc. … whether any mortgage, legal or equitable, evidence of discharge of mortgage, power of attorney etc.. court judgments, whether appealed, result of appeal.
thus equitable mortgages and a Will unsupported by an assent fail this test
In the exercise of the mortgagee/lender's power of sale, a legal mortgagee has absolute power to convey the legal interest in the mortgage property to a purchaser for value acting in good faith. The protection afforded the purchaser by Section 21(2). Conveyancing Act & Section 126(2). P & CL has been acknowledged as good root of title.
An assent is a document used to convey the legal interest in the real property of a deceased to the beneficiary who is entitled to it under a Will or rules of intestacy.
An assent must satisfy the following conditions to be valid:
It must be in writing.
It must name the beneficiary.
The executor/personal representatives must sign it.
An assent need not be by deed, neither is it stamped nor registerable. Thus, it is an exception to the general rule that a deed is required to convey legal interest in land. The effective date of the assent relates back and its deemed to take effect from when the testator died, not when it was issued. However, where a vendor relies on an assent in proof of his title, the purchaser should request to cite the probate or letters of administration so as to confirm the title to assent and that there are no endorsements on the probate.
In applying for a Certificate of Occupancy, the following procedure applies
Obtain an application form that will be sworn before a Magistrate Court.
The covering letter is to be addressed to the Executive Secretary, Land Use and Allocation Committee, attached with the following:
4 passport photographs
Receipt of the fees paid for processing land information i.e. charting the land.
Receipt of payment for the Certificate of Occupancy form.
Certificate of land information must be submitted.
Current tax clearance.
Development levy.
Receipt for publication, inspection, ground rent, stamping, registration etc.
Photocopy of purchase receipt on which stamp duty has been paid.
Special development levy receipt of N5,000.00
Photocopy of approved building plan.
Tenement rate receipt.
Survey plan 3 cloth copies and 3 sun copies must clearly state the municipal address of the property.
During investigation, Purchaser or his solicitor has to ensure the following:
that the seller has the right or authority to sell.
That there is no inexplicable break in the chain of devolution of the property and no exception, reservation, restriction, caution etc. endorsed on it.
He has to ensure that the description in the title deed fits the land being purchased. Where undeveloped, he is to check the beacon numbers against the coordinates in the attached plan.
Ensure technical accuracy of details on the face of the conveyance e.g. that it is properly executed by the appropriate parties.
Look out for encumbrances on the title and what could qualify for patent defects.
Ensure all developments comply with development control regulations; defects in respect of the property must be noted.
Where it is a state grant, ensure you look out for the letter of allocation which is the grant that a C of O evidences.
Ensure the area where undeveloped is not under Government acquisition and if it has been acquired, ensure that excision of the land has been made.
Ensure all necessary consents have been obtained. Ensure all charges are paid and duly receipted e.g. ground rent, tenement rate, land use charges, rent etc.
when all the above and more have been done, the purchaser's solicitor raises requisition on title. Requisitions are formal demands for answers to queries or demand to confirm facts and clear doubts arising from the abstract of title. The purchaser's solicitor has 14 days to make the necessary requisition and the vendor's solicitor has 7 days on receipt of the requisition to tender his reply to them.
The purchaser's solicitor should always reserve the right to make further requisitions in the event of his being dissatisfied with the reply he receives to the requisition. Where the purchaser is satisfied with the reply to the requisition, he may proceed to prepare the conveyance.
Why Conduct a Search Before Contract
The main reason why enquires are necessary before contract is based on the principle of Caveat Emptor. (The purchaser cannot rescind the contract because of non-disclosure of patent defects). A Search will reveal encumbrances on land and a physical inspection will eliminate constructive notice.
It also serves to reveal easement and restrictive covenants.
What are the documents you are likely to find during a search of documents.
1. An application for allocation of land
2. A Certificate of Occupancy
3. A Power of Attorney
4. A Deed of Assignment
5. A Mortgage Deed
Note that four (4) documents are to accompany the application to conduct the search. The first three (3) are obtained from the proprietor, while fourth one is prepared by the applicant. The documents gotten from the proprietor are:
Letter of consent
Copy of land certificate
Sworn declaration on the existence or otherwise of encumbrances, if any
The one prepared by the applicant is:
Sworn declaration that he actually received the consent of the proprietor
DRAFT SAMPLE LETTERS
Note the following:
In land matters, the FHC has no jurisdiction. See Section 39. LUA
Particulars of property at the Registry are the Number, Page and Volume (NPV). For instance, 44/44/7070, that is number 44 at page 44 in volume 7070
If you are asked to state the contents of a search report, start as follows;
Letter headed paper
Address of Addressee
Date of the Letter
Heading of the Letter
Introductory Statement
Date of Search
Place of Search
Name of Registered Owner
Particulars of the Property
Description of the Property
Nature of the Interest
Encumberances, if any
Comments/advice
Signature, name and address of solicitor that conducted the search and is writing letter
Completion for the vendor consists of:
Conveying with a good root of title the property contracted to be sold.
Delivering up actual possession and enjoyment.
Handing over original title documents to the purchaser
Collecting balance of purchase price from the purchaser
On the part of the purchaser, it is
Accepting the title
Tendering the engrossed conveyance
The payment of the balance of purchase price
Collecting original title documents from the vendor
Taking possession.
Items to be collected on completion by the purchaser from the vendor
At least five (5) copies of the duly executed deed (with plan attached)
All prior original title documents which relate to the land. The exceptions are where the document:
relates to other land retained by the vendor e.g. a power of attorney relating to other land
creates a trust which is subsisting
relates to the appointment or discharge of a trustee of a subsisting trust in which case the vendor will give an undertaking to safe cost and acknowledgement of the purchaser's rights to production of the document.
Receipt of payment of all outgoings.
Keys to the property if developed.
Three (3) Years Tax clearance certificate of vendor
Duly executed form for Governor's consent (called Form 1C in Lagos State)
Expired Power of Attorney where there is one
Approved building plan
Notice of assignment of insurance policy where there is one.
By virtue of Rule 22(b). RPC, execution of the deed of assignment should take place at vendor's solicitor's office except in exceptional circumstances where it may be at the vendor's place of office or residence.
Although the Land Use Act provides that governor's consent is to be obtained by the Assignor or transferor of interest, it is common practice for the transferee to obtain the consent due to his interest and to perfect his equitable title
By virtue of Section 1. Land Use Act, all land in a state is vested in the Governor of that state and shall be held in trust by him. Section 22. Land Use Act provides that a holder of a Statutory Right of Occupancy granted by the Governor must obtain the Governor's consent before alienating his right of occupancy by way of Assignment, mortgage, transfer of possession, sub-lease or otherwise.
Section 22 of the Act provides that:
"It shall not be lawful for the holder of a statutory right of occupancy granted by the Governor to alienate his right of occupancy or any part thereof by assignment, mortgage, transfer of possession, sublease or otherwise howsoever without the consent of the Governor first had and obtained"
Section 26 of the Act provides that:
"Any transaction or any instrument which purports to confer on or vest in any person interest or right over land other than in accordance with the provisions of this Act shall be null and void."
draft
Q4(B)II - April 1998
Dating is important for stamp duties purposes. Section 23(3) & (4). Stamp Duties Act provides that all instruments liable for the payment of stamp duty must be stamped within 30 days of execution. Where the party liable to pay the duty defaults, he is liable to pay a penalty for not paying within time. Anuku vs. Standard Bank (1972) UILR 106, at 109. For this reason, conveyancers normally refrain from dating a document before they are ready to perfect such document.
Any party with interest and whose interest in the property is going to be affected by the assignment must be made a party to the conveyance.
Narrative recitals trace the root of the title of the vendor by stating how the vendor became entitled to the property. It should be confined to the facts relevant to the explanation of the operative part of the conveyance.
An introductory recital explains:
How and why the existing state of affairs in respect of the property has to be altered.
It states the purpose of the assignment and
The ownership of the property, and
The intention of the vendor to transfer title in the property to the purchaser.
Statements in a recital contained in an instrument 20 years or older as at the date of the contract are presumed to be conclusive evidence of the matter stated unless the contrary is proved. This is known as the doctrine of ancient document. Section 125. Evidence Act.
A statement in a recital in a deed will operate by way of estoppel against the party that made the statement and he cannot deny the facts in the statements. The estoppel only operates to bind the party that made the statement and his successors in title (including a purchaser for value without notice)
This is where the binding clauses in the agreement start. A party may require the other to observe or perform some covenant contained in the conveyance. Where a default is not fatal to the transaction, the contracting party could require the other to covenant to indemnify him for any loss or liability he may suffer as a result of the default. Where the conveyance is for valuable consideration, the indemnity is implied by law.
The price for which the property is acquired must be stated both in figure and in words i.e. "in consideration of the sum of N150,000.00 (One hundred and fifty thousand naira) …". The consideration is an essential requirement for the purpose of stamp duties as it is useful for the Commissioner of stamp duty in calculating the ad valorem stamp duty payable on the property.
Where it is a Lease, the word used will be "DEMISES" or "TRANSFERS".
The Reddendum Clause follows the Habendum but only appears in the grant of a lease. It specifies the amount of rent the tenant pays and the time if falls due.
This is drafted as:
"the purchaser/assignee or any person deriving title under him covenants with the vendor/assignor from now on, to pay to the relevant authority all rents accruing to the title and due under the C of O for which the land is conveyed and to perform all the covenants and conditions contained to be observed and performed by the vendor/assignor, and also to keep the vendor/assignor indemnified against all proceedings, costs, claims, and expenses on account of any omission to pay rent or to observe and perform any of the covenants and conditions"
Note that a party to a deed cannot attest to such deed and at the same time sign as a party. See the case of Seal vs. Claridge (1881) 7 QBD 516.
In the case of a Company:
"The within named School for Lawyers Nig. Ltd. has caused its common seal to be here unto Affixed the date and year first above written" (Power of Attorney)
If one of the parties is an illiterate, there should be an illiterate jurat as set hereunder:
SIGNED, SEALED, AND DELIVERED by
___________ (Name of the Illiterate) the foregoing having been first read and interpreted to him in _______ Language by me Mr./Mrs. __________ (Name of Interpreter) and when he appeared to perfectly understand the same affixed his thumb impression.
IN THE PRESENCE OF:
NAME: ______________________
ADDRESS: ____________________
OCCUPATION: _________________
SIGNATURE: ___________________
DATE: ________________________
A tenant at sufferance is one who entered the premises lawfully through a valid lease agreement but overstays after the expiration his tenure.
A lease that is stipulated to commence when the first daughter of the family gets married is uncertain. This will be void.
In Okechukwu v. Onuorah, the commencement date of the lease was hinged on the date the Certificate of Occupancy was to be obtained by the Lessee on the property demised. The Court held that where the commencement date of the lease agreement is hinged on a future occurrence taking place and the future occurrence is ascertainable, then the lease will be valid.
In UBA Ltd v. Tejumola & Sons Ltd., the lease agreement was dated to be subject to contract. The Court held that when the date of commencement of a lease is not specified but stated by reference to the happening of a contingency which is uncertain in time, until the contingency happens, there is no enforceable Lease.
In Bosah v. Orji, the commencement date was hinged on the day the defendant obtained a Certificate of Occupancy for building on the unbuilt part of the land. The Supreme Court stated that the principle for a valid lease is that it must be clear that there is an intention to create a term of years with a certain beginning and a certain ending.
In Prudential Assurance Co. vs. London Residuary Body, a lease stipulated to expire when the landlord would require the land for the widening of the road was declared void
In Bierel vs. Carey, a lease for as long as the Company was trading was held void.
One may have exclusive possession without being in exclusive occupation.
E.g I. Where Mr. A. leases a house to Mr. B. who gives the house to his mistress. The mistress merely has exclusive occupation. Since the lease is in the name of Mr. B, Mr. B. has exclusive possession but is not in exclusive occupation.
One may be in exclusive occupation without having exclusive possession.
E.g.II. The landlord to the property lives downstairs and the tenant lives upstairs. The landlady keeps interfering with the occupation of property by the tenants. Thus, the tenants are in exclusive occupation and not exclusive possession.
The grant of the remainder of the term in a lease is an assignment. Nwanpa vs. Nwogu (2006) 2 NWLR (pt. 964).
A license is a mere permission/ personal privilege given by the occupier of land to a person to do an act upon his property which would otherwise amount to trespass. Ishola Williams vs. Hammond Projects. A license does not create proprietary (ownership) rights. Street v. Mountford, Eloichin Ltd. v. Mbadiwe
In Pitcher v. Turkey, rent was paid with bottles of wine. In Doe Edney v. Renhan, rent was equated with cleaning the parish church.
Rack rent is the best type of rent but a landlord should avoid collecting many years rent in advance due to its prohibition, taxation and inflation.
In fixing rack rent, the location of the property, quality of the property and extent of the building would be put into consideration. These are economic factors
Draft
"the tenant covenants with the landlord to pay all cost and expenses incidental to this agreement including all solicitor's fees for the preparation, engrossment, stamping, endorsement of the lease plus stamp duty and all registration fees as assessed.".
The lessee/tenant's covenant should come first before the lessor/landlord's covenant.
It is pertinent to note that the new Tenancy Law of Lagos has some significant and unique features. For instance, express covenants are provided for in the law and in the absence of contrary agreement they are applicable to a lease agreement. Section 7, 8 & 9. Tenancy Law 2011.
QNFC - Queen Nonye fried coconut
e.g. "This lease is subject to usual covenants"
QRTMV-Queen rita took mikes vaseline
Why???
NB:
You may be ask to draft a standard covenant as solicitor for either the Lessor or Lessee and depending on the facts you are given, draft it to suit the interest of the party you are representing. Some of the covenants are for the Lessor (option to renew, covenant on abatement of rent et.c) while others are for the Lessee. Please bear this in mind while answering a question on this topic.
MPVCR - (Miss prudence values chisoro's rice)
This does not apply to official and domestic staff and families who are
Nigerian citizens
Foreign citizens not resident in Nigeria for the purpose of carrying out official duties. Section 10. DIPA.
This is the covenant on the use to which the demised premises will be put. It should be noted that a landlord cannot permit a property to be used for a purpose contrary to the planning scheme. For example, a landlord in a residential area cannot permit the tenant to use his premises for industrial purposes and where, at the time of letting the premises, it is to the knowledge of the landlord that the premises is intended to be used for illegal purpose, the lease is wholly unenforceable.
In Lurcott vs. Wakely & Wheeler (1911) 1 KB 905, Fletcher Moulton L. J. said:
"For my part, when the word 'repair' is applied to a complex matter like a house, I have no doubt that the repairs include the replacement of parts. Of course, if a house had tumbled down or was down, the word 'repair' could not be used to cover rebuilding. Many and, in fact, most repairs imply that some portion of the total fabric is renewed, that new is put in place of old."
Buckley L.J., pointed out the distinction between 'repair' and 'renewal' as follows:
"Repair is restoration by renewal or replacement of subsidiary parts of a whole. Renewal, as distinguished from repair, is reconstruction of the entirety… it follows that the question of repair is, in every case, one of degree and the test is whether the act to be done is one which in substance is the renewal or replacement of defective parts or renewal or replacement of substantially the whole."
When a legal practitioner is acting for the landlord, he may insist that the tenant shall pay a refundable deposit for the repair of damages caused by his use of the property. This does not include fair wear and tear to the property. The amount should be reasonable. It is paid at the commencement of the term granted, perhaps when the advance rent is paid. This is because at that stage the tenant is usually desperate and will not object to this.
The interpretation of a covenant to repair in metropolis is different from interpretation of covenant to repair in a rural area.
Lessee's solicitor should generally avoid a clause of this sort. Where the Lessor insists on the clause, he may be offered an option for forfeiture in exchange if the clause is for a longer duration.
This practically means that the tenant should not ask for a refund of his rent where he leaves the property before the expiration of the term on grounds of the Landlord not repairing the property.
PRAAC-
Prudence Rejoiced about a car
It is also important to have provision for abatement. This entails exemption of the tenant from paying rent during the period in which the property is being re-instated. See Araka v. Monier Construction Co. Ltd.
If it is a shopping complex, a block of flats or offices, it is advisable for the landlord to insure. He may be reimbursed by the tenants depending, of course, on their agreement.
Compare with Re Kings
ADNA - Ada does not argue
In Ishola Williams v. T. A Hammod Project Ltd, where the only evidence as to who were in occupation of the demised premises at all material times were the junior officers and driver of the defendant, the Court held that it is the law that a lessee who retains legal possession of the whole premises at all material times does not break a covenant against parting with possession by allowing other people to use the premises.
A pent-up prejudice against insurance Companies generally such as was expressed by the plaintiff was insufficient to stigmatize an otherwise responsible and respectable insurance Company.
List of provisos - AFR3(5)
A - Abatement of Rent
F - Forfeiture and Reentry
R - Option to Renew
R - Rent Review Clause
R - Option to Purchase Reversion
Mnemonic - Aisha Fried Rice
can be a covenant or proviso
In this case, the Court held a 23 days' notice to be inadequate.
S - surrender
D - Disclaimer
N - Notice to Quit
E - Effluxion of Time
F - Forfeiture
F - Frustration
Stella does not eat fish fat.
In Araka v. Monier Construction Co (Nig) Ltd, the respondent took a lease of one year from the appellant. After six months, the civil war in Nigeria between 1967 - 1970 prevented the respondent from continuing with the lease. The appellant/landlord commenced an action for rent in arrears. The respondent contended that the outbreak of civil war had frustrated the contract. The Supreme Court while upholding its contention stated the following: "the doctrine of frustration may in certain circumstances apply to a lease. We think that it may amount to injustice to deny a tenant the benefit of frustration on cases where owing to circumstances of an intervening event or change of circumstances so fundamental as to be regarded by the law as striking at the root of the agreement, it has become impossible for the tenant to enjoy the fruit of his lease and at the same time to expect him on account of the abstract estate concept to honour his obligation under the lease, such a denial may also suffer injustice to a landlord who finds himself in the same position as the tenant."
Applicable laws are Common Law and Common Law Procedure Act 1852. Section 14(8). Conveyancing Act & Section 161(10). PCL
Note that the applicable Law in the exempted places is the Common Law on leases/ tenancy.
Also the Common Law is applicable to the PCL and CA States in the absence of a State Law regulating leases/tenancy
By virtue of Section 28. Magistrates' Court Law of Lagos State, the monetary jurisdiction of a Magistrate is N10 Million.
Here the law envisages a tenant not a licensee. In a lease, the lessor must notify the lessee before entry to inspect. However, this is not so in a licence.
CDPRTCPHRCPTSEA
The parties to the lease must be persons with legal capacity. At common law, a lease created by an infant is voidable and may be avoided by the infant within a reasonable time after attaining majority. An infant may take a lease but is entitled to repudiate it on attaining majority. See Section 14. Edict No 4 Rivers State 1988 & Section 18. Edict No. 17 Kaduna State 1990. An infant cannot create a tenancy in respect of residential premises but the parent or guardian or the High Court upon application may do so on his behalf.
An incorporated body can be a party to a lease agreement. However if a Company, it must not act outside its Memorandum and Articles of Association and if an incorporated or registered trustee must act within their constitution.
In Lagos, a single lady can be asked to bring a surety or guarantor. When a Company is to produce a guarantor, the director(s) can act as its guarantor. In stating the particulars of the parties, the full names, addresses and occupation of the parties are what is required.
If the lease is to have recital, in commencement, the word 'IS' must be included. 'THIS DEED OF LEASE is made this ____ day of ___ 2013. WHEREAS…"
FUNCTIONS OF RECITAL
Section 162. Evidence Act provides that statements in the recitals of a document that is 20 years old at the date of contract are presumed to be sufficient evidence of the truth of such facts. Johnson vs. Lawson (1971) 1 ALL NLR 56.
A recital can be used to interpret the operative part of a deed where there is ambiguity but if the operative part is clear, that means there will be no need to resort to the use of recital. Ex Parte Davis (1886) 7 QB 275, particularly at page 286.
Where a recital is clear and unambiguous, it constitutes estoppel against the party making it in favour of third party who are innocent of fraud and have become owners for value (including successors).
Recital is useful as a means of knowing the history and background of the document.
A single lady letting the premises may be asked to produce a surety who will also stand as a
guarantor in case of default of payment of rent. It should however be noted that a surety will be
equally liable for the payment of rent. If a Company, the guarantors may be the directors.
POSSIBLE LIP AREA
For blind say read aloud.
For deaf and dumb ADD - The contents of this lease having been first been read over to him by sign language by __________ a sign language instructor whih he appeared to perfectly understand it before affixed his thumb print/mark.
D DATED as
AND
R-REGISTERED
A-AS
N-NO
P-PAGE
V-VOL
O-OF
L-LANDS REGISTRY
-detra and rejoice are not proper virgins of lagos
Pursuant to C OF O
In computation, one does not have half of a day, the day starts from 12am.
A 5-year lease commencing on 23rd March 2012 will determine on 22nd March 2017
A 5-year lease commencing from 23rd march 2012 will determine on 23rd march 2017
these expressions should be avoided. It should be noted that once a quit notice is badly drafted, it is void for defective computation of time.
Where the Lease is covered by the Tenancy Law of Lagos State, this will be illegal pursuant to Section 4. Tenancy Law.
R- Rent
R - Rates and Taxes
A - Assignment Prohibition
A - Alteration Prohibition
R - repairs
U - Use Covenants
RRAARU (Igbo word for sleep)
Rita rejoiced and arranged roasted corn and Ube
N.B. Corn is not part of the acronym
Q - Quiet Enjoyment
I - Insurance
R - Option to Renew
A - Abatement Clause
Queeneth is rocking armani
Applicable Laws to Mortgage Transactions include:
Land Use Act
Constitution of the Federal Republic of Nigeria
Stamp Duties Act
Rules of Professional Conduct
Land Instrument Registration Law,
The Companies and Allied Matter Act. See Section 197. CAMA.
Property and Conveyancing Law
Mortgage Institution Act,
Law Reform Contract Law,
Federal Mortgage Bank of Nigeria Act,
Illiterate Protection Law (where applicable).
Mortgage and Property Law
Conveyancing Act
Evidence Act
Legal Practitioners' Act
Rules of Professional Conduct
Case Law: e.g. Savannah Bank v. Ajilo
Personal Income Tax Act
Companies Income Tax Act
Statute of Frauds
The Capital Gains Tax Act is not applicable as there is no gain in mortgage transactions. By virtue of Section 7(4). CGTA, mortgages are expressly excluded from disposal of assets and so do not attract the payment of CGT.
This is a major distinguishing factor of mortgage as the person using the property as security has the right of getting the property back upon fulfillment of the obligations. Hence, once a mortgage always a mortgage and nothing but a mortgage. See Yaro v. Arewa Constructions Ltd. Where a provision in a mortgage contract removes the right to redeem the property, then by virtue of the above principle, the provision is void.
Must have a statutory right of occupancy
Guarantor (surety) - this involves using another person's property as security for repayment of the loan. If X borrows/obtain loan from ABC Bank and Y uses his property as security for the repayment of the loan, X is the mortgagor while Y is surety/guarantor.
Where a guarantor is involved, then it will be said to be a Third Party Legal Mortgage.
Where it is a commercial bank, if the mortgagor is not a customer of the bank, the bank would require him to produce a person who is the bank's customer (of certain financial status) to guarantee the loan to the mortgagor.
A mortgage is not a sale. In Owoniboys Technical Services Ltd v. Union Bank of Nig Ltd (2003) SCNQR 58, the Court pointed out that "once a mortgage, always a mortgage; there must be no clog on the equity of redemption." The law does not divest the mortgagor of his title in the property; he remains the owner, whilst the mortgagee is the custodian of the property as a form of security to ensure repayment of the mortgagor's indebtedness.
The Federal Mortgage Bank
Housing Corporations like Federal Housing Authority
Finance Banks
Commercial Banks
Insurance Companies
Private property developers
Housing schemes
Life endowment policies
(for States of the old Northern and Eastern regions and some parts of Lagos). Edo & Delta is excluded
This can also be called conveyance. Note that where the mortgagor's title is a deemed grant under LUA it can be called a Conveyance and not an Assignment
Advantages of Mortgage by Sub-Demise
It is only a sub-demise of the unexpired residue less few days with a proviso for cesser upon redemption
The mortgagor still retains the reversionary interest in the mortgaged property
The doctrine of privity of estate and contract is inapplicable
There is uniformity as mortgages can be created by sub-demise in both the Conveyancing Act and Property and Conveyancing Law States
It can be used to create successive legal mortgage in the PCL States only
Disadvantages of Mortgage by Sub-Demise
The mortgagee cannot sell free of the mortgagor's reversion unless he includes the remedial clauses of:
Power of Attorney
Trust declaration
Under the PCL there is no need for the above clauses to cure the disadvantage of a mortgage by sub-demise as that has been taken care of by Section 112(1). P & CL and Re White Rose Trust. The disadvantage is only peculiar to the Conveyancing Act States.
In the Conveyancing Act States, the Mortgagor cannot create successive legal mortgage
This is a lessee's right of entry onto the leased property; esp., a lessee's interest in real property before taking possession. An interesse termini is not an estate; it is an interest for the term. It gives the lessee a claim against any person who prevents the lessee from entering or accepting delivery of the property.
"[The interesse termini's] essential qualities, as a mere interest, in contradistinction to a term in possession, seems to arise from a want of possession. It is a right or interest only, and not an estate, and it has the properties of a right. It may be extinguished by a release to the lessor, and it may be assigned or granted away, but it cannot, technically considered, be surrendered; for there is no reversion before entry, in which the interest may drown. Nor will a release from the lessor operate by way of enlargement, for the lessee has no estate before entry."
James Kent, Commentaries on American Law.
The doctrine of Interesse Termini was basically to the effect that a lease which was covenanted to make the lessor's right to possession impossible or unenforceable would be void. Hence, a successive legal mortgage cannot be created where it applies as any subsequent sub-demise after the first mortgage would make possession of the property utterly impossible during the term of the first mortgage although the term of the successive mortgage would be running.
It should be noted that in P & CL states, mortgage by sub-demise does not require remedial devices as it is automatically implied by Section 112. P & CL.
For the States of the old Western and Midwestern regions, except Lagos.
Several legal mortgages usually results in consolidation so long as there is a covenant to that effect.
Several legal mortgages is also known as mortgage of mixed properties and they are created by way of Charge by deed expressed to be by way of legal mortgage. This is one of the advantages of charge by deed expressed to be by way of legal mortgage. The mortgagor can use several properties secure one loan in the same instrument.
He has a right to sell the property
If you see a question saying that the mortgagee is a lessee and he wants to create a mortgage and does not want to violate the covenant against assignment; once the scenario is in the south, advise him to create the mortgage through a charge by deed expressed to be by way of legal mortgage.
The features and advantages of charge by deed expressed to be by way of legal mortgage are:
In the event of default by the mortgagor, the mortgagee cannot sell without the remedial devices
Since it passes no legal interest to the mortgagee, it can never amount to breach of the covenant against assignment
It passes no interest to the mortgagee, but it confers on the mortgagee all the powers and rights of a legal mortgagee. See section 110(1) PCL
It can be used to create a mortgage over mixed properties
It can be used to create several legal mortgages
It is easy to discharge as it is discharged by a statutory receipt
It is simple, shorter and easier to create. See Samuel v. Jawah.
This problem does not arise in assignment
The difference between equitable charge and the other types of equitable mortgage is well illustrated in the case of Mathews v. Gooday (1861) as follows:
"With regard to what are called "equitable mortgages", my notion is this: suppose a man signed a written contract by which he simply agreed that he thereby charged his real estate with fifty pounds to 'A', what would be the effect of it? It would be no agreement to give a legal mortgage, but a security by which he equitably charged his land with payment of a sum of money and the mode of enforcing it would be by coming into Court of Equity to have the money raised by sale or mortgage; that would be the effect of such a simple charge. It is the same thing as if a testator devised an estate to 'A' charged with the payment of a sum of money to 'B' 'B's right is not to foreclose 'A' but to have his charge raised by sale or mortgage of the lands. But the thing would be distinctly an equitable and not a mortgage nor an agreement to give one. On the other hand, the party might agree that having borrowed a sum of money, he would give a legal mortgage when called upon. That agreement might be enforced according to its terms and the court would decree a legal mortgage to be given and would also foreclose the mortgage unless the money was paid."
an equitable chargee cannot himself exercise a power of sale or appoint a receiver in the absence of a deed.
As soon as you have executed the mortgage deed and the Governor has given his consent, the mortgagee becomes entitled to possession immediately. The right arises immediately after the execution of the mortgage deed. It is possible, however, for the mortgagee to give away this right under the mortgage deed. If they are the tenants on the mortgaged property, they will pay rent to the mortgagee. While in possession, the mortgagee can create leases and accept surrender of leases.
A mortgagee is advised not to take possession except the property is being squandered or being destroyed or depreciated is imminent or where there is need to intercept the profit. If a mortgagee decides to go into possession, equity imposes on him a strict liability to account for the profits on the property. He will be liable for negligence or willful default for any sum not recovered. He is also liable for any deterioration or neglect or disrepair of the property. He cannot, however, be compelled to get the highest rent on the property. Note that he cannot make profit from the property; he can only realize his security.
Distinguish between Consolidation, Subsequent Mortgages and Up-Stamping
For consolidation, same parties, different properties; the mortgagor is barred from redeeming the property separately.
For subsequent mortgagee, only in PCL States, sale for different parties, the same property.
For up-stamping, same parties, same property additional facility, no need for fresh Governor's consent on addition facility
A legal mortgagee has a right to possession because legal estate to the mortgaged property resides in him. In law, possession follows the legal estate. In Four Maids Ltd. v. Dudley Marshall Properties Ltd. (1975) Ch. D 317 at 320, Per Harman J. held that a legal mortgagee may go into possession before the ink is dry on the mortgage.
A mortgagee is entitled to take possession without being liable in trespass. Awojugbagbe Light Industry Ltd v. Chinukwe (1995) 4 NWLR (Pt. 390) 370. As regards to this, he has to render account. In practice however, mortgages hardly take possession of mortgaged property because of the insistence or equity on strict accountability.
Can be done after governor's consent
For example, N24 million is borrowed by John from GTB to be repaid by monthly installments of 1million from January 2015 to 31st December, 2016. If John fails to pay installments in November and December, 2015, the power of sale has become exercisable, but it has not yet arisen because the legal due date has not passed.
The insertion of a shorter legal due date (legal fiction) is not to prejudice the mortgagor, but only to put him on his toes. So, he has nothing to worry about as long as he is faithful with the payments of the instalments of the mortgage sum and interest. Thus, in the example above, the mortgagee can just add proviso that the legal due date is 31st of July, 2015. This will not affect the instalment payments which will end when they ought to end. It will only operate to make the power of sale arise.
The Mortgagee is not an agent of the Mortgagor whilst exercising
A sale by mortgagee can only be set aside in the following circumstances:
Where the mortgagor has no good title ab initio. See Alli v. Ikusebiala, for instance, family property without consent
Where requisite consent was not obtained
Where there is fraud or collusion in respect of the sale between the mortgagee and the purchaser
Where the power of sale has not arisen
Where the property is sold at a gross under-value price.
Where the mortgage is a fraud on the mortgagor. For instance where the sale is at such a low value that it raises an inference that there is fraud in the sale
Where the property is sold even after the mortgagor has fully repaid the mortgage sum and interest
Where the parties agreed on a different mode of sale
Where the mortgagor can rely on estoppel
Where the mortgagee sells to himself or privy
However, the sale will not be set aside simply because:
The property was sold at a low price provided it is not a gross undervalue or negligible price
The outstanding sum is contested by the parties
The sale was motivated by ill-will
Mortgagor has paid a substantial part of the loan
Mortgage sum and interest is paid before conveyance but after sale
Order of Court was not obtained before the sale. See UBN v. Ilori Motors
Demand notice was not served or that service was insufficient. Okonkwo v. CCB Ltd, Section 126. P & CL & Section 21. CA
Power of sale was not properly exercised. Section 126. P & CL & Section 21. CA.
The instances under which an order of foreclosure absolute would be re-opened are:
Where in the interest of justice, it is just and equitable to allow the mortgagor to redeem
Where the property is of great value and importance to the mortgagor, such as family property
Where the value of the security greatly outweighs the mortgage sum and interest
Where, after obtaining an order of foreclosure absolute, the mortgagee still sues the mortgagor on his personal covenant to repay
Where the mortgagee satisfy the court that his failure or inability to pay was due to circumstances beyond his control and that he is now ready and willing to repay.
In Ndaba Nig Ltd v. UBN (2007) NWLR (pt 1040) 439, the Court held thus:
"The right to redeem a mortgaged property is so inseparable an incident of mortgage that it cannot be taken away either expressly or by implication, nor can such redemption be limited to time or particular persons. The right of equity of redemption continues until the mortgagor's title is extinguished or the interest destroyed by sale either under the process of court or by the mortgagee."
"Once a Mortgage always a Mortgage"
It should be noted that if the mortgagee is in physical possession of the mortgaged property and he has been in possession of the mortgaged property continuously for more than 10 years, as required under the Limitation Law, before the mortgagor brings an action to recover possession, the claim will be statute barred. See Federal Administrator General And Ors V. Cardozo And Ors (1973) 1 ALL NLR (PT. 11) 169. The equity of redemption is more than a mere right; it is an estate in land. It is therefore possible in some instances for the mortgagor to mortgage his equity of redemption.
The legal right to redeem can be exercised at any day before the expiration of the legal due date. See Okonkwo v. ACB, UBA v. Okeke.
N.B. As a solicitor, ensure that you retrieve all the title documents from the mortgagee upon discharge of the mortgage. Where the mortgagee refuses to return the title deeds, he can be sued for detinue.
When two persons claim the transfer of a legal estate, he who did not register his conveyance cannot plead it or give it in evidence. If they both registered their deeds, each takes effect as against the other from the date of registration, which means that the one executed earlier loses its priority if it was registered later. What counts is the date and hour of registration. Amankra v. Zankley.
Formal parts of a Deed of Legal Mortgage
Commencement
Date
Parties
Recital (it is a must in mortgages)
Testatum which are two in number
1st Testatum containing the consideration and receipt clause
2nd Testatum containing the covenants to repay, the legal due date and its commencement date
Charges clause containing:
Covenant as to title /capacity
Parcel clause
Word of grant e.g. 'ASSIGNS'/ 'CHARGES'/ 'DEMISES'
Habendum (term)
Miscellaneous part containing the provisos as to redemption
Testimonium
Execution
Attestation
for instance, where as Mr. A approach bank B and Bank B gives the amount of N10, 000, 000 and C agrees that his property at _____ be use as security for payment of the loan.
The Applicable Laws
Legal Practitioners Act.
Rules of Professional Conduct
Land Instrument Preparation Law
Legal Practitioners Remuneration for Legal Documentation and other Land Matters) Order 1991.
Judicial authorities.
Payment to secretary
Do not charge for non-legal work
In Okafor v. Nweke, the Supreme Court held that J.H.C. Okolo, SAN & Co. is not a legal/practitioner and cannot legally sign or file any process in the Courts.
The Table says "As in Part II thereof". Therefore, no calculations will be required. Just refer to Part II for the appropriate range and amount thereof.
First N1000 [1000] (Step 1) + Second and Third N1000 [2000] (Step 2) + 4th and each subsequent N1000 up to N20,000 [17,000] (Step 3)
= N20,000.
Amount already calculated = First N1000 [1000] (Step 1) + Second and Third N1000 [2000] (Step 2) + 4th and each subsequent N1000 up to N20,000 [17,000] (Step 3)
= N20,000.
Amount already calculated = First N1000 [1000] (Step 1) + Second and Third N1000 [2000] (Step 2) + 4th and each subsequent N1000 up to N20,000 [17,000] (Step 3)
= N20,000.
Applicable laws are:
1. The Wills Act of 1837 and the Wills Amendment Act 1852 all as SOGA
2. The Common Law and Equity
3. Wills Laws of the various States
4. High Court of Lagos State (Civil Procedure) Rules 2012
5. High Court of the FCT Abuja (Civil Procedure) Rules 2004 and those made by different States.
6. Administration of Estates Laws of the various states
7. Marriage Act
8. High Court (Civil Procedure) Rules of the various states
9. Case laws
10. Constitution of the Federal Republic of Nigeria
11. Legal Practitioners Act (by Section 22(4)(e). LPA, non-lawyers can draft Wills)
12. Rules of Professional Conduct
Highlights
T - Testamentary Disposition
E - Executed Lawfully
V - Made Voluntarily
M - By testator with sound disposing mind
A- ambulatory in nature
Individuals are generally reluctant to make Wills. This may be because of superstitious beliefs or a lack of trust.
Note the difference between Domicile and Residence
A person subject to Islamic law can only dispose of 1/3 of his property through a Will. The remaining 2/3 must be disposed in accordance with Islamic rules stated in the Koran.
No, seriously...
Until the death of the testator, a Will is a mere declaration of intention. Thus, it could be changed as often as the testator wishes. For that reason it is described as Ambulatory, meaning that it is unfixed until the death of the testator when it crystallizes into an instrument of disposition. A beneficiary under a Will where the testator is still alive has a mere "Spes" or "Hope" and not any interest in the property as the testator can always change his mind at any point in time.
Every person with a sound mind can make a Will. Section 3 of the Wills Act, 1837 provides that -
"It shall be lawful for every person to devise, bequeath, all properties or dispose of, by his Will executed in manner hereinafter required, all real estate and all personal estate which he shall be entitled to, either at law or in equity, at the time of his death, and which, if not so devised, bequeathed or disposed of, would devolve upon the heir at law...".
Thus, persons of requisite statutory age, with a sound disposing mind and memory can make a Will notwithstanding his tribe, religion, or physical status. Apatira v. Akanke (1944) 17 NLR 149.
A person's right of testation was held by the Supreme Court to be limited by the customary law relating to that class of property as it is provided by customary law not to be devisable by will. The locus classicus are Lawal Osula v. Lawal Osula, Agindingbi v. Agindingbi (supra), etc. These cases arose from the Benin Customary law relating to the devolution of the property where a testator lived and died called Igiogbe. The testator's first son is by customary law the rightful heir to the Igiogbe and a person cannot by his will based on statutory freedom of testation devise the property to any other person not being his first son. In Egharevba v. Oruonghae (2001) 11 NWLR (pt 714) 318, the Court of Appeal sitting in Benin reiterated this position.
The would also seem to limit the freedom of testation of a person who practices the Moslem faith. Such a person's testamentary freedom especially in the States that have adopted the Sharia as part of the States' Laws is limited by Islamic injunction with respect to devolution of the property of a person of Moslem faith. The person's freedom of testation is limited to devising by Will not more than one-third (1/3) of his estate. The remaining two-third (2/3) shall be divided amongst recognized beneficiaries in a manner provided by the Sharia. Adesubokan v. Yinusa.
Also, Section 2. Wills Law of Lagos State which operates to protect the interest of persons not favored or disinherited by the testator but who have legal claims on him e.g. his wife or wives, or husband, or children of the deceased. Such a person can apply to the Court for adequate provision on the ground that the deceased did not make reasonable financial provision for the applicant. The Court in that case can intervene to ensure there is equity in the distribution. This right is only exercisable within six (6) months of grant of probate following which it becomes statute barred.
Soundness of mind should not be confused with the state of body health
Thus omnia praesumantur rite esse acta (everything is presumed to be okay which okay)
As long as it is clear what the intention and wishes of the testator are, the Court will not, except in few cases, allow formalities to frustrate those intentions. Rolleston v. Sinclair (1924) 2 IR 157.
Note that this applies only in Lagos, Oyo, Abia and Jigawa.
Religious Delusion: E.g. where a certain woman had the belief that she was of the Trinity, was a Bride of God, Dr. Smith (the beneficiary) was God the father, and her husband was a devil.
Undue influence should be differentiated from persuasion simpliciter. Persuasions appeal to the affections, ties of kindred, or sentiment of gratitude for past services or pity. Hall vs. Hall.
In Foot v. Santon (1856) 164 ER 489, a Will was attested by two persons and neither of them recollected the circumstances, although they recognized their signatures. The Will was presumed duly executed.
See also the case of Ize-Iyamu v. Alonge (2007) 6 NWLR (pt. 1029) 84 where it was held that a Will will be ex facie regular if it is signed by the testator in the joint presence of at least two witnesses and dated. In such a case, the Will will benefit from the presumption of regularity. It must be noted that this presumption will apply even if the attesting witnesses are unable to remember and recollect the circumstances surrounding the execution of the Will. See Foot v. Stanton, The Goods of Holgate, In The Estate of Randle
It should be noted that exams, the answers are either specific, general, or demonstrative. You may go ahead to add the particular nature and interest.
Key: Specific gift is Gift + Description
Abatement means reduction in xter, quality or dimunition xfer
Key = Gift - Description
Note gifts of shares and stocks.
Key. Gift + Description of Source = Demonstrative legacy.
Be very careful. A demonstrative legacy could look very much like a general legacy. Just check if a particular source is prescribed; if yes, then it is a demonstrative legacy.
These are situations where the legacies/bequests will not be available to the beneficiary under a Will for some reasons as follows:
1. Where a witness, not falling under the exceptions, is a beneficiary or spouse of a beneficiary under the Will. Section 8. Wills Law, Section 15. Wills Act.
2. Where a specific gift is caught by ademption. This occurs where the gift is no longer in existence or its nature/character has changed before the testator's death. In such a case the beneficiary will have nothing. Ademption will occur in the following circumstances:
a. The gift is sold before the testator's death
b. The property as the gift is subject to a Formal Contract of Sale
c. The property given as a gift was compulsorily acquired by the State
d. A fundamental change occurs in the character of the gift
e. The property as gift is subject to a hire-purchase option.
f. ademption by operation of law
g. By a subsequent disposition by the testator of the subject of the gift
h. By presumption against double portions
i. Where the property is lost.
Ademption will not occur where the change in the gift is only in respect of the form e.g. shares in Bank A bought by another Bank B, the shareholders of A will still be shareholder in the later Bank. Furthermore, ademption will not apply where it is a general gift.
3. Lapse of gift. The gift lapses where the beneficiary predeceases the testator.
4. Based on public policy, a gift will fail like when the beneficiary is proved to have killed the testator. Errignton v. Errington.
5. The gift was made to promote an illegal purpose
6. Where there is uncertainty of the object or beneficiary, the gift will fail.
7. The estate of the testator abates. This occurs when it is insufficient to give any gift charged on it in a Will
8. Disclaimer by beneficiary. The beneficiary to disclaim a gift will write the executors rejecting a gift.
9. A conditional gift made subject to fulfilling some unsatisfied conditions.
10. Gift to testator's spouse will fail where there is a divorce/annulment of marriage. Section 18(a). Wills Act.
11. Where the gift is contrary to Inalienability Rule. Lawal Osula v. Lawal Osula.
12. Gifts which are contrary to the Nemo Dat Non Quod Habet rule i.e. where the testator has invalid title.
13. The presence of vitiating elements in the making of the gift/Will e.g. fraud, duress etc.
(see Section 33. Marriage Act for the elements of a valid marriage under the Act)
Refer to Week 19 Civil Litigation
(see Section 5. Matrimonial Causes Act for the grounds of voiding a valid marriage under the Marriage Act)
You must state the names of the parties
Section 3 MCA provides that the following are void marriages:
either of the parties is, at the time of the marriage, lawfully married to some other person;
The parties are within the prohibited degrees of consanguinity or, subject to section 4 of this Act, of affinity;
the marriage is not a valid marriage under the law of the place where the marriage takes place, by reason of a failure to comply with the requirements of the law of that place with respect to the form of solemnization of marriages;
the consent of either of the parties is not a real consent because-
it was obtained by duress or fraud; or
that party is mistaken as to identity of the other party, or as to the nature of the ceremony performed; or
that party is mentally incapable of understanding the nature of the marriage contract; or
either of the parties is not of marriageable age.
The provision of the Wills Act is a lot clearer on the issue, as opposed to the confusion under most versions of the Lagos Wills Law
In Ajibaiye v. Ajibaiye (2007) ALL FWLR (PT 359) 1321, the deceased testator, Alhaji Disu Ajibaiye, a Muslim from Ilorin made a Will under the Wills Act and disposed his estate not in consonance with Islamic law. He stated in the Will that "I also direct and want my estate to be shared in accordance with the English law and…. having chosen English law to guide my transactions and affairs in my life time notwithstanding the fact that I am a Muslim".
It was held that the Will in dispute was void ab initio for being contrary to the Wills Law of Kwara State which was in force and he could not validly make a will under Wills Act.
The properties of a Nigerian Muslim are subject to the dictates of Islamic law of inheritance which does not allow disposition anyhow. Having declared that he was a Muslim, the testator had subjected himself to the applicable law - the Wills Law of Kwara State.
For example, Section 1(1). Wills Law Lagos provides that:
"It shall be lawful for every person to bequeath or dispose of, by his will executed in accordance with the provision of this law, all property to which he is entitled, either in law or in equity, or at the time of his death -
Provided that the provisions of this Law shall not apply to any property which the testator had no power to dispose of by will or otherwise under Customary Law to which he was subject."
See also Section 4. Wills Law of Kwara
In Asika vs. Atuanya, it was held at the Court of Appeal that Section 42. CFRN recognizes women as citizens and guarantees the right not to be discriminated against the right to acquire and own immovable apply in Nigeria. Hence, the proposition of the respondent relating to the sharing of property in accordance with the Onitsha customary law which sought to divest the beneficiaries on grounds of gender could not override the provisions of the Will.
In Idehen vs. Idehen, the case concerned the gift of the Igiogbe (the house in which the testator lived and died) to one of the wives of the deceased testator rather than to his eldest surviving son. The gifts made were otherwise voided by the Courts. See also Lawal - Osula v. Lawal - Osula
The Court should provide facilities for safe custody of Wills of living persons
The Formal Parts of a Will
Commencement clause - containing the particulars of the testator/date
Revocation clause
Appointment clause
Charging clause
Disposition clause
Residuary clause
Testimonium / Execution clauses
Attestation
COMMENCEMENT CLAUSE
DATE CLAUSE
REVOCATION CLAUSE
APPOINTMENT CLAUSE
CHARGING CLAUSE
GIFT CLAUSE
RESIDUARY CLAUSE
TESTIMONIUM
EXECUTION CLAUSE
ATTESTATION CLAUSE
FRANKING.
The solicitor writes the Probate Registrar intimating by of the following things (contents of the letter)
Death of the testator accompanied with certificate
The place of death and date
The fact that the testator lived within the Jurisdiction of the Court
The fact that the testator made and deposited a Will at death
List the name of persons interested or likely to be interest in the estate of the testator
Application for grant of probate
Affidavit of attesting witnesses
Oath of Executors
Inventory Form
Justification of Sureties
Bank Certificate (to record the monies in Banks or shares in company owned by the testator before his death)
Check List of Necessary Documents for the Grant of Probate
Application for probate
Declaration of personal property of the deceased.
Death certificate of the deceased
Declaration on oath by the executors
A sworn affidavit by attesting witnesses to the Will stating that they are witness to the executed Will
Passport photographs of the applicants and Witnesses to the Will.
A copy of the Will shall attached to the application
Let's celebrate your return brother. Do not spoil the mood with talk of Houses, Cars, and remarried Wives. What matters is that you're back with us where you belong… Albeit alone, homeless and without a tire to your name.
Applicable Laws
1. Land Use Act
2. Capital Gains Tax Act
3. Personal Income Tax Act (PITA)
4. Stamp Duties Act
5. Land Instrument Registration Law (LIRL)
6. Land Use Charge Law Lagos
7. Value Added Tax Act
8. Companies Income Tax Act (CITA)
Note the exception in instances where the executor sells the property to a party in order to raise money that is taxable.
Note that for up-stamping in Mortgages, additional Stamp Duties will be paid. Owoniboys Tech Services vs. UBN.
NOT DISCUSSED IN CLASS
Property Law Practice
Week 1
General Overview & Legal Framework
Property Law Practice covers Land transactions and documents, Wills and Administration of Estates, Billings and Recovery of Professional Charges and Property Law Taxation. In the course, the term property refers to:
Immovable or Real Property.
Personal or Movable Property.
Section 2(1). Conveyancing Act, 1881.
Conveyancing refers to the creation and transfer of interests or rights in Land. Section 2(v). Conveyancing Act, Section 2(1). Property and Conveyancing Law.
In the course of property transactions, a Lawyer is expected to advise on legal requirements, prepare legal documents and instruments of transfer, document and perfect title, and uphold his professional responsibility to his client in conducting transactions. Section 5 & 22(1)(d). Legal Practitioners Act,
Various Transactions Affecting Land in Nigeria
There exist several transactions affecting Land in Nigeria. These include:
Pledge
Mortgage
Lease
Gift of Land
Donation of Power of Attorney
Sale of Land
Assignment
Wills and Assent
License
These transactions are characterised by several documents which serve as the medium through which interest in property is transferred. These include Deeds of Mortgage/Assignment/Lease, Tenancy Agreements, Contracts of Sale of Land, Power of Attorney, Statutory Forms, Probate Forms, Letters of Administration, Assent, etc.
Below are the features of the above listed transactions.
Transaction
Features
1.
Lease
The landlord is the Lessor while the tenant is the Lessee.
It must be for a period exceeding 3 years.
It must have a certain commencement date and duration (i.e. term certain).
There must be certainty of parties and property.
The agreement must be in writing and by deed.
It is usually given for a consideration.
The Lessee has exclusive possession.
It is only possessory interest that is transferred.
The landlord retains a reversionary interest in the property.
2.
Power of Attorney
It must be in writing.
Must be signed, sealed and delivered where necessary.
It must state the specific powers conferred on the donee.
The Principal is the Donor: The agent is the Donee.
It can be revocable or irrevocable.
It must contain revocable or irrevocable clauses.
The power must be such the principal can exercise himself.
It is not an instrument of transfer of title but of delegation.
3.
Gift
A Gift of Land must be voluntary.
It must be absolute. Anyaegbunam v. Osaka.
There must be an intention to make the gift.
There is no consideration.
There must be witnesses.
It must not be in writing unless it is a formal transaction. But in order to avoid contending the gift, it has to be by deed.
It is made inter vivos i.e. during the lifetime of the parties.
There must be acceptance by the beneficiary.
There must be delivery. Achodo v. Akagha.
A gift cannot be revoked once it is complete.
4.
Pledge
The borrower is the Pledgor whilst the lender is the Pledgee.
It is a customary transaction. Therefore, it need not be in writing.
The interest transferred is merely possessory.
There must be consideration for the pledge.
It is redeemable. Anyaegbunam v. Osaka
5.
Mortgage
The borrower is the Mortgagor whereas the lender is the Mortgagee.
It must be by Deed.
It is a security transaction.
There must be consideration and a collateral.
It could be legal or equitable.
There is only a transfer of possession to the mortgage.
There must be a duration for repayment of loan.
The mortgagor has the right of redemption.
It requires the governor's consent
6.
Sale
The parties are the Purchaser/Assignee and the Vendor/Assignor.
It must be in writing.
There must be payment and acknowledgment of receipt of consideration.
The land must be specifically delineated.
There must be witnesses.
It transfers absolute title in land to the purchaser.
7.
Wills
It is made by a Testator to demise his property to Beneficiaries.
It must be in writing.
It must be signed by the testator in the presence of two witnesses who will attest to the Will.
There must be testamentary capacity.
It is ambulatory i.e. not certain till the death of testator.
It is testamentary.
There must be gifts given and there must be beneficiaries.
8.
Assent
It is an instrument executed by the Personal Representative(s) of the Testator to the beneficiary in order to transfer title to the demised property under a Will to the Beneficiary.
9.
Assignment
It is a transfer of title in land.
It must be in writing and must be by deed.
What is transferred is the residual interest and not the whole interest.
There is no reversionary interest.
There must be covenants.
There must be execution.
It requires the Governor's consent.
It must be registered.
Transactions
Parties
Preparation of Documents
Assignment
Assignor (Vendor) and Assignee (Purchaser).
Assignee's Solicitor.
Contract of Sale of Land
Vendor and Purchaser
Vendors Solicitor
Lease (Above 3 years), Sublease, Licence
Lessor/Sub-Lessor and Lessee/Sub-Lessee and Licensor/Licensee
Lessor's/Sub-Lessor's Solicitor
Will
Testator, Executors and Beneficiaries.
Testator's Solicitor.
Letters of Administration
Deceased and Administrators
Administrator's Solicitor
Tenancy (3 Years and below)
Landlord and Tenant
Landlord's Solicitor
Assent
Executors and Beneficiaries
Executor's Solicitor
Mortgage (transfer of interest in land subject to cesser of redemption)
Mortgagor (borrower) and Mortgagee (lender)
Mortgagee's Solicitor
Donation of Power of Attorney
Donor and Donee (donee is not a party for execution purposes)
Donor's Solicitor
Gift of Land
-
Pledge of land (Possession)
-
Laws Applicable to Land Transactions, Administration of Estates and Property Taxation.
In determining the applicable law to a transaction, the relevant factors to avert your mind to include:
The nature of the transaction.
Location of the property involved (does not apply to Admin. of Estates and Power of Attorney).
With respect to Administration of Estates, Wills, and Power of Attorney; the jurisdiction covering the person making it.
Applicable Laws.
Status of the Parties.
General Applicable Laws
Constitution of the Federal Republic of Nigeria, 1999 (As Amended) - See Sections 43 & 44. CFRN
Land Use Act, 1978 - See Sections 1, 5, 22 & 28.
Stamp Duties Act - See Sections 19 & 22
Evidence Act 2011 - See Section 91(4), 159.
Rules of Professional Conduct, 2007
Legal Practitioners Act
Jurisdiction Specific Laws
Property and Conveyancing Law, 1959. This is applicable to states of the Old Western Nigeria. These States are Osun, Oyo, Ondo, Ogun, Ekiti. It also applies to Edo and Delta states.
Conveyancing Act, 1881 & 1882. This applies to all Northern and Eastern states, with the exclusion of Edo, and Delta State. Edo and Delta States are subject to the Property and Conveyancing Law of 1959.
Land Registration Law. This is the applicable law in Lagos State. It replaces the Registration of Titles Law of Lagos State.
Transaction Specific Laws
Wills Act, 1837 & 1852.
Administration of Estates Law of Lagos State.
Illiterates Protection Law and Act.
Land Instrument Registration Laws.
Personal Income Tax Act.
Law Reform Contract Law.
High Court Civil Procedure Rules of the Various States.
Capital Gains Tax Act
Mortgage Institution Act.
Companies and Allied Matters Act
Legal Practitioners Act
Tenancy Law of Lagos State, 2011.
Marriage Act
Legal Practitioners (Remuneration, Etc.) Order, 1991.
Town Planning Laws.
Ethical Issues relating to Week One.
Rule 14. Rules of Professional Conduct - The preparation of documents must be done diligently in line with applicable laws. A lawyer must be dedicated and devoted to the cause of the client.
Rule 15. Rules of Professional Conduct - A lawyer must advise a client according to the applicable laws in a given situation and must only represent him within the bounds of the Law. See NBA v. Akintokun.
Rule 16. Rules of Professional Conduct - A lawyer must demonstrate competence and expertise in handling transactions. Failure to do so may result in liability for negligence under Section 9 of the Legal Practitioners Act.
Rule 1. Rules of Professional Conduct - Duty to maintain a high standard of professional conduct in all matters.
Where a Lawyer is found liable for professional negligence, he may be required to pay damages or refund of monetary expenses incurred as a result of wrong advice. Furthermore, he may face disciplinary action before the Legal Practitioners Disciplinary Committee (LPDC) established under Section 11 of the Legal Practitioners Act. The LPDC may give directions that he be admonished, suspended from practice, ordered to refund client's properties in his possession, or that his name be struck off the roll. See Olufuntuyi v. Barclays Bank, NBA v. Koku.
Week 2
Deeds
A deed is a document which is in writing on paper, signed, sealed, and delivered. The essence of a deed is for the transaction contained in the deed to create a binding obligation and give effect to the transfer of an interest or right in property or confirm some act whereby an interest or right in property has already passed.
There are three types of deeds: A Deed Poll, Deed Indenture, and a Deed Supplementary. A deed poll is executed by only one person whereas a deed indenture is executed by more than one person. A deed supplemental is used to vary, add, or remove a clause with the consent of the parties. However, a supplementary deed must recite the deed it intends to vary or amend.
A deed may be employed in effecting the conveyance of an interest or right or property in real estate, in creating an obligation binding on a person, or in confirming an act where an interest or property has already been transferred. Deeds are required for certain Power of Attorney or where a statute mandates it. A deed is also required for a surrender of interest. However, deeds are not required where assents or vesting orders are employed or where there is a surrender by operation of law. A short term lease also does not require a deed. Transactions requiring the employment of a deed in order to be valid include:
Gift of Land. Re Vallance
Transfer of Legal interest in Land.
Power of Attorney vesting power in an attorney to execute a deed. See Abina v. Farhart, Powell v. London Provincial Bank
Lease for a term exceeding three years. Section 79(1) & (2). PCL.
Vesting declaration where new trustees are appointed.
Voluntary surrender. This is where a lesser estate is given up to merge with the greater estate in Land.
Rectification of a deed i.e. a Deed Supplementary.
Creation of a Legal Mortgage in States under the Conveyancing Act and the Property and Conveyancing Law.
Discharge of a Legal Mortgage where created by Sub-demise or Assignment in States subject to the Conveyancing Act
Where Statutorily Required. See Section 3. Real Property Act 1845, Section 77(1). Property and Conveyancing Law, Section 4. Statute of Frauds.
Transactions which do not require a deed for validity include:
Assents. An assent, also described as a vesting assent, is the instrument by which the personal representatives of a deceased person convey land to the beneficiary entitled to it.
Surrender by Operation of Law. Surrenders by operation of law usually take effect by implication, as for example, where a lessee accepts a new lease incompatible with his existing lease.
Lease or Tenancy for a term not exceeding three years (3 years and below). See Re Knight (1882), Hand v. Hall (1877). In Re Knight, the lease was for a period less than three years with a right to remain for a further three years. Therefore, it was only a demise for a term less than three years with an option to renew. As such, it was not required to be under seal.
Receipts. These are not required by law to be under seal: for example, a receipt endorsed on a mortgage serves as sufficient discharge of the mortgage.
Vesting Orders. A vesting order is an order made by a Court to create or transfer a legal estate in land. For example, where an equitable mortgagee exercises his power of sale, the Court may make an order vesting the land in the purchaser.
Conveyances taking effect by Operation of Law. Property vest by operation of law in several ways such as:
Admission of a Will to Probate,
Grant of Letters of Administration
Appointment of Trustees in Bankruptcy.
Certain Disclaimers. Section 56 of the Bankruptcy Act provides that a Trustee in Bankruptcy can disclaim onerous properties forming part of the Bankrupt's estate. E.g. Land burdened with onerous covenants. Also, where a beneficiary refuses a gift under a will without doing so in writing.
Transactions covered by the Rule in Walsh v Lonsdale: The rule is that an instrument which is void as a conveyance because it is not a deed may still operate in equity as an agreement for a conveyance.
Essential Elements of a Deed
Signing
As a rule of evidence, every document must be signed to be admissible in Court. See Section 83(4) & 94. Evidence Act 2011. A person cannot incur an obligation under a document unless he has signed it. See Section 97. Property and Conveyancing Law, Faro Bottling Co. Ltd v. Osuji. If an illiterate or blind person is to sign a document, an illiterate or blind jurat must be inserted and attested to by a Magistrate, Notary Public or a Legal Practitioner. See Akingbade v. Olayinka, Section 91(4). Evidence Act 2011. If a document is to be signed by a Company, always affix its common seal. See Section 71 & 74. Companies and Allied Matters Act, Section 98. Property and Conveyancing Law.
Sealing
Sealing is not necessary for an individual as that is implied. Section 159. Evidence Act 2011, Section 80. Registration of Titles Law. In First National Security v. Jones, a mortgage deed was signed by the mortgagor. The signature was across a printed circle at the end of the deed and in that circle were printed the letters "LS" - standing for the Latin Phrase Locus Sigilli, meaning place of the seal. This mortgage was held to be validly executed. See also Stromdale and Ball v. Burden, Carlen Nigeria Ltd. v. University of Jos.
For Companies, their documents must be sealed. Section 71 & 74. CAMA, Containers (Nigeria) Limited v. Niglasco Limited (1979).
Delivery
The document must be delivered. Anambra State Housing Corporation v. Emekwue. Delivery is an act done to evince an intention to be bound and occurs when interest passes. See Jegede v. Citicon Nig. Ltd. Sometimes, delivery takes place subject to a condition, which may be expressed or by implication, and this is known as delivery in escrow. See Dalfam (Nig.) Ltd. v. Okaku Int. Ltd. (2001). Delivery may be absolute or conditional (in escrow). Where a deed is delivered in escrow, it is still binding on the parties. A party cannot back out of a Deed delivered in escrow before the time limited for the condition to be fulfilled. See Dalfam (Nig.) Ltd v. Okaku Int. Limited.
A deed takes effect on the date of delivery even where it is in escrow and there exist subsisting conditions. Terrapin v. IRC, Beesley v. Hallwood. The doctrine of relation back will only operate when the condition is fulfilled and the date of signing the Deed will be the effective date and not the date the condition was fulfilled.
Any act of the party showing that the deed is intended to be binding upon him is sufficient evidence of delivery. Where a vendor executes a conveyance in advance of completion and delivers it to his solicitor, he executes the deed subject to the implied condition that it is not to become effective until the purchaser has paid the purchase price to the vendor's solicitor.
However, mere physical handing over or delivery without an intention to be bound does not amount to delivery for this purpose. See Awojugbagbe v. Chinukwe (1995).
Attestation
This is the witnessing of the Deed. At common law, attestation is not necessary to give validity to a Deed. It is however prudent to add the clause to the Deed, as it facilitates proof of due execution. Section 127 of the Evidence Act raises the presumption of due execution, sealing and delivery where a document is proved to have been signed and duly attested. It is immaterial that no impression of a seal appears on it.
However, there are certain exceptions where the law requires that certain deeds or documents be attested to. In those cases, attestation is required as a matter of law and its absence will vitiate the deed or document. They include:
Deeds or documents executed by illiterates. Where an illiterate executes a deed or document or where he is among those executing, his execution must be attested to by a Magistrate, Justice of the Peace or Notary Public. See Section 8(1). Land Instrument Registration Law. Here the illiterate jurat is mandatory and attestation is also mandatory.
A deed or document executed by a blind person (blind person jurat): where a blind person executes a deed or document or where he is among those executing, his execution must be attested to by a Magistrate, Justice of the Peace, Commissioner for Oaths or Notary Public. See Akinbade v. Olayinka
Deeds or documents executed by a Company or Corporation or Incorporated Trustees. The execution of a deed by any of these bodies must be attested to by its clerk, secretary, director or other permanent officer. For Company, it must be in the presence of a director and the secretary of the company. For incorporated trustees, in the presence of the secretary and a trustee or two trustees. See Section 98(1). PCL, Section 163. Evidence Act 2011.
Wills. Attestation by two or more witnesses is a mandatory requirement for the validity of a Will. This is because Section 9 of the Wills Act of 1837 provides, inter alia, that the execution of a Will must be attested to by two or more witnesses in the presence of the testator, but that no form of attestation shall be necessary. See White v. White.
Power of Attorney. A Power of Attorney also requires attestation. But the attestation can be by any independent person except if the donor is illiterate or blind. See Section 150. Evidence Act. In the case of a Power of Attorney executed outside the country for the purposes of conferring the power to execute a deed, it should be authenticated (attested) by a Notary Public, any Court, Judge, Magistrate, Consul or Representative of Nigeria. See Nnubia vs. A.G Rivers State (1999).
It is necessary that independent persons attest to the execution of the deed. This is to facilitate the proof of the due execution of the deed.
Endorsement of Governor's Consent
Where consent of an authority is a statutory requirement before an alienation of land is done, the fact that the consent is obtained must be endorsed on the Deed. e.g. Section 22. Land Use Act, Section 10 of the Land Instrument Registration Act provides that "No instrument requiring the consent of the Governor or any public officer for the validity thereof shall be registered unless such consent be endorsed thereon or the Registrar is otherwise satisfied that such consent has been given."
The practice is to endorse at the very end of the Deed words to this effect:
"I CONSENT TO THIS TRANSACTION
DATED THIS ……. DAY OF ………. 2008
GOVERNOR OF ABC STATE."
Failure to make provision for this in the Deed will constitute a material omission unless there is other evidence that consent was in fact obtained. Adedeji v. NBN Ltd (1989).
Engrossment
This is the making of fair copies or counterparts of the original deed. It is not essential to the validity of a Deed but it is a way of ensuring that each of the parties has a counterpart of the original.
Alterations and Erasures
These are presumed to have been made before execution. Section 128(2). Evidence Act 2011. It is prudent to ensure that all alterations or erasure are clearly initialled by the parties to the deed at the time of execution. An alteration varies rights and liabilities of parties and may amount to a cancellation of such right or clause. Ottih v. Nwanekwe
Franking
The name and address of the Legal Practitioner that prepared the Deed must be endorsed on the document. The advantage of this practice is that it removes the document from the provisions of the Illiterate Protection Act as a duly franked document is not invalidated by the absence of the Illiterate Jurat. See Saka Braimoh vs. Mrs. Karimu (1999), Edokpolo vs. Ohenhen (1994). In Eya vs. Qudus (2001), the Court of Appeal sitting in Ibadan restated the position thus:
"By virtue of Section 5 of the Illiterate Protection Law, Cap 47 Laws of Ogun State of Nigeria, 1948, the provisions of the law do not apply to any letter or other document written in the course of his business by or at the direction of any person admitted to practice and practicing as a Legal practitioner in the High Court or the Supreme Court. In the instant case, Exhibit F, being a document prepared by a Legal Practitioner, was validly prepared and it need not have any Illiterate Jurat. Thus, the jurat therein was superfluous, although its inclusion was prudent."
Date
The date of a deed is desirable but not mandatory in most transactions. A deed is valid even if it has no date, or it has a false or impossible date. Jegede v. Citicon Nig. Ltd, Anuku v. Standard Bank. A deed is generally presumed to be made on the date of delivery. However, a deed of lease must however be dated.
Formal Parts of a Deed
A deed may be divided into the following parts:
Introductory Part
Commencement. The nature of the transaction determines the commencement. Assignment - This Deed of Assignment; Mortgage - This Deed of Legal Mortgage.
Date. A deed takes effect from the date of its delivery and not on the date on which it is therein stated to have been made or executed. See Section 157. Evidence Act, Anuku v. Standard Bank. When drafting, it is better to leave the deed undated. There are three reasons why a deed is drafted without the date:
Section 157. Evidence Act already provides for the rebuttable presumption as to the date of a document and as such, failure to include the date is not fatal.
Section 23(2)(a) & 23(4). Stamp Duties Act provides that unless an instrument is written upon duly stamped material, it shall be duly stamped with the proper ad valorem duty within 30 days from the day it was executed or after it was received into Nigeria, if it was executed outside Nigeria. Therefore, because of the time limit prescribed for payment of stamp duties, conveyancers usually omit the date on the deed in order to avoid being in default and to avoid the penalty that follows.
The Land Instrument Registration Laws provide for registration within 60 days from the date of execution. Failure to do so attracts penalty.
The Parties. A party to a deed must be legal persons. These consist of natural persons and entities with corporate personality. A party to the deed must be described in detail. This includes the Name, Address and Status in the contract (in bracket). The description of the parties as to status is dependent on the nature of the transaction. For example:
THIS DEED OF ASSIGNMENT is made this ___ day of ____ 20___ BETWEEN CHIEF EMEKA DANLADI ADISA of No. 64, Ikeja Street, Ikeja, Lagos (ASSIGNOR) of the one part AND OGHO DAVID of No. 17, Udeh Street, Suru-Alaba, Lagos (ASSIGNEE) of the other part.
Recitals. These are precise and clear statements of the material facts constituting the background to the present transaction & stated in a chronological order which explains the reasons for the transaction. NITEL v. Rocokonoh. The existence of recitals in a deed is determined by the word 'is' used in the commencement. Recitals generally start with the word "Whereas", no matter the number of paragraphs. Recitals can be introductory or narrative. A narrative recital usually comes before the introductory recital and it states the root of title in the property up till the person in whom it is currently vested. That it, it narrates the history of how the vendor came to own the property in question.
An introductory recital usually comes below the narrative recital and it explains the vendor's intention to transfer the property to the purchaser and the purchaser's intention to acquire the property from the vendor. Functions of recitals include:
A clear recital can help clear ambiguity in the main body of the document.
Section 162 of the Evidence Act provides that when there is recital of fact in a document that is 20 years old at the date of the contract, it will be taken to be sufficient proof of title. Thus the statements of facts in such a recital are presumed to be true and correct. This is the ancient document rule.
Statements of facts in a recital may give rise to estoppel against the person making them. See Section 169. Evidence Act, Olukoya v. Ashiru.
It is a useful way to know the history of the property and how the vendor came to be vested with the property in question.
If the operative part is clear, there will be no resort to the recital. In Ex parte Davies, it was held that a specific description in the operative part of a deed is not controlled by the general description in the recital. A recital cannot be used to modify clear provisions of a deed. It is not every agreement that has a recital. There are some simple agreements that need no recital. Leases generally do not need recital except a sublease.
The Operative Part
The Testatum. A formal statement commencing the operative part. Either "Now This Deed Witnesses as Follows" or "This Deed Witnesses as Follows".
Consideration Clause. When contract involves a consideration, it should be stated. The total amount of consideration must be stated in order to know how much is to be paid as stamp duties. The absence of consideration or consideration clause will not affect the validity of a deed because a deed derives its validity from its form and not from the presence or absence of consideration. However, when inserted, the consideration performs the following functions and is important for the following reasons:
It is evidence that the conveyance is not a gift
It implies that a receipt will be issued to cover the amount received as consideration
It is used for the assessment of stamp duties ad valorem
"in consideration of the sum of _______ paid by the assignee to the assignor…."
The Receipt Clause. This is added to the statement of consideration and evidences that the vendor acknowledges reception of the consideration. The receipt clause should be in bracket. It is usually drafted "… (the receipt of which the vendor/assignor acknowledges) …". The functions of the receipt clause are:
It is an evidence of payment of consideration
By Section 54 of the Conveyancing Act and Section 92 of the Property and Conveyancing Law, the inclusion of a receipt clause in a deed dispenses with the need to issue a formal receipt of payment. This is because it is a sufficient discharge between the vendor/assignor and the purchaser/assignee, without any further receipt for same being issued.
By Section 55 of the Conveyancing Act and Section 93 of the Property and Conveyancing Law, the inclusion of a receipt clause in a deed is sufficient evidence of payment of the whole amount in favour of a subsequent purchaser not having notice whether the consideration acknowledged to be received was in fact paid or given.
By Section 56 of the Conveyancing Act and Section 94 of the Property and Conveyancing Law, the inclusion of the receipt clause in a deed is sufficient authority to pay money to the vendor's solicitor upon production of the deed that was executed by the person entitled to issue the receipt i.e. the vendor, without the solicitor producing any other direction or authority from the vendor and there is no liability for loss.
The receipt clause is not conclusive evidence that consideration has, in fact, been paid. Therefore, oral/extrinsic evidence is admissible to show that consideration has not been paid or fully paid.
Capacity Clause. The covenant of title in a deed are implied by into the deed by statute and the vendor/assignor's capacity is what determines the type of covenants of title that will be implied. The capacity of the vendor/assignor is stated immediately after the receipt clause. The vendor/assignor may be expressed to assign either as beneficial owner, personal representative, settlor, trustee or mortgagee. Where the vendor/assignor is expressed to have conveyed in his capacity as beneficial owner, the covenants of title implied by Section 7(a) & (b) of the Conveyancing Act and Section 100(1)(a) & (b) of Property and Conveyancing Law are:
Right to convey: that the vendor/assignor has the right to convey the unexpired residue of his interest in the property to the purchaser/assignee
Quiet enjoyment: that the vendor/assignor grants quiet possession and enjoyment to the purchaser/assignee
Freedom from encumbrances: that the property is free from encumbrances other than those disclosed to the purchaser in the contract or at the time of the contract
Further assurances.
Where it is a sub-lease, then in addition to the four (4) covenants above, the following two covenants are added to make it six (6):
The lease is valid and subsisting
That the rent has been paid and all the covenants contained in the lease to be observed and performed have been observed and performed up till date.
The above can be expressly excluded by the parties inserting an appropriate clause in the deed.
Words of Grant. This depends on the nature of the transaction. Assignment - assigns, Mortgage - mortgages, Lease - leases.
Parcel Clause. This clause gives a detailed description of the property which is the subject matter of the deed. It is drafted as follows:
"ALL THAT property/piece of land/three-bedroom bungalow at ___________ covered by C of O numbered _______ dated _______ and registered as ______ in the Lands Registry office, Enugu State together with all the rights, easements and things appurtenant to it and more particularly delineated with the red verged line in the annexed survey plan dated ____ and prepared by _________"
Habendum. it is used to define the estate taken by the other party or the quantum of interest given. That is, the habendum is a clause in a deed that defines the quantum or extent of interest granted to the purchaser or lessee under the deed. In Stephen Idugboe v. Anenih (2003), it was held that the habendum is a clause in a deed that defines the extent of ownership in the thing granted to be held and enjoyed by the grantee. The habendum clause is found in deeds of assignment and in deeds of leases. In a deed of assignment, it is drafted as follows:
"TO HOLD the same UNTO the assignee/purchaser for the term unexpired on the said R of O free of all encumbrances and subject to the provisions of the Land Use Act Cap L1, LFN, 2004."
In a lease, it is drafted as follows:
"TO HOLD UNTO the lessee for the term of _____ years, commencing on the _______ day of ________, 20___ and ending on the ________ day of __________, 20___"
In an assignment, the assignor conveys the entire residue of his interest in the property to the purchaser, while in a lease, the lessor retains some reversionary interest. Therefore, the absence of the habendum in a Deed of Assignment does not affect the validity of the deed because it is implied that the vendor/assignor is assigning all the unexpired residue of his interest in the property to the purchaser/assignee. However, in a Deed of Lease, the absence of the habendum may convert the lease to an assignment. This is because a Deed of Lease must specify the duration of the lease by providing for the term and commencement date and the date it ends. See UBA v. Tejumola & Sons, Odutola v. Papersack Nigeria Ltd. Thus a Deed of Lease must contain the habendum.
Miscellaneous Part
Indemnity Clause. This is an undertaking by the purchaser to pay the rent and observe all covenants and conditions running with the land or property. A Purchaser undertakes to indemnify the vendor in the event of a breach of the above covenants and conditions. A vendor may also undertake to indemnify the purchaser for any defect that may arise in respect of his title. The Covenant for Indemnity (Indemnity and Insurance Clause) is drafted as follows:
"the purchaser/assignee or any person deriving title under him covenants with the vendor/assignor from now on, to pay to the relevant authority all rents accruing to the title and due under the C of O for which the land is conveyed and to perform all the covenants and conditions contained to be observed and performed by the vendor/assignor, and also to keep the vendor/assignor indemnified against all proceedings, costs, claims, and expenses on account of any omission to pay rent or to observe and perform any of the covenants and conditions"
On the question of whether or not the indemnity clause must be expressly provided for in the deed, it will depend on the law where the property is located. Thus, in states governed by Property and Conveyancing Law, by virtue of Section 101 and Part VII of Second Schedule to the PCL, where the conveyance is for valuable consideration, the indemnity clause is automatically implied into the deed.
In states governed by Conveyancing Act, the indemnity clause must be expressly provided for as it cannot be implied. In states governed by Registration of Titles Law, by Section 29 of the RTL, the indemnity clause is implied into the deed whether it is for valuable consideration or not. Hence, the Indemnity clause is only required if property the is in Eastern (excluding Edo and Delta States) and Northern Nigeria. It is not required under the RTL by virtue of Section 129. RTL and is not required under PCL if consideration is paid. See Section 101. PCL. This is an undertaking by the assignee to pay the rates and observe the covenants and conditions stated in the certificate of occupancy.
Acknowledgement for production and undertaking for safe custody. An assignor can keep the original title documents when all the interest in the property has not been transferred to the assignee. In those circumstances, the interest of the assignee may be protected in any of the following ways:
Making and undertaking to keep the original title documents in safe custody.
Acknowledgement of right of the assignee to the production of the original title document.
Endorsement in writing on the face of the original title document that a part of the land has been transferred to the assignee to put a third party on notice.
Exception and Reservation Clause. Exceptions refer to whatever is withheld from the purchaser in the grant by the vendor (existing rights) while Reservations are new rights created by the parties which are beneficial to the vendor.
Concluding Part
The Testimonium. This commences the concluding part of the deed and it is drafted as follows: "IN WITNESS OF WHICH the parties have executed the deed in the manner below the day and year first above written"
The Schedule, if any. It provides additional information and clarity and serves to banish technicality. The survey plan would be in the schedule.
Execution Clause. A deed must be signed, sealed and delivered. Where it is a company, the "SIGNED, SEALED AND DELIVERED" is replaced with "The common seal of Medici Nigeria Ltd was affixed to this deed and it was duly delivered in the presence of Director and Director/Secretary"
A deed must be signed by the parties. Section 97(1) of the PCL provides that where an individual executes a deed, he shall either sign or place his mark on it and sealing alone shall not be deemed sufficient. See also Section 83(4). Evidence Act, Faro Bottling Co. Ltd v. Osuji (2002), Adefarasin v. Dayekh. Signature can be mark, thumb print. A party to a deed who fails to sign cannot sue on the contract covered by the deed.
Prior to now, a deed must be sealed by individuals. However, what the Courts now look out for is the intention to seal and have de-emphasized the need for actual sealing. Any indication of an intention to seal will be accepted for the purpose of the due execution of a deed and the deed will be deemed to have been validly executed even though there is no actual seal on it. In First National Securities Ltd v. Jones, the deed was sealed and the Court held that where there is intention to seal, it must be upheld.
Section 80 of the RTL provides that an instrument which is expressed to be made or to operate as a deed shall be deemed to be a deed and shall operate accordingly, but shall not on that account be required to be sealed. Further, Section 159 of the Evidence Act presumes that a deed which has been signed and duly attested to is presumed to have been sealed and delivered, even though no impression of a seal appears on it. The said Section 159 provides that when any document purporting to be, and stamped as, a deed, appears or is proved to be or to have been signed and duly attested to, then it is presumed to have been sealed and delivered although no impression of a seal appears on it. See also Stromdale & Ball v. Burden.
However, for a company, there must be actual sealing in the presence of a director and secretary of the company. There must be actual sealing and not presumption or intention of sealing for Companies and Corporations only. Section 163 of the Evidence Act and Section 98(1) of the PCL both provide that a deed shall be deemed to have been duly executed by a company or corporation if its seal is affixed thereto in the presence of and attested by its clerk, secretary, director or other principal officer or his deputy. See Western Nigeria Finance Co. Ltd. v. West Coast Builders.
Delivery does not necessarily mean physical handing over of the document. The fact that there was a handover does not mean that there is delivery and absence of handover does not mean that there is no delivery. Hence, delivery means that the maker of a deed expressly or impliedly acknowledges his intention to be immediately and unconditionally bound by the terms of the deed. It is an act done to evince an intention to be bound by the terms of the deed. See Jegede v. Citicon Nig. Ltd (2001), Vincent v. Premo Enterprises. Mere physical handing over or delivery without an intention to be bound does not amount to delivery for this purpose. See Awojugbabe Light Industries Ltd. v. Chinukwe.
Delivery can be total/unconditional or conditional/escrow delivery. Delivery in escrow means that delivery of the deed is conditioned on the happening of some specified event or the performance of certain conditions and the delivery is not complete until the event has occurred or the condition has been performed. Interest will not pass until such conditions are fulfilled. Where a deed is delivered in escrow, the principle of relation back applies. This is a principle whereby an act relates back to a prior date, from which date it is construed to have taken effect. This means that where a deed is delivered in escrow, the effective date of delivery relates back to the day on which the deed was delivered in escrow and not the date on which the conditions were performed. See Alan Estates Ltd. v. W.G. Stores Ltd. However, where a deed is delivered on the conditions that it becomes operative on the death of the grantor, it is not in escrow, but a testamentary instrument. See Governor vs. Guardians of Foulding Hospital & Crane. Also, a deed which is delivered subject to a condition and subject to such a right of withdrawal is not an escrow, but merely an undelivered deed.
The delivery of a deed in escrow is a final delivery in the sense that it cannot be withdrawn by the grantor before the grantee has had the opportunity to fulfill the condition. See Beesely v. Hallywood Estates Ltd where it was held that if you deliver a document as an escrow, it is your act and deed and it is not recallable by you.
The Attestation. This refers to the application of the signature, mark, thumb print etc. of the parties
Individuals
"SIGNED, SEALED and DELIVERED by the 'assignor'
_____________
Chief ABC
"SIGNED, SEALED and DELIVERED by the 'assignee'
______________
Chief XYZ
Company
"THE COMMON SEAL OF ABZ (NIG.) LIMITED is affixed to this deed and the deed was duly delivered in the presence of:
----------------- -------------------
Director Secretary
Illiterate/Foreigner (Non English Speaker)
"SIGNED, SEALED and DELIVERED by (the illiterate/blind)
The content of this deed having been first read and interpreted by me (name of Interpreter) from English language to Igbo language and he appeared perfectly to understand same before affixing his thumb print
---------------------
(THE ILLITERATE / BLIND)
BEFORE ME
_________________
MAGISTRATE / NOTARY PUBLIC
Attorney
"Signed, sealed, and delivered by the assignor through his Attorney (Name of Donee) by virtue of a POA dated _______ and registered in No. __________ at page _______ volume_____ at the Enugu state land registry. Note (FCT - ABUJA GEOGRAPHIC INFORMATION SYSTEM)
"IN THE PRESENCE OF:"
NAME: _________________________
ADDRESS: ______________________
OCCUPATION: _________________
SIGNATURE: ____________________
"IN THE PRESENCE OF:"
NAME: _________________________
ADDRESS: ______________________
OCCUPATION: _________________
SIGNATURE: ____________________
Governor's Consent
Franking. This provides for the name and address of the Solicitor who prepared the instrument. Franking serves to avoid the effect of the Illiterate Protection Act or Law as a duly franked document is not invalidated by the absence of the Illiterate Jurat. Saka Braimoh vs. Mrs. Karimu, Section 5. Illiterates Protection Act. The Commissioner for Stamp Duties may not accept a document if it is not endorsed by a legal practitioner. Edokpolo & Co. vs. Ohenhen
Perfection of a Deed
Perfection involves the following
Obtaining the Governor's consent. Section 22(2). Land Use Act
Stamping the Deed of Assignment
Registration
Failure to obtain the Governor's consent as regards land in a State or the Minister's consent when dealing with land in Abuja will render the legal transfer of interest void and make the interest equitable or inchoate. See Savanah Bank v. Ajilo
Where there is a failure to stamp the agreement, it will not be admissible in evidence. In Lagos, a failure to stamp after 60 days of the execution will make it void. Penalty will be paid as fine for late stamping.
Where there is a failure to register the agreement, it will be inadmissible in evidence and the interested party will not have priority over the land. Furthermore, it will only vest equitable interest in the owner
The Particulars of Instructions Needed to Draft a Deed of Assignment
The particulars of the parties
The particulars of witnesses
Description and location of the property
The history of the title to the land (abstract)
Consideration
Covenants and undertakings
Capacity of the Assignor
The quantum of interest given by the Assignor (Habendum)
Drafts of Deeds
DEED OF ASSIGNMENT
THIS DEED OF ASSIGNMENT is made this _______ day of ____________ 2016 BETWEEN The Registered Trustees of the Nigerian Bar Association, a body registered under Part C of the Companies and Allied Matters Act, Cap. C20, LFN 2004, and having its registered office at Ikeja Branch, Lagos, ("The Assignors") of the one part AND Mr. Kitunde of No. 23 Uguru Street, Yaba, Lagos ("The Assignee") of the second part.
RECITAL:
The assignor is the beneficial owner in possession of the property described in this deed of assignment.
The property is free from encumbrances.
The assignor has agreed to sell the property to the Assignee, and the Assignee has agreed to buy the property.
NOW THIS DEED WITNESSES AS FOLLOWS:
In consideration of the sum of N10,000,000 (Ten Million Naira only) paid to the assignors by the assignee (the receipt of which sum the assignor acknowledges), the assignors as beneficial owners hereby ASSIGN unto the assignee all that residue now unexpired of the term of years of the property located at No. 55 Ladoke Lane, Ikeja, Lagos, covered by the certificate of occupancy No. 864500 dated 11/11/2008 TO HOLD the same unto the Assignee subject to the provisions of the Land Use Act.
IN WITNESS OF WHICH THE PARTIES HAVE EXECUTED THIS DEED IN THE MANNER BELOW THE DAY AND YEAR FIRST ABOVE WRITTEN.
The common seal of The Registered Trustees of the Nigerian Bar Association ("The Assignors") was affixed on the ____ day of _______ 2016 and duly delivered in the presence of
________________________________ _______________________________
Mr. Ahmed Hassan Mr. Muazu Malik
Chairman Secretary
SIGNED, SEALED AND DELIVERED by the within named Assignee
________________________________________
Mr. Bashir Kitunde
IN THE PRESENCE OF
Name: __________________________________________
Address: _______________________________________
Occupation: ___________________________________
Signature: _____________________________________
Franked by:
Michael Izuchukwu Ezeh
Group 10 Chambers
No. 16 Ozumba Mbadiwe, Way, Victoria Island
Lagos State
I hereby consent to the transaction contained in this deed
Dated this__________ day of ______________, 2015
_______________________________
Governor
Lagos State
…………………………………………………………………………………………………………………………………….
DEED OF ASSIGNMENT
THIS DEED OF ASSIGNMENT is made this _______ day of ____________ 2015 BETWEEN
The Registered Trustees of the Nigerian Bar Association, a body registered under Part C of the Companies and Allied Matters Act, Cap. C20, LFN 2004, and having its registered office at Ikeja Branch, Lagos, ("The Assignors") of the one part
AND
Ogui Fish Farmers Microfinance Bank Limited, a body registered under Part A of the Companies and Allied Matters Act, Cap. C20, LFN 2004 and having its registered office at ________ ("The Assignee") of the other part.
RECITAL:
The assignor is the beneficial owner in possession of the property described in this deed of assignment.
The property is free from encumbrances.
The assignor has agreed to sell the property to the Assignee, and the Assignee has agreed to buy the property.
Concluding part:
IN WITNESS OF WHICH THE PARTIES HAVE EXECUTED THIS DEED THE DAY AND YEAR FIRST ABOVE WRITTEN.
The common seal of The Registered Trustees of the Nigerian Bar Association ("The Assignors") was affixed on the ____ day of _______ 2016 and duly delivered in the presence of
________________________________ _______________________________
Mr. Ahmed Hassan Mr. Muazu Malik
Chairman Secretary
___________________________________________
The Common seal of Ogui Fish Farmers Microfinance Bank Limited ('The Assignee') was affixed on the _______ day of ____________ 2014 and duly delivered in the presence of:
________________________________ _________________________________
Director Secretary
Franked by:
Michael Izuchukwu Ezeh
Group 10 Chambers
No. 16 Ozumba Mbadiwe, Way, Victoria Island
Lagos State
I hereby consent to this transaction between the parties
Dated this__________ day of ______________, 2015
_______________________________
Governor
Enugu State
…………………………………………………………………………………………………………………………………….
DEED OF ASSIGNMENT
THIS DEED OF ASSIGNMENT made this ________ day of _________ 2016 BETWEEN
Alheri Zainab Abaniwonda (Family Head)
Mr. Ferdinard Abaniwonda (Principal Member)
Mrs. Zitta Jones (Principal Member)
Mr. Femi Abaniwonda (Principal Member)
For and on behalf of the Abaniwonda Family, of No. 89 Ring Road, Jos, Plateau State ("The Assignors") of the first part
AND
Mr. Samuel Ajayi
Jonah Adams
Trading under the name and style of Beauty Zone Enterprises, a body registered under Part B of the Companies and Allied Matters Act, Cap. 20, LFN 2004 and having registered office at ___________ ("The Assignee") of the second part.
Concluding part
IN WITNESS OF WHICH THE PARTIES HAVE EXECUTED THIS DEED THE DAY AND YEAR FIRST ABOVE WRITTEN.
SIGNED SEALED AND DELIVERED by the within named Assignors
_________________________________ ________________________________ _______________________________
Alheri Zainab Abaniwonda Mr. Ferdinard Abaniwonda Mrs. Zitta Jones
Family Head Principal Member Principal Member
_________________________________
Mr Femi Abaniwonda
Principal Member
(For Themselves and On Behalf of the Abaniwonda Family of Jos, Plateau State).
In the presence of:
Name: ____________________________________________________
Address: _________________________________________________
Occupation: ______________________________________________
Signature: ________________________________________________
SIGNED SEALED AND DELIVERED by the within named Assignees
_________________________________ ________________________________
Mr Samuel Ajayi Jonah Adams
Partner Partner
(Carrying on business under the name and style of Beauty Zone Enterprises)
In the presence of:
Name: ____________________________________________________
Address: _________________________________________________
Occupation: ______________________________________________
Signature: ________________________________________________
…………………………………………………………………………………………………………………………………….
DEED OF ASSIGNMENT
THIS DEED OF ASSIGNMENT is made this ______ day of _________ 2015 BETWEEN Mr. Joe Ojulari and Mrs. Josephine Ojulari of 38 Family Crescent, Anthony, Lagos (the Assignors) of the first part AND
Mr. Chang Zex of No. 56 Marina Lagos (the Assignee) of the second part.
This Deed Recites as Follows:
The Assignor is the beneficial owner in possession of the property described in this assignment.
The property is free from encumbrances.
The Assignor has agreed to sell the property to the Assignee, and the Assignee has agreed to buy the property.
Concluding Part
IN WITNESS OF WHICH THE PARTIES HAVE EXECUTED THIS DEED THE DAY AND YEAR FIRST ABOVE WRITTEN.
SIGNED, SEALED AND DELIVERED by the within named ASSIGNOR
____________________________________ ______________________________________
Mr. Joe Ojulari Mrs. Josephine Ojulari
IN THE PRESENCE OF:
Signature: ___________________________________
Name: _______________________________________
Address: ____________________________________
Occupation: ________________________________
SIGNED, SEALED AND DELIVERED by the within named ASSIGNEE
_____________________________________
Mr. Chang Zex
The contents of this Deed having been read over and explained to the Assignee in Spanish Language by me, _____________ of ________________________ and he seemed perfectly to have understood the same before affixing his signature.
BEFORE ME
______________________________
MAGISTRATE
Franked by:
Michael Izuchukwu Ezeh
Group 10 Chambers
No. 16 Ozumba Mbadiwe Way, Victoria Island
Lagos State
I hereby consent to this transaction between the parties
Dated this _____ day of ____________ 2015
________________________________
Governor
Lagos State
…………………………………………………………………………………………………………………………………….
Week 5
Power of Attorney
A Power of Attorney is a document usually but not always necessarily under seal whereby a person seized of an estate in land authorizes another person (the donee) who is called his attorney to do in the stead of the donor anything which the donor can lawfully do, to the extent usually clearly spelt out in the Power of Attorney.
The person who donates the power is called the 'donor' (Principal) while the person to whom the power is donated is called the 'Donee' (Attorney).
A Power of Attorney may be employed for any of the following purpose:
Remedial device for legal mortgage by sub-demise in States covered by the Conveyancing Act.
Buying and selling land on behalf of the Donor.
Collecting money on behalf of the donor
Prosecuting cases in Court.
Receiving rates, rents, profit a prendre. See Ude vs. Nwara.
Usually, a Power of Attorney is made in a Deed poll (a Deed made by one party). However, in the following instances it is advisable to be made in Deed Indenture (a Deed made by two or more parties):
When it imposes some obligations on the Donee.
Where it is important to have a record of the Donee's signature to prevent fraud.
Where it is supported by a consideration.
Where it is coupled with an interest and so it is desirable to be signed by both parties.
The mode of creating a Power of Attorney depends on the purpose of that Power of Attorney. See Melwani vs. Five Star Limited. Where the Power of Attorney has to do with land, it must be in writing to comply with Section 4. Statutes of Fraud 1677. Where a Power of Attorney empowers the Donee to execute a deed, it must be by deed. See Abina v. Farhart, Powell v. London Provincial Bank. Where executed outside Nigeria, it must be attested to by a notary public. Hutcheon v. Mannington, Ayiwoh v. Akorede. Where the donor is illiterate or blind, there must be an illiterate or blind person's jurat. Ezeigwe v. Awudu.
For the power of Attorney to be valid, both the donee and donor must be a legal person. National Bank vs. Korban Brothers Nig. Ltd. Thus, a person under any legal disability cannot donate or be appointed a donee of a Power of Attorney. If the authority relates to land, the donor must be the owner of the land. The donor must have the capacity to carry out the act which he authorizes another. Thus, the appointment of an agent cannot be used to cure disability suffered by the Principal. Ajuwon v. Adeoti.
Circumstances Requiring Power of Attorney
A Power of Attorney is not mandatory in land transaction. However, the following circumstances may require a power of Attorney:
Unavailability of the donor. Ezeigwe v. Awudu, Chime v. Chime
Physical impairment
The need to involve an expert e.g. lawyers by virtue of their knowledge of the law.
Where donee is sought to be empowered to execute a deed or transfer interest in land
May be employed as a tool to secure purchaser's interest pending perfection of title of purchaser.
Where mortgage is by demise/sub demise under Conveyancing Act pending payment of mortgage sum
Capacity of the Parties
A person may appoint an attorney to carry out on his behalf only acts that he may himself lawfully do. The appointment of an Attorney cannot be used to cure a disability suffered by the Donor. Therefore, the Donor must be legally capable of doing that which he appoints another to do on his behalf.
Only a juristic person capable of suing and being sued can be appointed a Donee of a power of attorney. A business name or unincorporated body/Association or an Office cannot be appointed as they all lack the legal capacity. NBN Ltd. vs. Korban Brothers, Ude vs. Nwara, Chime vs. Chime. Where Power of Attorney is conferred on more than one person, the instrument must specify how the attorneys will sign e.g. together or by some other specified way.
Where the Power of Attorney relates to family property, it must be executed by the head of the family as one of the donors otherwise it is void. Ajamogun v. Oshurinde. Furthermore, a "Recital" must be included in the actual Power of Attorney to depict that the consent of principal members of the family was obtained.
Features of A Power of Attorney
It is a document in writing. It cannot be given orally. Abina v. Farhat.
It is an instrument of delegation. Ude v Nwara, Chime v. Chime.
It does not alienate or transfer interest in Land. Amadi v. Nsirim, Ezeigwe v. Awudu.
A Power of Attorney must be in writing but need not to be by deed. However, where the Power of Attorney is given to do an act which necessitates the execution of a deed, then it must be by deed.
It must be given by a person with legal capacity to another with legal capacity.
It requires a fixed rate of stamping. Usually the Registry assesses the document per value of the consideration offered. (generally land or rental value)
Power of attorney is usually a special instrument in the form of a Deed Poll, that is, an instrument that is executed by only one party.
A Power of Attorney may be revocable or irrevocable.
Where it is given for valuable consideration or coupled with an interest, it cannot be revoked by the donor without the concurrence of the donee until the interest for which it is granted is exhausted.
It does not require a consent provision, since it does not transfer interest in land.
A Power of Attorney is construed strictly and exhaustively as any extrinsic evidence cannot be admitted to establish additional powers given to the Donee not stated in the power of attorney. Re Bryant. Thus, oral evidence will not be admitted to contradict the powers expressly given in a Power of Attorney. NBA v Iteogu.
In a Power of Attorney, the general power clause does not confer any additional power to the Donee so a solicitor must exhaustively list out the Donee's powers and without ambiguity. Abina v. Fahart. The Power of Attorney must be drawn in a form that will ensure that no difficulty is experienced when dealing with third parties. Jacobs vs. Morris
Characterization of Power of Attorney
Powers of Attorney are characterised by the extent of the authority vested, the ease of revocability, and the length of time during which it subsists.
Extent of Authority
A General Power of Attorney is where the powers are broadly stated to cover issues pertaining to the subject matter. On the other hand, a Specific Power of Attorney is where the power is given in respect of a particular act to be done by the donee of the power e.g. to let premises to tenant and collect rent.
Ease of Revocability
A revocable power of attorney is one that can be revoked at any time and for any reason as long as the donee has not exercised the power. An irrevocable power of attorney is one which is given for a consideration and also coupled with interest.
Length of Time
A fixed power of Attorney is for a fixed period not exceeding twelve months within which the Power of Attorney cannot be revoked.
Revocation of Power of Attorney
This occurs when the Donor does not want the Donee to act for him any longer. The form of appointment of a Donee determines the form to be used in revoking it. An equal or one higher in form compared to that used in creation can be used for the revocation otherwise any such revocation will be invalid. For instance, a Donee appointed by a Deed can only be removed by a Deed and not a mere letter. Ojugbele v. Olasoji. A Donee appointed by a letter can be revoked by a Deed which is a form higher than the mode of his appointment. A revocation may be Express, Implied, or by Operation of Law.
Power of Attorney is a special form of agency. Therefore, some rules of agency therefore apply. Accordingly, in keeping with the rule that he who hires reserves the right to fire, the Donor can expressly remove the Donee or revoke the power. However, if the appointment is by deed, the power must be revoked by deed to be valid. Adegbokun vs. Akinsanya, Ojugbele v. Olasoji
An implied revocation occurs where the Donor, after giving a Power of Attorney to a Donee, still goes ahead and deals with the subject matter of the POA in such a manner that makes it impossible for the Donee to effect his authority under the Power. The fact that a donor gave a Power of Attorney does not mean that the Donor cannot himself do the act. Chime v. Chime.
A Power of Attorney is deemed revoked by operation of law if the Donor suffers death, insanity, bankruptcy or other legal incapacity during the subsistence of the power. Abina vs. Farhart, UBA vs. Registrar of Titles. An exception occurs where the power is coupled with interest or is fixed for a period of time. In such circumstances, the death, lunacy or bankruptcy of the donor will not affect the power. A Power of Attorney can be invalidated if fraud, duress or undue influence is established, whether or not valuable consideration has been furnished. Agbo v. Nwikolo
There are situations when the power of attorney is irrevocable. Both the Conveyancing Act, 1882 and the P & CL, 1959 provide protection for a third party dealing with the attorney under two situations:
When a Power of Attorney is given for valuable consideration and expressed to be irrevocable simpliciter. If a power of attorney is given for valuable consideration and in the instrument creating the power, it is expressed to be irrevocable in favour of the purchaser, that power shall not be revoked by the donor without the consent of the donee. See Section 81 of the Conveyancing Act and Section 143(1) of the P & CL. See also the case of UBA v. Registrar of Titles.
The death, disability or bankruptcy of the donor shall not revoke that power of attorney. Where the Power of Attorney is coupled with an interest, it is irrevocable until the interest is exhausted. In the case of Lababedi v. Odulana (1973), the issue was whether or not the power given to the plaintiff by the first defendant was irrevocable. The court held in this case that the power of attorney was irrevocable.
The second statutory exception is where the power of attorney is stated to be irrevocable for a fixed term not exceeding 12 months. Here, it does not have to be for valuable consideration. Even if there is no valuable consideration, as long as it is for a fixed term not exceeding 12 months, the donor cannot revoke it. See Section 91 of the Conveyancing Act 1882 and Section 144(1) of the Property and Conveyancing Law, 1959.
Protection of Third Parties on the Revocation of a Power of Attorney.
See Section 9, 10 & 71. Conveyancing Act, Section 142 & 143. P & CL
A third party who had acted with the Donee based on a Power of Attorney which later was revoked is protected by Law on the following:
Where the third party is a bona fide purchaser for value without notice of the revocation of the owner, he cannot lose interest. The Donor, thus, can only sue the Donee in damages for unlawful exercise of power.
Where a person has knowledge of the revocation, but goes ahead to acquire - he has no protection.
Where though the 3rd party had knowledge of the revocation but however obtains a statutory declaration from the donee that he has not received any official communication of the revocation, then the third party is protected. However, the statutory declaration must be done within 3 months of the revocation.
Where the Donee has not received any official communication of the revocation, then the 3rd party is protected. However, the statutory declaration must be done within 3 months.
Distinction Between Power of Attorney and a Conveyance
S/N
Power of Attorney
Conveyance
1
Parties - Donor and Donee.
Parties - Vendor and Purchaser.
2
Does not transfer title in land
Transfers interest or title in land
3
Governors consent is not required (except in Lagos where it is required)
Requirement of governor's consent is mandatory. Section 21 & 22. Land Use Act
4
Usually executed by one party, thus a Deed Poll.
Usually executed by both parties, thus a Deed Indenture.
5
It is an instrument of delegation
It is an instrument of transfer
6
No special mode of creation
A conveyance must be by deed
7
It need not contain a recital
Must contain a recital
8
May or may not be revocable
A conveyance is not revocable except if delivered in escrow and the condition has not been fulfilled.
9
A Power of Attorney may be executed in respect of any subject matter
A conveyance must be for interest in land.
10
The donee cannot sue in his own name but in the name of the donor. Melwani v. Five Stars Ltd.
Any cause of action can be instituted in the name of the parties
Differences Between Power of Attorney and Contract of Sale of Land
Power of Attorney
Contract of Sale of Land
1
Does not transfer title in land
Transfers equitable interest in land
2
Usually executed by one party
Usually executed by both parties
3
A Power of Attorney does not always require consideration.
Requires consideration to be valid
4
Must not be exchanged between the parties
It must be exchanged between the parties to be valid
5
Does not necessarily attract stamp duty but attracts a fixed duty
Attracts a stamp duty (ad valorem). Section 28. Stamp Duties Act.
The particulars required to prepare a Power of Attorney include:
Name & address of the Donor
Name & address of the Donee
Purpose of the Power of Attorney (i.e. the powers to be given)
Whether or not it is given for valuable consideration, and if yes, what is the Consideration.
Whether or not is shall be expressed to be irrevocable and the duration of irrevocability
Form & Content of a Power of Attorney
Commencement
In the olden days, a Power of Attorney was generally commenced with the words:
"KNOW YE ALL MEN BY THESE PRESENTS"
In modern practice, a Power of Attorney is generally commenced with:
"BY THIS POWER OF ATTORNEY".
Or
"THIS POWER OF ATTORNEY".
Date
"given this ____ day of ___________ 2016"
Or
"made the ____ day of ___________ 2016"
Recital
Recitals are rarely found in a Power of Attorney. It is generally necessary only where the Donor seeks to show that he has the consent of other principal members of the family to give the Power of Attorney. Recitals may be useful in the interpretation of a document. However, it is not normally taken into consideration when construing the document.
Appointment Clause
This is the clause appointing the Donee. The Appointment Clause in a Power of Attorney is for identification purpose only. A power of attorney being the delegation of power is not an agreement between one person and the other. Hence, it provides for the appointment clause. For example:
"I, Alhaji Abu Bango of 10, Abuja Close, Ikeja, Lagos, HEREBY appoint Mr. Eze Okoro to be my true and lawful Attorney and in my name and on my behalf to do all or any of the following acts or things:
Power/Authority Clause
This is a statement/list of the acts which may be performed by the Donee on behalf of the Donor. It should be very clear and exhaustive. The drafter must be meticulous in presenting their intentions because, as already stated, the powers conferred on the attorney are construed strictly. The clause usually ends with an omnibus expression thus:
"AND I ALSO DECLARE that my attorney may do all other things as I may lawfully do."
Or
"AND to do all things necessary and incidental to the matters above as I may lawfully do."
The inclusion of the omnibus clause does not introduce any powers beyond what is enumerated. Abina vs. Farhart.
Irrevocability Clause
To take the benefit of the statutory protection of third parties, it is important that a clause should be inserted to the effect that:
"AND IT IS DECLARED that in consideration of the sum of N50,000.00 (fifty thousand Naira) only, paid to the Donor by the Donee (the receipt of which the Donor hereby acknowledges) IT IS DECLARED that this Power of Attorney shall be irrevocable for a period of ____ months/years from this date.
Or
"IT IS DECLARED that this Power of Attorney shall be irrevocable for a period of twelve months from this date.
Testimonium
The Testimonium is couched thus:
"IN WITNESS OF WHICH the Donor has executed this Power of Attorney in the manner below the date and year first above written."
As opposed to other conveyancing documents, such as assignment, lease and mortgage, the language of power of attorney is in the singular. This is because, often times, only the donor executes it. Hence, it is called a Deed poll. For example:
"IN WITNESS OF WHICH I (name of donor) have executed this Power of Attorney in the manner below the day and year first above written.
Execution
"SIGNED, SEALED AND DELIVERED by _____________ (Name of the Donor).
This should be done in the name of the donor.
Execution of Deeds by an Attorney
The Donee may execute in the Donor's name or in his own name, except where statute requires execution in the name of the estate owner. Section 9(5) & 141. P & CL. Section 141(2). P & CL provides that statutory direction may be given for execution in the name of the estate owner.
In such cases where Deed is executed by an Attorney in his own name and on behalf of a Donor, the Donee executes the deed of conveyance on the Donor's behalf, notwithstanding that the Donor is the vendor. It is important that detailed particulars of the Power of Attorney are provided in the Execution Clause. Below is an example of execution by an Attorney:
"SIGNED SEALED AND DELIVERED by
__________________________
(name of the donee) the lawful Attorney of
(name of donor), the Vendor by virtue of
a Power of Attorney dated 1st January 2008
and Registered as No. 34 Page 21 Vol. 160
of the Lands Registry Office at Lagos.
In the presence of:
Signature: _____________
Name: __________________
Address: ________________
Occupation: ____________"
Attestation
Attestation facilitates proof of due execution. Generally, attestation is not mandatory in a Power of Attorney. Where a Power of Attorney is attested to by a Judge, Notary Public or a Magistrate, it is presumed to be duly executed. Section 118. Evidence Act, Ayiwoh v. Akorede (1951) 20 NLR 4.
A Power of Attorney intended for use outside the country should be attested to by a Notary Public, for easy acceptance in the country of use. This is because a Notary Public has credit all over the world. However, the fact that it is not attested to by a Notary Public does not render the Power void. Melwani v. Five Stars Ltd.
"IN THE PRESENCE OF"
Name: _______________________
Address: _____________________
Occupation: _________________
Signature/Mark: ____________
Or
BEFORE ME:
________________________________
NOTARY PUBLIC/MAGISTRATE
Perfection of a Power of Attorney
A Power of Attorney is perfected by obtaining the governor's consent, stamping and thereafter registering the instrument.
Governor's consent is generally not needed as it is not a document transferring interest in land or the subject matter of delegation to the Donee. Ude v. Nwara. However, where a Power of Attorney is used to alienate interest in land, it is registrable as an instrument and governor's consent must be sought and obtained. The consent column must be typed into the instrument as in the case of an assignment. See Section 7(b)(iii). State Lands Law of Lagos State.
Generally, Power of Attorney attracts a fixed stamp duty. Stamping is necessary for it to be admissible in Court.
Registration depends on whether the Power of Attorney qualifies as an instrument under the Land Instrument Registration Law applicable to the State where it is used. Uzoechi vs. Alinnor. A Power of Attorney will be a registrable instrument where:
It gives power to the Donee to deal with an interest in land
It is defined in the land Instrument Registration Law of a State as registrable
It is endorsed on any document transferring land i.e. a Deed of Assignment. See Section 84 & 85. Registration of Titles Law of Lagos State.
In some jurisdictions e.g. the Federal Capital Territory, the Lands Registry will demand a letter of consent from the Donor before the Power of Attorney is accepted for registration. This is to prevent fraud.
Non-registration of a Power of Attorney where it is registrable renders it inadmissible as evidence in Court. Ojugbele vs. Olasoji.
General Principles of Law Regarding Power of Attorney
Abina vs. Farhat
A Power of Attorney to execute a deed must be under a deed. In that case the donee had been granted power of attorney orally and he had executed a lease exceeding three years under deed. The Court held the lease to be invalid. See also Powell v. London Provincial Bank.
Chime vs. Chime (2001) 3 NWLR (Pt. 701) 527 at 549.
The fact that a Power of Attorney has been granted by a donor does not prevent the donor of the power from exercising the powers donated. This is so long as the donee has not yet exercised the power.
A Power of Attorney is general where the powers are broadly stated to cover issues pertaining to the subject matter while they are specific or limited where the power is given in respect of particular acts to be done by the donee of the power
Where a Power of Attorney is expressed to be irrevocable and is given to secure a proprietary interest of the donee or the performance of an obligation directed to the donee, it is irrevocable either by the donor without the consent of the donee, or by the death, incapacitation, bankruptcy, winding up or dissolution of the donor so long as the donee has the interest or the obligation remaining
Ude vs. Nwara (1993) 2 NWLR 638 at Page 664:
It was held herein that as long as the donee acts within the scope of the power of attorney, he incurs no personal liability. Any liability is that of the donor. It was also held that a power of attorney is only an instrument of delegation and not one which confers transfers, limits, changes or alternates any title to the donee.
Ojugbele vs. Olasoji (1982) SC 71
When a Power of Attorney is not registered then it is not admissible. That is, if the Land Instrument Registration Law of that particular state defines a Power of Attorney as a registrable instrument, then failure to register the said Power of Attorney will render it inadmissible in Court.
Where the powers in a Power of Attorney are specifically listed, the Court is bound to comply with them and not depart from their provisions. Hence, the donee cannot vary, contradict, or add to the specific provisions of the power of attorney
Uzoechi vs. Alinnor (2002) 2 NWLR (Pt 753) 217 at 274
Whether a Power of Attorney is a registrable instrument is dependent on the Land Instrument Registration Law of the various states. For instance, the State Land Law of Lagos defines "instrument" to include Powers of Attorney. Therefore, Powers of Attorney are registrable instruments in Lagos. Similarly, under Section 3 of the Land Instrument Registration Law of Northern Nigeria as applicable in Plateau State, a Power of Attorney is a registrable land instrument. By Section 15 thereof, for such Power of Attorney to be relied on in Court, it must be duly registered. It must be noted that only Powers of Attorney made by deed are registrable. However, such unregistered Power of Attorney can be pleaded and given in evidence in other cases not relating to or affecting the land which is the subject of the Power of Attorney. See also Akinbade v. Elemosho
Ajamogun vs. Oshunrinde (1990) 4 NWLR (Pt. 144) 407 at 419
The Power of Attorney in respect of family property not given or executed by the head of family or with his express consent is void and any act purported to be done under it is of no effect whatsoever. The family head must participate in the execution of a power of attorney in respect of family property either as sole donor or a co-donor with other principal members of the family.
Ezeigwe v. Awudu
A Power of Attorney by an illiterate person must have an illiterate jurat. An irrevocable power of attorney is not a document conferring title to the property in issue on the donee. It would still be necessary for the donee to prove title to the property where title is in issue. Indeed, the existence of the irrevocable power of attorney is a clear evidence or confirmation of the fact that the title to the land in dispute resides in the donor of the power.
The only document that can prove any passing of the title to the donee would be a conveyance or an assignment. In appellant's claim for declaration of title to land, he relied on an irrevocable power of attorney granted by the respondent in favour.
Ethical Issues
Duty not to aid a non-lawyer in the unauthorized practice of law. Rule 3(2). Rules of Professional Conduct. Thus, a lawyer should not frank a document not prepared by him.
Duty to represent client within bounds of the law. Rule 15. Rules of Professional Conduct. Thus, a solicitor should not circumvent the law by using a Power of Attorney as a document of transfer of title to land or interest. It is a growing practice for Lawyers to employ Power of Attorney in order to circumvent the requirement of obtaining the Governor's consent according to Section 22. Land Use Act.
Duty to be competent. Rule 16. Rules of Professional Conduct. A solicitor should demonstrate competence in drafting the Power of Attorney in terms of the specific powers and clauses.
Duty to render proper account. Rule 23. Rules of Professional Conduct. The solicitor should give prompt and true account of all rents collected in respect of client property as well as all monies collected on behalf of his client.
Duty not to be negligent. Rule 14(5). Rules of Professional Conduct. The Solicitor should investigate to ensure that the Donee's power has not been revoked before he acts for a client who wishes to rely on that Power of Attorney.
Disclosure of conflicting interests. Rule 17. Rules of Professional Conduct. A solicitor who is a donee of a Power of Attorney should not, in the same capacity, draft the Power of Attorney.
Sample Draft
BY THIS POWER OF ATTORNEY made the ______ day of May 2012, I, Mrs. Aduke Thomas of No. 45 Isheri Street Ikeja Lagos ("The Donor") on the one part
hereby APPOINT Mr. Samuel Abubakar, an Estate Consultant of No. 55 Adeniyi Jones Street Ikeja Lagos State ("The Donee") on the other part, to be my true and lawful Attorney and in my name to do all that I may lawfully do as follows:
To lease the property at No. 45 Isheri Street Ikeja Lagos in favour of Virgin Atlantic Limited for a term of ten (10) years.
To let out the four-bedroom bungalow in Enugu State in favour of Alhaji Aboki Shehu of No. 12 Agui street Enugu State.
To sell the three-bedroom bungalow at Awolowo Road, Ikoyi Lagos to Zenith Bank Plc.
To sell the block of four flats at Sapele Delta State in favour of Professor Ugo Ekanem.
AND to do all and any other things necessary and incidental for the carrying out of the powers created above.
AND I DECLARE that this Power of Attorney shall remain irrevocable for a period of twelve (12) months.
IN WITNESS OF WHICH I the Donor have executed this Deed in the manner below the day and year first above written.
SIGNED, SEALED AND DELIVERED by the Donor
___________________________
Mrs. Aduke Thomas
IN THE PRESENCE OF:
Name: ___________________
Address: _________________
Occupation: ______________
Signature: ________________
Date: _____________________
………………………………………………………………………………………………………………………………………..
It should be noted that if the power includes the right of the Donee to sue on behalf of the Donor, the party clause in any Court action will be as follows:
Mrs Aduke Thomas
(through her Attorney Abubakar Samuel) - - - - Plaintiff
If after the due execution of a Power of Attorney, Abubakar Samuel wishes to execute a Deed of Assignment or Lease on behalf of the Donor, it may be drafted as follows:
THIS DEED OF ASSIGNMENT made the ____ day of ___________ 2012
BETWEEN Mrs. Aduke Thomas of No. 45 Isheri Street Ikeja Lagos through her Attorney Abubakar Samuel of 55 Adeniyi Jones Street Ikeja Lagos State ("The Assignor") of the one part
AND Unik Ventures Ltd, a Company duly incorporated under the Companies and Allied Matters Act with its registered office address at No. 10 Beach Road Victoria Island Lagos ("The Assignee") of the other part.
Complete other parts: recital, operative part and the miscellaneous part.
IN WITNESS OF WHICH the parties have executes this Deed in the manner below the day and year first above written.
SIGNED, SEALED AND DELIVERED by the Assignor
_____________________
Abubakar Samuel
The lawful Attorney of Mrs. Thomas Aduke appointed by virtue of a Power of Attorney dated the 10 day of June 2011 registered as number 34 at page 54 volume 2011B at the Lands Registry Ikeja Lagos State.
IN THE PRESENCE OF:
Name: ______________________
Address: ___________________
Occupation: ________________
Signature: __________________
Date: _______________________
The Common seal of Unik Ventures Ltd. ("The Assignee") was affixed on the _____ day of ___________ 2014 and duly delivered in the presence of:
_______________________ _______________________
Director Secretary
………………………………………………………………………………………………………………………………………...
Week 6
Sale of Land I
Restrictions on Disposition of Land in Nigeria
Legislative Restrictions
The following legislative restrictions may apply to the disposition of land in Nigeria:
Governor's consent as provided by Section 22 & 26. Land Use Act. Abioye vs. Yakubu. The grant of the consent of the governor is discretionary. Qudus vs. Military Governor, Lagos State.
Person under the age of twenty-one years are restricted in their rights to acquire land except through guardians. Section 7. Land Use Act.
Grant or transfer to a non-Nigerian except with the approval of the National Council of States. Section 46(1). Land Use Act.
Properties owned by government agencies must be approved by the minister. Section 12(4). The Nigerian Coal Authority Act. The absence of the necessary ministerial approval is a serious defect which affects the title sought to be conveyed. Rockonoh Property Ltd. vs. NITEL Plc.
Town Planning laws and regulations may restrict the alienation of certain lands where the purposes for which they are intended to be used are contrary to the purposes of town planning laws. J.A Adediran vs. Interland Transport Ltd.
Judicial Restrictions
Doctrine of Lis Pendens
This expression translates to "pending law suit". The doctrine is intended to preserve the subject matter of litigation during the pendency of an action in Court. Hence, there can be no transfer of interest in land that is subject of litigation. Kachalla vs. Banki.
The doctrine will apply if the following conditions are shown:
There is a pending suit in respect of the property
The action is in respect of real property
The action is for recovery or assertion of title to a specific property.
The party concerned was aware or ought to be aware of the pending suit.
A person who purchases property which is subject to litigation for value consideration and without actual notice, cannot sustain his purchase. Ogundiani vs. Araba.
Contractual Restrictions
Contractual restrictions include covenants in leases. Usually, in a lease, it is typical to have a covenant with the lessee not to reassign or sublet or otherwise part with possession.
Customary Law Restrictions
With regards to Communal or family lands, the consent of the principal members and heads of the community or family must be obtained before there can be a valid sale. Adeleke vs. Iyanda. Sale of family land by the family head without the consent of principal members will make the transaction voidable. Where the land is sold by the family head as personal land, the sale will be void. The sale of family land by the principal members without the consent of the family head will render the sale void.
Limitations of the Nigerian Conveyancing Law Practice are as follows:
Multiplicity of Laws
Illiteracy
Failure of purchasers to consult solicitors until very late in the transaction
Professional incompetence and lack of diligence amongst lawyers
Uncritical dubbing of precedents etc.
Contractual/legislative restrictions
Customary tenure/family property (Duality of Tenure in Nigeria land law)
Touts and Estate agents have not helped the situation
Professional incompetence and lack of diligence amongst lawyers.
Inadequate appreciation of contract before conveyance
Archaic mode of record keeping at the registry making searches difficult and creating difficulties in the investigation of title
Lack of documentary evidence of title and weakness of proving traditional title where there is no written evidence
Land may be acquired by any of the following means:
Customary Law. Sadiku vs. Dalori, Nelson vs. Ebanga.
Government allocation/State grant. Iseru vs. Catholic Bishop of Warri Diocese.
Purchase/Sale/Assignment
By Deed of Gift
By Inheritance
First settlement on virgin area
Long possession
Allotment of family land
Sale of land is transfer of interest in land. A distinguishing factor between a sale of land and other conveyancing like lease, mortgage, is that in sale of land once interest has been transferred, it can never be taken back again. There is no reversionary interest. There are two stages to a transaction for the sale of land:
Contract Stage
Completion Stage
The procedure may be further divided into five stage:
Pre-contract stage (Negotiation & Pre-contract Inquiries);
Contract stage;
Post-contract stage (Investigation of Title);
Completion stage;
Post-completion or perfection of title stage (Governor`s consent, stamping & Registration).
Pre-contract stage: This involves a person carrying out inquiries/investigation on the land to discover any physical defects (caveat emptor) e.g. whether the land is encumbered, under government acquisition, or in conformity with the Town Planning Law of the state. Secondly, it is also necessary to ascertain the nature of the property, compliance with description, condition of property, security and encumbrances Furthermore, investigations enable the party negotiate a proper price for the property. this stage is before the contract of sale is entered. The pre-contract stage is concerned with inquiry and negotiations. It must be noted that the vendor is only under a duty to disclose latent defects.
Contract stage: This involves the preliminary enquiries; preparation and exchange of a Formal contract of Sale, and the payment of initial deposit for the land purchase price.
Post-contract stage: This stage involves the vendor deducing his title, the purchaser investigating the vendor's title in order to detect any defect in his title, and the exchange of the contract of sale of land.
Completion stage: This involves the Preparation and execution of the Deed of Assignment, completion statement, handover of title documents etc.
Post-completion or perfection stage: This involves obtaining the Governor's consent, stamping the Deed and registering it at the Lands Registry of the State where the land is situated.
Contract of Sale
A contract for sale of land is an agreement to convey interest in land. It is a preliminary step in the transfer of title to land. The purchaser acquires an equitable title while legal interest passes at completion. It also gives the purchaser ample time to investigate the title of the vendor.
There are basically three types of contract of sale of land in Nigeria. They are:
Oral Contract of Sale of Land
Open Contract
Formal Contract of Sale
Prior to discussing these contracts, the position of the law on any contract of sale of land is that the contract must contain certain conditions in writing namely: parties, property, purchase price and signature. It is desirable that both parties' sign the contract, however, the signature of the vendor must be there. Where the contract is not in writing, it is unenforceable. Section 4. Statute of Frauds, Section 5(2). Law Reforms Contract Act & Section 67(1). P & CL all provide that:
"no action shall be brought upon any contract for sale or other disposition of land on any interest in land, unless the agreement upon which such action is brought, or some memorandum or note thereof is in writing, and signed by the party to be charged or by some other person thereunto by him lawfully authorized.
However, the provisions above do not apply to the sale or other disposition of land under customary law. Dealings in land under customary law are mostly done orally. Section 5(3)(a). Law Reforms Contract Act, 1961 specifically excludes contracts under customary law from the requirement of writing by providing that the requirement that all contracts must be in writing before being enforceable shall not apply to contracts for the sale or other disposition of land under customary law. See Manya v. Idris (2001) 8 NWLR (PT 716) 627, Adedeji v. Oloso (2007) 5 NWLR (PT 1027) 134, Cole v. Folami, Alake v. Awawu, Ogunmuyiwa v. Odukoya (2009) ALL FWLR (PT 454) 1526.
Oral Contract
An oral contract for sale of land is generally unenforceable. However, it is neither void nor voidable. Section 4. Statute of Frauds, Section 5(2). Law Reform Contracts Act. Where an oral contract is made, the deposit made by the purchaser is generally not recoverable where the purchaser is in default. The limitations as to the enforceability of oral contracts will not apply in the following circumstances:
Sale of Land under Customary Law. Section 4. Statute of Frauds does not apply to land transactions under the customary law. See Section 5(3)(a). Law Reforms Contract Act, Alake vs. Awawu. The following must be present to validate an oral contract under customary law:
There must be clear stipulations as to price
The purchaser must have obtained possession of the land.
At least two witness must be present during the transaction.
The property/land must be specifically identifiable.
See Adedeji vs. Oloji (2007) 5 NWLR (PT 1027) 134, manya vs. Idris (2001) 8 NWLR (PT 716) 627, Cole vs. Folami, Alake vs. Awawu, Ogunmuyiwa vs. Odukoya (2009) ALL FWLR (PT 454) 1526.
Acts of Part Performance. The equitable remedy of specific performance may be granted where there are substantial acts of part performance by the purchaser on the basis of the oral contract. E.g. Building has commenced on the land or money has been paid to the vendor. Kachalla vs. Banki, Intl. Textile Industries Ltd. vs. Aderemi (1999) 8 NWLR (pt. 614) 268, Thomas vs. Brown. The intervention of equity in granting specific performance is based on the ground that if with the co-operation of the other party, one party partly performed his obligations under the contract, it would be fraudulent and inequitable for the other party to plead the statute of frauds to defend the action on the grounds that the contract is not in writing. This is because equity will not permit a statute to be used as a cloak for fraud. See International Textiles Industrial Ltd. v. Aderemi (1999) 8 NWLR (Pt. 614) 268.
In Adeniran v. Olagunju, the Court stated that there will be part performance when:
There is proper oral evidence to prove or establish the terms of the oral contract
The contract must be specifically enforceable in the sense that it is not a contract for personal service
The act constituting part-performance must unequivocally refer to the oral contract; and
The party complaining must have wholly or in part executed his own part of the oral contract.
It must be noted that where the conditions for validity of an oral contract have been satisfied, it is sufficient to constitute part performance and the contract will be enforced. However, it is risky for parties to rely on the doctrine of part performance for the enforcement of the oral contract because the order of specific performance is discretionary.
An oral contract is not advised because it is generally unenforceable, although valid. Furthermore, its enforcement is subject to judicial discretion after part performance has been proved. Any deposit paid is non-refundable
Open Contract
By virtue of Section 4. Statute of Frauds & Section 5. Law Reform Contract Act, all transactions on land are to be in writing. Kachalla vs. Banki. An open contract meets the minimum conditions for the validity of a written contract, but leaves its terms and conditions to be implied by Law. This has been described as the major shortcoming of open contracts because implied terms are usually uncertain. The features of an Open Contract include:
It is made in writing in a receipt or by several documents put together or in a note or memorandum.
The consideration paid is stated
The parties and property are adequately described.
It is signed by the parties which are to be bound.
See Section 5. Law Reform Contract Act, Paye vs. Gaji, Ali Sage vs. Northern State Cotton Board.
The Forms of an Open Contract include:
Letter. Akpara vs. UAC.
Reciepts. Kachalla vs. Banki, Osagie vs. Oyeyinka, Yahaya vs. Morgaji (1947) 12 WACA 132, Djukpan vs. Grivuyouhe.
Joinder of Documents. Okorro vs. Ogara.
Rough Draft of an Agreement. Grey vs. Smith.
Written offer which has been accepted
Recital of a Will
Minutes Book
At times the evidence in writing may not be embodied in one single document and may be deduced from several letters or documents between the parties. The several documents must be seen to refer to the same transaction and must be signed by the defendant. In such a case, they will be read together to constitute sufficient memorandum to satisfy Section 5. Law Reform Contract Act. See Uzoekwu vs. Ifekandu (2001) NWLR (pt. 74) 49, Sheers vs. Thumblebey & Son (1877) 76 TLR 709. In relation to a situation where the defendant signs only one of the documents relating to the same transaction, in Burgess vs. Cox, Haman J. found that he could read two (2) documents together to remedy the deficiency of the defendant`s signature lacking in the first document relied on as being a memorandum when it was obvious that if the two (2) documents were placed side by side they referred to the same transaction. In Ali Sage vs. Northern States Marketing Board, the issue was whether the receipt granted the plaintiff purchaser at an auction sale satisfied the requirement of Section 4. Statute of Frauds and Section 5. Law Reform Contract Act. The trial judge held it did not. On appeal it was argued that the trail judge should have read together with the receipt, the public notice advertising the sale and the memorandum in which the auctioneer gave particulars of the sale.
An open contract is valid and enforceable and equitable interest passes to the purchaser. The vendor becomes a qualified trustee but maintains a right of lien until the purchase price is completely paid.
Formal Contract for Sale of Land
A formal contract of sale is in a form fulfilling the conditions stipulated under Section 5. Law Reform Contract Act and is enforceable. It goes further to set out the terms expressly agreed by the parties, thus excluding the application of the implied terms of the Law. It is usually drafted by vendor's solicitor. The advantages of a formal contract of sale include:
It crystallizes the positions of the parties.
It affords ample time to investigate the title of the vendor.
The equitable doctrine of conversion is applicable to contract of sale.
The contract can be used to circumvent implied covenants or even create restrictions in the use of land.
It complies with the requirements of Section 4. Statute of Frauds.
It serves to reduce the incidence of stamp duty, especially where the property is a furnished house - fixtures and fittings could be separated from land and building. Matters relating to chattels and fittings may be dealt with under the contract and need not be reflected in the final deed of assignment.
A contract can be used to determine the position of the parties before consent is obtained under Section 22. Land Use Act.
A contract will enable the purchaser or his solicitor/agents have enough details about the property to enable him conduct necessary search.
It prevents gazumping (sale at higher price) and gazunduring (refusal to buy based on lower price offer).
It is binding on the parties and prevents last minute withdrawals.
Vendor can tender it as evidence of expectation of money while purchaser can mortgage his equitable interest. Ogundaini vs. Araba.
Affords parties an opportunity of obtaining some privileges/benefits pending completion e.g. possession before completion, part payment.
It protects the equitable interest of the purchaser
It makes the contract easier to enforce as the terms are clearly stated
Death of either party will not affect the contract as there is a binding contract in place which can be completed by personal representatives.
The formal parts of a contract for sale of land are divided into two broad categories:
Particulars of Sale. This consists of:
Commencement
Date
Party Clause
Testatum
Capacity of the vendor and the description of the property.
Special Conditions of Sale. These are the terms agreed upon and consist of:
Deposit. This contains the deposit paid as security by the purchaser to the vendor as evidence of his intention to complete the purchase of the property. It is not a mandatory requirement but is expedient. The payment of deposit is a sign or evidence of commitment on the part of the purchaser and binds the vendor who cannot sell the property to another person unless there is a breach by the Purchaser.
A difference exists between deposit and part payment. Biyo vs. Agu (1996) 1 NWLR (pt. 422) 1. A deposit is made before the conclusion of the contract to show commitment on the part of the purchaser and is non-refundable in the event of default by the purchaser. For part payment, the parties have agreed on the contract already and the payment is a portion of the purchase price. The vendor can recover part payment as a debt. Part payment is not forfeitable on the part of the purchaser. See Odusoga v. Rickett. The position of the law is that where the purchaser pays a deposit and the parties are unable to complete the contract for sale due to a default on the part of the vendor, then in law, the purchaser can recover the amount paid as deposit, with interest. Where the amount paid is regarded as part payment, it shall be refunded to the purchaser where negotiation fails, whether or not the default was due to the purchaser's failure to complete the contract. However, where the purchaser is the party in default, part payment shall still be refunded by the vendor provided that the vendor is entitled to keep 10% of the part payment for loss of bargain. Soper vs. Arnold (1989) 14 App. Cas. 429 at 435, Chillingworth v. Esche (1924) 1 Ch. 97. However, where the default is on the part of the purchaser, then the vendor is entitled to claim the amount paid as deposit.
Where deposit is paid and the contract is duly completed, then upon completion, the money paid as deposit becomes part payment without more. Where there is an agreement to pay deposit, the failure of the purchaser to pay the deposit amounts to a breach which the vendor can treat as a discharge of the contract and sue for damages. Deposit is traditionally fixed at 10% of the purchase price. This is subject, however, to increment or reduction by agreement of the parties.
Balance and interest on Unpaid Balance. The balance of the purchase price is paid on completion of the transaction for the sale of land. It is important to pay the balance of the purchase price within the stipulated time. Odusoga vs. Ricketts. The parties may also agree on the time for payment of the balance and the interest to be charged in the event of a delay. At common law, the interest is usually fixed at 4 percent. Esadile vs. Stephenson. It should be noted that the law implies that the balance is to be paid upon completion. Where the parties intend that it should be paid before completion, then an express provision should be made.
The clause helps parties to determine time when balance is to be paid and agree on the quantum of interest. It may also be employed in modifying the position of the law that where the purchaser fails to pay within time, he loses the deposit paid.
It must also be noted that, unless otherwise agreed, if the purchaser is in default of payment of the balance of the purchase price, the vendor is not entitled to the amount paid as part payment. Therefore, it would be necessary to insert a clause in the contract which will entitle the vendor to rescind the contract and retain the amount paid as part-payment in the event of unreasonable delay by the purchaser.
Capacity of the Vendor. The contract should expressly state the capacity in which capacity the vendor is conveying interest. The vendor may convey as a beneficial owner, mortgage, trustee, personal representative or an absentee. The Vendor must also have the legal capacity to convey. Thus, he should not be a minor, insane person or lunatic. The capacity of the vendor will determine the covenants to be implied in the contract.
Chattel/Fixtures and Fittings. This clause is employed in transferring legal interest in Chattels or fittings. These are personal property which are usually movable. Philips v. Lamdin. Fixtures are fixed to the land and whatsoever is fixed to the land, belongs to the land. Thus, fixtures also form part of the land. If fixtures and fittings are to be included in the contract, it should be provided for as a purchaser is not meant to pay for fixtures. Where a separate amount is agreed for fixture, then the amount will not be included in the instrument. One benefit of transferring fixtures at the contract state is that the purchaser is relieved from paying heavy stamp duties. The fixtures are usually included in a schedule to the contract
Date of Completion. Generally, time is not of essence at the contract stage. Section 68. P & CL. However, completion must be within reasonable time. Reynolds Construction vs. Edomwonyi, Johnson vs. Humphrey. It is advised that completion be within 3 months to avoid uncertainties. Olaniran vs. Adebayo. The insertion of this clause in a contract of sale makes for the certainty of the date of completion. However, where time is made essential to the completion of the contract, failure to complete the contract may lead to rescission of the contract, except the vendor ratifies the delay. Once a party is in breach of the provision as to the date of completion, the innocent party must serve on the defaulting party a notice to complete before terminating the contract or suing for damages.
Possession Before Completion. Possession generally goes in hand with legal ownership. Thus, the purchaser is not entitled to possession until completion of sale. However, where it is agreed, the vendor may bring the purchaser in as a Licensee or as a tenant at will. This fact must be stated in the contract to avoid difficulties in evicting the purchaser in the event of failure of the contract. Odutola vs. Papersack (Nig.) Ltd. Where the Purchaser has taken possession and he is aware of defects in the property, he cannot complain because it is deemed that he has waived his right.
Insurance Pending Completion. Upon the exchange of contracts, the risk and responsibility for the property passes to the purchaser and the vendor is under no duty to continue to insure the property. Pain vs. Meller (1801) 6 Ves 49. Thus, the purchaser is advised to insure the property. Castellian vs. Preston, Section 72. P & CL, Section 66 & 67(1). Insurance Act. However, if the purchaser is not in possession, a clause may be inserted for the property to be insured or for the vendor to retain liability until completion. Where the vendor insures the property in his name, he has the right to collect the monies paid upon any damage to the property and can use it as he wishes. The purchaser cannot compel the vendor to use the money collected to reinstate the property. Rayner vs. Preston. The clause may, however, provide for an insurance policy in the joint names of both vendor and purchaser or that the purchaser would contribute to the premium paid by the vendor so as to entitle him to a proportionate share in the insurance money in the event of loss or damage.
Sale Subject to Mortgage. The purchaser may not have sufficient fund to finance the transaction and he may in such a situation require loan from a financial institution with the property to be purchased as security for the loan. Since the purchaser is yet to acquire proprietary interest in the property the sale will be subject to mortgage. In other words, it is conditional upon the purchaser obtaining a loan from a stipulated financial institution.
A contract made "subject to mortgage" shall, among other things, contain the amount of the loan and the source thereof, the terms of repayment and interest payable on the loan. Where it fails to stipulate the above, it may be held void for uncertainty. In Lee Parker vs. Izzat (NO. 2) (1972) 2 ALL ER 800, there was a provision for contract of sale but the contract was made subject to the purchaser obtaining a satisfactory mortgage. It was held that the condition was void for uncertainty and that rendered the entire contract void.
There should be a provision in the contract for the return of deposit to the purchaser where the contract is void on account of uncertainty of the mortgage clause or where the purchaser fails to obtain the loan; otherwise the deposit may be forfeited by the vendor. Some of the mortgage institutions include Federal Mortgage Bank, Housing Corporations, Nigerian Building Society, Commercial banks, Insurance companies and so on.
The lender/mortgagee may demand from the purchaser a mortgage protection policy. If the purchaser is relying only on the property to be purchased as the security for the loan, this policy is a form of a guarantee by an Insurance Company to repay the outstanding loan to the lender in the event of death of the purchaser.
Exceptions and Reservations. The vendor must incorporate any exceptions or reservations or he forfeits the right. Tee Bay vs. Manchester Railway Co.
The formal contract sets out both the particulars of sale and the conditions of sale. The particulars of sale are the basic requirements of the statute of frauds, while the conditions of sale are the terms by which the parties are to be bound, which must be clearly spelt out. See Terrence v. Bolton.
Certain terms will be rendered void and unenforceable if contained in a Contract of Sale. These include:
Any term which restricts the purchaser in the selection of a solicitor in respect of the conveyance and requires him to employ the vendor's solicitor. This does not preclude the vendor from furnishing a specimen by which the purchaser can prepare a draft. The vendor is allowed to charge a reasonable fee for this. See Section 73. P & CL.
A condition in which the purchaser of a legal estate shall be mandated to seek the consent of an equitable owner
A condition that a purchaser of a legal estate shall pay or contribute towards obtaining a vesting order, appointment of trustees on trust for sale, preparation, stamping or execution of a conveyance on trust for sale. See Section 69(2). P & CL.
Tracing of outstanding legal estate at the expense of a purchaser is void. See Section 69(3). P & CL.
A condition that has the effect of depriving a purchaser of the right to request the production of documents relating to the transaction is void. For example, the Power of Attorney under which any abstracted document is executed.
Every condition of sale that precludes the right of objection or requisition on grounds of absence or insufficiency of stamp duty is void. See Section 108. Stamp Duties Act.
Any clause requiring the purchaser to accept an imperfect title
Payment of Deposit in a Contract of Sale of Land
The payment of the deposit can be made directly to the vendor or the vendor may direct that his solicitor receives it. The vendor's solicitor may receive the deposit either as an agent or a stakeholder. Rockeagle vs. Alsop. If he receives it as an agent, he keeps the deposit for the vendor and if he misuses it the vendor will be liable to refund it to the purchaser upon a failure of the transaction. Sorrell vs. Finch. However, if the vendor's solicitor receives the deposit as a stakeholder, he is not deemed an agent of any of the parties and the money received by him will be held by him as a trustee. He will have to give the money to the party entitled to it whether the contract succeeds or not. If he misuses the money collected, he will be personally liable. Hastingwood Property Ltd. vs. Saunder Bearman. As stakeholder, the solicitor is a like an interpleader as he acts as agent for both parties. He is not obliged to pay the money to either of the parties until that party becomes entitled to it. See Rockeagle v. Aslop Wilkinson
Where the solicitor wrongly pays the money over to purchaser, the vendor in such case can lay a complaint against the solicitor to the appropriate authority i.e. LPDC, and bring an action against him to recover the deposit or seek the leave of Court to join the solicitor as a third party in a claim for indemnity.
Where money is paid to the solicitor as stakeholder, he should deal with it by paying it into client's account.
The Capacity of the Vendor/Assignor/Lessor/Mortgagor in the Various Property Transactions. Section 100 - 101. P & CL & Section 17. Registration of Titles Law.
The capacity of a vesting party may be:
Beneficial Owner
Trustee
Representative capacity e.g. family head
Attorney etc.
The capacity of a party determines the covenants implied in the property transaction. Where a party to a property transaction acts in a capacity as a beneficial owner, the covenants generally implied are:
That he has the right to convey the property
That he has given the purchaser the right to quiet enjoyment and possession of the property
That the property is free from any encumbrances and claims other than those disclosed.
Further assurances.
See Section 7(b). Conveyancing Act & Section 100. P & CL.
Where it is in a Lease, the covenants implied when the lessor acts as a beneficial owner are:
That he has the right to convey the property
That he has given the lessee the right to quiet enjoyment and possession of the property
That the property is free from any encumbrances
Further assurances
In the case of a sub-lease, that the lease is valid and still subsisting
That all the covenants on the land have been performed
If it is in a Mortgage, the covenants implied when the mortgagor acts as a beneficial owner are:
That he has the right to convey
That he has given the Mortgagee the right to quiet enjoyment and possession of the property
That the property is free from any undisclosed encumbrances
A further assurance to the Mortgagee to indemnify him if the title is bad.
In the case of a sub-lease, that the lease is valid and still subsisting
That all the covenants on the land have been performed
That the mortgagor covenants to repay the loan and interest.
Note that the application of these implied covenants is not absolute. Before the covenants can be implied in the assignment, the vendor must have conveyed as beneficial owner, the vendor must, in fact, be a beneficial owner, and the assignment must be for value.
The Courts construe very strictly and literally the covenants implied. Belge vs. Midland Rly (1897) ich 12, Butler vs. Mountview Estate Ltd. (1951) 2/c 3563
The vendor may limit or exclude the entire legal implications of conveying as a beneficial owner by the insertion of an exemption clause in the deed, which may qualify the application of any of the covenants to the vendor and entirely absolve the vendor from the application of such covenants. E.g. The covenants for title implied in the use of the expression "as a beneficial owner" in conveyance shall not extend to breaches of the covenant to repair which may have occurred before the date of this assignment. See Butler vs. Mountview Estates Ltd.
Where the vendor conveys the property in any other capacity other than as a beneficial owner, for example, as a trustee, a mortgagee and so on, the only covenant implied is that the vendor has not himself encumbered the property.
Pre-Contract Enquiries
The law does not place any obligation in the vendor to disclose any defects in the property to the purchasers especially where such defects can be discovered by mere inspection of property. Thus, the Purchaser is advised to carry out an inspection of the property. Once the contract has been exchanged, the purchaser is bound by those facts for which the law places a duty on him to enquire i.e. Caveat Emptor - Buyer beware.
However, it has been declared that the doctrine of caveat emptor only applies to patent defects and not to latent defects. Yandle vs. Sutton, Ejigini vs. Ezenwa. It must be noted that where there is a misrepresentation of patent facts on the part of the vendor, such misrepresentation is actionable.
Exchange of Formal Contract of Sale of Land
Exchange of contract is the physical exchange of two signed parts of the contract by the vendor and the purchaser. This is when the Formal Contract of Sale is executed in several copies and exchanged by the parties to show that they are bound by it. It is the process of making the contract binding on the parties and the contract is effective after exchange. Awojugbaagbe Light Industries vs. Chinukwe, Domb vs. Iboz. While a deed takes effect and becomes binding upon delivery, a contract for sale of land takes effect and becomes binding when both signed parts of the contract are duly exchanged. Where there is a failure to exchange the contract, it will not be binding on either party. Eccles vs. Bryant. The exchange is to be done at the vendor's solicitor's office. Commission for the New Towns vs. Cooper (Great Britain) Ltd. Exchange of a contract of sale of land is effected as soon as each part of the contract, signed by the vendor or purchaser, is in the actual or constructive possession of the other party or his solicitor so that at his own need, he can have it available to him for use. Dumb v. Isoz (1980) Ch. 548. An actual physical exchange is unnecessary. Smith v. Mansi.
The procedure for the exchange of the Formal Contract of Sale of Land depends on whether one solicitor acted for both parties or not.
Where One Solicitor Acts for Both Parties to the Sale of Land
Where the parties are using the same solicitor, the exchange of contracts is unnecessary and superfluous. In Smith v. Mansi, Danckwerts L.J noted that where the parties are using the same solicitor, the exchange of contracts becomes "an artificial nonsense".
Rule 17. Rules of Professional Conduct provides that a legal practitioner should avoid adverse influences and conflicts of interests, except with the express consent of all concerned and after a full disclosure of the facts. However, in conveyancing transactions, a solicitor can act for both parties in the following instances:
Where the terms of the contract have been fully negotiated and agreed upon that a solicitor is only needed to formalize them
Where the transaction is of little legal consequence or where the consideration involved is so small that it is desirable that the parties avoid extra cost by using the same solicitor
Where the title to the property is sound
Where there is no likelihood of conflict between the parties. For instance, where the parties are related by blood or where the transaction is between a Company and its subsidiary; or between a personal representative and a beneficiary; or a settlor and a trustee
The procedure for the exchange will be as follows:
The solicitor will obtain all the facts from the vendor on the property
He will give all such information collected from the vendor to the purchaser
The Solicitor will thereafter obtain a written confirmation of acceptance from the purchaser to buy the land
The Solicitor will then draft the contract to be executed by the parties (a single document representing the minds of both parties).
Photocopies will be made. This is known as endorsement. The exchange is done once parties sign.
Where Different Solicitors Act for the Parties
The procedure for the exchange of contract will be as follows:
The vendor's solicitor will obtain all the necessary information, draft the agreement and send same to the purchaser for amendment.
The purchaser's solicitor ensures his client obtains a good title by vetting it to ensure it reflects agreed terms. Thereafter, he sends the draft to the vendor's solicitor with directions as to amendments and corrections
The vendor's solicitor will engross the document after effecting necessary corrections.
The vendor's solicitor will produce 2 plain copies and sends one to the purchaser's solicitor and retains the other copy for the vendor to sign.
The purchaser takes his executed copy to the vendor's solicitors office together with the deposit in exchange for vendor's signed copy. Payment of the deposit will be made and there will be an actual physical exchange. The vendor's solicitor will give the purchaser's solicitor the following documents:
Receipt of the deposit
Purchaser's copy of the contract of sale of land
Epitome or Abstract of Title
The vendor's solicitor will then prepare the final Contract of Sale for execution
After the exchange of the Formal Contract of Sale of land, the rights and obligations of the parties will change. With regards to the purchaser, he will acquire an equitable interest on the land and may transfer or mortgage his interest in the property to another person. This is based on the equitable doctrine of notional conversion. Folashade v. Duroshola (1961) 1 SCNLR 150. He can also protect his equitable title through injunctions prohibiting further transfers or the committing of acts of voluntary waste. Any subsequent purchaser acquires his interest subject to the equity of the original purchaser. Edosa vs. Zacalla (2006) ALL FWLR (pt. 306) 881. Furthermore, the risk in the property passes to the purchaser and he is advised to take out an insurance policy on the property. See Chidiak v. Coker
With regards to the vendor, he becomes a qualified trustee but maintains legal title to the property. Universal Vulcanizing Nigeria vs. IUTTC. The vendor is also entitled to rents and profits pending the completion of the sale but must render account to the purchaser. Plews vs. Samuel. He has a right of lien on the property to the extent of the unpaid balance and remains in possession pending completion. Lake vs. Baileys, Osagie v. Oyeyinka (1987) 6 SCNJ 94. Between the exchange of contracts and its subsequent completion, the duty of maintenance rests on the vendor, and he will be liable if he permits the property to fall into voluntary waste. Philips v. Silvester. Where there is a tenant on the land whose tenancy has expired, the vendor must consult the purchaser before granting a renewal.
The death of either party to the transaction does not terminate their obligations and their personal representatives can be compelled to complete the contract. Gwangwan vs. Gagare.
A contract of sale will be discharged when a deed of assignment is executed in purchaser's favour
Perfection of a Formal Contract of Sale of Land
Perfection of the formal contract of sale involves the stamping and registration of the contract. The consent of the governor is not needed as a formal contract of sale of land does not transfer legal interest. Section 22(2). Land Use Act, Solanke vs. Abed, Okuneye vs. FBN Plc, Awojugbagbe Light House Industries Ltd. vs. Chinukwe. Although Section 22. Land Use Act prohibits the alienation of a right of occupancy without the consent of the Governor first had and obtained, it does not prohibit agreements in preparation for effecting such alienation. See also Section 26. Land Use Act, Savannah Bank v. Ajilo. The governor's consent is only required when legal interest is transferred.
Stamp duty is to be paid within 30 days of the execution of the contract. The stamp duty is a fixed fee. Section 23. Stamp Duties Act. Failure to stamp is a criminal offence and an unstamped document is admissible in evidence
In Akinbade v. Elemosho, it was held that whether or not a contract for sale is a registrable instrument or not depends on the question whether the contract is defined as an instrument under the Land Instrument Registration Law of the state where the land is located. The registration of a Formal Contract of sale of land will depend on the applicable state law as follows:
In the Northern and Lagos States, it is not registrable. See Section 4. Lands Registration Regulation.
In the PCL States of the Old Western Region, it is registrable as an Estate Contract. Section 2. Land Instruments Registration Law, Section 2(1). P & CL.
In the Eastern Region, there are no specific provisions of the Law. However, in Okoye vs. Dumez, it was held that it is registrable.
The registration of the contract of sale of land serves as a notice and does not vest any legal interest in the purchaser. The Contract may be used to support a claim for specific performance. Fakoya vs. St. Pauls Church. Registration governs priority amongst competing contracts. Where there is a failure to register in cases where it is registrable, the contract will be inadmissible to prove title. Gabriel Tewogbade v. Obadina.
Particulars of Information
The particulars of instruction needed to draft a formal contract of sale of land include:
Particulars of the parties or personal details of the parties. This will include:
The names of the parties
Whether any of the parties is an illiterate or is blind
Their addresses
Occupations
Nationality
Phone numbers and e-mail addresses
Particulars of the property i.e. location, description, whether there are third party rights or restrictive covenants, survey plan (if any)
Nature of the vendor's title
Capacity of the vendor
Amount of consideration i.e. purchase price
Particulars of deposit, if any:
Whether it is to be paid;
Amount to be paid as deposit; and
To whom the deposit is to be paid and in what capacity, whether stakeholder or agent,
Particulars of fixtures, fittings and chattels, if any;
Proposed completion date for the contract;
Particulars of other special conditions for the sale:
Whether purchaser is to take over possession before completion;
Responsibility for risks and insurance: who is to insure and method of application of insurance money; and
Amount of interest on unpaid balance, and
Particulars of the persons who are to be witnesses to the contract.
Ethical Issues
Duty of solicitor not to mix client's money with his personal income i.e. duty not to misappropriate client's fund. Rule 21. Rules of Professional Conduct.
Vendor's solicitor holds deposit as a stakeholder, thus should be honest in his dealings.
Odusoga v. Ricketts
The land in dispute consisted of a four plots sold by the administrator of a deceased in 1965 to the plaintiff/respondent. The plaintiff paid a part payment of £700 out of £980 of the purchase price. He went into possession and developed a part of the land. The undeveloped part of the land was the subject matter of the dispute. He did not pay the balance in spite of repeated demands from the vendors. In 1971, the undeveloped part was sold to the appellant by the administratix. The trial Court upon instituting proceedings did not find for him but the Court of Appeal granted his claim. This was upturned at the Supreme Court.
The issue before the Supreme Court was whether the plaintiff acquired title to the 4 plots of land in 1965 notwithstanding that he did not pay the full purchase price. The Supreme Court stated that for a sale under customary law, where the purchaser fails to pay the full purchase price, there is no valid sale. To constitute a valid sale under customary law, three essential ingredients must be present:
payment of purchase price
purchaser is let into possession by vendor
The transaction is made in the presence of witnesses.
It follows therefore that where the purchase price is not fully paid then can be no valid sale, notwithstanding that the purchaser is in possession. Possession cannot defeat the title of the vendor. However, where part payment of the purchase is made and the balance is to be tendered within a stipulated time or, in the absence of a stipulated time, within a reasonable time, the vendor cannot renege from the contract of sale and the purchaser in possession will be entitled to a decree of specific performance.
From the standpoint of common law, payment of purchase price coupled with possession gives the purchaser an equitable title and he is entitled to seek an order of specific performance to compel the vendor to convey legal title to him. However, where the purchase price is not fully paid, the purchaser will have no right to enforce specific performance. Where the purchaser who has made a part payment of the purchase price is in default of payment of the balance, there is right in the vendor to rescind the contract of sale and re-sell the property. A mere receipt of part of the consideration does not confer legal estate to the land in dispute on the purchaser but will confer an equitable interest.
Kachalla v. Bank & ors
The appellant bought the landed property from the sales agent at N1,200, 000 on 16th march 1994. He paid the purchase price and was given a receipt, a deed of assignment and the certificate of occupancy on the land. He was in possession of the property. He could not register his interest in the property with the lands authority due to some intervening circumstances (equitable interest). On the 15th April 1995, the 2nd respondent bought the same property at an auction sale for the sum of N520,000. The 1st respondent was a judgment debtor and the property was to be sold to discharge the judgment debt (legal interest). The appellant brought an action for declaration that he is the bona fide owner of the property. The trial court and the Court of Appeal dismissed the appellant's claim. The Supreme Court upheld his appeal and held the following:
The fundamental rule is that competing interests will generally rank according to the order of their creation. Thus where a person pays for land and obtains receipt for the payment followed by his going into possession and remaining in possession, equitable interest is created for him in the land as such which can defeat the title of a subsequent legal estate of a purchaser with knowledge of the equitable estate in the land. The following are the remedies for breach of contract of sale
Damages
Order of specific performance. See Hope v. Walter
Rescission. See Odusoga v. Ricketts
Declaration
Injunction
Sample Drafts
THIS AGREEMENT made the ____ Day of ________ 2016
BETWEEN Mrs. Aduke Thomas of No. 45 Isheri Street Ikeja Lagos State ("The Vendor") of the one part
AND
Professor Ugo Ekanem of No. 11 Park Street Asaba Delta State ("The Purchaser") on the other part.
IT IS AGREED:
That the Vendor as BENEFICIAL OWNER sells and the Purchaser has agreed to buy ALL THAT property at No. 10 Bingo Street Sapele, Delta State covered by a Certificate of Statutory Right of Occupancy No. 641231 dated 12/11/2006 and registered as 14/14/2387 rightly described in the First Schedule, subject to the following terms and conditions:
CONSIDERATION
The consideration for the sale of the property shall be the sum of Thirteen Million Naira only (N13,000,000.00).
DEPOSIT
The purchaser shall before the execution of this Agreement pay the deposit of the sum of Seven Million (N7,000,000.00) to the vendor's solicitor who shall hold the deposit as stakeholder pending completion
BALANCE
The balance of the consideration being the sum of Six Million (N6,000,000.00) shall be paid at completion, and if there is delay caused by the default of the purchaser, he shall be liable to pay interest at the prevailing bank rate.
CHATTELS, FITTINGS AND OTHER ITEMS
The sale includes chattels, fittings and other items specified in the second schedule and valued at the sum of N____________ (the receipt of which the Vendor acknowledges).
CAPACITY
The Vendor sells as Beneficial Owner subject to the clauses to be inserted in the Assignment;
PROVIDED ALWAYS and it is agreed that the covenants which are implied by reason of assigning as beneficial owner shall not be deemed to imply that the vendor has performed the covenant for repairs contained in his document of title.
POSSESSION BEFORE COMPLETION
The purchaser after the execution of this Agreement shall take immediate possession of the property for his use and enjoyment as licensee, and if he defaults in the payment of the balance at completion he shall peacefully give up possession of the property to the vendor and the deposit paid under this Agreement shall be forfeited.
DATE AND PLACE OF COMPLETION
It is agreed that time is of the essence of this Agreement which shall be completed on or before ____ of ________ 2016 at the office of the Vendor's solicitor.
INSURANCE
The vendor shall insure the property with a reputable insurance Company registered in Nigeria against loss caused by fire, flood and other usual peril for the cost of reinstatement, and the insurance policy shall be assigned to the purchaser at completion.
PROVIDED THAT where reinstatement is not possible the insurance money shall be shared between the parties pro rata the deposit paid the purchaser.
INDEMNITY
The vendor agrees to indemnify the purchaser for any loss or damage arising from and connected with the title of the Vendor.
COST AND EXPENSES
The purchaser shall pay all costs incidental to the preparation and execution of this Agreement.
CONCLUSION
This contract shall prevail over any previous agreement and it contains all the terms finally agreed by the parties.
IN WITNESS OF WHICH the parties have executed this Agreement in the manner below the day and year first above written.
1ST SCHEDULE
Description of the property
2ND SCHEDULE
List of chattels and fixtures sold along with the property and their prices
SIGNED by the Vendor
_______________________
Mrs. Aduke Thomas
IN THE PRESENCE OF:
Name: ___________________________
Address: ________________________
Occupation: _____________________
Signature: _______________________
Date: ____________________________
SIGNED by the Purchaser
__________________________
Prof. Ugo Ekanem
IN THE PRESENCE OF:
Name: ___________________________
Address: ________________________
Occupation: _____________________
Signature: _______________________
Date: ____________________________
………………………………………………………………………………………………………………………………………...
Week 7
Sale of Land II
As noted earlier, the procedure for the sale of land may be divided into five stages:
The Pre-Contract Stage
The Contract Stage
The Post-Contract Stage
The Completion Stage
The Post-Completion or Perfection Stage
At the Post-contract stage, the vendor proceeds to deduce his title and the purchaser is given an opportunity to properly investigate the vendor's title. It is generally the responsibility of the purchaser's solicitor to conduct a search and draft a search report at the post-contract stage.
Deducing of Title
After the exchange of contracts, the vendor is required to show that he has a good root of title i.e. that he is in a position to transfer what he has contracted to convey and in the capacity in which he represents. Thus, the vendor is under a duty to deduce his title to the land after the contract is exchanged. MEPC. Ltd. vs. Christian - Edwards. The extent of the obligation to deduce title depends on the applicable law. The vendor deduces his title by preparing and delivering to the purchaser any of the following documents:
Abstract of title: this is the historical summary of all recorded instruments and proceedings affecting title to the property up until the present vendor
Epitome of title: this is a chronological list of the documents which prove title to the land usually to be accompanied by photocopies of the documents.
Both the abstract and epitome of title must show a good root of title.
The deducing of title serves as history of transactions which have taken place with respect to the property in question. It may also assist in the future as evidence of history in documents up to 20 years old are presumed to be correct. Section 162. Evidence Act. The person named in the document will not be allowed to deny the facts contained in the recitals of the document. Section 17 & 21. Limitation Law of Lagos State.
A purchaser must insist that the title be deduced up to a certain number of years. In the Conveyancing Act states, title is to be deduced for 40 years preceding the time of the present transaction. Section 2. Vendor and Purchaser Act 1874. In the PCL states, the preceding period for which title must be deduced is 30 years. Section 70(1). P & CL, Suleiman vs. Johnson.
Breach of the obligation to deduce title by the vendor may entitle purchaser to rescind from the contract.
Once the vendor has deduced title for the required period, the purchaser is precluded from requiring assurances of the title beyond the stipulated time and cannot make enquiry into any such document executed beyond the timeframe, notwithstanding whether or not such document is recited, except:
Where such document creates a trust under which part of the property is being disposed.
The document shows a Power of Attorney which is subsisting and subject to which any part of the property is being disposed.
The transaction is governed by customary law.
See Ekpendu vs. Eireka, Ali vs. Ikusebiala, Kalio vs. Nwoluchem.
In Lagos State, the vendor does not need to deduce his title as is done in the CA and PCL States. The purchaser depends solely on evidence from the register because entries in the register constitute sufficient evidence of the title of the proprietor subject to overriding interests. See Onagoruwa v. Akinremi (2001) 13 NWLR (PT 729) 38. Hence the purchaser under the Registration of Titles Law needs:
Letter of consent from registered proprietor or a statutory declaration
Copy of land certificate (Certificate of Title)
A statutory declaration by himself (purchaser)
In Lagos, the right of an owner of land becomes extinguished after 12 years of adverse possession. However, it must first be established that the owner has been dispossessed or has discontinued possession. Majekodunmi v. Abina.
Under the CA and PCL states, the Instrument is registered and not the title. Thus, the title could be defective and cannot be cured by the mere act of registration.
Abstract of Title
An Abstract of title is a written chronological summary of the history or account of how the property under consideration has moved from one person to another beginning with a root of title up to the present vendor who now wants to sell.
An abstract should contain the following:
Date of document
Nature of the event
Parties to the transaction in the stated event
Whether documents are the original or photocopies
Number of documents
Whether original document is to be handed over on completion.
In the past, when photocopying machines were not readily available, the abstract was typed on a brief paper divided into 6 columns as shown below.
Date of Document
Nature of Event
Parties
Whether Original or Photocopy
Number of Documents
Whether original handed over
1902
Settlement
Abstract
Nil
Nil
Epitome of Title
An epitome of title is a schedule of documents and events which constitute title to the property accompanied by photocopies of the said components. Generally, while the abstract of title deals with the original set of the document of title, the epitome of title deals with the photocopies of the documents of the title. However, both contain columns for "date", "parties", "transaction".
The contents of an epitome of title are:
Date of document
Nature of transaction
Parties to the transaction
Whether original, CTC or photocopy available
Number of documents available
Whether original document will be handed over at completion
Date of Document
Nature of Event
Parties
Whether Original or Photocopy
Number of Documents
Whether original document handed over on completion
10/03/89
Grant
Military Government & Mr. Ade
Photocopy
1
No
9/6/2000
Mortgage
Mr. Ade and First Bank Plc.
Photocopy
1
No
16/01/2013
First Bank Nigeria Plc. & Chief Amaechi
Original
1
Yes
Abstracts originated as a result of difficulties of delivering documents and deeds of title to the purchaser for verification. But the advent of photocopying and scanning machines have reduced the importance of abstract.
The solicitor to the purchaser should satisfy himself if the abstract/ epitome of title has the following matters:
Whether it commences with a good root of title
Whether the parties mentioned in the transaction had power to buy or convey, or otherwise deal with the property.
That there are no subsisting encumbrances except those that are disclosed in the contract.
That all mortgages and charges have been duly discharged
That all the documents have been duly executed, the requisite consent has been obtained, and the documents have been stamped and registered.
The advantages of employing an Abstract or Epitome of Title include:
It provides at a glance the nature of the vendor's title
It helps the purchaser's solicitor to make requisitions on title
It assists the purchaser's solicitor in preparing a search report on title
It provides a prima facie evidence of any defect in the vendor's title. However, it does not serve as conclusive evidence.
It aids the detection of encumbrances on the property or title.
Requisitions simply mean query. After carefully perusing an abstract and epitome of title, the purchaser's solicitor is expected to raise requisitions (queries or questions) where necessary. The purchaser's solicitor has the right to demand clarifications from the vendor's solicitor on the requisitions raised. Requisition are questions or issues from purchaser's solicitor to the vendor or his solicitor concerning doubts, ambiguities or confusions encountered by the purchaser's solicitor during investigation. The vendor is bound to give answers to requisitions and the answers must be clear and precise. The failure of the vendor to give satisfactory answers to requisitions or to rectify matters raised in such requisitions will be a ground for the rescission of the contract by the purchaser.
Root of Title
This is a document of title which is sufficient in itself without any extrinsic evidence to establish the title to the land. This shows if the vendor has a valid right to sell the land and if it is unencumbered. A document or transaction purporting to be a good root of title must satisfy certain conditions. The elements of a good root of title were stated in Lawson v. Ajibulu. The conditions to be satisfied for a document to be a good root of title are as follows:
It must transfer both the legal and equitable interest in the property
It must be a document of disposition or conveyance
It must clearly describe the property and extent of interest being conveyed
It must clearly state the owner of the property
It must not be subject to any higher interest over the property
Nothing on the face of the title should cast doubt on its genuineness or authenticity
See Section 63. Conveyancing Act, Section 88. P & CL, Akinduro v. Alaya.
If a document satisfies the foregoing conditions, then it will serve as a good root of title. Examples of documents constituting good root of title include:
Duly perfected Deed of Assignment/Deed of Transfer. Odubeko vs. Fowler (1993) 9 SCNJ 1.
Duly perfected Legal Mortgage.
Certificate of Title in RTL areas
Certificate/receipt from Court. This is a registrable instrument
Assent (by personal representatives)
Deed of Gift
Vesting order/Declaration of Court
Certificate of Occupancy from State grant from State owned land
Certificate of purchase
Examples of documents constituting a bad root of title are:
A Lease. This is because it transfers only possession and not title
A License.
A will, because it may be challenged later. However, a will is not strictly a bad root of title and it becomes valid once it is admitted to probate.
A Power of Attorney, as it does not convey interest in land.
Unregistered deed of assignment.
An equitable mortgage. This is because it does not convey legal interest.
Certificate of Occupancy is generally not sufficient evidence of title because it can be displaced. Ogunleye v. Oni. A certificate of occupancy is issued as evidence of a grant of title to a person on a piece of land and raised the presumption that the holder is in exclusive possession. It is not conclusive and can be rebutted by a person with better title. It will not be a good root of title with respect to a deemed grant under Section 34 & 36. Land Use Act. It should be noted that a Certificate of Occupancy may be a good root of title if the following exist:
It is granted in respect of a statutory or customary grant of a right of occupancy pursuant to Section 5 & 6. Land Use Act.
Where there are other facts or circumstances to support title e.g. long possession
When it is a state grant. Olojunde vs. Adeyoju.
A solicitor can satisfy himself of the vendor's title by:
Raising requisitions
Making searches in the land registry
Investigating Court judgments
Inspecting original title documents
Investigating traditional title if necessary
Physical inspection of the property. Idumdun vs. Okumagba
Investigation of Title
The investigation of title is the process of confirming the title of the vendor deduced by him. The purchaser's solicitor must investigate the vendor's title in order to see whether any defect exists in the title deduced by the vendor. Investigation of title is usually done by way of searches conducted in all places and offices where there may be particulars or details of the property. Where investigation is not conducted, the Purchaser buys subject to any defect in title.
Investigation is important because the fact that a vendor has adduced a document showing a good root of title is not necessarily conclusive proof of the title. A defect may exist in the title which had occurred before the document evidencing good root of title was executed which is not apparent from the document. The only way to be sure of vendor's title is to conduct a complete and thorough search/investigation on the property, hence the need for investigation.
The following procedure generally applies to the investigation of title:
The purchaser or his solicitor obtains the required documents needed for investigation from the vendor or his solicitor namely: abstract and epitome of title (photocopies)
A physical inspection of the property will be carried out. When it is done, it will reveal any patent defects, physical condition of the property, easement, boundaries of the property, whether other person is in possession (tenant). The vendor is not under any obligation to disclose patent defects and is only bound to disclose latent defects. If any defect could be discovered if a physical inspection was carried out, there will be no duty on the part of the vendor to reveal them and the principle of Caveat Emptor will apply.
A thorough examination of abstracted (title) documents is to be carried out.
Investigation of family or traditional history, if applicable. This investigation is important in sale of family or community property to determine whether consent has been obtained from relevant persons.
Searches will be conducted in the following places:
The Land Registry
The Corporate Affairs Registry
The Probate Registry
The Court Registry
The solicitor will write a search report to the purchaser and raise requisitions to the vendor where necessary.
The solicitor, after a perusal of the necessary documents during the search, must be satisfied as to:
The names of the parties on the documents
The description of the property
The signatures on the documents
Encumbrances, if any
Compliance with requirements for consent, stamping, and registration.
The procedure for investigating title under the CA and PCL states is as follows:
The purchaser's solicitor collects the Abstract and Epitome of title from the vendor
The purchaser's solicitor conducts a physical inspection of the property in order to discover patent defects relating to the title of the property.
An investigation of the traditional history of the land is also to be conducted.
The purchaser's solicitor is to conduct a search in the various Registries depending on the nature of the title e.g. the Probate Registry, Corporate Affairs Commission, High Court, Lands Registry etc.
He is to raise requisitions if necessary. In doing this, he is to do so within 14 days of the Exchange of Contract and the vendor's solicitor has 7 days on the receipt of the requisition to reply
He is to write a Search Report to be forwarded to the Purchaser.
Where a search is sought to be carried out under the RTL, an Abstract or Epitome of title will not be required and the purchaser will depend solely on evidence from the registers. The procedure for investigating title and conducting searches under the RTL are as follows:
The applicant must prepare the application letter to conduct the search and attach the following documents which must be obtained from the proprietor or registered owner of the title sought to be investigated:
Letter of consent (consent letter) from the registered owner (proprietor) authorizing or permitting the applicant to conduct the search. By virtue of Section 74(2). RTL, the registry is a private and confidential registry and not open to the public. Therefore, apart from the proprietor and any person duly authorized by him, no other person has the right to search the register on the entries made on any title. However, the letter of consent or authority can be dispensed with when a mortgagee wants to exercise the power of sale and mortgagor has refused to give such letter.
Copy of the certificate of title (land certificate)
Sworn declaration by the proprietor as to the existence or otherwise of encumbrances, if any.
A sworn declaration by the applicant stating that the registered owner (proprietor) actually granted him consent to conduct the search. This is a requirement in practice to prevent fraud by those who may claim to have the consent of the proprietor when they do not, in fact, have it. The sworn declaration renders them liable to be charged for perjury.
The application to conduct the search accompanied with the documents above are taken to the registry. Note that the application is addressed to the Registrar of Titles
The prescribed fees for conducting searches are paid
The search is conducted on the three (3) parts of the Register of Titles. That is the property register, the proprietorship register and the charges register
After the search at the registry is conducted, the applicant should proceed to the land to conduct physical investigation to discover patent defects on the land since the proprietor is only under a duty to disclose latent defects.
Draft the search report and send it to your client.
Raise requisitions where necessary
The documents to be submitted are mandatory otherwise, the search will not be allowed. However, the letter of consent or authority can be dispensed with when a mortgage wants to exercise the power of sale and mortgagor has refused to give such letter.
With regards to the investigation of title, Section 31. RTL provides that unless otherwise stated, a purchaser on the sale of registered land shall not require any evidence of title but shall depend on the evidence derived from the register as well as from a statutory declaration as to what does not constitute encumbrances.
Places where Searches are Conducted
Searches are conducted in the following places:
Lands Registry
This is where the lands in a state are administrated. It is usually located at the ministry of lands, Survey and Town Planning. A search at the land registry will reveal the following:
The nature of the grant and holder of the interest
The description of the property - size, survey plans, beacons
Details of fees paid on the property such as taxes, ground rents etc.
Details of registered transactions on the property such as previous deeds, contracts of sale etc.
Previous and existing encumbrances on the property e.g. mortgage
Any act of government acquisition of the property
Any Court judgment obtained and registered over the property which affects the vendor's title
Counter parts (office/file copies) of right of occupancy or certificate of occupancy on the property.
Abuja Geographic Information Systems (AGIS)
AGIS was established in 2003. It regulates Land administration in Abuja, the Federal Capital Territory. Prior to its establishment, the function was vested in the Lands Department of the Federal Capital Development Authority (FCDA). The procedure for conducting searches at AGIS is as follows:
Collect Abstract and Epitome of Title from the vendor
A written application to conduct a search is made to Abuja Geographic Information System, stating the particulars of the property.
The application is accompanied by a letter of consent by the owner of the title (vendor) authorizing the purchaser's solicitor to conduct the search of the property. Also attached to the application is a copy of the owner's Certificate of Occupancy.
The application must be accompanied with evidence (bank slip) of the payment of search fees in a designated bank in favor of AGIS
The officials at Abuja Geographic Information System conduct the search and complete the search report which is signed by the Registrar of Deeds. The report contains the findings on the property investigated. In other words, it is not the solicitor conducting the search that actually prepares the report but an official in the registry that conducts the search and supplies to the solicitor the result of the search. The solicitor does not have the opportunity for a direct and personal view and inspection of the file
Physical inspection on the land to discover patent defects
Attach the search report to a cover letter and send to your client
States Land Registry
The steps to conduct the search at a State's Land Registry are:
Write an application to conduct a search to the commissioner for lands in the state.
Attach evidence of payment of search fee.
Attach a copy of the certificate of occupancy
The application is processed and the permission of the commissioner is granted to conduct the search.
The file on the property is produced from the strong room and given to the solicitor to peruse the entries, examine and make a record of his findings.
Federal Lands Registry
The Federal Lands Registry administers federal lands located in the States or the Federal Capital Territory. They register all titles of the Federal Government and all interests created by subsequent transactions on lands vested in the Federal Government and its agencies.
Probate Registry
The Probate Registry of states keep a record of wills and other testamentary documents. The probate Registry is part of the registry of the High Court in various states. This search becomes necessary if there is a fact in the Abstract pointing towards the death of any of the predecessors- in-title to the property. A search at the probate registry may answer any of the following:
Whether the property was the subject of a bequest in a Will (Probate) or intestacy (Letter of administration).
The personal representatives entitled to convey title
The beneficiaries under the probate or letter of administration
Whether any assent has been executed
Whether there is any challenge on the Will, Probate or administration and any judgment thereto.
Corporate Affairs Commission
Where a Company, business name or incorporated trustee is a party to a property transaction, a search is to be conducted at the CAC to discover the following:
Whether the Company or incorporated trustees is registered and has the capacity to conduct the transaction
Whether there are any records of any of the properties of the Company in the Register.
Whether there is a registered resolution of the Board of Directors or Trustees, to acquire or dispose of the property.
It is also important to ensure that the sale is not a void transaction as provided under Section 413. CAMA which provides that:
"In a winding up by the Court, any disposition of the property of the company… made after the commencement of the winding up, shall unless the Court otherwise orders, be void."
Courts
A search at the Court for any judgment is intended to determined:
If the person was subject to any Court litigation and the outcome of the dispute
Whether any appeal is filed against the judgment and the result of the appeal.
If an order of sale of the land was made and whether the sale complied with the rules
Whether the vendor is a beneficiary in a probate dispute which entitles him to convey the person.
Inquiry on Communal and Family Land
Inquire on whether consent of the principal members and family head has been granted
Whether the vendor has the right to sell the land.
Whether there exists any customary prohibition against his right to sell
Physical Inspection of the Property
A personal/physical visit to inspect the people may reveal:
Whether the property is being occupied
The extent of development of the property
Actual dimension of the land and whether it conforms to the dimension at the lands registry.
Whether there are public utilities on the land/property e.g. electric poles, telephone cables
Any damage caused by natural elements e.g. erosion
The general condition of the property.
Search Report
When the purchaser's solicitor has concluded investigation, he is to draft a search report and send it to the purchaser. There are two means of drafting a search report namely:
A covering letter and a search report attached to it
A letter containing the search report
The contents of a search report include:
Date of search
Place(s) of search
Name of Registered owner
Particulars of the property
Description of property
Nature of owner's title/interest
Encumbrances (if any)
Comment/opinion/conclusion
Signature, name, address of solicitor that conducted the search.
Sample Draft of Search Report
KENNETH OKWOR & ASSOCIATES
LEGAL PRACTITIONERS AND SOLICITORS
STAR CHAMBERS
No. 5, Kano Crescent, Kano
Email:
[email protected]
Phone: 07064793812
Our Ref: _______________________ Your Ref: ____________________
Date: _____________________
To:
Mallam Sani Idi
No. 5 Balarabe Crescent,
Sabon Gari,
Kano.
Dear Sir,
REPORT OF SEARCH CONDUCTED ON PROPERTY REGISTERED AS NUMBER 45 ON PAGE 45 IN VOLUME 2908 (45/45/2908) AT THE LANDS' REGISTRY OFFICE, KANO STATE
Kindly refer to the above subject matter and find below our report of the search.
OR
Pursuant to your instructions received on the ___________, a search was conducted and the report is as follows:
DATE OF SEARCH: 17/01/2015
PLACE OF SEARCH: Lands Registry office, Kano, Kano State
NAME OF REGISTERED OWNER: Mallam Sabo Mutumi
PARTICULARS OF THE PROPERTY: The property is registered as number 45 on page 45 in Volume 2908 at the Lands Registry, Kano
DESCRIPTION OF THE PROPERTY: The property is a three-bedroom bungalow with a boys' quarters located at No 3, Ijesha Close Kano and is covered by Certificate of Occupancy numbered 1234529hl
NATURE OF TITLE/INTEREST: Statutory Right of Occupancy
ENCUMBERANCES: There is an undischarged mortgage on the property. The mortgage is registered as number 65 at page 87 in volume 8763 at the lands registry Kano State. OR NIL
COMMENTS: The title to the property is sound, but the property is encumbered by the undischarged mortgage. Purchaser is therefore advised to stay action on the contract for sale until the said mortgage is completely discharged.
Our bill of charges is attached to this letter for your kind and prompt consideration.
Thank you.
Yours faithfully,
______________________
K.O. Okwor Esq.
For: K.O Okwor & Associates
Solicitor
Note that where more than one search report is involved, then a cover letter is drafted and the search reports are attached including the bill of charges. See sample draft:
KENNETH OKWOR & ASSOCIATES
LEGAL PRACTITIONERS AND SOLICITORS
STAR CHAMBERS
NO 5, Kano Crescent, Kano
Email:
[email protected]
Phone: 07064793812
Our Ref: _______________________ Your Ref: ____________________
Date: _____________________
To:
Mallam Sani Idi
No. 5 Balarabe Crescent,
Sabon Gari,
Kano.
Dear Sir,
REPORT OF SEARCH CONDUCTED ON PROPERTY REGISTERED AS NUMBER 45 ON PAGE 45 IN VOLUME 2908 (45/45/2908) AT THE LANDS' REGISTRY OFFICE, KANO STATE AND PROPERTY REGISTERED AS NUMBER 53 ON PAGE 60 IN VOLUME 2909 (53/60/2909) AT THE LANDS' REGISTRY OFFICE, KANO STATE
Kindly refer to the above subject matter and find attached the reports of the searches conducted
OR
Pursuant to your instructions received on the ___________, the searches were conducted and the search reports are attached to this letter.
Our bill of charges is also attached for your kind and prompt consideration
Attached to this letter are the following:
a) Search Report conducted
b) Bill of Charges
Thank you
Yours faithfully
______________________
Kenneth Okwor
For: K. O. Okwor & Associates
Solicitor
Completion Stage
This is the stage where the parties of the transaction conclude all processes that vest the legal title on the purchaser. This is the final stage of the transaction. Kilner v. France. At completion, the designation or description of the parties changes from vendor and purchaser to assignor and assignee. The following usually signify completion:
Payment of the balance of the purchase price.
Execution of the formal conveyance by the parties
Handing over of title deeds and other documents by the assignor (vendor) to the assignee (purchaser)
Taking over possession of the property by the assignee (purchaser) either actual or constructive.
Vesting of legal estate in the assignee (purchaser).
In certain circumstances, the title documents are not handed over at the completion stage. Where this is the case, it is to be endorsed on the agreement that the vendor is with the title documents and a covenant to produce the title documents is to be inserted in the deed of conveyance (safe custody clause).
At the completion stage the following steps are to be taken:
The assignor's (vendor's) solicitor prepares and sends a completion statement to the assignee (purchaser)
The assignee's solicitor prepares/drafts the conveyance (Deed of Assignment). Section 73(1). P & CL. The draft is generally first prepared using precedents and then sent to assignor's solicitor for vetting.
The Deed of Assignment will be vetted by the assignor's solicitor and returned to the assignee's solicitor.
The assignee's solicitor makes engrossed copies of the Deed of Assignment
Certain documents will be taken by assignee's solicitor to the assignor's solicitor's office. These include a bank draft showing payment of the balance, a draft conveyance, and a file containing documents over the course of the entire transaction.
The Deed of Assignment is executed upon payment of the balance of the purchase price and attested to by witnesses.
Assignor delivers the following documents to assignee:
At least five copies of duly executed Deed of Assignment
Completion statement
All prior original title documents which relate to the land. The exceptions are:
where the document relates to other land retained by the vendor e.g. a Power of Attorney relating to other land
where the document creates a trust which is subsisting
relates to the appointment or discharge of a trustee of a subsisting trust in which case the vendor will give an undertaking to safe cost and acknowledgement of the purchaser's rights to production of the document.
Receipt of payment of full purchase price (consideration), if any
Receipt of payment of ground rents and all other outgoings
The keys to the property where the property is developed
Letter of introduction introducing assignee to tenants, if any are still in possession
Receipt of payment for chattels (if sold alongside the property)
Notice of assignment of insurance policy (if necessary)
Three years' Tax Clearance Certificate
Duly executed form for governor's consent (called Form 1C in Lagos)
Approved building plan
Original power of attorney (where the deed is executed pursuant to a Power of Attorney)
Assignee's solicitor does a quick and final check of the original title documents by comparing them with the photocopies given at the exchange of contracts. He also checks to ensure that they are complete
The assignee acquires legal title, subject to perfection.
The Deed of assignment is drafted by assignee's solicitor. The vendor's (assignor's) solicitor has an obligation to prepare a Completion Statement and a Schedule of Documents to be delivered. The completion statement is otherwise referred to as the financial statement and is prepared by assignor's solicitors involved in a sale of property. It is a statement of the financial commitment of the parties and any financial obligation expected to be met towards a successful completion of the transaction. The advantages of serving a completion statement include:
It helps the seller to decide whether to sell with regard to the expenses to be incurred or to suspend sale until the property appreciates in value.
It helps the purchaser calculate his financial obligations to know whether he can continue with the transaction.
It helps in accountability and reduces chances of fraud being perpetrated on the client.
It helps in the computation of taxes e.g. capital gains tax, which is 10% of the price a property is sold for less the expenses on the property.
Post Completion Matters / Perfection of Title in Sale of Land
The conveyance will only act to pass interest in land where it is delivered as a deed. To achieve this, the vendor's solicitor is obliged at law to obtain the state governor's consent by virtue of Section 22. Land Use Act. In practice, however, the purchaser's solicitor obtains the governor's consent, stamps the document ad valorem under the Stamp Duties Act, and registers the deed in the state's land registry where the deed is given a registration number.
Application for Consent of Governor
Where property is subject to a Customary Right of Occupancy, the consent required is that of the Local Government where the Land is located. Section 21. Land Use Act. Where it is the subject of a statutory right of occupancy, the consent of the state governor must be sought. As already noted, the governor's consent is usually sought and obtained by the Purchaser's Solicitor. Ideally, it is the vendor who should apply for and obtain the Governor's consent. Ugochukwu vs. CCB Nig. Ltd. The Purchaser is to ensure that he obtains a letter of application for consent from the vendor. The documents required to process the obtaining of the governor's consent are:
Application for consent in the prescribed form - Land Form 1C (if the land is in Lagos)
Covering letter
Tax clearance certificate of both parties (3 years preceding)
Certified true copy of assignor's title documents
6 copies of the executed Deed of Assignment containing undertaking to pay government levies
Receipts of payment of:
tenement rate (where the property is developed)
ground rent
stamp duties
development levy
inspection, charting and consent fees.
Attach copy of approved building plan (developed property)
If a Company is a party to the transaction, the following documents must also be attached:
A Certified True Copy of the Certificate of Incorporation of the Company
A Certified True Copy of the Memorandum of Association
A Certified True Copy of the Particulars of Directors of the Company
Tax clearance certificate of at least two directors
Evidence of PAYEE returns for its staff
A Resolution of the Company approving the transaction
The above is the procedure as obtainable in Lagos State. In Lagos, Form 1C i.e. Land Form is filled and payment of the consent fee is made of between 7 - 7½% of the value of the property.
The procedure for applying for consent in Abuja is as follows:
A written application letter addressed to the Minister of FCT is prepared by the vendor consenting to the alienation
Inspection and valuation of the land is conducted.
Payment of consent fee of N5000
Payment of ground rents
Processing fee of N5000 (residential plots) & 6000 (commercial plots)
Payment of title registration fee if the applicant is not the direct owner of the property (5% of the value of the property)
Original of title deeds for citing and the counterparts
Where there is failure to obtain governor's consent on the transfer of interest in land, the entire transaction is not void but the Assignee/Mortgagee will only acquire an equitable interest in the property. Section 26. Land Use Act.
It must be noted that where the governor's consent is sought for and refused, the transaction is invalid, null and void. However, where no attempt has been made at obtaining the governor's consent, the transaction is inchoate, incomplete or voidable and it becomes complete upon the obtaining of the Governor's consent. Awojugbagbe Light Industries v. Chinukwe. Where the refusal of Governor's consent is not reasonable, it can be actionable. Shitta Bey v. FPSCC. In Kachalla vs. Banki (2001) 10 NWLR (PT. 721) 449, it was held that where an applicant for consent has fulfilled all the requirements of the Land Use Act, the Court will presume that legal estate has vested in such an applicant after a reasonable time has elapsed and the Governor still withholds consent.
The Governor may delegate the power to grant consent to a Minister or Director or other officer in Lands Ministry through a Gazette.
The Governor consent is endorsed thus:
I CONSENT TO THIS TRANSACTION
Dated this _____ day of ________ 2016
_____________________________
Governor of XYZ State
Stamping
The amount to be paid as stamp duty may be a fixed fee or an ad valorem charge i.e. based on the capital value of the transaction. Stamping of documents which are charged ad valorem is to be done within 30 days while others are to be done within 40 days of its execution. Section 23. Stamp Duties Act.
Where there is a failure to pay the stamp duties on the documents, the document will not be acceptable for registration and is inadmissible in evidence in Court. Section 9 & 10. Land Instrument Registration Law. However, a Court may order payment of stamp duties to make the document admissible. There will also be a penalty for late stamping of the document. Section 22. Stamp Duties Law of Lagos State, Ogbahon vs. Registered Trustees CCCG (2001) FWLR (pt. 80) 1496. It should be noted that Stamp duties in respect of land matters are paid to the states. The following steps apply to the stamping of documents:
The Original Document is delivered in triplicate to the Stamp Duties Commissioner for assessment.
The assessed duty is paid and a receipt is issued. The rate of duty payable is between 2 - 3% of the value of the transaction
The instrument is impressed with a red-ink indicating that stamp duty has been paid on the document.
A Contract for Sale of Land is chargeable to a fixed stamp duty or a flat rate (to be stamped within 40 days), while the Deed of Assignment is chargeable to Stamp duties ad valorem (to be stamped within 30 days).
Registration
A conveyance is a registrable instrument and registration must be done within 60 days of execution. The registration of transactions transferring legal interest in land serves as constructive notice to subsequent dealers on the interest already transferred and renders the instrument admissible in evidence.
The effects of a failure to register such transfer of legal interests in land are:
The instrument cannot be pleaded in evidence to prove title. Section 15. Registration of Titles Law, Akinduro vs. Alaya (2007) ALL FWLR (pt. 224) 2061. However, the document is admissible to prove agreement and payment of money. See Ogunbambi v. Abowab (1981) WACA 272 & Agwunede v. Onwumere (1994) 1 SCNJ 106
It has no priority over subsequent instruments registered over the same legal transfer of interest. See Section 16. Registration of Titles Law, Fakoya v. St. Paul's Church, Sagamu. Okoye v. Dumez Nig. Ltd, Amakri v. Zankley.
It does not serve as notice to third parties dealing on the same interest
It renders the instrument void where registration is mandatory. Section 5. Registration of Titles Law, Section 14. Land Instruments Registration Law.
See Onashile v. Barclays bank Ltd.
The procedure for registration is as follows:
Deliver in duplicate, 2 duly stamped and executed copies of original deeds to the Deed Registrar in the Lands Registry of the State.
The Registrar collects the deeds and registers it in the Register of Deeds on a particular volume, on a particular page with a particular number i.e. No. _____ At Page _______ in Vol. ________ of the lands registry________________
An endorsed copy of the original deed is given back to the Purchaser, while the Counterpart is kept at the Registry. Amadi v. Orisakwe
A survey plan signed by a licenced surveyor must be attached to a conveyance for a proper and sufficient description of the property to be assigned. Section 9. Land Instrument Registration Law. Where a survey plan is not attached, the Registrar has the discretion to refuse to accept the Deed for registration unless:
When the Deed of Assignment to be registered refers to an earlier Deed which contains a survey plan. Amadi v. Onisakwe (2005).
If it is a transfer under the Registration of Titles Law of Lagos State, there is no need to attach a survey plan as the particulars of the property are already contained in the Register of Titles. Section 31. RTL, Onagoruwa v. Akinremi (2001).
Where there is a parcel clause or schedule containing the particulars of the survey plan.
It must be noted that Section 23. Land Instrument Registration Law, Lagos provides that in all cases where registration of an instrument is required by statute, the fact of such registration does not cure any defect in the title of the grantee. Thus, where such grantee had no valid title in law before registration, his title cannot be validated by registration. See Onasanya vs. Anifowose. Furthermore, registration does not cure the defect arising from the absence of Ministerial approval or Governor's consent, and the mere fact that an instrument which does not have the necessary consent endorsed on it when it was registered, will not ipso facto, raise the presumption that the registrar was satisfied that such consent had been given which led him to register the instrument. Rockonoh Property Co. Ltd. vs. NITEL Plc.
In most jurisdiction Governor's consent and registration are done simultaneously. An unstamped document cannot be registered. Thus, you apply for stamping first before applying for Registration. The order is Consent, Stamping and Registration (CSR).
A lawyer is important to a purchaser seeking to investigate the title of the vendor. This is to ensure that the expertise of the lawyer will be employed to ensure a thorough and professional investigation of title and conduct physical inspection of the property and to ensure that property described in particulars of sale correspond with the one the purchaser is buying. Ali Sage vs. Northern State Marketing Board. The use of a lawyer will ensure that the purchaser gets a good title and the removal of contractual restrictions with respect to sale of the property and transfer of interest. A good lawyer will also ensure that relevant consents are obtained and that the purchaser complies with all relevant laws concerning acquisition of land in the state.
Form and Content of an Assignment
An assignment can be divided into four (4) broad parts:
The Introductory part. This includes the commencement, the date, parties, and recitals
The Operative part.
The Miscellaneous
The Conclusion
Introductory Part
The introductory part includes the commencement, the date, the parties, and the recitals. The Commencement Clause (This Deed of Assignment…) describes the nature of the transaction. The Date Clause (… is made/made this ___ day of ________, 2016…) of the transaction is also stated in the introductory part. Where no date appears on the face of a Deed, it is presumed to take effect from the date of delivery. Section 125. Evidence Act. The fact that lawyers don't date their documents before perfection has been accorded judicial recognition. See Awojugbagbe Light Industries vs. Chinukwe.
The Parties Clause is commenced with "BETWEEN". The parties must have capacity to enter into such contract. Where they are individuals, state their forenames and surnames. Descriptive words are to be used to describe the parties and reflect the capacity in which they are entering the transaction e.g. Mr. Henry Okeke ("the Assignor"). This is to prevent repetition of their names and to ensure there is consistency in the description of the parties. The addresses of the parties also form a part of the Parties Clause and must be clearly stated. Where any of the parties is a Company, it must be referred to by the registered name and the registered address or the address of its business premises will be given.
The Recitals are not essential to the validity of the deed and are inserted to give background information with respect to the transaction. It is introduced by the use of the term "WHEREAS" (use "RECITAL" or "BACKGROUND" in exams). The commencement generally reflects whether or not the document will have a recital. A document with a recital is generally commenced with "This Deed of Assignment is made…".
There are two types of recitals: The Narrative recital and the Introductory recital. The narrative recital gives a historical background of the devolution of the title whereas the introductory recital gives background facts relating to the state of affairs in the present transaction. Recitals are generally not used in a Deed of Assignment. Where a recital is clear and unambiguous, it may be referred to in aid of the construction of the operative part of a Deed. District Bank Ltd. vs. Webb (1958) 1 ALLER 126, Owoade vs. Omitola (1988) SCNJ 13.
Operative Part
The second part of a deed is the Operative Part. It starts with the Testatum Clause ("NOW THIS DEED WITNESSES AS FOLLOWS…"). After the Testatum comes the Consideration Clause (… in consideration of the sum of...). The consideration shows that the deed does not relate to a gift. Following the Consideration Clause is the Receipt Clause (... the receipt of which the assignor hereby acknowledges...). The Receipt Clause makes the issuance of a receipt unnecessary. Section 54. Conveyancing Act & Section 92. P & CL. Furthermore, it serves as sufficient authority to the assignee's solicitor to pay the balance of the purchase price to the assignor's solicitor and serves as sufficient evidence of payment in favour of a subsequent purchaser without notice that the money has not been paid. Section 53 & 55. Conveyancing Act & Section 93 & 94. P & CL. The absence of a receipt clause in a conveyance does not affect its validity. It only means that the vendor will be required to issue a separate receipt for the money he receives. A receipt clause raises a rebuttable presumption that the purchase price had been paid. After the Receipt Clause is the Covenant of Title (... the Assignor, as beneficial owner...). The capacity in which the assignor assigns determines the implications of the law. The Words of Grant (... ASSIGNS…) follows from the Covenant of Title and is determined by the nature of the transaction. The Operative Words (ALL THAT…) comes after the words of grant. The Parcel Clause (… (description of property) located at…) and the Habendum (... TO HOLD UNTO THE ASSIGNEE FOR all the residue now unexpired of the term held by the Assignor…) follow the Operative Words. The Parcel Clause gives a physical description of the land/property. The municipal address and description with reference to a survey plan must also be given. The description must be full and accurate. However, it will not prevail over the description given in an attached plan. The Habendum states the quantum of the interest to be acquired by the assignee. The Habendum is not strictly essential for the validity of a conveyance. Where there is none, the deed will operate to pass the whole of the grantor's interest without any words of limitation unless a contrary intention is expressed.
Miscellaneous Part
The miscellaneous part contains express covenants imposed by one party on the other or both parties on each other. Express covenants form a part of a deed of assignment.
There could be need for an Indemnity Covenant. On the question of whether or not the indemnity clause must be expressly provided for in the deed, it will depend on the law where the property is located. Thus:
In states governed by the PCL, by virtue of Section 101. P & CL and Part VII. Second Schedule. P & CL, where the conveyance is for valuable consideration, the Indemnity Clause is automatically implied into the deed
In states governed by Conveyancing Act, the Indemnity Clause must be expressly provided for as it cannot be implied.
The Indemnity Clause is only required if property is in Eastern and Northern Nigeria. It is not required under the PCL if consideration is paid. Section 101. PCL. This is an undertaking by the assignee to pay the rates and observe the covenants and conditions stated in the Certificate of Occupancy.
In certain cases, some covenants are enforceable against the successors in title of the parties depending on the nature of the particular covenant. The covenants could be positive or negative.
The Miscellaneous Part may also contain Exceptions and Reservations and an Acknowledgement for Safe Keeping. Exceptions refer to property or interest, which the vendor excluded from the grant or conveyance to the purchaser. This may be rights or interest appurtenant to or attached to the property conveyed but which the vendor does not want the purchaser to enjoy. Reservation, on the other hand, refers to such rights created in favour of the vendor in the conveyance which he may retain even after the conveyance. It may be a right of way to an adjoining land or ordinarily to a particular road and so on. These expressions constitute limitations against the interest conveyed to the purchaser. An Acknowledgement for Safe Keeping may be necessary where, on completion, the vendor retains possession of deeds and documents relating to the land conveyed. This may be because they relate to some other land which he retains. The Deed will thereby incorporate an acknowledgement by the vendor of the purchaser's right to the production and delivery of copies of the documents retained
Concluding Part
The Concluding Part begins with the Testimonium (IN WITNESS whereof the parties have set their respective hands and seals the day and year first above written…/ IN WITNESS OF WHICH the parties have executed this Deed in the manner below the day and year first above written). This links the content of the deed with seal and signature of the contracting parties. An individual will have his hand and seal set to the document while a Company will cause its common seal to be affixed. The Attestation/Execution Clause (Signed, Sealed, and Delivered by…) follows the Testimonium. Each party signs his name and it is witnessed. In certain Deeds, a Schedule may be contained and will follow the Attestation/Execution Clause. It contains all the descriptive details in the agreement. To be a part of the document, the Schedule must have been referred to in the body of the agreement.
Ethical Issues
A Lawyer should keep a separate account and should not mix his money and the clients' money. Rule 23(2). Rules of Professional Conduct.
A Lawyer should not search the land Registry for defects in title with view to employment or litigation. Rule 47. Rules of Professional Conduct.
Duty to represent his client within the bounds of the law. Rule 15. Rules of Professional Conduct
Duty not to frank a document unless seal and stamp of NBA is affixed. Rule 10. Rules of Professional Conduct.
Duty not to aid the unauthorized practice of law. Rule 3. Rules of Professional Conduct.
Duty not to sign a document prepared by a non-lawyer. Rule 3(2). Rules of Professional Conduct.
A lawyer should not under stamp i.e. reducing the consideration stated on the face of an instrument in order to reduce stamp duty. This comes under a lawyer's duty not to knowingly engage in illegal conduct. Rule 15(2)(j). Rules of Professional Conduct, Adenuga vs. Ajao.
Duty to represent client competently, know the appropriate documents to prepare. Rule 16. Rules of Professional Conduct
Duty to keep client informed of progress of transactions, give warnings and cautions where necessary. Rule 14(1), (2) & (5)(a) - (d). Rules of Professional Conduct.
Sample Drafts
ABSTRACT OF TITLE
IN RE: THE THREE-STOREY BUILDING AT 43, UDO STREET, IKEJA, LAGOS
Mrs. Uduak Ufot Okoye died in 1960 leaving a will in which she left her three-storey building at No. 34, Oduduwa lane, Ikeja, Lagos, to her daughter, Dr. Deola Okoye;
By a Deed of Gift dated 12/11/1970, Dr Deola Okoye made a gift of the property to her fiancée, Mr. Guy Pwol;
In 1979, Lagos State Government re-numbered the street and the property now became No. 43 Udo Sreet, Ikeja, Lagos;
In 1984, in execution of a judgment against Mr. Guy Pwol, the property was sold by public auction to Mazi Olowu Aboki of 34, Arewa Close, Ikoyi, Lagos. A certificate of Purchase was issued to Mazi Olowu Aboki;
Mazi Olowu Aboki died intestate leaving an only son, Mr. Ibo Aboki;
By a Land Sale Agreement dated 23/09/2006, Mr Ibo Aboki sold the property to Madam Nneoma Adede of 56, Adamma Street, Ojota, Lagos;
In 2009, Mr. Barth Denge sold the property to Mrs. Ada Oladimeji vide a Deed of Assignment registered as 34/34/1345;
In 2011, Mrs. Ada Oladimeji obtained a Certificate of Occupancy 10/10/2010 registered as 59/59/2010A in respect of the property;
In 2011, Mrs. Ada Oladimeji obtained a loan of N130 million from GTBank Plc. and executed a legal mortgage registered as 22/22/2087 in respect of the property.
Dated this ____ day of _______________ 2014
Signed:
__________________________
Ogu Okpaku Esq.,
Ogu Okpaku & Co.,
Solicitor to the Vendor
No. 25, Egunju Street,
Ikeja, Lagos
08111444555,
[email protected]
…………………………………………………………………………………………………………………………………….
Search Report (without a covering letter)
BILI OKE & CO
LEGAL PRACTITIONERS
12, ASMAU STREET, IKEJA, LAGOS STATE, NIGERIA
08027666643,
[email protected]
Date: 18 June 2014
SENATOR BOGUS YELLOWE,
15, Wale Cole Close,
Banana Island,
Ikoyi, Lagos
Dear Sir,
SEARCH REPORT ON PROPERTY LOCATED AT 2, ABUDU SMITH STREET, VICTORIA ISLAND, LAGOS
Kindly refer to your letter dated 24 May 2014, ref no: SBY/2345/2014 on the above subject and find below our report of the search:
Date of Search: 10 June 2014
Places of Search: Land Registry, Alausa, Ikeja, Lagos State;
Name of Owner: Chief Tonye Okiki of No. 2, Abudu Smith Street, Victoria Island, Lagos
Nature of Interest: Statutory Right of Occupancy
Description of the Property: The two-storey house together with Stewards' Quarters and garage, located at 2, Abudu Smith Street, Victoria island, Lagos, covered by Title Certificate No: L05166 of 1963 and by the Certificate of Statutory Right of Occupancy No: 87345, dated 19/09/2001 and registered as 99/99/2001H in the Lands Registry, Alausa, Ikeja, Lagos State
Encumberances: Legal mortgage in favour of Heritage Bank Plc., registered as _______________
Comment/Advice: Title is sound, but property is encumbered. Purchaser should discontinue the transaction until Legal mortgage is discharged
Our bill of charges is attached to this letter for your kind and prompt consideration.
Thank You.
Yours faithfully,
__________________________
BILI OKE ESQ.
…………………………………………………………………………………………………………………………………….
Search Report (with a Covering Letter)
BILI OKE & CO.
LEGAL PRACTITIONERS
12, ASMAU STREET, IKEJA, LAGOS STATE, NIGERIA
08027666643,
[email protected]
Date: 18 June 2014
SENATOR BOGUS YELLOWE,
15, Wale Cole Close,
Banana Island,
Ikoyi, Lagos
Dear Sir,
SEARCH REPORT ON PROPERTY LOCATED AT 2, ABUDU SMITH STREET, VICTORIA ISLAND, LAGOS
Kindly refer to your letter dated 24 May 2014, ref no: SBY/2345/2014 on the above subject and find attached our report of the search:
Our invoice is also attached for your kind attention
Yours faithfully,
_______________________
BILI OKE ESQ.
Principal Partner
Attachment:
BILI OKE & CO
LEGAL PRACTITIONERS
12, ASMAU STREET, IKEJA, LAGOS STATE, NIGERIA
08027666643,
[email protected]
Date: 18 June 2014
SENATOR BOGUS YELLOWE,
15, Wale Cole Close,
Banana Island,
Ikoyi, Lagos
Dear Sir,
SEARCH REPORT ON PROPERTY LOCATED AT NO. 2, ABUDU SMITH STREET, VICTORIA ISLAND, LAGOS
Date of Search: 10 June 2014
Places of Search: Land Registry, Alausa, Ikeja, Lagos State;
Name of Owner: Chief Tonye Okiki of No. 2, Abudu Smith Street, Victoria Island, Lagos
Nature of Interest: Statutory Right of Occupancy
Description of the Property: The two-storey house together with Stewards' Quarters and garage, located at 2, Abudu Smith Street, Victoria island, Lagos, covered by Title Certificate No: L05166 of 1963 and by the Certificate of Statutory Right of Occupancy No: 87345, dated 19/09/2001 and registered as 99/99/2001H in the Lands Registry, Alausa, Ikeja, Lagos State
Encumberances: Legal mortgage in favour of Heritage Bank Plc., registered as _______________
Comment/Advice: Title is sound, but property is encumbered. Purchaser should discontinue the transaction until Legal mortgage is discharged
Thanks, sir, for your cooperation.
Yours faithfully,
__________________________
BILI OKE ESQ.
Principal Partner
Week 9 & 10
Leases
A Lease is a document creating an interest in land or a property for term of years certain usually but not always in consideration of payment of rent. The interest created is called a term of years but is also referred to as a lease or leasehold interest. In every lease, the Lessor retains a reversionary interest. Reversion is the interest which remains in the lessor after the expiration of the term granted to the lessee. A lease must be for a less estate than the lessor has in the property, for if it comprises his whole interest, it is no longer a lease; it is an assignment of that interest. Title documents need not be requested and investigated in a short term lease. However, if the lease is for a longer duration, investigation of title documents is important. A lease is a legal estate in land, if correctly created. For the purposes of creating a legal estate, all leases are to be by deed, except leases taking effect in possession for a term not exceeding three years
A Tenancy is transfer of interest in land for a fixed period of 3 years of less. The difference between a Lease and a Tenancy is duration. Under the Tenancy Law of Lagos state, there is no distinction between tenancy and lease. The Tenancy Law applies to all areas in Lagos except Apapa, Ikeja GRA, Ikoyi and Victoria Island. Section 1(3)(i) - (iv). Tenancy Law, Lagos. Section 47. Tenancy Law defines tenancy to mean holding of interest in land or property by a tenant under the tenancy agreement. Tenancy agreement is an agreement whether written or oral, express or implied between a landlord and a tenant regarding possession of premises and use of common areas and includes Leases and Sub-leases.
The parties to a lease are:
The owner of the property who makes the grant - Lessor/Landlord.
The person who takes over the exclusive use of the property - Lessee/Tenant.
In certain instances, the person who undertakes to guarantee the due performance of the covenants and the term of a lease - Guarantor.
The hallmark of a lease is the exclusive possession given by the lessor to the lessee whereas ownership of the demised property remains with the lessor. Features of a lease include:
A lease is a grant of a term above 3 years. Therefore, it must be by deed.
The title to the Land is not conveyed, only the use and occupation is transferred
The relationship is for a fixed or definite period
The Lessee, may subject to conditions stated in the agreement, assign his interest or sub-lease part of his interest to another person.
Rent is usually but not necessarily paid by the lessee for the use and occupation of the property.
There is a right of reversion of the property to the lessor.
In a Lease, the lessor is under no obligation to show absolute title and the lessees has no right to call for the title to the reversion. Section 13. Conveyancing Act, Section 70(2). P & CL
The types of leases are:
Lease for a fixed period
Periodic tenancies
Yearly tenancies
Tenancies at will
Tenancies at sufferance
Statutory tenancies
Creation of a Lease
Oral/Parol Lease
A parol or oral lease is not in writing but is permissible under Section 3. Statute of Frauds & Section 79(2). P & CL. See Foster vs. Reeves. The essentials of a valid lease include:
It must take effect in possession
It must reserve the best rent (not premium or rack rent i.e. the rent must not be paid in advance or in lump sum)
It must be for a period not exceeding 3 years.
The drawback with oral lease is the difficulty of proving the essential terms agreed to by the parties. A party alleging an oral agreement is duty bound to prove the agreement to the hilt. Odutola v. Papersack (Nig.) Ltd, Ekpanya v. Akpan.
Written Lease/Tenancy Agreement
This is a written agreement applicable to leases not exceeding 3 years. A tenancy agreement need not be under seal and is signed in the hand of the parties only. Section 4. Statute of Frauds. A written lease is binding upon the parties as a contract and is enforceable. The term of lease under a tenancy agreement may be for a fixed period, weekly, monthly, quarterly or yearly. A.P Ltd. vs. Owodunni. The advantages of a written lease include:
The terms are easily ascertainable and enforceable.
An order of specific performance may be ordered.
Where specific performance fails or is rendered impossible, an award of damages may be made.
Lease by Deed
A lease may be made by deed. It is mandatory for leases above 3 years to be by deed and this satisfies the requirements of Section 17(1). P & CL to the effect that any conveyance of land or of any interest in land is void unless made by deed.
However, the rule in Walsh v. Lonsdale states that an agreement to create a lease will still operate as a lease notwithstanding that it is not created under seal. This is based on the maxim "equity looks at the intent rather than the form".
Essentials of a Valid Lease
The essentials of a valid lease include:
Certainty of Terms
Certainty of Parties
Certainty of Property
Certainty of Intention
The Lease must be created in due and proper form
There must be exclusive possession
See Osho vs. Foreign Finance Corporation, International Textile Industry (Nig.) Ltd. vs. Aderemi.
Certainty of Term
The term of a lease must be certain or ascertainable. Hence, the lease must have a specific time frame and the duration of the lease is not to be left to the party's wishes and caprices. The duration may be monthly, weekly, quarterly, yearly or for a fixed period. The commencement date and the expiration date must be expressly stated as a lease cannot enure in perpetuity. Lace vs. Chantler, UBA vs. Tejumola & Sons Ltd. Thus, the commencement date of a lease must be from a specific date or upon the happening or occurrence of an ascertainable future event or contingency which is certain in time. Okechukwu v. Onuorah, Bosah v. Orji. A lease that has no date will therefore be declared invalid. Aminu vs. Nzeribe. Where the term of a lease is dependent on future contingencies which are certain to take place, it will be deemed to be ascertainable. Bosah vs. Oji, Okechukwu vs. Onuorah.
If the date of commencement of the lease is certain or ascertainable from the document and its direction is also certain, then the lease is valid and enforceable.
Certainty of Property
The property in a lease must be described with specific dimensions. The address stated must be clear not vague. Furthermore, the property should be in existence as at the time of commencement of the lease transaction.
Certainty of Parties
The parties to a lease must have capacity to contract the lease agreement. The parties must be juristic entities. They may be natural or juristic persons who can sue and be sued. UBA vs. Tejumola & Sons Ltd. The parties must be sufficiently described and defined. Odutola v. Papersack (Nig.) Ltd. It is not uncommon for the landlord to be defined as "the Landlord" which expression, where the context so admits, shall include the person for the time being entitled to the reversion rights. The tenant shall, where the context so admits, include his successor in title. Section 102 & 103. P & CL, Section 58 & 59. Conveyancing Act, 1881.
Certainty of Intention
The intention of the parties must be clearly stated/seen in the tenancy agreement and deed of lease. Odutola v. Papersack (Nig.) Ltd.
The Lease must be Created in a Proper Manner
Where it is for 3 years and above, it must be by deed. Where the lease is for a term below 3 years, it may be by agreement under the hand of the parties. This may be simply called a tenancy agreement. Section 4. Statute of Frauds, Section 67. P & CL, Section 5. Law Reform (Contracts) Law.
Exclusive Possession
The lessee must have the right to exclude every person from the property including the lessor or landlord. Schilt v. Malford. However, a condition that the landlord may enter the property for repairs will not be void. Umezurike vs. George. A document which purports to be a lease but fails to confer exclusive possession is not a lease. Clore v. Theatrical Properties Ltd. The absence of exclusive possession transforms a lease to a license, which is a personal privilege to use the property without owning any interest in it. Possession ceases to be exclusive only where another person is on the land lawfully. Olukoya v. Ashiry.
In Schilt v. Macford, it was held that the exclusive rights of the lease extend to his wife, children, wards and servants. However, it does not confer right on him to sublet without the consent of the Lessor.
Distinction Between Lease and Assignment
Lease
Assignment
1.
May not be created by deed
It is always created by Deed.
2.
Only possessory interests are transferred.
Proprietary interest is transferred
3.
The Lessor retains a reversionary interest in the property.
The entire interest in the property is assigned.
4.
Needs no investigation to prove title.
Very important to investigate title of assignor.
5.
When a lease is assigned, all covenants in the head-lease remain binding on the parties to the sub-lease.
When a Deed of Assignment is assigned, only the covenants that touch and concern the land are binding on the parties to the assignment because there is no privity of contract.
Distinction Between a Lease and a Sub-Lease
Lease
Sub-Lease
1.
There exists a direct relationship between the lessee and the lessor
There is no direct relationship the head-lessor and the sub-lessee
Distinction Between a Lease and a Licence
Lease
Licence
1.
It is a transfer of interest in property
There is no transfer of interest
2.
In a leasehold agreement, the lessee has exclusive possession
Licensee has no exclusive possession
3.
The interest of the lessee is transferable through a sub-lease
There is no transferable interest.
4.
The demised estate can survive the death of the parties.
Death of any party to the agreement terminates the relationship
5.
Lessee can maintain an action in trespass against 3rd parties
Licensee cannot maintain an action in trespass
6.
A lease is entitled to the statutory Notices
A Licensee is not so entitled.
Rent in Lease
Rent is the consideration paid by the tenant for the use and enjoyment of the landlord's property. Rent is not mandatory in leases and may be money or money's worth. Section 47. Lagos State Tenancy Law. Rent must be certain or ascertainable. Almost every state of the federation has regulations controlling rents charges in Nigeria. Rent need not be in monetary consideration. There exist instances where rent may not be paid. They include:
When lump sum or capital sum is paid
When there is a condition which is enshrined in one of the covenants and the lessee has agreed to perform the covenant, that can serve as consideration
When there is acknowledgment of relationship of Landlord and Tenant (mere acceptance of the lease by the lessor)
Rent should be made an essential requirement in the agreement as the Courts will presume the subsistence of a lease agreement between the parties even without the payment of rent. Osho v. Foreign Finance Corporation. Where rent is provided for, it is still payable even if the premises cannot be used. E.g. due to destruction by fire. This is because the doctrine of frustration hardly applies to leases. E.O. Araka vs. Monier Construction Co. (Nig.) Ltd.
It should be noted that rent is not due until the expiration of the period created. In a monthly tenancy, the rent is due on the eve of the commencement of another periodic month. Re St Andrews Allotment Association. In Lagos, rent may be due before or after the expiration of the period created. Where the landlord/lessor desire rent to be paid in advance, it should be stated in the rent clause. Rent can be paid in advance subject to the agreement between the parties and the law regulating leases or tenancy in a particular state.
The main feature of a lease is lawful occupation by tenant and whether he pays regular rent, subsidized rent or no rent at all is immaterial. African Petroleum Ltd. vs. Owodunni.
Rent may be in the following forms:
Ground Rent. This is the rent paid on the bare land itself whether or not it is developed. It is payable to the government upon the grant of a statutory Right of Occupancy. Section 5(1). Land Use Act. The ground rent is subject to revision every 5 years. In a traditional setting, kolanuts and palm wine may suffice for ground rent.
Rack Rent. It is the economic rent payable for the land and the improvements and developments on the land. It represents the full values of the property i.e. land and developments on the land. It could be paid annually, monthly or fixed periods.
Premium. This is a lump sum paid in addition to the other rents. It is regarded as a fine and as such is prohibited in some states in Nigeria. Section 3 & 4. Rent Control and Recovery of Premises Law, Section 4. Lagos State Tenancy Law. Landlords attempt to circumvent the prohibition of premium, by charging rent in advance for many years. In Lagos, it is lawful to insert a clause demanding an advance payment of yearly rent which does not exceed a year for yearly tenant. Section 4(1). Lagos State Tenancy Law. However, where payment of premium is required or allowed, it attracts stamp duties payment and it is charged as income tax.
The mode of payment of rent must be indicated in the agreement and can be in arrears or in advance. G.B. Olivant vs. Alakija. Rent is payable in arrears unless the parties agree otherwise. The consequences of the payment of rent in advance include:
Inflation. A lessor who collects several years rent in advance may turn out to be at a disadvantage as the value of the money may be greatly reduced as a result of inflation.
Tax Implications. Rent collected in advance for more than 5 years is subject to taxation as income. Section (2)(c). Income Tax Management Act, Section 3(2)(c). Personal Income Tax Act.
Legislative Restrictions. In Lagos State, rent paid in advance must not be in excess of one year for a yearly tenant or 6 months for a monthly tenant. Section 4(4). Lagos State Tenancy Law. Default attracts criminal liability.
Where the parties have agreed to the sum to be paid as rent, neither party can unilaterally alter it. Yahaya vs. Chukwuma (2002) 3 NWLR (Pt. 753) 20
Rent Review Clause
The importance of the rent review clause is to enable the landlord to review the rent periodically. The right to review must be expressed as a condition in the agreement and the landlord cannot unilaterally review the rent. In the absence of a rent review clause, the Court may resolve any subsequent disagreement as to rent by applying a fair market value or a reasonable rent and this will be a matter of evidence. UNILIFE Development Corporation vs. Adeshigbin. A rent review clause may be inserted in the reddendum or it may be referred to a schedule.
A rent review clause enables the landlord to keep up with the prevailing market rates as the value of landed property tends to appreciate with time. A rent review clause should contain the following:
Method of initiating the review i.e. notice/time frame of notice.
Period of the Review i.e. when it is renewable and date when it is payable.
Valuation formula. This is the method of calculating the new rent e.g. by expert valuation.
Conflict resolution provision. Olaniyan v. Shokunb
The Lease/Tenancy agreement is prepared by the Landlord's Solicitor. Payment of the Solicitor's fees can be made by landlord or tenant depending on the express agreement of the parties
Covenants in Leases
Covenants are agreements creating obligations. They may be in the form of positive covenants or negative/restrictive covenants. Positive covenants stipulate the performance of an act whilst negative covenants forbid the doing of an act or acts. The type of covenant to be inserted into the lease depends on the type of the lease, the nature of the property and the practice within the jurisdiction where the lease is to take effect. The types of covenants are:
Implied covenants
Usual covenants
Express covenants
Implied Covenants are implied by law whether the lease or tenancy agreement makes provision for them. Adollo vs. Adeyemi, Warren vs. Keen. The implied covenants on the part of the landlord/lessor include:
Guarantee of quiet enjoyment i.e. not to disrupt tenant from enjoyment of the property
Non-derogation from grant/title
Guarantee that the property will be fit for human habitation
Compliance with relevant laws guiding recovery of premises (notices)
The implied covenants on the part of the tenant include:
Payment of rent
Payment of rates and taxes.
Covenant not to commit waste
Covenant to keep and deliver the premises in a tenantable condition. Warren v. Keen.
Covenant to allow the landlord/lessor to re-enter premises for repairs. Section 64. Registered Land Law Lagos.
Usual Covenants are proper and common covenants inserted in a lease based on the facts or evidence presented before the Court. They may also be implied by legislations or expressly provided for in the lease. See Section 34(1). Landlord and Tenant Edict of Rivers State. Usual covenants must, however, be reasonable to be enforceable. The factors determining usual covenants in a lease include:
Judicial interpretation
The jurisdiction of the property
Purpose and usage of trade for which the property is let
The custom of the locality where the property is situated.
Previous dealings
The type of lease in question
The nature of the property
Usual covenants include:
Quiet enjoyment of the property
Payment of rent
Payment of taxes except those expressly stated to be payable by the Landlord
Maintain and deliver up property in a good state of repairs
Allow Landlord view the state of repairs
Express Covenants are covenants which will not be implied in the lease or enforced by the parties except there is definite agreement on them. These are the covenants agreed to by both parties during negotiations and exchange of drafts and they are expressed in the lease agreement. They often incorporate both usual and implied covenants.
Covenant to Pay Rent/Rent Clause
A lease should provide for the payment of rent because rent is not one of the implied covenants in leases. Where the landlord desires to collect rent from the tenant, there must be a clause for rent in the lease agreement. The amount of rent, the period which that rent would cover and the fact that the rent should be paid in advance must be stated. This is against the background that rent is paid in arrears under the common law and if not provided for, payment is in arrears. The covenant to pay rent differs from the rent clause and is usually drafted as: "The sub-lessee covenants with the sub-lessor to pay the rent reserved in the lease at the time and in the manner prescribed"
The rent clause is useful to both parties as the rent payable and the method and period of payment is ascertainable and neither party can vary or deny the agreed amount. The Rent Clause is usually called the Reddendum and is drafted as: "PAYING THE YEARLY RENT OF_____ clear of all deductions by yearly payments in advance"
The Rent Review Clause is usually inserted under the Lessee covenants and helps the lessor/landlord maximize his profit/investment in line with prevailing economic reality and guides against effect of inflation. It also protects lessee/tenant from arbitrary increment of rent on the part of the landlord/lessor. A draft of the rent review clause must contain the method of review, the period of review, and the valuation formula:
Draft:
(Method) - The lessor and the lessee covenant that by a notice in writing to the lessor three months before the expiration of the current lease, (Period) - the rent reserved shall be subject to review every five years for a term equivalent to the term granted under this lease and shall be payable immediately after the new rent has been agreed. (Valuation Formula) - Subject to the agreement of the parties, the rent may be determined by an independent estate valuer in line with the prevalent market rate of the property. (Conflict Resolution) - PROVIDED THAT any further conflict shall be resolved by a single arbitrator to be appointed by the parties in accordance with the Arbitration and Conciliation Act Cap A18 Laws of the Federation of Nigeria 2004
The remedies for failure to pay rent include:
An action in Court to recover the money
An action in distress. i.e. the seizure of the Lessee's good to satisfy the rent without going to Court.
An action for forfeiture where contained in the lease
A claim for mesne profit against a tenant at sufferance
The distinction between Arrears of Rent and Mesne Profits must be noted. Arrears of rent is the rent payable to a landlord by a tenant before the expiration or determination of the tenancy. Mesne profit is the amount payable by the tenant to a landlord after the expiration of the tenancy and the retention of the premises.
Section 7(1). Tenancy Law provides that subject to any provision to the contrary in the tenancy agreement, the tenant shall pay the rents at the times and in the manner stated. If a tenant fails to pay rent for 12 consecutive months for a yearly tenancy or 6 consecutive months for monthly tenancy, there is no need for notice to quit in order to recover possession.
Covenant to Pay Rates and Taxes
This covenant is otherwise known as covenant to pay out goings. There are two types of rates: Recurring rates and Non-recurring rates. Generally, recurrent rates and outgoings like bills, light bills, waste disposal bills etc. are to be paid by the Lessee/Tenant while non-recurrent bills like fixing of electric poles etc. are to be paid by the Lessor/Landlord. In most cases it is the owner of the tenement that pays the outgoings. However, parties may on their own determine who is to pay particular rates and taxes.
There are rates which a statute will require either the landlord or the tenant to pay. In Lagos, where there is no express covenant on who is to pay the rates and outgoings, Section 7(2). Tenancy Law will apply and the tenant is to make all payment on rates and outgoings that the landlord is not legally obliged to pay.
A Party who covenants to pay rates and taxes is not deemed to be bound to pay all new rates and taxes subsequently introduced unless the new rates and taxes are of the same specie as the rates and taxes existing when he covenanted to pay. Smith vs. Smith, Miles End Town Vestry vs. Whitby. Where there is a contrary intention, it must be specified.
The party who will pay rates depend on how the covenant to pay the outgoing is drafted. There are three ways of drafting it:
A stipulation that the tenant shall pay all existing rates and taxes, charges on the day of creation of lease. Where it is so stated, the tenant will pay only the existing outgoings and where new rates are introduced the tenant will not pay. There are three exceptions:
Where the new law provides that it is the occupier that will pay for it, the tenant would pay.
On the authority of Smith v. Smith, where the new rate is of same specie of the former rate, the tenant would pay. For instance, NEPA bills now PHCN bill.
Under Section 7(2). Lagos Tenancy Law, charges not payable by the landlord by law shall be payable by the tenant.
A stipulation that the tenant will pay all rates existing including any other rate subsequently introduced. However, where landlord is to pay the rate by statute, the tenant will not pay as the position of the law is superior.
When the covenant provides that the tenant will pay all rates, taxes and outgoings existing at the creation of the lease, subsequently whether payable by the tenant or landlord. This is a standard draft done on behalf of a landlord.
In drafting the covenant pay rates and taxes, it should be made wide enough to accommodate future goings.
Draft:
To pay rates and taxes, levies, duties, outgoings and charges payable now or as may be subsequently imposed on the property whether payable by the Landlord or not.
The covenant serves to preserve uninterrupted supply of basic amenities and services to the property. It also protects both parties from the provisions of any legislation regulating payment of taxes on the property. It should be noted that a landlord cannot bind a diplomat, foreign envoy, or consular chief representative of a commonwealth countries and their official and domestic staff to pay rates and taxes as they are exempted by the Minister of Finance. Section 9. Diplomatic Immunities and Privileges Act.
The remedies for the breach of the covenant to pay rates and taxes include:
An action to recover the outgoings and rates that have accrued.
An action for damages
An action for forfeiture and re-entry where the lease contains a provision to that effect.
User Covenant
If this is not stipulated, the demised premises can be used by the lessee for any Lawful purpose. Dawodu v. Odulaja. The restrictions on the usage of a property may also be stipulated by the Certificate of Occupancy or town planning laws and regulations. Zard vs. Saliba. The parties must comply with the user covenants in the title documents.
The covenant serves to protect against nuisance and ensures that the lessor controls and determine the use and purpose of the property in order to protect his reversionary interest. It also prevents the use of the property for unlawful or immoral purposes and ensures compliance with town planning laws and user covenants on the title documents. Zard. Vs. Saliba.
Draft:
The tenant covenants to use the premises for commercial or residential purposes only
Or
The lessee covenants to make use of the premises and to permit the premises to be used for the purpose of (residence/ commerce/agriculture) only.
Or
"The tenant covenants not to use/suffer the premises to be used for any unlawful or immoral purposes but to use same for commercial purposes only"
See Veegee Ltd. vs. Contract Overseas Ltd.
The points a solicitor should note in advising clients regarding the insertion of user covenants include:
It does not always favour lessor/landlord as the more restrictive the use of the property, the lower the open market price
It should not be harsh against the tenant.
A solicitor should advise client properly to avoid being held liable for professional negligence. Sykes vs. Midland Executors
A solicitor should avoid a narrow drafting of the covenant.
The remedies for breach of user covenant include:
Action for injunction to prevent a contrary use
Action for damages to compensate for misuse of the premises
Action for forfeiture and re-entry if it is provided for in the lessee
Covenant to Repair
In the absence of an express covenant to repair, the obligation to repair is generally imposed on the tenant by virtue of the implied covenant to use the demised property in a tenant like manner and the implied covenant not to commit waste. The tenant is relieved from liability to repair if the disrepair or dilapidation resulted from the operation of wear and tear or of natural causes. Repairs mean the replacement of subsidiary parts of the premises while to renew refers to replacement of substantial parts of whole of the premises. Lurcott v. Wakely & Wheeler.
The covenant ensures that the property is maintained in good condition. The practice is that before a tenant enters a premises, the landlord and the tenant will inspect the house and the inventory of items recording the state of the important structures in the property. A covenant to repair imposes an obligation on the person covenanting to put the premises into repair even if they are in a state of disrepair at the start of the lease and to ensure that they do not thereafter fall into a state of disrepair. Payne v. Haine (1847) 16 M & W 541 at 545, Proudfoot v. Hart (1890) 25 Q. B. D 50.
Under the Common Law, the Landlord has no liability to repair unless it is agreed by the lease or implied by statute. Furthermore, where a premises is in disrepair at commencement of lease and lessee (tenant) covenants to repair, it is presumed that lessee will yield up premises in its repaired state. Section 7(3). Tenancy Law provides that the tenant shall keep the premises in good and tenantable condition, repair and reasonable wear and tear excepted. Section 8(iv). Tenancy Law provides that the landlord shall effect repairs and maintain the external and common parts of the premises.
In the absence of express stipulations in the agreement, any of the party may carry out the repairs but it still depends on the type of repairs as follows:
Structural repairs like repairs on the roof, house foundation, etc. are to be done by the Lessor/Landlord. Section 8(vi). Tenancy Law of Lagos State
Internal repairs like bad sinks, broken floor etc. are to be repaired by the tenant/lessee.
If the lease is of a short duration, the landlord has a greater obligation to repair.
If it is a lease of a longer duration, the tenant has more obligation to repair. Demuren vs. Plastic Manufacturing Co.
The lessee is generally responsible for interior parts (block of flats) while the lessor is responsible for external parts. Sections 64 & 65(f) - (g). Registered Land Law Lagos.
In drafting the covenant for repair, the solicitors should note the following points:
A covenant must be carefully couched so as to avoid onerous presumptions on the tenant.
Structural repairs must be itemized in the schedule
The lessor must reserve right of entry
The draft must acknowledge and allow the occurrence of fair wear and tear
The aggregate character, locality of the premises and the general nature of the property at the commencement of the lease must be considered by the solicitor.
Expressions like "tenantable repair", "sufficient repair" "good and substantial repair" may be used in a covenant to repair. It must be noted that these expressions do not have the same effect. Lurcott vs. Wakely & Wheeler, Proudfoot vs. Hart, Oyename vs. Sulu. However, the expressions "good tenantable repairs", "good repairs" or "good habitable repairs" all mean the same thing.
The following is an example of a defective repair covenant:
"To keep the premises in a good state of repair and so to deliver up possession of the premises the end of the term."
The noticeable defects in the above clause include the failure to state when repairs are to start and make provisions for the landlord to enter and take inventories. It also fails to protect the tenant as to fair wear and tear.
The phrases "reasonable wear and tear excepted" implies that the lessee is relieved from liability from any state of disrepair so long as the disrepairs result from a reasonable use of the premises and the effects of natural elements.
The advantages of a covenant to repair include:
It protects the premises against waste which may be committed by the tenant/lessee
It protects the value of the property
It ensures the enjoyment of the premises by the tenant by maintaining same in a habitable condition
It protects both parties from being subject to implied terms under statute or common law
It facilitates the payment of a deposit which is refundable at the end of the term
The Landlord is not liable on his covenant to repair until he has notice of the need for repair. Notwithstanding, the landlord has the right to enter and view the state of repair. Demuren v. Plastic Manufacturing Co Ltd (1974) 6 CCHCJ. The landlord can effect repair and sue for money spent on repair. In Lurcott v. Wakely & Wheeler, repair which was to be made by the tenant was effected by the landlord. In landlord's action for money spent, the Court held that he was entitled to recover the money spent.
The remedies against a tenant for the breach of a Covenant to Repair is determined by whether or not the tenant is in possession. Where tenant is in possession:
Serve him a notice to repair
Where there is a continuous default, an order for forfeiture and re-entry.
An action for specific performance
Action for damages. The measure of damages will be the amount that would be required to put the premises in the state of repair in which the tenant should have delivered possession. See NCHC Ltd. vs. Awoyele (1988) 4 NWLR (PT. 90) 588.
Where tenant is no longer in possession:
Action for damage (to the tune of the amount needed for carrying out repairs)
Action for loss of rent.
Where the landlord is in breach, the tenant may:
Serve the Landlord a Notice to repair
Institute an action for specific performance
The tenant may repair the property and claim or set off the costs from subsequent rent.
However, where the landlord is in breach of the covenant to repair, the tenant is not entitled to withhold the payment of rent or quit the premises. Demuren vs. Plastic Manufacturing Ltd. This is because the covenant to pay rent is independent and not conditional on the covenant to repair. See Oke vs. Salako (1972) 1 CCHCJ 82.
Draft:
"The tenant covenants to keep and maintain the premises in a good state of repair, fair wear and tear excepted, and to permit the landlord to enter at reasonable times to view the state of repairs"
Covenant not to make Alterations
Alterations include additions or changes to the premises e.g. breaking of the walls, reworking the veranda, repainting, etc. The covenant against alteration may be absolute or conditional. Where it is conditional, the lessee must carry out alterations within the confines of the consent given. In practice, covenants against alterations are absolute in short leases and conditional in long leases.
Draft:
"The tenant covenants not to make any alteration to the premises without the written consent of the Landlord, such consent not to be unreasonably withheld and to restore the property to its original position at the end of the term of the lease at his own expense."
The covenant not to make alterations serves to safeguard the premises and lessor's reversion.
Covenant on Abatement of Rent
Abatement of rent is simply suspension of rent. Generally, in contracts, frustration applies to the rights and liabilities of the parties. But in terms of a lease, frustration does not apply as a general rule except in some instances. See Araka vs. Monier Construction Nigeria Ltd. (1978) NSCCF 462.
Covenant to Insure
This is an undertaking to insure the demised premises by one of the parties to the lease or in the name of one or all of the parties. Insurance of the demised premises is necessary because the parties have insurable interests in the property. The Landlord has reversionary interest and the tenant has possessory interest in the property.
The Insurance clause should cover the following:
Who is to insure (Policy Holder)
Risk to be insured (Risk)
Amount of insurance cover (Amount)
Application of the insurance money. (Application of the Insurance Money)
The Insurance Company
Provision for Abatement
Draft:
"... To keep the Demised Premises insured at all times throughout the subsistence of the tenancy in the joint names of the Landlord and the Tenant against the risk of fire, lightning, explosion, riot, civil disturbances or commotions, earthquake, storm, tempest, flood, and other risks and usual perils normally insured under a comprehensive policy on property of the same nature as the Demised Premises, with a reputable insurance Company to be approved by the Landlord, which approval shall not be unreasonably withheld, for a sum equal to the full cost of complete reinstatement and to make all payments of premium and other payments necessary to effect and maintain the policy or policies as and when due; and to produce to the Landlord on demand the policy and the receipt for each payment and to apply all money received by virtue of the policy to be immediately laid out in rebuilding and reinstating the Demised Premises or any part of it in respect of which such money shall have become payable."
There are many risks to insure in a property. The parties should agree on what specific risk to insure against e.g. fire. In drafting the clause, the solicitor should avoid the use of expressions such as "insurable risks" or "full & comprehensive insurable risks", because these terms have no defined meanings.
In determining who is to insure, the following is to be considered:
Existing Obligations on the Property e.g. where the Lessor charges the property for a loan and the bank requires him to insure the property, the Lessor should continue to insure
The Nature of the Property: where part of the property is held by the Lessor, then he should insure the property to make sure a common policy covers the whole property. Where the Lessee occupies an exclusively detached flat, then the Lessee should insure in his own name.
Usage of the Property: Where the use to which the property is being put is highly risky, the tenant may insure.
Other provisions existing in the Lease: Where the landlord performs certain acts or obligations such as maintenance of common grounds, operation of lifts, etc., it is ideal that the landlord insures.
Section 8(iii). Tenancy Law provides that subject to any provision to the contrary in a tenancy agreement, the landlord shall keep the premises insured against loss or charge. The risk for which the property is insured against may be fire, flood, tsunami and burglary.
Where there is provision in the lease agreement for the landlord to charge for services rendered, the landlord may undertake to insure the property. He will be entitled to recover from the tenant by way of service charge.
The risk to be insured largely depends on the nature of the premises. Where the tenant is required to insure with a particular insurer but is not given the particular risk to insure, his obligation would be limited to the policy as it applies from time to time with the insurance company. Upjohn vs. Hitchens
The amount of cover should be the full cost of reinstatement. Hence, the party insuring should avoid under-insuring the property. Bander Property Holding vs. Darweji Ltd. Section 50. Insurance Act provides that the receipt of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk unless the premium is paid.
There is a need to provide for how the insurance money recovered, if risk occurs, will be applied because under the common law, the person that insured can apply the money in any manner favourable to him and the other party has no action against the party that insured. Leeds vs. Cheetham. If the policy were taken in their joint names, one party can compel the other to apply the money to reinstate the property. The application of the Insurance money will largely depend on whether reinstatement of the property is possible or not.
Where the tenant insures or reimburses the landlord for insuring, he can compel the landlord to use the insurance money to reinstate the property. Munford Hotels Ltd vs. Wheeler. It should be noted that where the tenant insures in his own name, in the absence of a provision in the lease requiring the tenant to reinstate, the landlord cannot compel the tenant to re-instate.
Where reinstatement is impossible, provision should be made in the lease for a division on a Pro Rata basis. In the absence of any Contrary provision, inferences can be drawn from the terms of the lease and the insurance policy. Beacon Carpets Ltd vs. Kirby.
Statutory provisions have been made regarding the application of the Insurance money. Section 67. Insurance Act is to the effect that where a house or other building insured against loss by fire is damaged or destroyed by fire, the insurer may on the request of any person entitled to or interested in the insured house or building, use the insurance money to reinstate the building. The insurer reserves the right to elect between reinstatement and paying the insured for the loss suffered. For this provision to apply, the damage must be caused by fire. With regards to the insured, no grounds of suspecting fraud or arson must exist on part of the insured. The application to the Insurance Company should be made before the payment of the Insurance money.
The covenant to insure protects the property and the reversion and in the event of loss, provides for reinstatement of the property. It also serves to provide for the sharing formula where reinstatement is not possible.
Where there is a breach of the covenant to insure, the remedies include:
Damages against the person who ought to insure but fails to do so.
Action for forfeiture if expressly provided
Application to Court by a person interested in a destroyed property to use the insurance money to reinstate the damaged property.
Covenant to Deliver Possession at the Expiration of Term Granted
A tenant cannot be regarded as having delivered up possession if he vacates the premises but retains the keys of the property thereby preventing entry of landlord. Asorope v. Orelaja
Covenant against Assignment and Sub-Letting
Assignment by a lessee or tenant means transferring the entire/remaining term to another person. Sub-letting means transferring a part of the term of lease e.g. where ABC, a lessee, transfers 5 years out of his 10 years lease to XYZ. Generally, a tenant has the unrestricted right to assign his tenancy or to create subleases of such tenancy in the absence of a provision to the contrary. Inuwada vs. Bryne, Keeves vs. Dean. However, this is not applicable to Lagos State as Section 7(6). Lagos State Tenancy Law expressly prohibits a tenant from assigning or sub-letting any part of the demised premises without the Landlord's consent.
The covenant against assignment and subletting ensures that the Landlord is in control of tenants occupying the premises. The covenant may come in any of the following forms:
Absolute Bar/Prohibition
Conditional/Qualified Prohibition
Balanced/Ideal Clause
An absolute bar provides that the tenant shall not assign or part with possession of the demised premises in any circumstance. Ishola Williams vs. Hammond Projects. However, this statement is limited as such the tenant can still charge his interest in the property.
While drafting an absolute covenant against assignment, it is advisable that all the acts prohibited must be covered in the covenant.
Draft:
"… not to assign, underlet, charge or otherwise part with possession of the property."
The clause is harsh on the tenant and stipulates that the tenant does not have any right whatsoever to sub-let or assign. It is advisable for a tenant to negotiate with the Landlord for an amendment of the clause.
It should be noted that where the tenant permits another person to use the premises e.g. allowing a licensee to use the premises, this does not amount to breach of the covenant not to assign or sublet. Ishola Williams vs. Hammond Projects.
The conditional prohibition differs from the absolute prohibition due to its provision for assignment where the consent of the landlord is obtained. Where there is a failure to obtain the consent of the landlord or consent is refused, any assignment will be void.
Draft:
"Not to assign, sublet, charge or part with possession of the premises or any part of it without the written consent of the Landlord."
A conditional covenant fails to adequately cover the interests of both parties as the test for granting or refusing consent is subjective.
A balanced clause is used to ensure a balance of the competing interests of the parties.
Draft:
"Not to assign, underlet or otherwise part with the possession of the demised premises without the written consent of the landlord, such consent not to be unreasonably withheld in the case of a responsible and respectable person"
For refusal to be reasonable or not, the following is considered:
Personality of the intended sub-tenant. (financial standing and relationship with previous landlords
The use or purpose for which the sub-tenant requires the premises. Houlder Brothers & Co. vs. Gibbs, Coham vs. Popular Restaurant
The nature of the property. Shanly vs. Ward, Gov. of Bridgewell vs. Faulkner & Rogers
In Alakija v. John Holt, it was held that where the consent to an assignment is unreasonably withheld, the result is that the tenant is at liberty to assign without the landlord's consent. The burden of proving that the reason of refusal is unsubstantial lies on the tenant. Holder Bros & Co. Ltd vs. Cribbs.
Tenant should always request for consent before assigning. Once consent is given, it cannot be withdrawn. Ideal Films Renting Co. vs. Nielson, Alakija vs. John Holt, Obasuyi vs. Mandilas & Karaberis Ltd.
The covenant against assignment serves to protect the Lessor's reversionary interest, helps guide against nuisance to neighbours and prevents subletting/assigning of property to persons who would use it for illegal or immoral purposes. Where a balanced clause is employed, it enables the Lessee recoup part of his expenses or money expended on the property.
Where a tenant wishes to assign the property but is refused consent, the remedies available include:
The tenant can seek a declaration that the refusal is unreasonable.
The tenant may compel the Landlord to give his consent in an action for specific performance.
The tenant may ignore the Landlord and sub-let and apply for an order of injunction restraining the Landlord from harassing the sub-tenant.
The tenant may ask for damages.
With regards to the Landlord, where the tenant is in a breach of the covenant, the Landlord is entitled to remedies. The Landlord may also seek a Court order for re-entry and forfeiture of the lease. However, the Landlord cannot resort to self-help. Akpina vs. Balogun, Ojukwu vs. Governor of Lagos State.
Where there is a breach of any of the covenants by the Lessee, the options open to the Lessor include:
Claim of damages
Action for forfeiture
Entry into the demised premises to carry out repairs
Action for specific performance of the covenants
Provisos in a Lease
The provisos in a Lease may qualify or limit any of the covenants in the lease.
Option to Renew/Covenant for Renewal of a Lease
This is a covenant made by the lessor to the lessee that at the expiration of the lease, a new lease will be created for similar or reviewed terms, rents and covenants. Being an offer to the Landlord, it must be accepted as it is and until the option is exercised, it confers no interest but is merely a contractual right to acquire a demise in the future. See Kuforiji vs. PZ & Co. Ltd. (1959) LLR 57. Where it is provided in a lease, it may be enforced against the lessor. This term/covenant gives the Lessee/Tenant the option to express his interest in taking out the demised premises for another term of years as lease/Tenancy by notifying the Lessor/Landlord on time on such terms as may be agreed by the parties. Where the tenant makes a counter offer, then the current option lapses. See International Institute of Tropical Agriculture v. Khawan (1975) WACA 158.
The contents of the option to renew clause include:
Time within which the application is to be made e.g. 3 months or six months
Manner of the exercise e.g. usually in writing.
Condition precedent to be fulfilled before exercise of the option e.g. lessee to have paid rent and performed all his covenants in the lease.
The terms of the new lease. Iita v. Khawam
The option to renew clause helps to secure lessee's interest in the property at the end of the subsisting lease and helps the lessee recoup part of his expenses or maximize his use of the improvements in respect of the property. The option to renew may also serve to prevent the drafting of a new Deed of Lease or Tenancy Agreement.
The clause must state the condition necessary to be fulfilled by the tenant before the option can be accepted. This condition precedent must be clear and certain and it must be strictly complied with. The "condition precedent" requirement in an Option to Renew clause is important to the landlord because it affords him the opportunity to assess the tenant, whether or not he has been a good tenant and has observed the covenants and conditions stated in the lease. See West Country Cleaners Ltd. vs. Sally (1965) 3 ALL ER 210. The Courts are very strict in construing the performance of these conditions and no matter how trivial a breach of a condition precedent, it is sufficient to disentitle the tenant the right to exercise the Option to Renew. It is usual for parties to state an Option Clause that the rent shall be a new rent to be mutually agreed. This would appear to be void for uncertainty unless a proviso is inserted in the option whereby a machinery to settle the new rent is put in place in the event that the parties are unable to reach a mutual rent.
The Solicitor should be careful when drafting the covenant to ensure that no perpetually renewable lease is created. Re Hopkins Lease. A perpetually renewable lease is one which has also renewed the option to renew clause and has made the rent payable under the new term to be at the previous rate. An example of a clause creating a perpetually renewable lease is:
"The Lessor shall on the written request of the lessee made at least three months before the expiration of the current term, grant to the lessee the lease of the demised premises for another term of five years from the expiration of the current term on the same terms and conditions as this present lease"
An option to renew should be created by stating that the terms of the new lease are created by reason of the option to renew and expressly excluding the option to renew in the subsisting lease agreement.
Draft:
"The Lessor shall on the written request of the Lessee made at least three months before the expiration of the current term, grant to the Lessee the lease of the demised premises for another term of five years from the expiration of the current term on the same terms and conditions as the present lease, except rent and this option to renew; Provided, however, that Lessee shall have materially observed all its obligations under the present lease".
Option to Purchase Reversion
The option to purchase reversion is assignable. Re Buttons Lease. The tenant may enforce the option by action for specific performance and may even sue to set aside the sale of the property to another person. Owosho v. Dada
Proviso for Forfeiture and Re-Entry
This may lead to the suspension or termination of the lease for non-payment of rent or non-observance of covenants of the lease. It operates to bring a lease to an end earlier than it would otherwise terminate. The law presumes against forfeiture of leases except where the clause is expressly stated.
Draft:
"PROVIDED ALWAYS that if the tenant commits a breach of covenants or conditions in the lease or becomes bankrupt. It shall be lawful for the lessor to re-enter the premise and immediately the term shall absolutely cease and determine."
Until the landlord has shown his final decision to treat the lease as forfeited, he may waive his rights. It may be express or implied. The tenant also reserves the right to seek relief against the landlord exercising his right of forfeiture for non-payment of rent. Equity looks on the landlord's right as merely a security and as a means of enforcement of payment of rent. The Lessor is required to strictly prove the breach of covenants by the lessee in an action for forfeiture.
If the proviso for forfeiture and re-entry is not stated in the Lease/ Tenancy agreement, the Lessor/Landlord must go to Court. If the lessee/tenant pays the rent after the action for forfeiture has been instituted by the Lessor/Landlord, the action of forfeiting the premises shall lapse. Section 14(1). Conveyancing Act, Section 161(10). PCL.
Where the lessor has waived his right to enforce covenants in the lease, he cannot be allowed to exercise the right for forfeiture. The lessor may enforce the clause in two ways:
By peaceable re-entry
By action for possession
A tenant who deserves relief must state so in his defence to the landlord's claim or by a counterclaim. He must prove the following:
That he had paid the rent due.
That he had paid any expenses to which the landlord had been put.
That it is just and equitable to grant him the relief.
It must be noted that the tenant is given a six-month time limit within which he can seek relief.
Where forfeiture and re-entry is for breach of other covenants, the landlord is bound to serve on the tenant a statutory notice as required by Section 161. P & CL & Section 14(1). Conveyancing Act. The statutory notice must provide the following:
The covenant breached must be expressly stated.
If the breach is capable of being remedied, then the tenant should be required to do so.
That the tenant should pay compensation in form of money for the breach if the landlord requires it in the notice served on the tenant.
The landlord must allow "reasonable time" within which the tenant may comply with the notice. See Ishola Williams v. Hamkmond Properties (1988) 1 NWLR (PT. 71) 481. In practice, three months is usually considered to be enough reasonable time. However, where a breach committed can be remedied within a shorter time, a 14 days' notice is adequate.
The exceptions to serving of statutory notice include:
Where the tenant denies the landlord title.
Where there is already a process for forfeiture for non-payment of rent.
Abatement of Rent
This must be provided for due to the fact that the doctrine of frustration is generally inapplicable to leases. At Common Law if rent was paid over a premise and the premise is destroyed or anything prevents its use, the rent will run until it expires and the tenancy will be exhausted even if the tenant was unable to use the premises.
The proviso serves to prevent the rent paid from running in such cases where the property is destroyed e.g. by natural occurrences like storms, earthquakes etc. or the premises unable to be put to use.
Draft:
"… The Lessor covenants with the Lessee that the rent shall not continue to run in a case of an act of God where the demised premise is destroyed or anything happens preventing the use of the premises."
Determination of a Lease or Tenancy
The following are the various methods in which a lease may be determined:
Effluxion of Time. A lease or tenancy for a fixed period is automatically determined at the end of the period. The determination may also be the happening of some events.
Merger. This is where the tenant or third party retains the lease and acquires the reversion before expiration of the lease. For a merger to be operative, the person in whom the merger is vested must have acquired both the lease and the reversion in the same capacity. In Chambers v. Kingham (1878) 10 Ch. 631, the Court held that where a person holds the lease as his and the reversion as an executor, it does not amount to a merger.
Notice to Quit. Statutory notices given in respect of statutory tenancies will determine a lease. The mode and length of notice is specified in the relevant laws. However, the parties may exclude the application of this law in relation to length of notice. Where the parties have made express agreement relating to the length of notice, the above provisions of the Law shall not apply. Chief Ikomi v. Cole (1960) 5 FSC 63. Notice to quit should be personally served on either party, but where there is evidence that the other party is evading service, then notice may be placed on some conspicuous part of the premises.
By Surrender. This occurs where the lessee gives up his term of years to merge with the lessor's reversion. Surrender may be express (voluntary) or by operation of law. Allen v. Roachdale
Disclaimer. Where a lessee sets up an adverse claim to the ownership of the property or claims direct ownership, the lessor is entitled to determine the lease.
Frustration. This is subject to the determination of the Court in relation to the circumstances of the case. Araka v. Monier Construction Nig. Ltd, National Carriers Ltd. vs. Panalpina. It must be noted that where the property is destroyed and the lessee remains in possession, he cannot plead frustration. Odusanya v. Oniororo.
Forfeiture. The landlord may become entitled to re-take the premises before the expiration of the tenancy, where there is a breach of covenant to pay rent or any other covenant by the tenant.
Where the forfeiture and non-payment is based on non-payment of rent, the rent must be reserved and the Landlord must make a formal demand after which the tenant remains in default. Furthermore, the forfeiture must be expressly provided for in the lease. The Landlord may exclude the requirement for formal demand as follows: ''the landlord may forfeit and renter the premises where the rent reserved is in arrears for 21 days whether or not formally demanded".
The forfeiture and re-entry may also be for the breach of any other covenant in the Lease. Section 14(1). Conveyancing Act 1881 & Section 160 & 161. PCL. The Landlord must serve a statutory notice which must contain the (1) nature of the breach committed by the tenant, (2) a request that the tenant should remedy the breach, and (3) allow a reasonable time for tenant to remedy the breach. Ishola Willaims vs. Hammond Projects.
The tenant has a right to relief against forfeiture and re-entry. However, he must satisfy the following conditions:
He must be willing to pay and remedy the breach complained of
He is willing to pay the landlords cost of bringing the action
It is just and equitable to grant him relief.
Procedure for Determination of a Lease or Tenancy
If an agent is to act for the Lessor/Landlord, give him a letter of authorization to act
The Lessor/Landlord or his agent is to serve a Notice to quit on the Lessee/tenant. See Form TL2 or TL3 of the Tenancy Law of Lagos 2011 & Form A/B or C/D of the Recovery of Premises Act applicable in Abuja.
If the lessee/ tenant still retains possession of the premises, serve Notice of Owner's Intention to apply to Court to recover possession which will last for 7 days (also called the 7 days' notice). See Form TL4 of the Tenancy Law of Lagos 2011 & Form E of the Recovery of Premises Act applicable in Abuja.
Take out a Plaint or Claim or Writ in Court if the tenant is still in possession of the premises. See Form TL6A or TL6B of the Tenancy Law of Lagos 2011 & Form F of the Recovery of Premises Act applicable in Abuja.
Particulars of Instruction/Information Needed to Prepare a Lease
Particulars of the parties, such as: name, address, occupation
Commencement date
The property being demised, its detailed description and whether only parts of the premises are being demised
Duration of the lease
Rent payable and method of payment; whether in advance or arrears
Covenants to be performed by the Lessee/Sub-Lessee
Covenants to be performed by the lessee/Sub-Lessor
Party to insure the property, duties and liabilities in respect of the insurance policy
Instructions on rent review (if desired), renewal of the lease, forfeiture and re-entry
Whether necessary consent has been obtained from Governor (sublease/ Certificate of Occupancy)
Witnesses to attest the agreement
Tenancy Law of Lagos State
The tenancy law of Lagos State applies to businesses and residential premises only. The law does not apply to:
Ikeja GRA, Victoria Island, Ikoyi, Apapa
Premises used by Educational institutions for its staff and students
Public and Private Hospitals, Emergency shelters, Mental Health Facilities, Care or Hospice Facility, Physio Therapy Centers.
See Section 1. Lagos State Tenancy Law.
Both the Magistrate Court and the High Court have jurisdiction to entertain matters brought under the law. Section 2. Lagos State Tenancy Law. The determinant is the amount of money involved in the case. Where the claim exceeds the monetary jurisdiction of Magistrate, the matter will be heard by the High Court.
Features of the Lagos State Tenancy Law include:
It empowers the Court to refer of tenancy proceedings to citizen mediation centre or the Lagos Multi-Door Courthouse with or without the consent of the parties. Section 32. Lagos State Tenancy Law.
It is unlawful for the landlord to demand for rent in excess of 6 months for monthly tenancy or in excess of one year for yearly tenancy. Section 4. Lagos State Tenancy Law. Default is punishable with N100,000 fine or 3 months' imprisonment. Section 4(5). Lagos State Tenancy Law.
It is mandatory for the Landlord to issue a rent payment receipt to the tenant upon payment of rent. Section 5. Lagos State Tenancy Law. Where the landlord fails to issue the receipt, it is a violation of the law and is punishable with N100,000 fine or 3 months' imprisonment. Section 5(3). Lagos State Tenancy Law.
Service charges and other ancillary costs should be covered by a separate receipt. Section 10. Lagos State Tenancy Law.
Definition of rent is wider under the law as it includes monetary and non-monetary consideration. Section 47. Lagos State Tenancy Law
A Licensee who refuses or neglects to give up possession is to be given 7 days' notice using Form TL4. Section 14. Lagos State Tenancy Law.
Professional fees of any agent is payable by the party bringing him. Section 11. Lagos State Tenancy Law.
The landlord has to ensure that the tenant enjoys quiet possession. Section 6. Lagos State Tenancy Law.
Formal Parts of Lease
Commencement: "THIS LEASE" or "THIS DEED OF LEASE". Where it is a simple tenancy, it is commended thus "THIS TENANCY AGREEMENT" or "THIS AGREEMENT".
Date: "Made this ____ Day of ________ 20__". The date is the day the lease is made. Where it is by deed, the important date is the date of delivery of the Lease. In a Tenancy Agreement, the important date is the date of execution.
Parties: Individuals - "BETWEEN ___(Name)___ of ___(Address)___ Lessor/Landlord
And ___(Name)___ of ___(Address)___ Lessee/Tenant".
Companies - "XYZ Ltd., a Company registered under Part A of the Companies and Allied Matters Act 2004 and having its registered office at __(Address)__ (the Lessor of one part or the Lessee of the other part). Attorney - "Mr. XYZ, the lawful attorney of _______ (lessee/lessor)".
Recitals: This is not an essential part of a lease except where the agreement is a sub-lease, where there is a Power of Attorney, or if there is a surety or guarantor.
Testatum: "WHEREBY the Landlord agrees to demise to the Tenant" or "IT IS AGREED AS FOLLOWS; the Lessor demises to the Lessee…". The Testatum contains the operative words and parcel clause. In case of a tenancy agreement, it is "WHEREBY" and in a lease agreement it is "WITNESSES AS FOLLOWS"
Parcel Clause: "ALL THAT property situated at (describe the property) …"
Habendum: "TO HOLD UNTO the Lessee for the terms of ___ years commencing on _______ and ending on _________". The phrase "commencing on" includes the date named in computation while "commencing from" excludes the named date. The habendum specifies the quantity and commencement of the term of a lease.
Reddendum: "paying yearly during the term created under this lease the sum of ____________". The reddendum defines the amount of rent payable by the lessee, the person to whom the rent is payable must be stated, as well as mode of payment usually in advance.
Covenants:
Provisos: "PROVIDED THAT…".
Testimonium: "IN WITNESS OF WHICH the parties have executed this lease in the manner below the day and year first above written". If it is a Company - "IN WITNESS OF WHICH XYZ Ltd has caused its common seal to be affixed and the lessee has executed this Lease in the manner below the day and year first above mention". This clause connects the parties with the agreement.
Schedule: It should be inserted where necessary and may be used to describe the property in detail, delineate the parts of the property to be repaired by each party, or stipulate the rent review formula
Execution: "SIGNED, SEALED AND DELIVERED by the within named Lessor/Lessee". This provides for the signature, mark or seal of the parties to the lease.
In a Tenancy Agreement - "SIGNED by Landlord/Tenant".
Where one of the parties is a Company - "THE COMMON SEAL of XYZ Ltd. is affixed to this Lease and the Lease duly delivered in the presence of (Director and Secretary).
Where one of the parties is an illiterate or a foreign party who does not speak nor comprehend the English language - "SIGNED, SEALED and DELIVERED by the illiterate /blind Having been first read and interpreted to him in Igbo Language by me (Name of Interpreter) When he appeared perfectly to understand it before Affixing his thumb print, mark/signature
______________________
(Name of Illiterate)
By an Attorney -
"SIGNED, SEALED AND DELIVERED by
(Name) The lawful Attorney of the Lessor by virtue of a power of attorney dated ____ and registered as No_____ Page ____ Vol_____ at the Lands Registry (Jurisdiction)
ATTESTATION:
"IN THE PRESENCE OF:
Name: __________________
Address: _______________
Occupation: ___________
Signature: _____________
This contains the witnesses to the lease and their signature.
Steps to Perfection of a Lease
Obtain the Governor's consent which is endorsed on the Deed of Sub-Lease. This is not needed for a Tenancy Agreement.
Stamp the Deed of Lease at Ad Valorem rate
Registration at the Lands Registry of the State where the Land is situated
Expressions Relating to Time
"On" - Includes the date mentioned. Start counting from the day mentioned
"From" - Minus the mentioned date. Exclude the mentioned date when computing time.
"After" - Excludes the day mentioned
"Till and until" - Not clear if mention date should be included or excluded
"As soon as possible"
"within a reasonable time"
Ethical Issues
Failure to reflect instructions given. Rule 14. Rules of Professional Conduct.
Duty to show competence when drafting the lease agreement. Rule 16. Rules of Professional Conduct.
The document should correctly and fully reflect the wishes of the party with special reference to the covenants.
Duty not to mix the rent paid to/by the client with the solicitor's money and not to spend such fund belonging to the client. Rule 23(2). Rules of Professional Conduct.
Duty not to frank a document not prepared by the Solicitor. Rule 3(2). Rules of Professional Conduct, Section 10. Legal Practitioners Act.
Duty not to aid a non-lawyer in the unauthorized practice of Law. Rule 3(1)(a). Rules of Professional Conduct.
Sample Drafts
Deed of Sub Lease (Illiterate and Company)
THIS DEED OF SUB-LEASE made this ____ day of ____2013
BETWEEN MRS TITILAYO OKON of No. 26, Faro Street, Ikeja, Lagos state, Nigeria (sub-lessor) of the one part; AND ZONGE ALABARI of No. 65 Balewa Crescent, Port Harcourt, Rivers state, Nigeria (sub-lessee) of the other part.
THIS DEED WITNESSES as follows:
IN CONSIDERATION of the rent and covenants contained in this sub-lease, the sub-lessor as BENEFICIAL OWNER grants to the sub-lessee ALL THAT property comprising a block of six flats situate at No. 67, Zamuna Street, Port Harcourt, Rivers state, covered by Certificate of Occupancy No. 87679 dated 23/11/2009 and registered 45/45/20093 (the demised premises) TO HOLD UNTO the sub-lessee for a term of ten (10) years commencing on 30 January 2013 and ending on 29 January 2023, YIELDING AND PAYING annually in advance the sum of N10,000,000.00 (Ten Million Naira) only, clear of all deductions, the sum of N20,000,000.00 (Twenty Million Naira) only, covering the first two years having been paid by the sub-lessee to the sub-lessor (the receipt of which the sub-lessor acknowledges).
THE SUB-LESSEE COVENANTS as follows:
To use the demised premises for lawful commercial purpose only.
Not to assign, sublet, charge or otherwise part with possession of the demised premises or any part of it without the prior written consent of the sub-lessor, consent not to be unreasonably withheld or delayed in case of a responsible and respectable person.
To pay all rates, taxes, charges and outgoings in respect of the demised premises, payable now or as may be imposed subsequently whether payable by the owner or by the occupier.
The rent reserved in this sub-lease shall be reviewed at the end of the first two years of this sub-lease. The parties to this sub-lease may agree on the revised rent before the review date, provided that if agreement has not been reached by the reviewed date, the rent shall be determined by an independent qualified Estate Valuer, who shall be appointed by agreement of both parties and in default of agreement, by the President of the Institute of Estate Valuers at the request of the first of them to apply to him, at the joint expense of the parties , and shall do so an Arbitrator under the Arbitration and Conciliation Act, LFN, 2004.
To keep the Demised Premises in a decent and good tenantable condition on and repair reasonable wear and tear excepted and at least one month before the expiration or termination of the tenancy, to carry out repairs and renovations on the Demised Premises and to put in the same condition as it were at the commencement of the sub-lease, reasonable wear and tear excepted, provided that the sub-lessor shall keep the main structure (including the walls and roof) in good and tenantable condition and repair as enables the Demised Premises to be used for the purpose or purposes as are contained in this sub-lease.
Not to make or permit to be made any alterations in or addition to the Demised Premises or any part of it without the prior written consent of the sub-lessor.
To keep the Demised Premises insured at all times throughout the subsistence of the tenancy in the joint names of the Landlord and the Tenant against the risk of fire, lightning, explosion, riot, civil disturbances or commotions, earthquake, storm, tempest, flood, and other risks and usual perils normally insured under a comprehensive policy on property of the same nature as the Demised Premises, with a reputable insurance Company to be approved by the Landlord, which approval shall not be unreasonably withheld, for a sum equal to the full cost of complete reinstatement and to make all payments of premium and other payments necessary to effect and maintain the policy or policies as and when due; and to produce to the Landlord on demand the policy and the receipt for each payment and to apply all money received by virtue of the policy to be immediately laid out in rebuilding and reinstating the Demised Premises or any part of it in respect of which such money shall have become payable.
PROVIDED ALWAYS THAT in breach of any of the covenants contained in this Deed by the Sub-lessee, the Sub-Lessor may forfeit the sub-lease by re-entering the premises or any part of it and the term granted in this Deed shall come to an end immediately.
THE SUB-LESSOR COVENANTS as follows:
PROVIDED ALWAYS and it is hereby expressly agreed and declared as follows:
That if the rebuilding or reinstatement of the premises or any part of it shall be frustrated, all the insurance monies relating to the premises or any part thereof in respect of which the frustration occurs shall be apportioned equally between the Lessor and the Lessee; and
If the Lessee shall at any time fail to keep the premises insured, the Lessor may do all things necessary to effect and maintain the insurance and any monies expended by him for that purpose shall be repayable by the Lessee on demand and be recoverable immediately.
OPTION TO RENEW:
The Sub-Lessor shall on the written request of the Sub-Lessee made not later than three (3) months before the expiration of the term hereby created, provided the sub-lessee shall have reasonably performed and observed all his covenants and the provisions of the sub-lease, grant to the Sub-Lessee the sublease of the demised premises for another term of three (3) years from the expiration of the current term on the same terms and conditions as this present sub-lease with the exception of the Rent and Option to Renew Clause
IN WITNESS OF WHICH the parties have executed this Deed in the manner below the day and year first above written.
SIGNED, SEALED AND DELIVERED by the within named SUB-LESSOR
____________________
Mrs. Titilayo Okon
IN THE PRESENCE OF:
Name: ________________________
Address: _____________________
Occupation: __________________
Signature: _____________________
SIGNED, SEALED AND DELIVERED by the within named SUB-LESSEE
_____________________
Mr. Zonge Alabari
The content of this Deed having been read over, interpreted and explained to the sub-lessee from English Language to the Kalabari language by ______ of ______ and he appeared perfectly to have understood the same before he affixed his signature (mark/thumb print)
BEFORE ME
_____________________
NOTARY PUBLIC/MAGISTRATE/JUDGE
Franked by:
Michael Izuchukwu Ezeh
Group 10 Chambers
No. 16 Ozumba Mbadiwe, Way, Victoria Island
Lagos State
I Hereby Consent to this Sub-Lease
Dated the ____ Day of _______ 2014
______________________________
Executive Governor, Enugu State/ Minister, Federal Capital Territory
………………………………………………………………………………………………………………………………………
THIS DEED OF SUB-LEASE is made this ____ day of __________ 2016 BETWEEN Mrs. Aduke Thomas of No. 15 Ojota Road, Yaba, Lagos State ("The Sub-Lessor") of the first part
AND Pages and Print Limited, a Company duly incorporated under the Companies and Allied Matters Act 2004 with its registered office address at No. 56 Igala Street, Ikoyi, Lagos State ("The Sub-lessee") of the second part.
RECITALS
The Sub-Lessor is the lessee of the property owned by MR X, the BENEFICIAL OWNER of a Duplex with Boys Quarters situate at No. 8 Ajagun Estate, Nyanya, Abuja, by virtue of a Deed of assignment dated 21st June 1995 registered as No. 4051 pages 50 in volume 1350 at the Lands registry_______
The Sub-Lessor has the consent of the Lessor/owner to enter into the transaction
The sub Lessor desires to lease the property to the Lessee for a term of five years.
Or (If it is pursuant to a C of O)
The sub lessor is the beneficial owner of the property a Duplex with Boys Quarters situate at No. 8 Ajagun Estate, Nyanya Abuja, by virtue of a Certificate of Occupancy dated 21st June 1995 registered as No. 4051 pages 50 in volume 1350 with the Abuja Geographic Information systems
The Sub Lessor desires to lease the property to the Lessee for a term of five years.
NOW THIS SUB-LEASE WITNESSES AS FOLLOWS:
IN CONSIDERATION of the rent and covenants reserved in this Deed, the Sub-Lessor AS BENEFICIAL OWNER demises to the Sub-Lessee ALL THAT four-bedroom bungalow at No. 13 Chime Avenue, Enugu, Enugu State together with all its appurtenances covered by a Certificate of Occupancy registered as 45/45/2345 and rightly described in the survey plan attached to the 1st Schedule referred to as "The demised Premises" TO HOLD UNTO the Sub-Lessee for a term of ten (10) years commencing on the 1st day of February 2014 and to expire on the 31st day of January 2024, subject to any proviso for determination contained in this Sub-Lease. YIELDING AND PAYING the sum of Three Million Naira only per annum (N3,000,000.00) as rent for the term granted, payable in advance the first of such payment to be made on the 2nd day of February 2014.
(The covenants are to be here as part of the miscellaneous part of this sub-lease)
PROVIDED ALWAYS THAT in breach of any of the covenants contained in this Deed by the Sub-lessee, the Sub-Lessor may forfeit the sub-lease by re-entering the premises or any part of it and the term granted in this Deed shall come to an end immediately.
OPTION TO RENEW:
The Sub-Lessor shall on the written request of the Sub-Lessee made not later than three (3) months before the expiration of the term hereby created, provided the sub-lessee shall have reasonably performed and observed all his covenants and the provisions of the sub-lease, grant to the Sub-Lessee the sublease of the demised premises for another term of three (3) years from the expiration of the current term on the same terms and conditions as this present sub-lease with the exception of the Rent and Option to Renew Clause
IN WITNESS OF WHICH the parties have executed this sublease in the manner below the day and year first above written.
1st Schedule
SIGNED, SEALED AND DELIVERED by the within named Sub-Lessor
___________________________
Mrs. Aduke Thomas
The contents of the foregoing having been first read and explained to her from English Language to Yoruba Language by me Felicia Olutope of _________ when she appeared perfectly to understood same before making her thumb impression above.
BEFORE ME
__________________________________
MAGISTRATE/NOTARY PUBLIC/COMMISSIONER OF OATHS
The common seal of the Sub-Lessee is affixed on this Deed the ______ day of ___________ 2014 and duly delivered in the presence of:
_________________________ _____________________________
Director Secretary
I Hereby Consent to this Sub-lease
Dated the ____ Day of _______ 2014
______________________________
Executive Governor of Enugu State/ Minister, Federal Capital Territory
………………………………………………………………………………………………………………………………………
Tenancy Agreement
THIS TENANCY AGREEMENT made the _____ Day of ____________ 2014 BETWEEN
MRS. ADEMOLA AJAO of No. 4 Olusegun Crescent, Wuse II Abuja ("Landlord") of the one part
AND
MRS. PAUL IKENNA of No. 16 Latifa Close Garki, Abuja ("tenant") of the other part.
IT IS AGREED AS FOLLOWS:
The landlord demises to the tenant ALL THAT premises together with the Boys Quarters and known as No. 8 Ajagun Estate, Nyanya Abuja, TO HOLD the same to the tenant from the 1st day of January 2014 for the term of two years to end on 2nd January 2016 PAYING the yearly rent of N1,000,000 (One Million Naira only) clear of all deductions by yearly payment in Advance; the first of such payment to be made on _______ Day of _________ 2014.
The rent is subject to review in accordance with the provisions contains in the Schedule to this lease.
THE TENANT COVENANTS WITH THE LANDLORD AS FOLLOWS:
To pay rent reserved in the lease on the day mentioned.
Pay all rates, taxes, assessment, charges and outgoings or as may be imposed later whether payable by Landlord or not.
Not to assign, sublet, or otherwise part with possession of the property or any part thereof without the consent of the Landlord in writing first had and obtained, such consent to be unreasonably withheld for a respectable and responsible person.
Not to make any alteration to the property except for the installation of Air Conditioners and Burglary proof without the consent of the Lessor and to restore the property to its original position at the end.
To keep the premises in a good state of repairs, fair wear and tear excepted, and to deliver up possession of the property at the end of the lease term.
To use the property for residential purposes only.
PROVIDED ALWAYS that if the rent reserved or any part of it shall be unpaid for twenty-eight (28) days after becoming payable and demand made for it or if the Lessee commits a breach of the covenants in the Lease or the Lessee become bankrupt, it shall be lawful for the Lessor to re-enter the premises and immediately the term shall absolutely cease and determine.
THE LANDLORD COVENANTS WITH THE TENANT AS FOLLOWS:
The Lessee shall have a quiet enjoyment of the property free from interference by the landlord or his agents.
To insure the property against fire with NICON insurance Co. Ltd. (RC No. 9999) to the tune of N10,000,000 (Ten million naira) to be paid by the tenant and in the event of the property being damaged, all money received in respect of the insurance shall be used to reinstate the property. Where reinstatement is not possible, the sum will be shared PRO RATA between the parties.
Upon the Lessee paying the rent and observing all the terms and covenant in the Lease upon 3 months before the expiration of the tenancy the Landlord shall (may) grant him a further term of two years at a rent and terms to be agreed by the parties.
The Lessor covenants with the Lessee that the rent shall not continue to run in a case of an act of God where the demised premise is destroyed or anything happens preventing the use of the premises
IN WITNESS OF WHICH the parties have executed this agreement in the manner below day and year first above written.
SIGNED by the within named Landlord
____________________
Mrs. Adebayo Ajao
IN THE PRESENCE OF:
Name: ________________________
Address: _____________________
Occupation: __________________
Signature: _____________________
SIGNED by the within named tenant
________________________
Mr. Paul Ikenna
IN THE PRESENCE OF:
Name: ________________________
Address: _____________________
Occupation: __________________
Signature: _____________________
Franked by:
Michael Izuchukwu Ezeh
Group 10 Chambers
No. 16 Ozumba Mbadiwe, Way, Victoria Island
Lagos State
Week 11 - 13
Mortgages
A Mortgage is a legal relationship or security transaction by which rights in land are transferred to secure the payment of money or the discharge of some other obligations subject to redemption upon repayment of the loan or discharge of the obligation. That is, upon the repayment of the loan or the performance of the obligation, the conveyance becomes void and the interest is reconveyed. Adetona v. Zenith Bank (2011) 18 NWLR (pt. 1279) 629, Olowu v. Miller Bros.; Bon Ltd v. Akintoye (1999) 12 NWLR (pt. 392) 403. Suberu vs. AISL Ltd. (2007) 10 NWLR (pt. 1043) 590. Santley vs. Wilde. It is a security created by contract for the payment of a debt already due or to become due. Olowu vs. Millers Bros Limited.
Other types of security which may be the subject of a Mortgage (apart from land) include:
Debenture
Insurance Securities
Guarantees
Stock and Shares
Charge over fixed deposit account
Trust receipts
Bill of Sale
Letter of set-off
Trust deed, etc.
In spite of the existence of other types of security, land is preferred as the security for a loan. The reasons for this preference are not far-fetched:
Landed properties are more stable.
The value of land appreciates than the others, particularly in times of inflation.
Land is immovable and we can go to the land and inspect it physically.
It is easier for banks and other mortgagees to enforce their security in the case of landed properties than other properties.
In determining the kind of security or collateral to demand, the mortgagee usually considers the following factors:
The amount of the loan;
The nature of the facility being sought
The duration of the loan
The integrity and financial strength of the borrower.
The parties to a Mortgage are the Mortgagor/Borrower and the Mortgagee/Lender. The Mortgagor is the person borrowing the loan and advancing the security whereas the Mortgagee is the party advancing the loan (usually a bank).
A tripartite Mortgage is a Mortgage with three parties and may be employed where the mortgaged property belongs to a third party or where a third party guarantees the repayment of the loan by the mortgagee. The third party will become a party i.e. a guarantor or surety and there will be tripartite Deeds of Mortgage. A mortgagee may insist that there should be a guarantor to a Mortgage in certain circumstances e.g. where the collateral is not up to the value of the loan given the mortgagor. The mortgagee usually insists that the guarantee deposits his title deeds with the mortgagee so that upon default to pay the loan by the mortgagor, the mortgagee can exercise its powers/rights over the guarantor's property.
The features of a Mortgage include:
It is a conveyance of an interest in land to a lender of money
The land is held only as security or collateral to ensure repayment of the money loaned.
The property is re-conveyed back to its owner when the money loaned is repaid.
In the event of failure to repay the money advanced, the lender of the money has the right to sell the land to realize the money advanced.
An essential feature of mortgage both legal and equitable is that once a mortgage, always a mortgage and nothing but a mortgage. Yaro vs. Arewa Construction Ltd.
The validity of a mortgage is dependent on
The capacity of the mortgagor and mortgagee
The title of the mortgagor
The proper documentation and execution
Stamping and registration
Requisite Governor's consent
A contract subject to mortgage usually occurs where the mortgagor borrows money to build or buy a house which will also be used to secure the loan. Where the purchaser does not have the entire purchase price, it is possible that parties can enter into a contract of sale of land subject to a mortgage that is in expectation of some loan and the property to be purchased will be used as security for the loan to be obtained. In such a case, a clause called the "contract subject to mortgage clause" should be inserted into the contract of sale of land to make the contract of sale conditional on the purchaser obtaining the loan. The clause should also provide that in the event that the mortgage fails and the loan is not obtained, the contract of sale shall become void and the vendor shall return the deposit paid by the purchaser. The contents of a valid contract subject to mortgage clause are as follows:
It must state the source of the loan;
It must state the amount of the loan;
It must state the terms and manner of repayment of the loan; and
It must state the interest payable on the loan.
Draft of Contract subject to Mortgage Clause:
"This contract of sale is conditional on the purchaser obtaining a mortgage loan from First Bank of Nigeria Plc. in the sum of N150,000,000 (One Hundred and Fifty Million Naira Only) to be repaid through equal monthly instalments over a period of 2 years with interest at the rate of 21% per annum on the security of the property,
PROVIDED that where the loan is not obtained on completion, this contract of sale shall become void and the purchaser shall be entitled to a return of the deposit paid."
It must be noted that in a contract subject to mortgage, the vendor guarantees the loan facility by permitting his property to be used as security, so it is always done with the consent and concurrence of the vendor.
A contract may be executed subject to Mortgage. A contract of sale of land entered into in expectation of some loan should be made conditional upon the purchaser obtaining the loan. The contract should also provide that in the event that the loan is not obtained, the vendor shall return the deposit paid by the purchaser; this is what is referred to as contract subject to a mortgage. For a Subject to Mortgage clause to be valid, it must state the source and amount of the loan, the terms of payment, and the interest to be paid on the loan.
Draft of Subject to Mortgage Clause:
"This contract of sale is conditional on the purchaser obtaining a mortgage loan from Better Bank Ltd in the sum of N5,000,000 (Five Million Naira) with interest payable at the rate of 12% PROVIDED THAT where the loan is not obtained on completion, this contract of sale shall be void and the purchaser shall be entitled to the return of the deposit paid."
Mortgage and Similar Transactions
Mortgage and Assignment
In assignment, there is a transfer of the totality of interest of a person in property while in a mortgage; title is transferred subject to redemption upon payment of the loan. Although both involve the transfer of interest, in mortgage, there is a proviso for cesser upon redemption, such that the property will be conveyed back to the mortgagor upon the repayment of the debt; while in a sale or assignment, the vendor/assignor divests himself of and transfers the entire unexpired residue of his interest with no remainder in him. Hence, in a mortgage, the mortgagor is still the owner of the mortgaged property and the mortgagee is the custodian of the property; while in a sale, the purchaser/assignee becomes the owner of the property.
In a sale, the parties are described as vendor and purchaser (assignor and assignee); while in a mortgage, they are described as mortgagor and mortgagee
Mortgage and Lien
A mortgage is the conveyance of land or other property as security for the repayment of a debt or the performance of some other obligation, with a proviso for cesser on redemption. While a lien is the right to retain possession of a property of another until a debt is repaid. A lien is a claim or qualified right of a creditor over the property of a debtor which serves as security for the debt. It is the right to retain possession of the property of another until a debt is paid. Afro Tech Services Ltd vs. Mia and Sons Ltd. The holder of a lien does not have the right to sell the property unlike in mortgage, where the mortgage has a right of sale. A lien is a means of coercing a debtor to pay the money advanced to him, rather than as security against payment not being made; while in mortgage, the property is conveyed as security for the repayment of the debt. A lien may be created over other properties and not necessarily on real property as in mortgages. In a mortgage, legal or equitable title is transferred with a proviso for cesser on redemption; but in a lien, no title is transferred. A lien could arise as a statutory right without any prior agreement between the creditor and the debtor; while a mortgage always arises out of a prior agreement between the mortgagor and the mortgagee
Mortgage and Charge
A charge operates like a mortgage. However, in charge, neither possession nor ownership nor any interest whatsoever is transferred to the Chargee. The Chargor retains all the interests, but creates an encumbrance over the title in favour of the Chargee. The Chargee only has an encumbrance.
In a mortgage, interest in the property is conveyed by the mortgagor to the mortgagee; while in a Charge, no interest whatsoever is transferred by the Chargor to the Chargee. Rather, the charge has some encumbrance in the property which serves as security for the money advanced by him.
In a mortgage, the parties are described as mortgagor and mortgagee; while in a charge, the parties are called Chargor and Chargee
Mortgage and Pledge
Pledge is a deposit of some personal property to a creditor as a security for some debt or performance of some act. The pledgor only has a possessory right over the property while the mortgagee acquires ownership in the property. A pledge is usually created under the incidences of customary law; while a mortgage is created under the authority of statutes. In pledge, there is no legal due date for redemption as a pledge is perpetually redeemable. That is, even after 100 years, upon repayment of the debt, a Pledgor has the right to redeem; while in a mortgage, there is usually a legal due date for redemption and at its expiration, the mortgagee can sell the property to realize the money advanced, after fulfilling certain conditions. In Adetono v. Zenith International Bank Plc, the Court distinguished a mortgage from a pledge thus:
"…by mortgage the title is transferred.
By a pledge, possession is transferred…"
A pledge is a possessory security, while a mortgage is a proprietary security. This is because by a pledge, actual and physical possession is transferred; while by a mortgage, title is transferred. That is, the pledger retains general title, but transfers possession to the Pledgee until the debt is satisfied. While in mortgage, the mortgagor may retain possession, but transfers title to the mortgagee until the debt is repaid.
In a pledge, the parties are described as Pledgor and Pledgee; while in a mortgage, the parties are described as mortgagor and mortgagee.
Mortgage Institutions in Nigeria
These are largely regulated by the provisions of the Mortgage Institutions Act, Cap M19 LFN 2004.
Federal Mortgage Bank
The Federal Mortgage Bank (FMBN) is established pursuant to the Federal Mortgage Bank of Nigeria Act, Cap E16 LFN 2004. This is the apex mortgage institution in Nigeria. It grants loan for the purchase or construction of houses or for the improvement or extension of existing ones. Its loans are usually granted to mortgage institutions and individuals. FMBN vs. Olloh. It is a Federal Government agency and is a preferred mortgage institution for the following reasons;
The facility granted is long term (up to 25 to 30 years' repayment)
It can give as much as 66 percent (66%) of the purchase price as loan.
The interest rate is very low, as low as 6%
It has branches spread all over the country but this exists, to a large extent, in theory.
It enjoys government support
Housing Corporations
The most prominent of these statutory corporations is the Federal Housing Authority established by the Federal Housing Authority Act, which was set up primarily to execute the National Housing Programme. At the States level, we have the State Property Development Corporation. In Lagos State, it is called Lagos State Development & Property Corporation (LSDPC). In Kogi, it is the Kogi State Investment and Property Ltd. In most other states, it is called the State Housing Corporation. They provide funds for building and sometimes they build houses and sell to the public through mortgage.
The advantages of this source of Mortgage Finance include:
There is security of title in respect of property purchased from any of these corporations as there is no problem of demolition.
Funds from the corporation attract low rate of interest.
They are built on State land with their Certificate of Occupancy ready for collection; C of O is automatic and immediate.
In spite of the advantages, certain disadvantages exist as the prices are beyond the reach of ordinary Nigerians. Furthermore, though the concept is admirable, there is a scarcity of funds, particularly for housing projects.
Housing Schemes
This is an employers' scheme for the benefit of employees to enable them (employees) acquire their own houses. The practice is that the employee is required to deposit the title document with the employer until the loan is liquidated. The advantages include a low interest and a long-term repayment plan. Affordable deductions are made from the employee's remunerations for several years.
However, the scheme is no longer popular because of lack of funds and many workers cannot afford it.
Commercial Banks
Commercial banks are in the business of providing credit facilities for financing projects, including housing. Usually, the customer would have to pay 20 - 40 percent of the cost of the property while the bank provides the balance. Period of repayment is between 5 and 10 years, depending on the bank, and interest rate is as high as 21 per cent.
This therefore is not the best option for loan to build or purchase houses; the interest rate is very high and customers are often unable to provide the kind of collateral demanded by the banks. Furthermore, the loans may be short-term and the collateral conditions are stringent.
Private Property Developers
Private property developers build houses like the housing corporations and make them available to the public on mortgage basis. A buyer pays deposit and takes possession. Balance is repayable over long period, of course, at an interest rate.
Life Endowment
This is a policy of life insurance and is a form of savings. Insurance companies may lend or guarantee loan from a bank with a collateral mortgage of life policy. This arrangement is usually on the condition that you maintain a life assurance policy with the insurance Company concerned. The borrower assigns the policy to the lender and the notice of this is given to the insurance Company. This is usually a good retirement plan although it is not common among insurance companies because it is a long-term loan and the lender will have to wait for the number of years stated in the policy. Where payment is due on the death of the borrower, he will have to wait till he dies.
Stages in a mortgage transaction:
Negotiation of the loan
Preliminary investigation of the Mortgagor's title
Valuation of the proposed security.
Search report by the mortgagee's solicitor
Contract
Documentation, that is the preparation of the mortgage deed by the Mortgagee's solicitor (final document will depend on the location of the property and the mode of creation)
Execution of the deed by the parties
Perfection of the title. In Lagos, the procedure for perfection is involves two stages on account of the MPL and Lands' Registry. Where a Company is involved, it would be three stages on account of MPL, Lands' Registry and CAMA.
Role of Solicitors in Mortgage Transactions
Investigation of title of the property sought to be mortgaged
Prepare a search report
Negotiation of the terms and conditions of the loan
Drafting the mortgage instrument
Perfecting the mortgage - consent, stamping and registration
Assist in discharge of the legal mortgage.
Investigation of Title
The method of investigation here is similar to the method a purchaser's solicitor adopts in investigating a vendor's title in conveyancing. However, certain differences exist. These include:
The mortgagee has a stronger bargaining power and is in a better position than the purchaser;
There is yet no existing contract between the proposed mortgagor and the mortgagee and so there is no obligation on the part of the mortgagee to advance money,
The mortgagee may therefore at any time withdraw from the transaction if it is not satisfied with the mortgagor's title but a purchaser is compelled under the contract to complete the purchase.
Two major issues that must be properly investigated before loan is approved on the security of a building or land are the title of the borrower and the value of the property. The value of the property must accommodate the credit proposed by the borrower.
The steps of investigating title are the same as in the contract of sale of land. A mortgagee must address several issues in investigation namely:
The title of the borrower (to ascertain genuineness and encumbrances)
The value of the property. A property or estate valuer can be appointed to value the property. A valuation report may be prepared.
Where a company is borrowing the search should also ascertain whether the company is permitted by its Memorandum and Articles of Association to borrow and the extent and limits of such borrowing powers of the Company.
Where a Company is involved, CAC should be visited for search
At the end of investigation, a search report will be drafted which should contain the following:
Letter headed Paper
Address of Addressee
Date of the Letter
Heading of the Letter
Introductory Statement
Date of Search
Place of Search
Particulars of the Property
Description of the Property
Name of Registered Owner
Nature of the Interest
Encumbrances, if any
Comments/Advice
Signature of the Legal Practitioner
Name of the Legal Practitioner
Designation
The reasons for investigating the borrower's/mortgagor's include:
to ascertain borrower's ownership of the property mortgaged to the bank as security;
to ensure that the same property has not been previously mortgaged or charged as security;
to ascertain that there are no other encumbrances on the property.
Depending on the circumstances, investigation of the borrower's title may require all or one of the following:
A thorough scrutiny of the document, which may be a Deed of Assignment, Certificate of Occupancy, Land Certificate, Certificate of Purchase, Deed of Lease, etc.
Physical inspection of the property;
Searches at the land Registry, Probate Registry, Companies Registry, etc.
The brief for the investigation of title in a mortgage transaction is usually given out by Banks, through their legal Departments to External Solicitors. After the search, the Solicitor writes a Search Report, which is sent to the Bank for consideration whether or not to accept the property as security. The solicitor should comment on the type and condition of the building, whether or not there are tenants, squatters, right of way or other encroachments.
The checklist of matters to be covered by a search report include:
Date of Search;
Places of Search
Name of Borrower;
Name of the person giving security, if different from the borrowers;
Description of the property;
Title of the borrower or person giving security;
Valuation report (if any);
Encumbrances (if any);
Conclusion - this should state in unequivocal terms whether or not the borrower or person giving security has good title to the property and whether or not he has an unencumbered power to charge it to the Bank as security for a loan.
Name, address and signature of the solicitor that conducted the search.
Where the borrower is a Company/incorporated body, the following matters should be inspected at the Corporate Affairs Commission and incorporated into the search report:
Date of incorporation/registration of the Company
Particulars of shareholding
Borrowing powers of the Company;
Particulars of Company Directors;
Whether annual returns are filed up to date;
Any registered charge or encumbrances.
Creation of Mortgages
There are, at common law, two broad types of mortgages - Legal and Equitable Mortgage.
Legal Mortgage
This mortgage created pursuant to statutory provisions. It is usually by Deed. The location of the property determines the mode of creation and the law(s) applicable. The country is divided into three jurisdictions, namely:
The Conveyancing Act, 1882 (CA) States - Under the Conveyancing Act, we have three methods/modes of creating a legal mortgage:
By assignment of the unexpired residue of the Mortgagor's leasehold interest with a proviso for ceaser upon redemption. By this mode, the entire unexpired residue of mortgagor is transferred to mortgagee with a proviso that upon repayment of the loan, the property is reconveyed back to the mortgagor. Upon assignment, the mortgagor only has an equity of redemption in the property. One major feature of this is that the mortgagor transfers the entire unexpired residue of his leasehold interest to the mortgagee. Furthermore, there is no reversionary interest in the mortgagor, hence in the event of default, the mortgagee can pass the mortgagor's entire interest to a purchaser without any problems. There is no privity of contract between the Governor/Head-lessor and the mortgagee. However, there is privity of estate. The advantages include:
The mortgagee is vested with the entire interest in the property, subject to the proviso for cesser upon redemption
The mortgagor has no reversionary interest in the property and so the mortgagee can exercise his right of sale easily and transfer the property upon mortgagor's default without recourse to the mortgagor
The mortgagee, when exercising his right to sell, can convey the entire interest in the property
The title deeds are retained by the mortgagee.
The mortgagee can enforce the beneficial covenants in the Head lease. This is because there is privity of estate
One important point which operates as an advantage to the mortgagor, but a disadvantage to the mortgagee is that there is privity of estate between the mortgagee and the overlord (Governor) based on the rule in Tulk v. Moxhay. Thus, the mortgagee, not the mortgagor is liable to pay all rates, taxes and outgoings on the mortgaged property and he is bound by restrictive covenants. However, by way of an advantage to the Mortgagee, he can enforce the beneficial covenants in the head lease.
The privity of estate between the mortgagee and the overlord serves as a disadvantage to the mortgagee. Thus, the mortgagee is liable to pay all rates, taxes and outgoing on the property and for breach of all covenants and conditions in the head lease. e.g. The mortgagee becomes responsible to the Governor for covenants in the Right of Occupancy granted the mortgagor. All restrictive covenants running with the land are binding on the mortgagee.
Sub-demise of the unexpired residue less few days with a proviso for ceaser upon redemption. Unlike in an assignment, the mortgagor here has a reversionary interest in the mortgage property. The interest transferred here by the mortgagor is a term of years' absolute with the reversionary interest still in the mortgagor. The main advantages of this mode are:
There is neither privity of contract nor privity of estate between the Governor/head-lessor and the mortgagee; Thus restrictive covenants are not binding on the mortgagee.
The mortgagor has reversionary interest
There is uniformity, as this mode is applicable under the Conveyancing Act as well as under the P & CL and MPL. This makes attractive to banks.
A mortgage by sub-demise may have certain disadvantages for either party. Where the mortgagee successfully exercises the power of sale, he will be liable to render account to the mortgagor. Furthermore, a legal mortgage by sub-demise in a Conveyancing Act State cannot be used to create a successive legal mortgage because the doctrine of Interesse Termini is still applicable in the Conveyancing Act States. In CA States, the mortgagee cannot sell the mortgage property in the event of a default because the reversionary interest is still in the mortgagor. That is, Sub-demise under Conveyancing Act suffers from the problem of inability of the mortgagee to sell the reversionary interest of the mortgagor (nemo dat quod non habet). However, this problem can be overcome by inserting any of the remedial devices or clauses in the sub-demise deed. They are either:
A trust declaration clause
An irrevocable Power of Attorney clause
The insertion of the Power of Attorney clause empowers the mortgagee to sell the property on behalf of the mortgagor. Thus, with the irrevocable Power of Attorney, the mortgagee can sell the property as an Attorney.
By the Trust declaration clause, the mortgagor is turned into a trustee for the mortgagee and the mortgagee is given the power to remove the mortgagor as trustee and appoint anyone, including itself as trustee. The clause can also provide for the transfer of the property to the beneficiary (mortgagee).
With the insertion of either a trust declaration or power of attorney (irrevocable) in the mortgage deed created by sub-demise in Conveyancing Act states, the problem of inability to sell reversionary interest by the mortgagee would have been cured. That is, these remedial devices are used to circumvent the limitations of creating a legal mortgage by sub-demise in Conveyancing Act states. This limitation is created by the fact that the mortgagor has a reversionary interest in the mortgage property and so, the mortgagee cannot sell the property because he does not have the entire interest in the property. To avoid this limitation, the remedial devices are used and inserted in the deed to give the mortgagee the power to sell without the mortgagor.
Deed of Statutory Mortgage. Section 26(1). Conveyancing Act. A freehold or leasehold holder may create a legal mortgage by deed expressed to be made by of statutory mortgage. This mode of creation is hardly ever used. It is simple to create and can be discharged by a statutory receipt.
Property & Conveyancing Law (PCL) States: Under the PCL, there are three methods/modes of creating a legal mortgage:
Demise of a freehold for a term of years' absolute subject to Cesser of Redemption. Any purported conveyance of an estate in fee simple by way of mortgage shall operate as a demise of the land to the mortgagee for a term of years absolute, without impeachment for waste but subject to cesser on redemption. However, the creation of a legal mortgage even though sanctioned under the PCL is no longer possible because of the spirit of the Land Use Act which provides that the greatest interest a person can have is a specified term of not more than 99 years. See Section 108. P & CL. However, this may be allowed under Section 34 & 36. Land Use Act.
Sub-demise for a term of years' absolute, less at least one day than the term vested in the Mortgagor and subject to provision for ceaser on redemption. Section 108(1) & 109(1). P & CL, Akano vs. FBN Plc. The same rules as explained earlier apply here, except that under the PC & L, there is no need for the drafting devices. The law already makes provisions for them. See Section 112. PC & L. Contrary to the position in Conveyancing Act states, under the PCL, the problem of mortgagee's inability to sell the whole interest in the property, when such right is exercisable, on account of the mortgagor reversionary interest has been solved by Section 112. P & CL. The section is to the effect that if the mortgagor default in his obligation (to repay the loan), the reversionary interest would merge with the leasehold interest of the mortgagee and mortgagee (bank/lender) can validly sell the entire interest of the mortgagor including his reversionary interest. Thus, under the PCL states, a mortgage created by sub-demise no longer requires the remedial devices of trust declaration and irrevocable Power of Attorney as they are implied by Section 112. P & CL.
Under the PCL states, unlike in CA states, Section 163. PCL expressly abolishes the Common law doctrine of Interrese Termini. Therefore, a successive legal mortgage can be created where the mortgage was created by way of sub-demise. However, with regards to the creation of such successive legal mortgages, Section 109(2)(b). P & CL provides that in a successive legal mortgage, the term to be taken by the second or subsequent mortgagee shall be one day longer than the term vested in the first or other mortgagee whose security ranks immediately before that of the second or subsequent mortgagee. Thus, the first mortgage should expire before the second mortgage. Successive legal mortgage simply means one mortgagor using the same property to create different mortgages with different mortgagees. Several legal mortgages means using different properties to create different mortgages, but with the same mortgagee. That is, the same parties. This is usually done where the mortgage was created by Charge by Deed expressed to be by way of legal mortgages. Upstamping is when the same property is used for a new loan facility between the same parties (same mortgagor and mortgagee) and all that is required is just an increase of the loan facility from the initial facility granted to a higher facility.
A Charge by Deed expressed to be by way of Legal Mortgage. Section 110. P & CL. This charge confers in the mortgagee all the powers and privileges of a legal mortgagee, even though it creates no legal interest. This mode is most appropriate where the mortgagor is charging several properties. If the mortgages were by assignment/sub-demise, each of the properties would have to be conveyed by a separate instrument. The advantages include:
It does not pass any interest to the mortgagee and so can never amount to a breach of the covenant against assignment or subletting against the mortgagor. See Section 22. Land Use Act. Thus, where the mortgagor is a sub-lessee under a sublease with a covenant against assignment and subletting, he can create a mortgage through this method and it will not amount to a breach of the covenant since no interest is passed to the mortgagee.
it is shorter and simpler to create. Samuel v. Jarrah
It is easily discharged as it is discharged by a Statutory Receipt and no deed of discharge needs to be executed. However, the discharge of a mortgage by a statutory receipt is not advisable as it has its own problems. This is because the statutory receipt (receipt of payment) is not a registrable instrument and so, it is not registered. Thus, at the Lands' registry, the mortgage will continue to reflect as an undischarged encumbrance on the property, notwithstanding that the mortgage has actually been discharged. Therefore, the mortgagor will have the onerous task of having to explain the fact of the discharge of the mortgage to all persons dealing with him in relation to the property as the fact of the discharge is not discoverable through a mere search or investigation.
There is no transfer of the legal interest in the land/property used as security
It can be used to create a mortgage over mixed properties. This is applicable where the mortgagor does not have one property which can effectively serve as security for the debt, but he has some other properties (2 or 3 others) which if put together would be sufficient to serve as security. Thus, he can use this method to create a legal mortgage over the mixed properties. It should be noted that the creation of a legal mortgage over mixed properties can only be done through this method. If is an assignment or sub demise, separate documents must be used for each of the properties.
Although it confers no interest on the legal mortgagee, this Charge confers on the mortgagee all the powers and privileges of a legal mortgagee, and so the mortgagee can enforce the mortgage. See Section 110(1). P & CL.
In the event of a default by the mortgagor, the mortgagee cannot sell the mortgaged property without the remedial devices.
It can be used for the creation of successive legal mortgages. That is, just one document can create several legal mortgages over the same property.
Statutory Charge: this mode is not very common under the PCL states in creating legal mortgage. It should be noted that is also discharged by a Statutory Receipt.
Creation of Legal Mortgage Under the Mortgage & Property Law of Lagos State. The creation of legal mortgages in Lagos State is governed by the MPL. Under the MPL, the ways of creating mortgage depends on whether the legal interest is a right of occupancy or a leasehold interest.
Where it is a Right of Occupancy, legal mortgage may be created either through:
A demise for a term of years' absolute, subject to a provision for cesser on redemption; or
A charge by deed expressed to be by way of legal mortgage; or
A charge by deed expressed to be by way of statutory mortgage. See Section 15(1). MPL
Where it is a Leasehold (term of years absolute), legal mortgages may be created either by:
A sub-demise for a term of years' absolute, less by one day at least than the term vested in the mortgagor subject to a clause on redemption; or
A charge by deed expressed to be by way of legal mortgage; or
A charge by deed expressed to be by way of statutory mortgage. See Section 16. MPL.
There exist differences between a legal mortgage created by assignment/sub-demise & one created by a charge expressed to be by way of legal mortgage
In an assignment/sub-demise, the mortgagor conveys the whole or part of his interest to the mortgagee, whereas the mortgage by way of a legal charge does not convey any interest in the property but vests rights of a legal mortgagee
The mortgagor can charge several properties in a charge expressed to be by way of legal mortgage. However, in an assignment/sub-demise, each of the properties would have to be conveyed by a separate instrument.
When the head-lessor prohibits the assignment of the property, such property may still be charged without liability, unlike in assignment and sub-demise
Banks prefer a legal mortgage by sub-demise over a mortgage by assignment/demise for two reasons. These are:
Lack of Privity. In a legal mortgage created by an assignment, even though there is no privity of contract, there is privity of estate. Hence, the Mortgagee is bound and liable for the restrictive covenants running with the land. Tulk v. Moxhay. This opens the mortgagee (bank) to liability for breach of the covenants. On the other hand, in a mortgage by sub-demise, there is neither privity of contract nor privity of estate between the Governor/head-lessor and the mortgagee.
Uniformity. The sub-demise is common to both under the Conveyancing Act as well as under the PC & L. Hence, there is uniformity, which is attractive to the Banks that have branches all over Nigeria. However, assignment is only peculiar to Conveyancing Act States
The creation of successive legal mortgages using the same property as security is only possible under the PCL for mortgages created by Charge by Deed/Sub-Demise. Section 109(2). PCL.
A Mortgage by Sub-demise presents a technical problem. As the Mortgagor did not convey his reversionary interest to the mortgagee, when the mortgagee is enforcing the security, it cannot sell that reversionary interest. This problem is peculiar to the CA States as the problem does not arise in the PC & L States because Section 112(1). P & CL & Re White Rose Trust stipulate that the mortgage term shall merge with the leasehold reversion and the mortgagee can validly sell the entire interest of the mortgagor including his reversionary interest. The problem does not arise in a legal mortgage by assignment, since there is no reversionary interest in the mortgagor.
In the CA States, the problem of reversionary interest can be taken care of by inserting the following in the mortgage deed:
Power of Attorney Clause: By a Power of Attorney clause in the mortgaged deed, the mortgagee, in consideration of the mortgage sum is appointed Attorney with authority to deal with the entire estate and including the reversionary interest. The Power of Attorney is expressed to be irrevocable until the loan is discharged and by this device, the mortgagee can sell the legal estate by virtue of the clause.
Trust Declaration: The mortgage may provide for a trust declaration. The Mortgagor will be made to declare himself a trustee of the property in favour of the mortgagee and he would convey the property to the mortgagee as a beneficiary.
The advantages of a legal mortgage include:
It is easier to enforce a legal mortgage. The equitable mortgagee must obtain a Court order before he can sell or take possession of the property or foreclose or appoint a receiver/manager.
A legal mortgagee without notice of the equitable mortgage takes priority over the equitable mortgagee
It is easier to commit fraud in the case of equitable mortgage than in legal mortgage; the borrower who has deposited the original title deeds with a bank may obtain a certified true copy of the Deed from the Registry for other fraudulent purposes.
Stages in a Mortgage Transaction
Upon receipt of instruction to effect a mortgage, a legal practitioner is expected to follow the following order:
Negotiation of the loan
Investigation of the mortgagor's title to the property to be used as collateral security/ valuation of the property
The search Report is prepared by the Mortgagee's solicitor
Parties agree on the terms of the mortgage. This is put in a loan agreement
Preparation of Loan agreement and a Mortgage Deed and submit.
Execution of the Deed of Mortgage by the parties
Perfection of the Deed of Mortgage
If a company is the Mortgagor, file Form CAC 8 - Registration of Charges with the CAC within 90 days of its creation.
If the mortgage sum has been repaid by the Mortgagor company, file Form CAC 9 -Release of Charge to notify the CAC
Equitable Mortgage
An equitable mortgage is a type of mortgage created under the rules of equity and it confers equitable interest on the mortgagee. Equitable mortgage is more suitable for short-term loans. The modes of creating equitable mortgages in Nigeria are uniform, with the exclusion of Lagos State. Ogundaini vs. Araba. There are several modes of creating equitable mortgages in Nigeria:
Deposit of Title Deed with an Intention to create Mortgage. There must be a clear intention that the deed should be taken or retained as security for a loan. British and French Bank Ltd. vs. S. O. Akande. The mere deposit of title deeds for safekeeping with the bank does not amount to creation of equitable mortgage. Bank of the North vs. Akintoye. Intention may be shown by the mortgage signing a memorandum of deposit. If the Memorandum of deposit is under deed, statutory power of sale is possible even though it is an equitable mortgage.
Where there is a deposit of title deeds as security for a loan, there is an implied agreement by the mortgagor to execute a legal mortgage in favour of the mortgage. Furthermore, it amounts to part performance as agreement becomes enforceable. Walsh v. Lonsdale, Russel vs. Russel.
An Agreement to create or execute a Legal Mortgage at a later date coupled with Acts of Part Performance. Once the lender advances the money, whether or not the agreement is under seal, equitable mortgage is created. The equitable mortgagee can enforce the agreement by an action in equity for specific performance, on the principle in Walsh vs. Lonsdale, Yaro vs. Arewa Construction Ltd., Carter vs. Wake, Ogundaini vs. Araba.
An imperfect legal mortgage will amount to an equitable mortgage. Ogundiani v. Araba. For instance, where a deed of legal mortgage is yet to be perfected (consent, stamping, registration). See British and French Bank v. Akande
Mortgage of an equitable interest
Equitable Charge of the Mortgagor's Property. This does not create an estate (proprietary right), but merely gives a right to repayment of the debt or other discharge of other obligation/burden in respect of which the property stand charged. Ogundaini v. Araba. The security can only be realised through sale or appointment of receiver under an order of Court. See Ogundaini v. Araba.
An equitable mortgagee cannot exercise the power of sale without an order of a Court. For an equitable mortgagee to be able to exercise power of sale over the mortgage property without recourse to Court order, the following conditions must be satisfied:
The equitable mortgage must be by deed
The equitable mortgage must contain any of the remedial devices; and
There must be no contrary intention in the mortgage deed. A contrary intention could be the provision of another remedy in the mortgage deed such as an increased interest rate as penalty or other remedy which will show that the parties did not intend a sale.
In the absence of these conditions, an equitable mortgagee cannot sell the mortgage property without an order of Court.
Pursuant to Section 18. MPL, the methods of creating an equitable mortgage in Lagos are:
Assignment of an equitable interest with a proviso for cesser on redemption
Deposit of title deeds accompanied by an agreement to create a legal mortgage
Charge of an equitable interest accompanied by an agreement to create a legal mortgage. That is equitable charge.
However, this does not expressly exclude the other methods of creating an equitable mortgage such as an imperfect legal mortgage.
The advantages of equitable mortgages include:
It is suitable for small loans and short term loans
It is cheaper and easier to create than a legal mortgage
It encourages uniformity in the Conveyancing Act and P & CL states.
Creation of Successive equitable mortgages are possible
Equitable mortgage is not affected by the covenants in the head lease
However, the disadvantages of an equitable mortgage include:
The mortgagee is not entitled to the title documents
The mortgagee is not entitled to benefit from the beneficial covenants in the head lease
The mortgagee is not entitled to the benefits of the covenants in the head lease and there is no privity of estate between the head-lessor and the mortgagee.
It is not possible create successive legal mortgages with an equitable interest.
Unless where the two or any of the remedial devices of declaration of trust or creation of power of attorney are inserted, the mortgagee has difficulty in transferring/selling legal mortgage to third party.
There is no legal protection of mortgagee's interest.
It is difficult to exercise the power of sale except with recourse to Court or unless remedial devices are inserted in the deed creating it.
Sample Draft of Search Report
GABRIELLA NDU & CO
BARRISTERS AND SOLICITORS
NO. 15 LOKOJA STREET, IKEJA
LAGOS STATE
OUR REF: __________________ YOUR REF: ___________________
DATE: __________________
The Bank Manager
Zenith Bank Plc No. 23 Marina Lagos State.
Dear Sir,
SEARCH REPORT CONDUCTED ON PROPERTY REGISTERED AS 12/12/6532 AT THE LANDS REGISTRY IBADAN, OYO STATE
Sequel to your briefing our Firm to conduct a search on the above property, we are pleased to inform you that the search has been carried out and a copy of the Search report is attached below:
DATE OF SEARCH: 17 May, 2014
PLACE OF SEARCH: Lands Registry Ibadan Oyo State
NAME OF REGISTERED OWNER: Chief Mrs. Remi Yakossi
NAME OF BORROWER: Chief Nosa Okon of No. 16 Makurdi Close Kwara State.
DESCRIPTION OF THE PROPERTY: No. 12 Croker Street Oyo State.
NATURE OF INTEREST: Right of Occupancy No. 6532 dated 12/07/2004 registered as 12/12/6532 at the Lands Registry Ibadan Oyo State.
ENCUMBRANCES: Nill
COMMENTS/OBSERVATIONS: The property is a good security and it is unencumbered
Yours faithfully,
_________________________
Bassey Olakunle, Esq.
(Principal Partner)
For: Bassey Olakunle & Co.
External Solicitors to Zenith Bank Plc
Covenants in Mortgages
Covenants in mortgages are specific agreements between the parties reached to regulate the relationship between the mortgagor and mortgagee in a particular mortgage transaction.
Covenant to Repay the Principal and Interest at a Fixed Date
The mortgage sum is the principal amount advanced to the mortgagor by the mortgagee while the interest is the sum accruing on the principal over a period of time. This covenant must be included in a Deed of Mortgage. Where the mortgagee is a bank, the rule is that parties are bound by the rate of interest they have agreed. Where there is no express agreement, the bank is entitled to charge interest on the basis of customs and usages, or on the ground that the customer impliedly consented where he allowed his account to be debited and he did not protest.
A bank will not be able to unilaterally charge compound interest. Owoniboys Tech Services vs. UBN. Compound interest is chargeable when agreed. UBN vs. Ozigi
The covenant aids the Mortgagee in determining when his power of sale may arise. Twentieth Century Banking Corporation Ltd v. Wilkinson & anor. It also shows what the mortgagee's cause of action will be upon the failure of the mortgagor to pay the principal sum or interest etc. Where the legal due date has not passed, any action will be held to be premature. Where the covenant is contained, it aids in avoiding the statute of limitations.
The covenant to repay principal & interest must be drafted as a positive inducement and not a negative inducement i.e. It must not be punitive in nature. The Courts will frown at a covenant drafted thus: "The interest payable is 15% but where mortgagor fails to pay on time, the interest shall be 20%". The Courts of equity will interpret this clause as a penalty and it will not be upheld.
Draft
"The interest payable is 20% but where the mortgagor pays promptly, it will be reduced to 15%"
Covenant to Insure the Property
This covenant is to provide for what will happen in the event of any damages or destruction to the property. This is very important as the transaction is dependent on the mortgage property. Any damage or destruction to the property would adversely affect the rights of the parties. The mortgagee must ensure that the property is insured.
The covenant should contain the following things:
The Insurance Company (should be reputable)
Date of commencement of the Insurance policy.
The risk to be insured against. The determinants of the risk to be insured against are:
The use to which the property is put
The location of the property e.g. flooded area, erosion prone
The nature of the property itself i.e. developed property or not
Applicable Government policy
The premium and who is to pay the premium. The premium payable must not be outrageous. Section 130. P & CL & Section 23. CA
The person to insure the property and whether to insure in his name or name of the other party.
The application of the insurance money in the event of damage.
The Mortgagee usually insures the property against damage and the premiums paid for such insurance shall be a charge on the mortgaged property in addition to the mortgage money. Section 123(1)(II). PCL & Section 19(1)(ii). CA. However, where the Mortgagor insures, the Mortgagee should be granted a Power of Attorney by the Mortgagor as his lawful attorney in order to be able to collect the insurance money upon damage of the property.
The Mortgagee, upon receipt of the Insurance money, will disburse the funds first to pay off the principal sum and interest owned him by the mortgagor and then render the remaining amount to the mortgagor. As such, the mortgagee will not have to apply the Insurance money towards the reinstatement of the damaged property.
Where there is a failure to insert a covenant to insure, the mortgagee cannot compel the mortgagor to surrender the insurance money to him. Halifax Society v. Keighly.
Covenant to Consolidate Different Mortgages
Consolidation of mortgages occur where a mortgagor uses different properties to secure a loan of money from a mortgagee. The covenant tries to prevent the mortgagor from redeeming the properties separately. These mortgages as described are consolidated in the sense that the mortgagor will not be allowed to redeem any of the properties without also redeeming the other securities.
Generally, the law leans against consolidation of mortgages except where the parties expressly agreed to it in their deed of mortgage. Section 17. Conveyancing Act, Section 115. P & CL & Section 114. Abia State Law of Property all prohibit the consolidation of mortgage. However, it is allowed by the Lagos State Mortgage & Property Law 2012
Where parties expressly agree to allow for consolidation, four conditions must be satisfied:
It must be the same mortgagor
It must be the same mortgagee
The legal due date must have passed
It must have been expressly agreed by the parties and stated in the deed of mortgage.
Observance and Performance of Covenants in the Headlease
A lease or a sub-lease usually has attendant covenants e.g. covenant on use, to pay rents, not to sublet, repairs etc. The mortgagor is under an obligation to observe these covenants. Where the Mortgagor mortgages the property, he should agree with the Mortgagee to ensure that the Mortgagee observes the covenants in the headlease. This is important especially in a mortgage by assignment. Where the mortgagee does not wish to be liable for observing the covenants and conditions in the headlease, the parties may covenant that the Mortgagor continues to be liable to perform the covenants in the headlease.
Covenant to Repair
The covenant to repair deals with the reinstatement of parts that have fallen into disrepairs. It serves to maintain the value of the property and prevent depreciation otherwise this will affect its value where the mortgagee is to exercise his power of sale. Thus, this covenant should be primary concern to the mortgagee.
The parties should agree on who is to repair, and list out the places to be repaired. All these are to be included in a schedule to the mortgage deed.
It is advisable that the mortgagee carried out the repairs and subsequently charge the cost of repairs on the mortgage property. It must be noted that repair does not include rebuilding the property. Nigerian Loan & Mortgage Co. vs. Ajetunmobi.
Covenant to Create Lease and Sub-Lease on the Property
The creation of mortgage does not mean a lease cannot be created. A mortgagor in possession can create a lease and he is not under a duty to account to the mortgagee. Section 18(1). CA, Section 121(1). P & CL. If there was a lease on the property before the mortgage, the lease will be binding on the Mortgagor and even on subsequent purchaser and the mortgagee will not be entitled to rent. Where the lease is created after the mortgage, then the determining factor is whether either party is in possession in which case that party in possession of the mortgaged property can create a lease binding on the other. Section 18(1). CA & Section 121(1). PCL provides thus;
"A mortgagor of land while in possession shall, as against every incumbrancer, have power to make from time to time any such lease of the mortgage land or any part thereof".
Where the mortgagor is in possession, the mortgagee's solicitor should ensure that the covenant is couched in such a way as to provide that mortgagee's consent in writing should be first had and obtained before the mortgagor can lease or sub-lease the property. However, such consent is not to be unreasonably withheld in case of a responsible and respectably person.
Where the lease is created after the mortgage, the CA and PCL regulate the relationship. By virtue of Section 121(1) - (18). P & CL and Section 18(1) - (18). C A, a mortgagor in possession has the right to create a lease, subject to the following conditions:
It is a building lease, which must not exceed 99 (ninety-nine) years, that is expressly stated under the Law. Section 121(1). P & CL, Section 18(3). CA.
The lease shall take effect in possession within the 12 (twelve) month of its creation. Section 121(4). P & CL, Section 18(5). CA. Thus, a lease under the section cannot be created to take effect in possession more than the stipulated period. Though a lease created to take effect beyond 12 (twelve) months remains valid and binding on the parties to the lease, it takes it outside the purview of the statutory protection afforded the mortgagor to create a lease that will be binding on the mortgagee.
Best rent reasonably obtainable must be reserved. Section 121(5). P & CL, Section 18(6). CA.
Covenants to pay rent must be included and upon the lessee's failure to pay the reserved rent for a period of 30 (thirty) days, the right of re-entry must be provided. Section 121(6). P & CL, Section 18(6). CA.
The mortgagor shall have a counterpart of a formal lease duly executed and delivered by the parties. Section 121(7). P & CL, Section 18(8). CA.
A counterpart kept by the mortgagor shall be handed over to the mortgagee within one month of its execution. Section 121(10). P & CL, Section 18(11). CA.
The lease must be in consideration of the mortgagee agreeing to erect either a new building or renovate or cause improvement on an existing building on the demised premises. Section 121(8). P & CL, Section 18(9). CA.
This is subject to the express agreement. Section 121(12). P & CL, Section 18(13). CA
The mortgagee must not have taken possession or appointed a receiver. Section 121(8). P & CL.
This means that the power of the mortgagor or mortgagee to create a valid lease that will be binding on the other party is regulated by the statute and the agreement of the parties.
A mortgagee in possession can also create a lease. Where he creates a lease, he must account for rents collected as the rent is meant to be use for discharging the principal and interest.
Restriction of Redemption for a Fixed Term Certain
What this means is that the mortgagor's right of redemption may be expressed to be inoperative for a certain period and only to become operative from a certain time after the creation of the mortgage. e.g. the right of redemption may not be operative during the first two years after the creation of the mortgage but as from the third year, the mortgagor can redeem his property. The mortgagee may push for the insertion of these clauses in the agreement in order to enjoy the interest which will accrue on the principal sum where the mortgagor does not redeem soon after the creation of the mortgage.
Generally, the Courts frown on this covenant as it is generally deemed to be a negation of the right of the mortgagor to redeem his property at any time he is ready with the principal sum and interest already accrued. However, it may be allowed after the consideration of the following factors:
The length of time. Where the length of time is short, the Court may allow it. Where it is fairly long the Court may not allow it. In the case of Multi Service Banking vs. Merden, a restriction of redemption for a period of 10 years was held not to be too long. See also Samuel v. Jarrah
The parties. If the mortgagor is a corporate body made up of members who are elites and knowledgeable, the Court will allow the restriction on the ground that the members ought to know the implications of such restriction. Where, however, it is an individual, the Court may be sympathetic towards him.
The type of mortgage created
The circumstances surrounding the creation of the mortgage
Creation of Successive Legal Mortgages using the Same Property as Security
This occurs when the same property is mortgaged twice or more in security transactions. The general rule is that where there is an equitable mortgage, a subsequent legal mortgage can be created (conversion) and where there is legal mortgage, a subsequent equitable mortgage can be created over the equity of redemption. Successive creation of legal mortgages involves same mortgagor, same property, but different mortgagees. That is, successive legal mortgages occur where one mortgagor uses the same property to create different mortgages with different mortgagees.
In the Conveyancing Act States, successive legal mortgages cannot be created over the same property. This is because in the CA States, the applicable law for the creation of legal mortgage is the common law. The Mortgagor is deemed to transfer his legal title in the property to the mortgagee and what he has left is a mere equity of redemption, which can at best only be used to create an equitable mortgage. This is because of the common law doctrine of Interessi Termini which is to the effect that once a legal mortgage has been created, all interest in that property terminates. (Nemo Dat Quod Non Habet).
In the P & CL States, successive legal mortgages can be created over the same property as Section 163. PCL has abolished the doctrine of interesse termini. Under the PCL, where the mortgagor creates a legal mortgage by sub-demise, he retains his legal interest, which he may subsequently mortgage to a second mortgagee by executing another legal mortgage.
The conditions for creation of successive legal mortgages under the PCL include:
The legal mortgage must have been created by sub-demise or charge by deed expressed to be by way of legal mortgage.
The term to be taken by a subsequent mortgagee shall be one day longer than the term vested in the other mortgage whose security ranks before the subsequent mortgage.
The entire interest must not be exhausted. Section 109(2). P & CL.
The arrangement permitted by Section 109(2)(b). P & CL would have been legally impossible because it is in conflict with the Common Law doctrine of interesse termini, which states that it is not possible to create a term of years in a property to commence at the expiration of another term of years created in respect of the same property.
A difference between successive legal mortgages and up-stamping is that while up-stamping is applicable through-out the country, successive legal mortgages only applies in Lagos and the States under the P & CL as its applicability to the states to old Northern and Eastern region has been precluded by the common law doctrine of Interrese Termini.
Up-Stamping
Up-stamping of mortgages refers to the practice or process of payment of additional stamp duties on a mortgage document in satisfaction of the increased facility granted over an earlier mortgage. This exists where a mortgagor had earlier borrowed money from a mortgagee using a particular property as security for a loan. If, subsequently, the mortgagor wants an additional loan from the same mortgagee using the same property as security, the mortgagee will draft a new agreement and the document will be up-stamped. When up-stamping, the property and the parties are the same. However, the new facility is different and additional stamp duties must be paid on it. The following conditions must be fulfilled to validate an upstamping:
The parties must be the same
The mortgage property must be the same
The value of the property must cover both the first and subsequent loans.
There must be no contrary intention in the deed creating the initial mortgage. See Owoniboys Technical Services Ltd. v. UBN Plc. (2003) 7 SCNJ 177.
Simply put, up-stamping is the act of paying additional stamp duty on the new mortgage or loan agreement. Owoni Boys Technical Services vs. UBN
The consent of the Governor is not required in granting the new facility so long as his consent had been obtained when the first mortgage was created. Bank of the North vs. Babatunde. The consent of the Governor is required in respect of alienation of interest in land and not for any additional facility. Owoniboys Tech Services Ltd. v. Union Bank of Nigeria Plc. Even where the Governor's consent was granted under a law which had ceased to exist e.g. Land Tenure Law, no further consent of the Governor is required for up-stamping. Adepate v. Babatunde.
The effects of up-stamping a mortgage are:
A fresh consent of the Governor need not be obtained.
A new Deed of Mortgage is not required to be executed
The earlier Deed of Mortgage executed by the parties is only taken for payment of stamp duty on the additional loan. Owoniboys Tech Services v. UBN
Mortgagee's Remedies
The remedies available to the Mortgagee are cumulative and not necessarily alternative. Olori Motors Ltd. vs. Union Bank Plc. These rights are not mutually exclusive, thus the taking of one does not exclude the use of the others. The mortgagee can exercise any or all of them at the same time.
The particular remedy taken would depend on:
What the mortgagee is claiming, is it the principal or the interest?
The type of mortgage, whether it is legal or equitable?
The rights and remedies available to a legal mortgagee include:
Resort to ADR. Rule 15(3)(d). RPC
Right of action to recover the Mortgage sum and interest in Court
Right to sale of the mortgaged property
Action for foreclosure
Right to appoint a receiver. Section 123(1)(iii). P & CL, Section 19(1)(iii). CA.
Right to take possession of the property
Right to keep the title Deeds
Right to Consolidation (where it is expressly provided for)
See Section 19(1). Conveyancing Act
The rights and remedies available to an equitable mortgagee include:
Right of sale of the mortgaged property. This right will only exist if the following conditions are present:
The mortgage is by Deed
The remedial devices/clauses of power of attorney /trust declaration are included as terms in the Deed
There is no contrary intention of the parties
An action for specific performance
Action for foreclosure
An application to the Court appointment of receiver
Right of action in Court to recover the mortgage sum and interest
Right to Take Possession
A legal mortgagee has a right to take possession of the mortgaged property upon execution of the mortgage. This right is immediate, not contingent upon the default of payment of the mortgage sum. Section 19(1)(10). Conveyancing Act & Section 123. PCL. Furthermore, he cannot be compelled to get the highest rent on the property. Generally, a mortgagee should take possession where:
The property is being squandered
Fear of destruction or depreciation is imminent
There is need to intercept the profit
In most circumstances, it is not advisable for the mortgagee to take possession. This is because equity imposes on him a strict liability to account for the profits on the property and he will be liable for negligence or wilful default for any sum not recovered. Furthermore, he cannot make profit from the property and can only realise his security. He is also liable for any deterioration or neglect or disrepair of the property. Furthermore, he who is in possession has an obligation to insure the mortgage property.
Appointment of Receiver
A receiver is an independent, uninterested third party appointed to manage the mortgaged property. Adetona & anor v. Zenith Int'l Bank Ltd. This statutory right is implied in every mortgage, legal or equitable, created by a deed where the circumstances would allow the mortgagee to exercise a power of sale.
The power to appoint a receiver need not be expressly stated in the deed once it is a legal mortgage. Section 123(1)(iii). P & CL, Section 19(1)(iii). CA. Where it is an Equitable Mortgage created by Deed, the deed should provide for the power to appoint a receiver. Where there is no such clause, the mortgagee may apply to Court for one to be appointed. By Section 131(1). P & CL, Section 24(1). CA, a receiver can only be appointed after the mortgagee has become entitled to exercise the power of sale. If the mortgagee has not yet become entitled to exercise the power of sale, he cannot appoint a receiver. See Awojugbabe Light Industries Ltd. vs. Chinukwe.
When the receiver has been appointed by the mortgagee, the receiver is deemed to be an agent of the mortgagor. Section 131(2). P & CL, Section 24(2). CA. But, if the receiver is appointed by the Court, he is personally liable for his acts.
A receiver appointed is expected to go into the property and manage the property (mortgage property)
The remuneration of receiver is from the income of the mortgage property i.e. the mortgagor pays. The powers/duties of a receiver include:
The receiver shall have the power to demand and recover all the income of the property of which he is appointed receiver.
He shall be entitled to remuneration out of the money received by him to pay taxes, rates and other outgoings in respect of the property.
To pay interest accruing in respect of any principal money due under mortgage.
To pay the residue of the money received by him to the person who is entitled to receive the income of the mortgaged property.
See Section 24. Conveyancing Act & Section 131. PCL.
Action in Court to Recover Principal and Interest
The mortgagee can institute an action in Court against the mortgagor to claim the principal sum advanced to the mortgagee and the interest that has accrued on it. This can be by way of summary judgment or judgment under the undefended list. Order 11. HCL & Order 21. FCT
The mortgagee cannot exercise this right of action to recover the mortgage sum and interest if the right to an order of foreclosure has been exercised. This is because this right and that of foreclosure are mutually exclusive when the right to foreclose has been exercised first.
Action for Order of Specific Performance
This remedy is available to an equitable mortgagee. This would arise where the equitable mortgagor fails, refuses or neglects to complete documentation of the mortgage agreement. The Court would give an order mandating the mortgage to complete documentation, thus the legal interest in the property will be passed to the mortgagee. Thereafter, he can exercise the power of sale. The equitable mortgagee has no legal estate to transfer as such, he cannot exercise a power of sale hence this action for specific performance. Where the mortgagor refuses, neglects or fails to complete the documentation, the Court will then order an officer of the Court to execute a legal mortgage with the mortgagee. It must be noted that before an order of specific performance, there must be part performance on the part of the mortgagee.
The act of part performance on the part of the mortgagee is the actual handing over of the loan to the mortgagor. On The mortgagor's part, the part performance is the deposit of his title deeds with the mortgagee and intention creates a legal mortgage. Ogundiani v. Araba
Statutory Power of Sale
This is available to all mortgages created by deed, whether legal or equitable, and it is provided for under Section 123(1)(i). P & CL, Section 19(1)(i). CA. The power and right of a mortgagee to sell property is central to legal mortgages created by deed and is automatic. A Legal mortgagee need not go to Court to enforce it. Where it is an equitable mortgage, then the mortgagee cannot exercise the power of sale without a Court order subject to the satisfaction of the following conditions:
the mortgage must be by deed
there must be no contrary intention in the deed (a contrary intention could be the inclusion of a higher interest rate as penalty or any other provision that shows that the parties intended another penalty, not a sale)
the mortgage must contain any one of the remedial devices.
Where it is a legal mortgage, the mortgagee does not require any Court order before it can exercise the power of sale as long as it has arisen and has become exercisable. Section 123(1)(i) & 125. P & CL, Section 19(1)(i) & 20. CA. Furthermore, the mortgagee can exercise this power not minding that he has used other remedies and not minding that an action over the subject matter is in Court. In UBN v. Olori Motors & Co Ltd., the mortgage (bank) brought an action in Court to recover the mortgage sum and interest. While the case was pending, the mortgagee sold the mortgage property in exercise of the power of sale. The mortgagor sought to set aside the sale of the mortgage property on the ground that the sale violated the principle of pendente lite and that by instituting an action in Court to recover the mortgage sum and interest, the mortgagee could not exercise the power of sale. It was held at the Supreme Court that since in a legal mortgage, the right to sell the mortgage property was independent of the Court in that the mortgagee can sell without any Court order and also, since the remedies of a mortgagee are not mutually exclusive, then the mortgagee can exercise the power of sale even if there was an action in Court provided that the power of sale had arisen and was exercisable.
The two conditions must be satisfied (arisen and exercisable). Usually, the power must arise first before it becomes exercisable. The power of sale may become exercisable without it arising and in such a case, the mortgagee cannot sell. For the power of sale to arise, the following three conditions must exist:
The mortgage must have been created by a deed;
There must be no contrary intention against sale in the mortgage deed; and
The legal due date, which is the date of redemption of the mortgage must have passed.
See Section 19(1). Conveyancing Act, Section 123. PCL, Section 122(1). Abia State Law of Property
The above conditions are conjunctive/cumulative. NHDS Ltd. vs. Mummuni.
Even where the power of sale has arisen, the mortgagee is still not entitled to sell the mortgaged property unless and until the power has become exercisable. NAB Ltd v. UBA Plc. The power becomes exercisable when any of the three conditions in Section 20. Conveyancing Act & Section 125. P & CL are satisfied, which is that:
A written Notice to the mortgagor to pay the loan sum had been served on him and after a period of 3 months he is still in default of the mortgage sum and interest or part thereof. Section 125(1)(i). P & CL & Section 20(1)(i). CA; or
The interest/mortgage sum are in arrears after becoming due for two months. Section 125(1)(ii). P & CL & Section 20(1)(ii). CA, or
There has been a breach of a fundamental provision contained in the mortgage deed or in the Act/Law and on the part of the mortgagor. Section 125(1)(iii). P & CL, Section 20(1)(iii). CA, Okonkwo vs. ACB
Compliance with the above provisions is mandatory on exercise of the right to sell mortgage property. Usually, the power must arise first before it becomes exercisable. The power of sale may become exercisable without it arising and in such a case, the mortgagee cannot sell.
The requirement of notice to the mortgagor includes notice to persons deriving title through him, for example, where there is a subsequent mortgage. The notice need not fix the time of repayment and it is sufficient for it to simply request that the mortgagor should pay the loan. The date of the service of the notice is excluded in the computation of time for this purpose. Where the mortgagor is in default of payment of any instalment or interest is in arrears, it is not a defence that substantial part of the loan has been paid. Okafor & Sons v. NHDS Ltd.
Where the power of sale has not arisen, the mortgagee/lender has no right to sell. If the right of sale has arisen but it has not become exercisable and the property used as security is sold, the mortgagor can apply to the Court to set aside the sale. However, where it was sold to a bona fide purchaser for value without notice, the Court can only grant damages to the mortgagor. Section 21(2). CA, Section 126. P & CL. If the power of sale has not yet arisen, then any sale will be void and it will not matter if it was sold to a bona fide purchaser for value without notice.
A purchaser who purchases a property before the power of sale arises will not acquire a good title. A mortgagee's power of sale becomes exercisable if it has arisen and once it has so arisen, the title of a subsequent purchaser without notice will not be affected by its improper or irregular exercise and the sale will be regarded as valid. Nigeria Advertising Services Ltd v. UBA.
The requirement that the power of sale must arise and become exercisable works hardship on the mortgagee as the mortgagor can refuse to pay as long as the legal due date has not passed and the mortgagee is helpless. To protect itself, the mortgagee can insert a proviso that the entire mortgage sum and interest is to be repaid at a shorter legal due date. That is, a date shorter than the proper legal due date on which instalments would end. The effect of this is to bring the legal due date closer in order to make the power of sale arise in the event of a default. This shorter legal due date is called a "LEGAL FICTION." The effects of the shorter legal due date apply to all remedies of the mortgagee.
Sale extinguishes the mortgagor's right of redemption. A sale may be conducted by public auction or by private contract. For sale by public auction, a 7-day public notice of the intended auction must be given. Section 17. Auctioneer's Law.
The sale must be made in good faith. Where the sale was made at an undervalue, it does not necessarily evidence bad faith. However, where the mortgagee sells to his cronies, relations, or himself directly or through an agent, the Court will infer bad faith.
A mortgagee is not an agent or trustee for the mortgagor during power of sale. In exercising the power of sale, the mortgagor must not do the following:
It must not sell to itself, servant, privy, agent or family as such will be deemed to amount to fraud and collusion. See Ihekwoaba v. ACB Ltd. The sale can be set aside. This is because the court will always infer bad faith or mala fide where the mortgagee sells to himself directly or through an agent, cronies, and relations. It will amount to selling at fraudulent or gross undervalue. Ihekwoaba v. ACB Ltd.
The mortgagee must not collude with the buyer. The mortgagee should always act bona fide and in good faith.
The mortgagee must not sell at a negligible price or at a gross undervalue. A mortgagee is only required by law to obtain a proper price and not the best price for the property when exercising his power of sale. To vitiate the sale, it must be shown that the sale was fraudulent. Ihekwoaba v. ACB, Okonkwo vs. CCB, Eka Etheh vs. NHDS.
A sale of the property used as security may be set aside on the following grounds:
That the mortgagor had no good title ab initio
The Mortgage transaction was not registered if the property is in the RTL district
There is fraud/ collusion between the mortgagee and the purchaser
The right of sale has not arisen
Sale was effected after payment of out-standing mortgage sum
A sale of the property used as security for a mortgage will not be set aside on the following grounds:
Where the property was sold at a low price, except it was sold at a gross undervalue and there exists evidence of fraud. Section 183. PCL, Okonkwo vs. ACB
The outstanding sum is contested by the parties
The sale was motivated by ill-will
The mortgagor has paid a part of the loan
The mortgage sum and interest is paid after the sale
An Order of the Court was not obtained before the sale. UBN Ltd. vs. Olori Motors Ltd.
The power of sale was improperly exercised.
After the sale, the mortgagee is a trustee for the mortgagor in respect of the proceeds of the sale. The implication of this is that the mortgagee has a duty to account to the mortgagor on the proceeds of the sale.
Summarily, in exercising the mortgagee's power of sale, the mortgagee is not a trustee of the mortgagor as the power is given for the mortgagee's benefit to enable him realize his money. The mortgagee is not expected to sell at the best obtainable price and as long as the sale is not gross under value, such sale will pass. However, the mortgagee is expected to sell at public auction and not by private contract. Also, the mortgagee cannot sell to himself or his privies (directly or indirectly). Even though the mortgagee is not the trustee of the mortgagor, he is a trustee of the proceeds of the sale and there is a prescribed order in which the proceeds are to be applied. Where the sale is completed, the mortgagee is to use the proceeds to satisfy mortgagor's indebtedness to him and if there is another mortgage, to use the balance to settle the other mortgage otherwise, he must return the balance of the sale to the mortgagor. This is because the Mortgagee is a trustee of the proceeds of sale. thus, the Mortgagor can sue the Mortgagee for the surplus where he refuses to give it.
Proceeds of sale may be applied in the following order:
Settle prior encumbrances first. E.g. prior existing mortgages/ mortgages having priority. That is, prior encumbrances are to be paid first
Settle costs, charges and expenses incurred in the course of the sale, such as auctioneer's fee, advertisement, services of a solicitor.
Pay up outstanding interests
Pay up outstanding mortgage sum
Pay the balance, if any, to the person or persons entitled to the equity of redemption. It may be the mortgagor or subsequent mortgagee or an assignee of the equity of redemption.
Settle subsequent mortgages
See Section 21(3). Conveyancing Act, Section 127. PCL, Visioni Ltd. vs. NBN, Section 31. MPL.
Where the proceeds of the sale are insufficient to satisfy or liquidate the mortgage/principal sum and interest, then the mortgagee can proceed against the mortgagor by an action in Court to recover the outstanding sum and interest or he can proceed against other properties of the mortgagor. See Visioni Ltd. vs. NBN
An equitable mortgagee, where the deposition of title deed is accompanied by memorandum in deed in which the remedial devices are inserted, can exercise the power of sale. The aforementioned conditions in addition are extant. The sale of mortgage property in its effect extinguishes equity of redemption and the mortgagor's equitable right to redeem
The mortgagor can sell the security. However, the following points must be noted:
Where the mortgagor sells the security with the consent and concurrence of the mortgagee, the purchaser receives a good title
Where the mortgagor sells the security pursuant to an order of a Court, the purchaser receives a good title
Where the mortgagor sells the security without the consent and concurrence of mortgagee and without an order of Court, the purchaser only acquires the mortgagor's equity of redemption and takes subject to the mortgagee's interest. See Olufintuyi v. Barclays Bank DCO
Action for Foreclosure
The right of mortgagee to apply for an order of foreclosure is available to both legal and equitable mortgage. Foreclosure is an order of court by which the equity of redemption of the mortgagor and all persons claiming through him including subsequent encumbrances are extinguished so as to vest the mortgaged property absolutely in the mortgagee. This is an Order of Court extinguishing the mortgagor's equity of redemption. The Order is first made nisi (in the interim) and then it becomes absolute after 6 months. The Courts are always reluctant to grant an order of foreclosure and they would rather grant a judicial sale. The Order of foreclosure can be re-opened on the following grounds:
If the mortgagee, after obtaining a foreclosure order made absolute, is still suing the mortgagor to repay the balance of the mortgage sum if the proceeds of sale is not enough to satisfy the loan
If the mortgagor brings an application timeously stating that his inability to repay was due to circumstances beyond his control and that he is now able and willing to repay the mortgage sum and interest
Fraud
That the property foreclosed is worth a lot more than the mortgage sum and interest
The mortgagee acted mala fide in obtaining the order nisi
Where, in the interest of justice, it is just and equitable to allow the mortgagor to redeem
The property as security is of immense value i.e. it is a family property
The conditions the mortgagor/applicant seeking to re-open the foreclosure order will show/prove to succeed in the application are:
That he is not guilty of delay
He has the money in Court to pay the loan sum
The property value is too high compared with the amount outstanding in the repayment of the loan
The property has not been sold by the mortgagee
The action is brought in good faith
Transfer of Mortgages
Section 27. Conveyancing Act & Section 134. P & CL provide for the power of the mortgagee to transfer the mortgage or the benefit of the mortgage to a transferee by executing a Deed expressed to be made by way of statutory transfer. The consequences of such transfer are:
The transferee acquires the right to demand, sue for, recover, and give receipt for the mortgage money or the unpaid part of it and interest thereon (if any) as may be due.
The transferee acquires the right to sue on all covenants with the mortgagee, and the right to exercise all powers of the mortgagee.
The transferee acquires all the estates and interests in the mortgaged property then vested in the mortgagee subject to redemption of the loan.
Mortgagor's Remedies and Rights
Equity of Redemption
Equity of redemption is an estate in land that could be sold, disposed of, or even mortgaged. This right arises the moment the mortgage is created and it continues to subsist till the day the mortgage ends or is discharged. As long as there is a mortgage, there is an equity of redemption. The mortgagor's equity of redemption cannot be taken away unless there is an order of foreclosure or a valid sale of the mortgage property under mortgagee's power of sale. Fairclough v. Swan Breweries Co Ltd (1973) 1 All NLR.
This right can never be clogged either expressly or impliedly by agreement in the Mortgage Deed. Santley vs. Wilde, Fairclough vs. Swan Breweries Co. Ltd. The circumstances when the equity of redemption will be extinguished include:
The right of sale has been exercised
A foreclosure Order absolute has been made
The mortgage sum has been redeemed
The mortgagor's equity of redemption can be conveyed by sale or will or devolve upon his personal representative on intestate succession. This is subject to the right of the mortgagee. The right starts from the day legal mortgage is created. Of all the three rights of the mortgagor, the equity of redemption is the most important and it is also the basis for the other two rights. The effect of the equity of redemption is as follows:
The parties cannot insert any clause in the mortgage to clog or negate the mortgagor's right to redeem as such a clause would be void. See Okonkwo v. ACB Ltd; UBA v. Okeke (2003) 8 NWLR (pt. 822). The equity of redemption must never be clogged, restricted or impeded. See also Knightbridge Estate Ltd. vs. Byrne, Fairclough vs. Swan Breweries Co. Ltd.
The equity of redemption is so powerful that it entitles the mortgagor to continue to exercise the rights of ownership over the mortgage property. It can even be used to create an equitable mortgage. The equity of redemption is not affected by any breach on the part of the mortgagor.
Legal Right to Redeem
This is the period stated in the Loan agreement/Mortgage Deed for the repayment of the loan sum known as the legal due date. Upon the expiration of the specification date for payment, the legal right to redeem expires. The legal right to redeem arises the moment is created and it continues to subsist until the end or discharge of the mortgage. Where there is a legal due date stated in the deed, the legal right to redeem can be exercised before the expiration of the legal due date. After the legal due date, the legal right to redeem terminates and the mortgagor loses his legal right to redeem the property.
The legal right to redeem encapsulates the mortgagor's right to repay the mortgage sum and interest and recover his property at any time on or before the legal due date. The mortgagor does not need to wait for the legal due date before he can repay the mortgage sum and interest. He can do so even on the next day so long as there is no restriction on the right to redeem for a fixed term. See Okonkwo v. ACB Ltd, UBA v. Okeke (2003) 8 NWLR (pt. 822).
At common law, after the legal due date, the mortgagor loses his right to redeem. This harsh position of the common law has been mitigated by equity through the equitable right to redeem.
Equitable Right to Redeem
The equitable right to redeem is the right granted by equity to the mortgagor to still recover his security by paying the mortgage sum and interest although the time fixed for the payment of the money has passed. Yaro v. Arewa Construction Ltd.
Under common law, the legal right to redeem was construed strictly such that once the mortgagor fails to redeem before the legal due date, he is taken to have lost the right to redeem. The equitable right to redeem arises upon the expiration of the legal right to redeem. Once legal due date elapses and the mortgagor has not redeemed, his equitable right to redeem automatically activates on the expiration of the legal due date. This equitable right to redeem can only be lost upon exercise of power of sale by mortgagee or an order of foreclosure absolute (after 6 months).
Discharge of Mortgages
Legal mortgage (by way of Sub-demise or Assignment). In CA States, it is discharged by Deed of Discharge, Deed of surrender or Deed of Release. This Deed of Discharge, Release or Surrender is registrable in the lands registry where the mortgage was registered.
Equitable mortgages are discharged by receipt of payment of principal and interest. It must be noted that where the payment is made to the Mortgagor's solicitor or agent, the receipt must be by Deed.
A Legal mortgage created by charge by deed under PCL states is discharged by way of statutory receipt. These receipts are not registrable, hence, the encumbrance would still be reflected on the property at the lands registry.
Where the mortgagor is a Company, a memorandum of satisfaction is to be executed in its favour upon re-payment of the sum. Section 204. CAMA. Also, the Company is to complete and file Form CAC 9.
Discharge by Court. Despite the covenant restricting redemption, the mortgagor can still redeem. He can apply to Court via a Motion Exparte and it will order that the mortgage money be paid into Court. Upon the payment, the mortgage is discharged.
Discharge by Complying with Section 135. P & CL. An alternative method of the discharge of mortgages is where a receipt is either endorsed on, written at the foot of, or annexed to, a mortgage for all money secured by it which states the name of the person who pays the money and is executed by the mortgagee or the person in whom the mortgage property is vested and who is legally entitled to give a receipt for the mortgage money. The receipt shall operate without any reconveyance, surrender or release as a discharge of the mortgaged property from all principal money and interest secured under the mortgage. This method dispenses with the use of a deed of discharge, surrender or release.
Where a third party pays the mortgage sum, the rights of mortgagee transfers to the third party, the mortgagor be indebted to the 3rd party and the mortgage continues. The mortgagor may decide to sell his property and use the proceeds to the loan in discharging the debt. In this instance, there should be a tripartite agreement between the mortgagor and mortgagee as "the Assignors" and the purchaser as "the Assignee".
In CA States, the mere fact that the mortgage sum has been repaid does not discharge the mortgage. The mortgagee holds the interest in trust for the mortgagor pending when a deed of release has been executed.
In PCL States, the mere fact that mortgage money has been repaid absolutely and instantly discharges the mortgage.
Perfection of Legal Mortgage
Consent
The consent of the Governor must be sought and obtained for the creation of a legal mortgage. Section 22. LUA. Thus, a mortgage for which the consent of the Governor was not obtained will result in an equitable mortgage (inchoate or incomplete legal mortgages). See Savannah Bank of Nig. Ltd v. Ajilo. However, where consent is applied for and refused, it will vitiate the mortgage transaction. It is the duty of the mortgagor to obtain the consent of the Governor as he is the holder of Statutory Right of Occupancy. See Ugochukwu v. CCB Nig. Ltd.
However, the consent of the Governor is not required at the agreement/contract stage of property transactions, but it is only required at the conveyance stage. The documents required to apply for governor's consent include:
Application for consent - Form 1C
Duly executed deed of mortgage
Tax clearance certificates of both parties
Receipts of payment of ground rent, consent fee, inspection fee, tenement rate, and other charges imposed on the property.
The governor's consent will not be required to perfect a Mortgage in the following instances:
Where it is an Equitable Mortgage, the consent of the Governor is not required because it is in the nature of an agreement to create a legal mortgage only. Okuneye v. FBN Plc. Where the consent of the Governor was sought and obtained in the creation of an equitable mortgage, no further or other consent will be required if a legal mortgage is to be created over the same property.
Up-stamping of a Mortgage. Where consent of Governor was obtained when the mortgage was originally created, no consent is required for up-stamping of the mortgage if further facility is granted on it. BON vs. Babatunde
Re-conveyance of the mortgaged property
Stamping
A deed of legal mortgage is required to be stamped as evidence of payment of Stamp Duties (taxes) imposed by the Stamp Duties Act. The duty paid on mortgages is ad valorem (according to the value of the transaction). A document is required to be stamped within 30 days of its execution. Section 23. Stamp Duties Act.
Registration
A deed is to be registered within 60 days of its execution. Section 2(1). Land Instrument Registration Law. Where a deed of mortgage is not registered:
The instrument is inadmissible in evidence to prove title and is only admissible to prove payment of money. Section 15. LIRL, Ogunbambi vs. Abowoh.
An unregistered deed of mortgage loses priority where there is conflict of interest. Fakoya v. St. Paul's Church Shagamu, Section 16. LIRL, Okoye v. Dumez
If the property falls within the registration district and it is not registered within two months of the execution of the deed of mortgage, the transaction will be void. Idowu v. Onashile, Onashile v. Barclays Bank.
It must be noted that on account of MPL, the Deed of Legal Mortgage will also be registered at the Lagos State Mortgage Board.
Generally, the documents required to perfect/process a legal mortgage of land include:
Certified True Copies of original title documents
Three (3) years tax clearance certificate of the mortgagor (and the surety, if any).
A receipt of payment of the current ground rent on the property to be mortgaged.
A duly completed application for Governor's consent Form - Form 1C
A copy of the approved plan of the property.
A copy of the valuation report of the property.
Approved building plan of the property
Insurance policy of the property
5 copies of duly executed mortgage deed (Deed of Legal Mortgage)
3 years' tax clearance certificate of mortgagor (and surety or guarantor, if any)
Evidence of payment of current ground rent on the property to be mortgaged, land use charge, consent fee, inspection fee and other charges imposed on the property.
Where the Mortgagor is a Company, the following additional documents are required by the CAC
A Certified true copy of the Memorandum and Articles of Association of the Company.
A copy of the resolution of the Board of Directors authorising the mortgage.
A copy of the Certificate of Incorporation of the Company.
Tax clearance certificate of at least two directors of the Company
Updated annual returns
Where a company is the mortgagor, the mortgage document or charge must be registered within 90 days of its execution by filing Form CAC 8. Section 197. CAMA.
Preparation of Mortgage Deed
The particulars needed to prepare a mortgage deed include:
Particulars of the parties: Full names and addresses
Particulars of the amount advanced as loan by the mortgagee to the mortgagor
Particulars of the property to be used as security for the loan
Date of commencement
Particulars of legal due date and the mode and manner of repayment of the loan
Duration of the mortgage
Interest rate
Description of the mortgage property
Particulars of the covenants to be reserved in the mortgage
Particulars of the witnesses to the mortgage
The remedies available to either party upon default by the other party
Formal Parts of a Mortgage Deed
Introductory Part
Commencement: This depends on the mode and type of mortgage. For mortgage created by assignment or sub-demise, the commencement can be: "THIS MORTGAGE" or "THIS DEED OF LEGAL MORTGAGE". For mortgage created by charge by deed expressed to be by way of legal mortgage, it is "THIS CHARGE BY DEED EXPRESSED TO BE BY WAY OF LEGAL MORTGAGE".
Date: "is Made the ____ day of _____________ 20__". It should be noted that a deed takes effect from the date of delivery not necessarily the date on the deed.
Parties: "BETWEEN ______________ of _______________________ (the mortgagor) of the first part AND ____________ of __________________ (the surety) of the second part AND OCEANIC BANK PLC a Registered Company under Part A of Companies and Allied Matters Act Cap. C20, LFN 2004 with its registered office at No. 20, Oyo Road, Oyo state (the mortgagee) of the third part."
It is possible to have a third party, that is a guarantor or some person forwarding his property as security.
Recitals: "THIS DEED RECITES AS FOLLOWS:"
recital cannot be waived in any mortgage deed. It must be inserted. The facts to be recited include the mortgagor's title, the existing loan agreement which will include the interest and capital, the surety' title where applicable, the desire of the mortgagor to borrow and mortgagee's agreement to lend, guarantor's agreement to guarantee the loan.
Operative Part
Testatum: "NOW THIS DEED WITNESSES AS FOLLOWS"
Unlike other instruments of conveyance which have a single testatum, a mortgage deed has two Testatum. The first testatum has the covenant to repay the principal sum and interest on a named date (the legal due date). This date for the interest of the mortgagee is usually short (most times 6 months). The second testatum has the charging clause which charges the security with a proviso for cesser on redemption.
Covenants
Testimonium: "IN WITNESSES OF WHICH…"
Execution: "SIGNED, SEALED, AND DELIVERED by… ". If a Company, "The COMMON SEAL of ______ is duly affixed to this deed"
Attestation: "IN THE PRESENCE OF: (Name, address, signature, and occupation of witness)". If a Company, "IN THE PRESENCE OF: (Director, Secretary)"
Consent clause where required
Principles in Mortgage
Union Bank of Nigeria Plc. v. Olori Motors & Co. Ltd & Ors (1998) 5 NWLR (pt. 551) 652
The appellant sued the respondents jointly and severally claiming the sums of N7,947,273.00 (seven million, nine hundred and forty-seven thousand, two hundred and seventy-three naira) being the debit balance outstanding in the current account of the 1st respondents as at 23/8/88 and N84,971.00 (eighty-four thousand, nine hundred and seventy-one naira) being the balance outstanding in the loan account of the 1st respondent. Both the overdraft and loan were jointly guaranteed by the 2nd and 3rd respondents.
At the hearing of the matter, the respondents were represented by counsel but they failed to lead evidence in defence of the action. They also refused to call any witness to prove the counterclaim which they filed. After hearing the case, the trial Court entered judgment for the appellant as claimed. In addition, the appellant was granted interests on the amount awarded. Furthermore, the Court which dismissed the respondent's counterclaim went ahead to hold as follows "subject to any necessary consent being obtained, the plaintiff is at liberty to sell the properties mortgaged by the defendants as securities for the various facilities granted by the plaintiff".
The respondents were dissatisfied with the judgment. They appealed to the Court of Appeal and at the same time filed a motion for stay of execution. The respondents duly paid for the service of both the notice of appeal and the motion for stay of execution. However, the processes were not served on the appellant. The trial Judge whose duty it was to fix the date for hearing of the motion retired before assigning any date for the argument of the said motion. While the respondents were trying to facilitate re-assigning the case to another Judge, the appellants without going back to the trial Court for any process towards executing the judgment against the respondents, simply resorted to its power of sale under the mortgage deed executed by the parties. The appellant proceeded to sell two of the respondents' mortgaged properties. On becoming aware of the sale, the respondents then filed a motion on notice before the trial Court seeking to set aside the sale. After hearing the argument on the application, the trial Court, relying heavily on Vaswani v. Savalakh (1972) All NLR 922 granted the application and set aside the ruling. Aggrieved by the ruling, the appellant appealed to the Court of Appeal.
Held
On whether mortgagee requires order of court before exercise of power of sale, the Court of Appeal, Per Mohammed JSC, stated thus:
"the exercise of powers of sale under a mortgage deed is quite distinct and separate from the exercise of power by a judgment creditor to execute a judgment delivered in his favour. The two rights are in fact governed by separate and distinct relevant laws applicable to the exercise of each of the rights. This is because the appellant Court could have validly exercised its power of sale of the mortgaged properties under the deed of mortgage even if the judgment of the lower Court did not contain any order empowering the appellant to sell the mortgaged properties. In other words, the execution of the judgment of the lower Court of 4/2/94 in favour of the appellant merely came through incidentally in the process of the appellant's exercise of its right of power of sale under the mortgaged deed."
On whether exercise of power of sale by mortgagee/Judgment creditor without recourse to Court amounts to abuse of Court process, it was stated that the issue of abuse of Court process cannot arise to justify the setting aside the sale of a mortgaged property where as in this case, the sale was not done through the issue of any Court process but simply through the exercise of the mortgagee's power of sale under the mortgage deed.
Mohammed JSC, further held that:
"It is also not in dispute from the facts averred in the respondent's affidavit in support of their motion and the appellant's counter affidavit that before the sale of the two mortgaged properties, the appellant did not apply nor obtain any process from the lower Court which delivered the judgment in its favour on 4/2/94 in facilitating the execution of that judgment. In other words, the appellant did not have any recourse to the Registry of the lower Court before selling the two mortgaged properties of the respondents. In fact, all what happened in the present case is that the appellant chose to exercise its power of sale under the Mortgage Deed rather than going through the processes of execution of the judgment in its favour. In the circumstances of this case therefore, was the learned trial Judge right in applying the decision of the Supreme Court in Vaswani Trading Co. v. Savalakh & Co. (supra) in coming to the conclusion that the situation in the present case is similar to that in Vaswani s case? The answer of course is in the negative.
The Court of Appeal thus held that the appeal succeeds and was allowed. The ruling of the lower court of 31/3/95 setting aside, the sale of the respondent's mortgaged properties was set-aside and replaced with an order dismissing the respondent's application.
Owoniboys Tech Services Ltd. v. Union Bank of Nigeria Ltd. (2003) 15 NWLR (pt. 844) 545
The appellant applied for a secured loan of N50,000.00 (Fifty Thousand Naira). It used its landed property at Oja Iya, Taiwo Road, Illorin as collateral. A deed of mortgage was executed for this purposed with the Governor's consent (marked as exhibit 4). Later, the loan was increased to N100,000.00 (One hundred thousand naira) and another deed of mortgage was executed to reflect this amount, which deed was accordingly up-stamped (marked as Exhibit D1). Still later, the loan was increased to N200,000.00 (Two hundred thousand naira). The same procedure was followed (marked as exhibit 5). The Governor's consent was not sought in respect of exhibits D1 and 5.
There was however, a failure of the repayment by the appellant of the facility granted. The respondent, sometime in 1988 made a demand for the repayment. As the appellant did not comply, the respondent then advertised for the sale of the mortgaged property. The respondent alleged that the appellant failed to repay the loan together with the accrued interest in accordance with the terms of the agreement. It decided to exercise its power of sale of the property as provided under the deed of mortgage. The appellant on the other hand disputed it was owing. It alleged that it discovered several multiple debits of particular cheques which when sorted out would leave it with enormous credit balance. It also contended that the Governor's consent was not obtained for exhibits D1 and 5 and that they were null and void as a result. It then argued that since exhibit 4 has ceased to exist on the principle of merger, there was no valid mortgage upon which the power to sell its property could be exercised by the respondent. Finally, it contended that even if there was a subsisting deed of mortgage, the originally agreed interest rate could not be increased by the respondent and used to calculate its liability without both parties agreeing upon such an increase.
Consequently, the appellant instituted the action leading to this appeal against the respondent challenging, in the main, the validity of the mortgages and injunction restraining the respondent from selling the property, subject to the said mortgages.
At the conclusion of the hearing, the trial Court granted the appellant's claim. Upon appeal to the Court of Appeal by the respondent, the judgment of the trial Court was reversed and the Appellant's claim was dismissed.
The appellant was dissatisfied with the decision of the Court of Appeal and appealed to the Supreme Court. One of the issues raised by the appellant was that the respondent's ground of appeal which challenged the ruling of the trial Court in refusing to grant the respondent an amendment of its statement of defence, having been filed along with the appeal against the final decision of the trial Court, without leave, was incompetent.
Held
On application of principles of merger to mortgages, it was stated that a mere mortgage is extinguished by the taking of formal mortgage, even though the mortgage does not confer a legal estate, and the sum from then on secured is the sum mentioned in the mortgage notwithstanding that other sums were covered by the deposit. What is referred to here as 'deposit' is the equitable mortgage by way of deposit of the deed of conveyance to secure a loan. It should be understood that merger may take the form of a merger of estates or of a merger of charge in the land. It is the merger of charge in the land. It is the merger of an equitable mortgage with the legal mortgage in land that is reflected here. However, a mortgage is not merged by the taking of a new mortgage on the same property to cover the original debt and further advances. Thus, in the instant case, it was proper to un-stamp the relevant exhibits to reflect the further advances or loans made to the appellant in consequence of the authorized mortgage transaction.
On whether Governor's consent required for upstamping of mortgage, it was stated that where the consent of the Governor had been obtained in respect of a mortgage deed, an increase in the amount of the loan would not call for fresh Governor's consent. The Governor's consent has nothing to do with the amount of loan. Rather, the consent is for the alienation of the legal title in the property to the mortgagee in compliance with section 22 and 26 of the Land Use Act, 1978, for the period of the mortgage transaction. So, no further consent would be necessary just because further loans had been obtained upon the same collateral.
The appeal was thus dismissed for lacking merit.
Sample Drafts
Deed of Legal Mortgage (Charge by Deed expressed to be by way of Legal Mortgage in Lagos)
THIS CHARGE BY DEED EXPRESSED TO BE BY WAY OF LEGAL MORTGAGE is made this _______ day of ______________ 2014 BETWEEN Chief Tonye Okiki of No. 2, Abudu Smith Street, Victoria Island, Lagos State ("Chargor/Mortgagor") of the first part; AND Heritage Bank Plc., a Limited Liability Company registered under the Companies and Allied Matters Act, Cap C20 LFN, 2004 with its registered office at No. 56, Marina Street, Victoria Island, Lagos ("Chargee/Mortgagee") of the second part
WHEREAS:
The chargor/mortgagor is the owner of the two-storey house together with Stewards' Quarters and garage, located at No. 2, Abudu Smith Street, Victoria Island, Lagos, covered by Title Certificate No: L05166 of 1963 and by the Certificate of Statutory Right of Occupancy No: 87345, dated 19/09/2001 and registered as 99/99/2001H in the Lands Registry, Alausa, Ikeja, Lagos State (hereinafter referred to as "the mortgage property")
By a loan agreement dated March 12, 2014, the chargee/mortgagee agreed with the chargor/mortgagor to lend to the chargor/mortgagor, and the mortgagor has agreed to borrow from the chargee/mortgagee the sum of N50,000,000.00 (Fifty Million Naira) ("the mortgage sum"), subject to terms and conditions contained in this Deed.
The chargor/mortgagor has agreed to provide the mortgage property as security/collateral for the repayment of the mortgage sum and interest, subject to the terms contained in this of this Deed
NOW THIS DEED WITNESSES as follows:
In pursuance of the said agreement and consideration of the sum of N50,000,000 (Fifty Million Naira) only, lent to the mortgagor by the mortgagee (the receipt of which the mortgagor acknowledges), the Chargor/Mortgagor AS BENEFICIAL OWNER CHARGES in favour of the Chargee/Mortgagee ALL THAT two-storey house together with Stewards' Quarters and garage, located at No. 2, Abudu Smith Street, Victoria Island, Lagos, covered by Title Certificate No: L05166 of 1963 and by the Certificate of Statutory Right of Occupancy No: 87345, dated 19/09/2001 and registered as 99/99/2001H in the Lands Registry, Alausa, Ikeja, Lagos State (hereinafter referred to as "the mortgage property), subject to the proviso on redemption contained in this Deed
The Chargor/Mortgagor covenants with the Chargee/Mortgagee to pay on the _____ day of ____________ 20___ the mortgage sum together with interest at the rate of 12% per annum payable monthly or at such rate not being more than 8% above the Central Bank minimum rediscount rate as may be stipulated from time to time.
PROVIDED ALWAYS THAT if the Chargor/Mortgagor shall repay to the Chargee/mortgagee the mortgage sum, interest, and any other monies payable under this Deed, the term hereby created shall cease and become merged with the Chargor/mortgagor`s reversion, and the Chargee/Mortgagee shall at the cost of the Chargor/Mortgagor execute and do all such deeds, acts and things as may be necessary for releasing the property to the Chargor/Mortgagor.
THE CHARGOR/MORTGAGOR COVENANTS AS FOLLOWS:
________________________________
________________________________
________________________________
Etc.
IN WITNESS OF WHICH the parties have executed this Deed in the manner below the day and year first above written
SIGNED SEALED AND DELIVERED by the Chargor/Mortgagor :
___________________________
Chief Tonye Okiki
IN THE PRESENCE OF:
Name: _____________________________
Address: __________________________
Occupation: _______________________
Signature: _________________________
The COMMON SEAL of Heritage Bank Plc. (Chargee/Mortgagee) was affixed to this Deed and the Deed was duly delivered in the presence of:
___________________________ ________________________
Director Secretary
Franked by:
Michael Izuchukwu Ezeh
Group 10 Chambers
No. 16 Ozumba Mbadiwe, Way, Victoria Island
Lagos State
I Hereby Consent to the Transaction contained in this Deed
Dated this _____ Day of _____________ 2014
____________________________________
Executive Governor
Lagos State
………………………………………………………………………………………………………………………………………..
Deed of Legal Mortgage (By Assignment)
THIS DEED OF LEGAL MORTGAGE BY ASSIGNMENT is made this ______ day of ________________ 2014 BETWEEN Chief Tonye Okiki of No. 2, Abudu Smith Street, Victoria Island, Lagos State ("Mortgagor") of the first part; AND
Heritage Bank Plc., a Limited Liability Company registered under the Companies and Allied Matters Act, Cap. C20, LFN 2004 with its registered office at 56, Marina Street, Victoria Island, Lagos (Mortgagee) of the second part
WHEREAS:
The Mortgagor is the owner of the two-storey house together with Stewards' Quarters and garage, located at No. 2, Okigwe Road, Owerri, Imo State, covered by the Certificate of Statutory Right of Occupancy No: 87345, dated 19/09/2001 and registered as 99/99/2001H in the Lands Registry, Owerri, Imo State (hereinafter referred to as "the mortgage property")
By a loan agreement dated March 12, 2014, the Mortgagee has agreed with the mortgagor to lend to the mortgagor, and the mortgagor has agreed to borrow from the mortgagee the sum of N50,000,000.00 (Fifty Million Naira) (hereinafter called the mortgage sum), subject to terms and conditions contained in this Deed.
The Mortgagor has agreed with the mortgagee to assign the absolute interest of the mortgage over the mortgaged property to the mortgagee as security for the loan subject to cesser on redemption
NOW THIS DEED WITNESSES as follows:
In pursuance of the said agreement and consideration of the sum of N50,000,000 (Fifty Million Naira) only, paid to the Mortgagor by the Mortgagee (the receipt of which the Mortgagor acknowledges), the Mortgagor as beneficial owner HEREBY ASSIGNS to the mortgagee ALL THAT the two-storey house together with Stewards' Quarters and garage, located at No. 2, Okigwe Road, Owerri, Imo State, covered by the Certificate of Statutory Right of Occupancy No: 87345, dated 19/09/2001 and registered as 99/99/2001H in the Lands Registry, Owerri, Imo State (hereinafter referred to as "the mortgage property") subject to the Governor's consent being obtained by the Mortgagor, TO HOLD UNTO the Mortgagee for the term unexpired on the said Certificate Statutory Right of Occupancy subject to the proviso on redemption contained in this Deed.
The Mortgagor hereby covenants with the Mortgagee to pay the sum of N_______ with interest thereon from the date hereof at the rate of 12% per annum
PROVIDED THAT if the Mortgagor, on any day on which interest is payable as agreed or within 14 days thereafter pays to the Mortgagee interest on the principal money sum for the time being hereby secured at the rate of 12% per annum and if the power of sale applicable thereto has not become exercisable, the Mortgagee shall accept interest at the rate of 10% per annum instead of the said rate of 12% per annum originally agreed.
AND FURTHER PROVIDED ALWAYS that if the Mortgagor shall repay to the mortgagee the mortgage sum, interest, and any other monies payable under this Deed, the mortgagee shall at the cost of the mortgagor execute and do all such deeds, acts and things as may be necessary for releasing the property to the mortgagor
THE CHARGOR/MORTGAGOR COVENANTS AS FOLLOWS:
________________________________
________________________________
________________________________
Etc.
IN WITNESS OF WHICH the parties have executed this Deed in the manner below the day and year first above written
SIGNED, SEALED AND DELIVERED by the Mortgagor:
______________________________
Chief Tonye Okiki
IN THE PRESENCE OF:
Name: ________________________
Address: _____________________
Occupation: __________________
Signature: ____________________
The COMMON SEAL of Heritage Bank Plc. (Mortgagee) was affixed to this Deed and the Deed was duly delivered in the presence of:
___________________________ ________________________
Director Secretary
Franked by:
Michael Izuchukwu Ezeh
Group 10 Chambers
No. 16 Ozumba Mbadiwe, Way, Victoria Island
Lagos State
I Hereby Consent to the Transaction contained in this Deed
Dated this _____ Day of _____________ 2014
____________________________________
Executive Governor
Imo State
……………………………………………………………………………………………………………………………………......
Deed of Legal Mortgage by Sub-demise (where there is a surety/guarantor)
THIS DEED OF LEGAL MORTGAGE BY SUB-DEMISE is made this ______ day of ______________ 2014 BETWEEN Chief Nonso Seriki of No. 16, Markurdi Close, Ilorin, Kwara State ("Mortgagor") of the first part; AND
Heritage Bank Plc., a Limited Liability Company registered under the Companies and Allied Matters Act, Cap. C20, LFN 2004 with its registered office at No. 56, Marina Street, Victoria Island, Lagos ("Mortgagee") of the second part; AND
Chief Tonye Okiki of No. 2, Abudu Smith Street, Victoria Island, Lagos ("Surety") of the third part.
WHEREAS:
The Surety is the owner of the two-storey house together with Stewards' Quarters and garage, located at No. 2, Abudu Smith Street, Victoria Island, Lagos State, covered by the Certificate of Statutory Right of Occupancy No: 87345, dated 19/09/2001 and registered as 99/99/2001H in the Lands Registry, Ikeja, Lagos State (hereinafter referred to as "the mortgage property")
By a loan agreement dated 12 March 2014, the Mortgagee agreed with the mortgagor to lend to the mortgagor, and the mortgagor has agreed to borrow from the mortgagee the sum of N50,000,000.00 (Fifty Million Naira) ("the mortgage sum"), subject to terms and conditions contained in this Deed.
The surety has agreed to provide the mortgage property as security/collateral for the repayment of the mortgage sum and interest, subject to the terms of this Deed
NOW THIS DEED WITNESSES as follows:
In pursuance of the said agreement and consideration of the sum of N50,000,000 (Fifty Million Naira) only, lent to the Mortgagor by the Mortgagee (the receipt of which the Mortgagor acknowledges), the Surety as Beneficial Owner SUB-DEMISES to the Mortgagee ALL THAT two-storey house together with Stewards' Quarters and garage, located at No. 2, Abudu Smith Street, Victoria Island, Lagos State, covered by the Certificate of Statutory Right of Occupancy No: 87345, dated 19/09/2001 and registered as 99/99/2001H in the Lands Registry, Ikeja, Lagos State (hereinafter referred to as "the mortgage property"), TO HOLD UNTO the Mortgagee for a term of 90 years certain, commencing on April 01, 2014, subject to the proviso on redemption contained in this Deed.
The Mortgagor covenants with the Mortgagee to pay on the ____ day of ___________, 20___ the mortgage sum together with interest at the rate of 12% per annum payable monthly or at such rate not being more than 8% above the Central Bank minimum rediscount rate as may be stipulated from time to time.
PROVIDED ALWAYS THAT if the Mortgagor shall repay to the Mortgagee the mortgage sum, interest, and any other monies payable under this Deed, the term hereby created shall cease and become merged with the Surety`s reversion, and the Mortgagee shall at the cost of the Mortgagor execute and do all such deeds, acts and things as may be necessary for releasing the property to the Surety.
THE MORTGAGOR COVENANTS AS FOLLOWS:
______________________________
______________________________
______________________________
Etc.
IN WITNESS OF WHICH the parties have executed this Deed in the manner below the day and year first above written
SIGNED, SEALED AND DELIVERED by the Mortgagor:
_______________________________
Chief Nonso Seriki
The contents of this Deed having been read over and interpreted to the mortgagor in the Igbo Language by me ___ (name of interpreter) ___ of __ (address of interpreter) __, and he appeared perfectly to have understood the same before he affixed his signature/mark/thumb-print
BEFORE ME
_______________________________
MAGISTRATE/JUDGE/NOTARY PUBLIC
The COMMON SEAL of Heritage Bank Plc. (the Mortgagee) was affixed to this Deed and the Deed was duly delivered in the presence of:
_______________________________ _______________________________
Director Secretary
SIGNED, SEALED AND DELIVERED by the Surety:
________________________________
Chief Tonye Okiki
IN THE PRESENCE OF:
Name: ____________________________
Address: _________________________
Occupation: _____________________
Signature: ________________________
Franked by:
Michael Izuchukwu Ezeh
Group 10 Chambers
No. 16 Ozumba Mbadiwe, Way, Victoria Island
Lagos State
I Hereby Consent to the Transaction contained in this Deed
Dated this _____ Day of _____________ 2014
____________________________________
Executive Governor
Imo State
……………………………………………………………………………………………………………………………………......
Deed of Legal Mortgage by Sub-demise (without surety/guarantor)
THIS DEED OF LEGAL MORTGAGE BY SUB-DEMISE is made this _____ day of ___________ 2014 BETWEEN Chief Tonye Okiki of No. 2, Abudu Smith Street, Victoria Island, Lagos (Mortgagor) of the first part; AND
Heritage Bank Plc., a Limited Liability Company registered under the Companies and Allied Matters Act, Cap. C20, LFN 2004 with its registered office at No. 56, Marina Street, Victoria Island, Lagos (Mortgagee) of the second part.
WHEREAS:
The Mortgagor is the owner of the two-storey house together with Stewards' Quarters and garage, located at No. 2, Abudu Smith Street, Victoria Island, Lagos State, covered by the Certificate of Statutory Right of Occupancy No: 87345, dated 19/09/2001 and registered as 99/99/2001H in the Lands Registry, Ikeja, Lagos State (hereinafter referred to as "the mortgage property")
By a loan agreement dated March 12, 2014, the Mortgagee has agreed with the mortgagor to lend to the mortgagor, and the mortgagor has agreed to borrow from the mortgagee the sum of N50,000,000.00 (Fifty Million Naira) (the mortgage sum), subject to terms and conditions contained in this Deed.
The Mortgagor has agreed to provide the mortgage property as security/collateral for the repayment of the mortgage sum and interest, subject to the terms of this Deed
NOW THIS DEED WITNESSES as follows:
In pursuance of the above agreement and consideration of the sum of N50,000,000 (Fifty Million Naira) only, lent to the Mortgagor by the Mortgagee (the receipt of which the Mortgagor acknowledges), the Mortgagor as Beneficial Owner SUB-DEMISES to the Mortgagee ALL THAT the two-storey house together with Stewards' Quarters and garage, located at No. 2, Abudu Smith Street, Victoria Island, Lagos State, covered by the Certificate of Statutory Right of Occupancy No: 87345, dated 19/09/2001 and registered as 99/99/2001H in the Lands Registry, Ikeja, Lagos State (hereinafter referred to as "the mortgage property"), TO HOLD UNTO the Mortgagee for a term of 90 years certain, commencing on April 01, 2014, subject to the proviso on redemption contained in this Deed.
The Mortgagor covenants with the Mortgagee to pay on the ____ day of ___________ 20___ the mortgage sum together with interest at the rate of 12% per annum payable monthly or at such rate not being more than 8% above the Central Bank minimum rediscount rate as may be stipulated from time to time.
PROVIDED ALWAYS THAT if the Mortgagor shall repay to the Mortgagee the mortgage sum, interest, and any other monies payable under this Deed, the term hereby created shall cease and become merged with the Mortgagor's reversion, and the Mortgagee shall at the cost of the Mortgagor execute and do all such deeds, acts and things as may be necessary for releasing the property to the Mortgagor
THE MORTGAGOR COVENANTS AS FOLLOWS:
___________________________________
___________________________________
___________________________________
Etc.
IN WITNESS OF WHICH the parties have executed this Deed in the manner below the day and year first above written
SIGNED, SEALED AND DELIVERED by the Mortgagor:
_________________________________
Chief Tonye Okiki
IN THE PRESENCE OF:
Name: ___________________________
Address: ________________________
Occupation: ____________________
Signature: ______________________
The COMMON SEAL of Heritage Bank Plc. (Mortgagee) was affixed to this Deed and the Deed was duly delivered in the presence of:
________________________________ ________________________________
Director Secretary
Franked by:
Michael Izuchukwu Ezeh
Group 10 Chambers
No. 16 Ozumba Mbadiwe, Way, Victoria Island
Lagos State
I Hereby Consent to the Transaction contained in this Deed
Dated this _____ Day of _____________ 2014
____________________________________
Executive Governor
Imo State
……………………………………………………………………………………………………………………………………......
Search Report (In a Mortgage Transaction)
DANTE & ASSOCIATES
BARRISTERS & SOLICITORS
NO. 12, SURVIVOR'S GUILT, IKEJA, LAGOS STATE, NIGERIA
Tel. No: 08027666643
[email protected]
OUR REF: _________________ Date: 18 June 2014
Ms. Levis Ann,
No. 15, Wale Cole Close,
Banana Island,
Ikoyi, Lagos
Dear Madam,
SEARCH REPORT ON PROPERTY LOCATED AT NO. 2, ABUDU SMITH STREET, VICTORIA ISLAND, LAGOS
Kindly refer to your letter dated 24 May 2014, Ref No.: SBY/2345/2014 on the above heading and find below our report of the search:
Date of Search: 10 June 2014
Places of Search: Land Registry, Alausa, Ikeja, Lagos State;
Name of Borrower: Chief Nonso Seriki of No. 16, Markurdi Close, Ilorin, Kwara State.
Name of Owner of Property: Chief Tonye Okiki of 2, Abudu Smith Street, Victoria Island, Lagos
Nature of Interest: Statutory Right of Occupancy
Description of the Property: The two-storey house together with Stewards' Quarters and garage, located at 2, Abudu Smith Street, Victoria Island, Lagos, covered by Title Certificate No: L05166 of 1963 and by the Certificate of Statutory Right of Occupancy No: 87345, dated 19/09/2001 and registered as 99/99/2001H in the Lands Registry, Alausa, Ikeja, Lagos State
Encumbrances: Nil
Comment/Advice: Title is sound. Property is not encumbered. Mortgagee may continue with the transaction.
Our bill of charges is attached to this letter for your kind and prompt consideration.
Thank You.
Yours faithfully,
_________________________
Michael Izuchukwu Ezeh
Principal Partner
For: Dante & Associates
………………………………………………………………………………………………………………………………………...
Week 14
Solicitors Billing and Charges for Property Transactions
The Principles and Rules Guiding Billing for Solicitor's Services include, but are not limited to, the following:
Only a legal practitioner has the exclusive right to prepare documents of transfer of interest in land in Nigeria. However, it is not in the exclusive preserve of a legal practitioner to draft a will.
It is an offence for a non-lawyer to prepare a land instrument. Section 22(1)(b). LPA
A solicitor shall receive adequate remuneration for his services from the client. Rule 48(1). RPC. The charges shall not be too high nor ridiculously low.
The solicitor may present his bill of charges to the client.
A legal practitioner shall not share his legal fees with a non-lawyer. Rule 3(1)(c). RPC. However, this will not apply to a payment of money as compensation to the estate/family of a deceased lawyer for services rendered before his demise or payment to non-lawyer employees in retirement plan. Rule 53. RPC.
A lawyer shall not enter into an agreement for, change or collect as illegal or clearly excessive fee.
Where a lawyer accepts a general or special retainership, he shall not advise on or appear in any proceedings detrimental to the interest of the client paying the retainer during the period of the retainer. Rule 19(3). RPC.
A lawyer shall not enter into a contingent fee arrangement without first having advised the client of the effect. Rule 50(4). RPC
Types of Fees
Scale Fee. These are fees charged under scales I and II of the Legal Practitioners (Remuneration for Documentation and other Land Matters) Order in non-contentious matters. Fees here are fixed and can neither be disputed nor varied by the Court.
Fixed Fee. This is fee charged for specified class of works, such as writing letters, writing a will, incorporation of business entities. Fixed fee is charged for simple non-contentious works and is usually a flat rate.
Hourly Rate Fee. This is fee charged on hourly rate for the number of hours spent on the client's work. The time spent must be commensurate and reasonable to the work done.
Percentage Fee. This is fee charged based on the value of the transaction, the higher the value the more the value of the percentage charged; and the lower the value, the lower the value of the percentage charged. It is common in property transactions especially the sale of land.
Appearance Fee. This is fee charged for each appearance in Court to represent a client. The distance of the law firm from the Court as well as the standing of the legal practitioner at the Bar often determine the fee charged as appearance fee. Okonedo - Egbaregbemi v. Julius Berger.
Contingent or Success-Based Fee. This is fee charged after the success of the action. The solicitor agrees with the client on the amount he will be paid based on the amount they actually recover. Where no such amount is recovered, he may earn nothing. Under the common law, contingent fees are prohibited, whereas it is banned under Rule 50(2). RPC with respect to criminal matters. It is only permitted in civil cases. Rule 50(1). RPC.
Scale of Charges
The Legal Practitioners (Remuneration for Legal Documentation and other Land Matters) Order 1991 provides 3 scales of charges for legal documentation and land matters.
Scale 1: This deals with completed transactions of sale, purchase or mortgage. In mortgages, the solicitor to the mortgagor charges his full charges as computed according to the scale, while the solicitor to the mortgagee is entitled to charge full charges as computed according to the scale. Where one solicitor acts for both Mortgagor and Mortgagee, he is entitled to the full charges due to the mortgagee's solicitor plus half of what would be due to the mortgagor's solicitor.
Scale II: This deals with leases and agreement for leases in which the transaction have been completed. In leases, the lessor's solicitor is entitled to the full charges as computed according to the scale, whereas the lessee's solicitor will be entitled to half of what the lessor's solicitor is entitled to. Where one solicitor acts for both lessor and lessee, he is entitled to the full charge due to the lessor's solicitor, plus half of what is due to the lessee's solicitor i.e. full charge of lessor's solicitors fees plus ¼ of lessor's money.
Scale III: These deals with all other legal documentation not provided for in scales I and II. There is no specific amount fixed, the fees charge shall be fair and reasonable. The principles for assessment under scale III are:
The complexity, novelty and difficulty of the matter
The skill, labour, specialized knowledge, expertise and responsibility involved on the part of the solicitor
Value of the property involved
The number and importance of the documents prepared
The importance attached to the transaction by the client
Places to be visited where the transaction or a part of it will take place.
The time expended by the lawyer in the transaction
Special exertion of devotion towards that transaction.
Procedure for Recovery of Professional Fees
The fees owed a solicitor by clients is debt which is recoverable. The following steps should be followed in recovering professional fees:
Step 1
It is advisable that the solicitor should first explore any of the Alternative Dispute Resolution mechanisms (ADR) such as persuasion, mediation, conciliation, negotiation and arbitration. The reasons for first adopting ADR are:
Litigation of fees strains the relationship with the client will most likely lead to loss of clients
To avoid a lengthy trial and the dissipation of resources and energy
Litigation discourages potential clients from briefing the solicitor
Step 2
Where the solicitor has explored ADR options unsuccessfully, he may sue for his fees in Court. Section 16 - 19. Legal Practitioners Act. There are 3 important and mandatory things which a solicitor must do in order to recover his charges from a defaulting client viz:
He must prepare a Bill of charges which should set out the particulars of the principal items of his claim.
He must serve his client with the Bill of Charges
He must allow a period of one month to elapse from the date the bill was served before the action is commenced. Section 16(1)(2). LPA.
These three conditions are used conjunctively and not conjunctively. They are mandatory and must be complied with. Failure to comply will render an action for recovery of fees not only bad but incurably bad. FBN v. Adoma - Egba.
Bill of Charges
Charges mean any charges whether by way of fees, disbursement expenses or otherwise in respect of anything done by a legal practice in his capacity as a legal practitioner. Section 19(1). LPA. The purpose of the bill of charges is that it helps the client to know what he owes the solicitor and also helps the taxing authority to compute the taxes payable by the solicitor.
The Bill of charges must be signed by the legal practitioner in a personal capacity. The Courts have held that a firm is not a person known to law. A legal practitioner endorsing a document must sign in his personal name and not in the name of the firm.
Thus, the Bill of charges (in the case of a firm of partners) must be signed by the legal practitioner in his personal name and on behalf of the firm.
E.g.
______________________
E. E. Olowononi
For: Olowononi & Co.
The bill of charges should be headed to reflect the subject matter and should contain all the charges, fees and profession disbursements for which the lawyer is making a claim. Charges and fees should be particularized with sufficient information to enable the client to obtain advice on tax obligation and for the taxing officer to tax it. Oyekanmi v. NEPA
Professional disbursements include payments which are necessarily made by the solicitor in pursuance of his professional duty e.g. Court fees, witness fees, cost of production of records etc.
The bill of charges must be served either by personal service i.e. physically and personally handing to the client the bill of charges or by substituted service by leaving it at the client's last known address or posting to the client's last known address. Section 16(1)(a). LPA.
After service of the bill of charges on the client, the period of one month beginning with the date of delivery of the bill must expire before an action is instituted to recover the charges. One month here is one full calendar month. A calendar month is a complete month in the calendar. A calendar month ends upon the same day in the next ensuring month having the same number as that on which the computation began (i.e. the corresponding day in the next month). E.g. 6th March to expire on 6th April. However, if the next ensuring month does not have the same number as that on which the computation began, then the calendar month ends on the last day of the next ensuring month.
The Court may abridge the period of one month within which a solicitor is expected to wait after service of the bill before commencing action where there is proved to exist circumstances indicating that the client is about to do some act which would probably prevent or delay the payment to the practitioner of the charges. Section 16(3). LPA
Institution of Action for Recovery of Professional Fees
The place of institution of the action is the State High Court. It must be the High Court where the legal practitioners in question usually carries on his practice or resides or where the client resides or has his principal place of business. Section 19(1). LPA. An action for the recovery of professional charges could be commenced by means of a Writ of Summons.
Where the solicitor intends to bring the action under the undefended list procedure, he should ensure that there is an express agreement by the parties i.e. that the defendant had agreed to pay the fee charged by the solicitor. Aruwa v. Abdulkadir
Where a client feels that the solicitor charged him exorbitantly, he may apply to the High Court for a review of the fees. The procedure for the taxation of professional fees is as follows:
The Court would appoint a tax officer to review the charges and make a report thereafter.
At the end of the review, the taxing officer will issue a certificate of taxation wherein he shall state the charges recommended. Section 18(4). LPA.
The client has to make this apply for taxation of the charges within one month of the delivery of the bill of charge on him. Section 17(1). LPA.
After the expiration of the one month, both the client and lawyer are entitled to apply for taxation of the bill. Section 17(2). LPA.
SCALE 1
For the first N1,000 per N100
N
For the 2nd & 3rd N1000 per N100
N
For the 4th & each subsequent N1000 up to N20,000 per N100
N
For the remainder without limit per N100
N
1.
Vendor's legal practitioner for deducing title to lease hold property and perusing and completing legal documentation (including preparation of contract and condition of sale if any)
As in Part II thereof
22.50
11.25
5.00
2.
Mortgagor's legal practitioner for negotiating loan
11.25
11.25
3.75
2.50
3.
Mortgagee's legal practitioner for negotiating loan
22.50
22.60
7.70
5.00
PART 1
PART II
Over 900 naira but exceeding N1000 - N225.00
NB: For the full Table, see the Schedule to the LPA.
Question
UBA Plc. is desirous of selling a property at Aso Drive Asokoro, Abuja and has engaged your services as a solicitor for the purpose of deducing title to the property valued at N100,000 and for perusing and completing legal documentation thereof. Using the appropriate table, calculate your remuneration
Calculations:
Using No. 3 of Scale I
Step 1:
For the first N1000 per N100
= N225.00 (refer to Part II, no calculation required)
Step 2:
For the 2nd and 3rd N1000 per N100
= ((1000 x 2 [second and third 1000])/100) x 22.50 = (2000/100) x 22.50 = 20 x 22.50 = N450.00
Step 3:
For the 4th and each subsequent N1000 up to N20,000
= (17,000 [fourth 1000 to 20,000]/100) x 11.25 = 170 x 11.25 = N1912.50
Step 4:
For the remainder without limit per N100 (the total value of the property minus amount already calculated)
= ((100,000 [value of property] – 20,000 [amount already calculated])/100) x 5.00 = (80,000/100) x 5.00 = 800 x 5.00 = N4,000.
Step 5:
Add up the answers
= N4,000 + N1912.50 + N450 + N225 = N6587.50
The fees chargeable for the transaction is N6,587.50k.
Question
Using the same value of N100,000 and acting as solicitor for both the mortgagor and mortgagee, calculate the remuneration for negotiating the loan.
Mortgagor's Solicitor's Fees
Step 1:
For the first N1000 per N100
= (1000/100) x 11.25 = 10 x 11.25 = N112.50
Step 2:
For the 2nd and 3rd N1000 per N100
= ((1000 x 2 [2nd and 3rd 1000])/100) x 11.25 = (2000/100) x 11.25 = 20 x 11.25 = N225.00
Step 3:
For the 4th and each subsequent N1000 up to N20,000
= (17,000 [fourth 1000 to 20,000]/100) x 3.75 = 170 x 3.75 = N637.50
Step 4:
For the remainder without limit
((100,000 [value of property] – 20,000 [amount already calculated])/100) x 2.50 = (80,000/100) x 2.50 = 800 x 2.50 = N2,000.
Step 5:
Add up the answers
= N2,000 + N637.50 + N225.00 + N112.50 = N2975.00
Mortgagor's Solicitor's Fees = N2975.00
Mortgagee's Solicitor's Fees
Step 1:
For the 1st N1000 per N100
= (1000/100) x 22.50 = 10 x 22.50 = N225.00
Step 2:
For the 2nd and 3rd N1000
= ((1000 x 2 [Second and Third N1000])/100) x 22.60 = (2000/100) x 22.60 = 20 x 22.60 = N452.00
Step 3:
For the 4th and each subsequent N1000 up to N20,000 per N100.
= (17,000 [fourth 1000 to 20,000]/100) x 7.70 = 170 x 7.70 = N1309.00
Step 4:
For the remainder without limit per N100
((100,000 [value of property] – 20,000 [amount already calculated])/100) x 5.00 = (80,000/100) x 5.00 = 800 x 5.00 = N4,000
Step 5:
Add up the values
= N4000 + N1309 + N452 + N225 = N5986
Mortgagor's solicitor's fees = N5,986.00
Representing both parties, solicitors fee is half of mortgagor's solicitor's fees and full mortgagee's solicitor's fees.
Thus:
Mortgagor's solicitor's fees = N2975
2975 = 1487.50
2
Add to Mortgagee's solicitor fees
1487.50
+ 5986.00
N7473.50
See sample of a Bill of Charges below:
JOHN BROWN & CO
BARISSTERS AND SOLICITORS
NO. 120 KENT STREET IKOYI, LAGOS STATE
OUR REF: ____________________ Date: 30th April, 2012.
To:
Mrs. Aduke Thomas
No. 45 Isheri North Scheme
Ikeja
Lagos State.
Dear Madam,
RE: PREPARARTION OF WILL
BILL OF CHARGES
Sequel to your instruction to prepare your last Will, please find attached our Bill of Charges on the execution of the instruction.
Date
Principal items
Amount (N)
3 August 2012
Professional fees on preparation of Will
250,000
4 August 2012
Transportation to Probate
Registry
2,000
5 August 2012
Lodging of Will at Probate
500
Total
252,500.00
Less deposit
100,000.00
Amount due
N152,500.00
Yours faithfully,
_____________________
John Brown, Esq.
(Managing Partner)
For: John Brown & Co
…………………………………………………………………………………………………………………………………….
Week 13
Wills and Codicils 1
A Will is a testamentary document made by a person called the Testator with a sound disposing mind on how his estate will be disposed upon his death or it is a directive of a person on how his things or his properties will be disposed of upon his death. Okelola v. Boyle (1998) 1 SCNJ. The law that regulates Wills is the law of the testator's domicile i.e. where the testator resides with the intention to permanently reside there.
Before the colonial era, disposition of property took place under Customary law or Islamic law. This was affected mainly through oral disposition. Where a deceased made oral disposition before his death, Customary or Islamic law would govern the disposition of his property. Under Islamic law, a testator has no full testamentary capacity as he can only dispose of one-third (1/3) of all his property while two-third (2/3) will be distributed in accordance with Islamic law.
Under customary disposition, the oral disposition must be in accordance with the customary law. Hence, a testator cannot validly dispose of family property (shrine). This principle applies generally. Where a man failed to dispose his properties orally, upon his death, the properties would devolve wholly according to the customary law. In Yoruba land, a dying person can dispose his property under the customary law by oral disposition in the presence of 4 witnesses.
During the colonial era, Statutory Wills were introduced. A statutory will is a Will created in accordance with a particular statute in force. Section 3. Wills Act 1837 provides that it shall be lawful for every person to devise, bequeath or dispose of his property at death by Will executed in the manner hereinafter required.
In dealing with Wills, the person making the Will is called the Testator. Where the person is a female, she is called Testatrix. Where a person makes a Will, he is said to have died testate. Where no Will is made, he is said to have died intestate. The person entitled to the properties or benefits under the will is called a beneficiary and sometimes successor.
The total of the personal and real properties of a deceased is referred to as the estate of the deceased. The estate includes the liabilities of the deceased. The personal representatives appointed under the will to administer the estate of the deceased are called executors. Where the deceased dies intestate, administrators are appointed to administer the estate.
The advantages of making a Will include:
Excludes or limits the application of customary rules of inheritance. This is subject to the rule in Idehen vs. Idehen. See also Lawal Osula vs. Lawal Osula.
A Will displaces the application of the rules of statutory devolution e.g. Section 49. Administration of Estate Law of Lagos & Section 39. Marriage Act.
Through a Will, the testator can extend the category of his beneficiaries beyond his nuclear family and include friends, mistresses etc.
Through a Will the testator has the opportunity of determining and choosing the persons who would administer his estate as his executors
The testator is given the opportunity to give his funeral directives though this is not advisable. Funeral directives should be in a separate document.
Through a Will, the testator can give additional or extended powers to the executors, such as making them trustees
The making of a Will removes the application of customary law rules of succession/ intestacy upon the disposition of his estate where allowed under the relevant Wills Law.
Where a Will is made and executors are named in it, the powers of the executors arise immediately upon the death of the testator and they do not need to wait for probate before they begin to administer the estate. This is because their powers are derived from the Will. See Ojukwu v. Kaine (1997) 9 NWLR (Pt. 522) 613. Probate is only granted as a confirmation of their authority.
The cost is cheaper in obtaining Probate than it is with obtaining Letters of Administration if a person died intestate (without making a Will). It also reduces the Inheritance Tax Liability where substantial assets are involved.
There is continuity in the administration of an estate covered by a Will. This is because in the event that all the executors die, then by transmission and operation of law, the executor of the last surviving executor is entitled to continue the administration of the testator and can complete the winding up of the testator's estate
It assists in appointing guardian(s) or trustee(s) for his infant children
A Will gives the testator the opportunity of expressing his personal opinion and feelings
It can be used to make a trust in form of donations to Institutions/ Charity Homes
It can serve as documentary evidence
The disadvantages of making a Will include:
It does not enhance community and affinity in the families of the deceased
Additional costs and expenses incurred on its drafting
Any mistake on the formal requirements of a will may easily vitiate it.
Codicils
A Codicil is an attachment or addition of a Will. It is dependent on the existence of a Will. Where there is a codicil to a Will, the Will cannot be read in full without the codicil. A codicil may do any of the following to a Will:
It can revoke it,
It adds to it, alters it
It revives it,
republish a Will.
The factors and requirements for the validity of a Will also apply to Codicils.
A document can be incorporated into a Will by reference. For such incorporation by reference to be valid, the following conditions must be satisfied
The incorporated document must be in existence at the time of executing the Will
The will must clearly identify the document
The will must refer to the document as already being in existence.
Types of Wills
Formal Wills
This is a Will made according to prescribed form as required by the relevant Wills laws. It derives from English law and it is required to be signed by the testator and attested by at least two witnesses.
Statutory Wills
These are wills made in accordance with the requirement of certain statutes. Examples, Wills made according to Armed Forces Act Cap 420 LFN 2004 for members of the armed services.
Nuncupative Wills
Nuncupative Wills are also known as customary Wills and they are the oral directives of a deceased person as to the disposition of his property. There are conditions to be fulfilled before there can be a valid nuncupative will:
The directives must be made in presence of at least two credible witnesses.
The directives were voluntarily made
The deceased must have possessed the requisite testamentary capacity. Banks v. GoodFellow.
The beneficiaries must be specifically named and described so as to be ascertainable and identifiable
The gifts (properties) must be specifically named and described so as to be ascertainable and identifiable
See Ayinke v. Ibidunmia.
Mutual or Reciprocal Wills
It is made by two or more persons. They are reciprocal and they make provisions for each of the makers of the will. It is an agreement between them to dispose their properties in a particular way. It is common among husband and wife when each leaves their property to the other on the condition that the last to die will leave all their estate to an agreed 3rd party beneficiary.
Privileged Wills
These are Wills made a special category of persons which do not need to comply with the requirements of the Wills Act or the Wills Law before they can be valid. All they require to be valid is that they must be made by those who are entitled to make privileged Wills. The persons who are entitled to make privileged Wills are:
A mariner or seaman being at sea. See Section 6. Wills Law of Lagos, Section 11. Wills Act.
A crew of a commercial at air. See Section 6. Wills Law of Lagos, Section 11. Wills Act.
Military personnel in actual military service. However, under Section 276. Armed Forces Act, there are two conditions which a soldier making a privileged will must satisfy:
The Will must be in writing
The Will must be attested by an officer also in actual service or a government medical officer
The testator must also have a sound mind and the intention to make the Will voluntarily. It is argued that a privileged Will can only dispose of money and other personal properties and that it cannot dispose of Real Property (Land or Interests in Land). The privileges here are that the persons entitled can make Wills without the formalities and requirements of full age, writing, attestation etc.
Holograph Wills
This is a will written and executed in the hands of the testator himself which is usually not attested.
Prenuptial Wills
This is a will made preparatory to a marriage
Conditional Wills
This is a Will executed based on certain pre-conditions which must be fulfilled before the Will can take effect. For example:
"A gift of My Note to Henry if Arsenal bloody sign a striker this transfer window"
Related Transactions
The following transactions are concerned with the disposition of properties but are not wills.
Nominations. This is a directive made by a person (the nominator) to an organization, or institution or any other person that, upon his death, his funds in the organization should be paid to a particular individual (the nominee). Nominations can be made only in respect of funds of the nominator and not in respect of other properties.
Settlement inter vivos. This occurs where a settler transfers his property in his lifetime to another living person to hold and take effect in his lifetime. It differs from a Will because a Will takes effect after the death of the maker of the Will.
Donatio mortis causa. This is a disposition of property made by a person in contemplation of death which takes effect only when the donor dies. Where the donor recovers from the anticipated death, the gift does not take effect.
Features/Characteristics of a Formal Will
It must be in writing, except privileged Wills (Section 6(2). Lagos Wills Law) and a nuncupative Will. See Section 9. Wills Act, Section 4(1)(a). Lagos Wills Law, Section 4. Statute of Frauds.
It is testamentary. That is, it speaks only from the death of the testator. See Section 24. Wills Act.
It is ambulatory i.e. it can be revoked at any time before the death of the testator
It must be freely and voluntarily made i.e. made without force or coercion
It must be executed in accordance with the provisions of the law. See Section 9. Wills Act.
The testator/testatrix must have a sound disposing mind (corpus mentis) at the time of making and executing the Will
It must disclose the intentions of the testator
Validity of a Will
The factors that must exist to make a Will valid in Law as follows:
Testamentary capacity of the testator to dispose of his estate
The Will was made voluntarily without any element of undue influence
It must be made in writing
It must be duly executed in accordance with Section 9. Wills Act.
Testamentary Capacity
These are the elementary criteria to be possessed by an individual before he is qualified in Law to make a valid Will. The testator must possess the testamentary capacity to make a will viz:
Age
Mental Capacity
Age
Only persons at least 18 years in age can make Wills in Lagos State. In States under the Wills Act, the age of capacity is 21 years. Section 7. Wills Act (21 years) & Section 3. Wills Law of Lagos (18 years)
Where a person under the requisite age makes a will, the fact that he later or subsequently attained the age of adulthood will not validate the Will. The exception to the above rule relates to Privileged Wills made by members of the Military in actual military service who are below the age adulthood. By virtue of Section 6. Wills Law & Section 11. Wills Act, the exception also applies to any seaman, or mariner being at sea (not being a member of the Nigeria Navy) or crew of commercial airline being in the air.
Mental Capacity
A testator must have the mental capacity or sound disposing mind to make a Will. This must be present both at the time of giving instructions for his Will to be prepared and at the time of its execution. See Okelola v. Boyle, Kwentoh v. Kwentoh (2010) 5 NWLR (pt. 1188) 543, Adebajo v. Adebajo.
The tests for determining if the testator had mental capacity/sound disposing mind when making his Will was lay down in the case of Banks v. Goodfellow as follows:
Whether he understood the nature of the act of will making and its legal implications
Whether he knew the nature of the property and the extent of the gifts made?
The testator must understand the claims on him. That is, he must understand, appreciate and recollect the persons who are the objects of his bounty (beneficiaries)
The Will must be rational
Johson v. Maja, Adebajo v. Adebajo, Okelola v. Boyle
To prove the mental capacity of a testator, reliance may be placed on either or both of the following:
Presumption of a sound disposing mind
Positive affirmative evidence of a sound mind.
It is presumed that a testator was sane at the time he made his Will. The presumption of sound mind is based on the view that where a will appears ex-facie rational and logical, it will be presumed to be so. Thus, where no suspicion attaches to a will, the Courts will presume the document as alright unless other evidence displaces this presumption. Okelola v. Boyle. In the case of Banks v. Goodfellow, the presumption was rebutted as it was proved that the testator made the Will and went about his normal activities even though he was suffering from fits of unsound mind.
The presumption of sound disposing mind will not apply where there are reasonable grounds for suspicion or the will is not ex-facie regular or where the testator suffers from some disability such as deafness, blindness or illiteracy.
The requirement of sound disposing mind at the time of making and executing was modified a little in Parker v. Felgate. Thus, if the testator gave instructions directly to his solicitor to prepare his Will at a time when he had mental capacity and the solicitor prepared the Will strictly in accordance with the instructions and the testator subsequently lost his mental capacity, but knew when he executed the Will that he was executing his Will for which he had earlier given instructions, the Court would uphold the validity of the Will. See Parker v. Felgate
From the foregoing, there are two conditions that must be satisfied namely:
The instructions must be given directly by the testator to the lawyer; and
The lawyer must carry out the instruction - preparing the will in line with the instruction
Thus the rule in Parker v. Felgate will not be available to save a Will where the testator did not give his instructions directly to the solicitor but instructed the solicitor through an intermediary except if it is established that:
The instructions delivered to the intermediary were clear and unambiguous
The intermediary perfectly understood the instruction
The intermediary honestly delivered the instructions given
The solicitor also perfectly understood the instructions and complied with them strictly.
See Singh v. Amirchand, Perera v. Perera.
Consequently, if the testator is sane at relevant periods, the Will is valid and it is immaterial that he was insane before or after those periods. This is because supervening incapacity does not affect the validity of a Will. However, it must also be noted that recovery from incapacity does not validate an otherwise invalid Will.
If the state of mind of the testator is contested, the onus is on the propounder of the will to establish that the Will is duly executed usually by showing that the Will is rational on its face or he may decide to advance positive affirmative evidence in support of the testator's state of mind. After this, the onus shifts to the challenger will must adduce evidence to show that despite the fact that the Will is rational on its face and duly executed, the testator was insane at the time the will was made. Johnson v. Maja
It should be noted that extreme old age does not impute a lack of mental capacity.
Testamentary Intention
To make a valid will, a testator must possess animus testandi (intention to make a will) and must know and approve of the contents of the Will. Testamentary intention not dislodged by old age. Balonwu v. Nezianyi
The Will of a person who is sane at the time of giving the instructions for the preparation of the Will but insane at the time of signing it may be valid or invalid depending on the facts of each case. If the instruction was personally given to the Solicitor, the Will will be held to be valid. Parker v. Felgate. Conversely, if the instruction was given through a third party/lay agency to be further communicated to a solicitor, it will be held to be invalid. Singh v. Armichand.
As a Solicitor, certain precautionary measures must be taken in respect to the mental capacity of the Testator. The Solicitor may:
Have a confirmatory statement signed by the testator that the testator had mental capacity to make a Will. Re Walker.
Get a medical report by a medical practitioner who examined the testator confirming the presence of mental capacity of the testator
Writing
No particular form of writing is necessary. It may be typed printed, handwritten (holograph) or a combination of any of these. The language must not only be English. In Whiting vs. Turner, the Court held as valid a Will written in French language. Section 9. Wills Act 1837, Section 4. Lagos Wills Lagos.
A blind person can make a Will upon the satisfaction of the following conditions:
It must be shown that the Will was read over to him and he perfectly appeared to understand the contents before affixing his hands to it.
A special attestation clause must be inserted to the Will as evidence of having read the Will to him. It is called blind person's jurat. Insitful v. Christian
Order 49. Rule 23. Abuja provides that where the testator is blind or illiterate, a Court shall not grant administration with the Will annexed unless the Court is satisfied by proof or by what appears on the face of the Will that the Will was read over to the deceased before its execution or that he had at that time knowledge of its contents. Henry Charles Christopher v. Samuel Insutful Tawiah.
It should be noted that a blind person cannot attest to a Will because his disability makes it impossible for him to see the signature of the testator and the act of signing the document.
Due Execution
Section 9. Wills Act & Section 4. Wills Law of Lagos provide for the requirement for an execution of a Will as follows. No will shall be valid unless:
It is in writing
It is signed by the testator or signed in his name by some other persons in his presence and by his directions
The testator makes or acknowledges the signature in the presence of at least two witnesses present at the same time
The witnesses attest and subscribe the Will in the presence of the testator.
Signed by the Testator
An essential requirement of a statutory or formal will is that it must be in writing and executed in accordance with the law. With regards to the execution, the testator has three alternatives methods to execute his Will. They are:
First, a testator can sign the Will personally in the presence of at least two credible witnesses who are both present at the same time and the witnesses attest and subscribe to the Will (by signing) in the presence of the testator but not necessarily in the presence of the other witness(s)
Secondly, the testator can delegate/authorize another person to sign the will on his behalf, in his name, and in his presence and that of at least two credible witnesses; who are both present at the same time and the witnesses attest and subscribe to the Will (by signing) in the presence of the testator but not necessarily in the presence of the other witness(s). The delegation or authorization must be in writing to facilitate proof of due execution. See Onwudinjo v. Onwudinjo, Apatira v. Akande; Groffman v. Groffman
Thirdly, the testator can pre-sign the Will then he acknowledges his signature in the presence of at least two credible witnesses who are both present at the same time and the witnesses attest and subscribe to the Will (by signing) in the presence of the testator but not necessarily in the presence of the other witness(s)
Note that the Will must be:
Signed by the testator first and in the presence of at least two witnesses. See Onwudinjoh v. Onwudinjoh
Attested to by at least two witnesses in the presence of the testator. See Apatira v. Akande
The witnesses must be present at the same time when the testator is signing or acknowledging his signature.
The testator need not be physically present during attestation so long as he is in the position to see the witnesses. See Norton v. Barzett, Casson v. Dade
All the witnesses need not be present during attestation so long as the testator is present. See Groffman v. Groffman
The witness need not know the content of the Will, but they must at least know that they are called to attest to the signature of the testator. See Smith v. Smith; Re Rawlins.
A signature may be an initial, a cross, rubber stamp. The signature must be what the testator intended and it must be complete. Signature does not include sealing. Ellis v. Smith. However, In The Goods of Emerson, Sealing coupled with Initials on the seal was held as signing.
A thumb impression was accepted as signature In The Estate of Randle, Nelson v. Akofiranmi. Where the testator is illiterate or blind, a jurat should be inserted indicating that the contents of the will were first read and interpreted to him and he, understood before affixing signature.
Formerly, under the Wills Act of 1837, the signature of the testator was required to be at the bottom of the Will. However, the Wills Act, as amended in 1852, provided that it does not matter where the signature is provided it is signed. However, in all cases, the testator must sign before the witnesses sign. In order to avoid fraud, any disposition or direction which is underneath or follows the testator's signature is void and invalid. See Section 1. Wills Act, Section 4. Lagos Wills Law, In The Goods of Osborne, Re Howell
Attestation by the Witnesses
The signature of the testator must be made or acknowledged by him in the presence of at least two witnesses who must be present at the same time. Words are not necessary for attestation. Ize - Iyamu v. Alonge. The witnesses must be present at the time of execution by the testator though they may not be present when each of them is signing. Chodwick vs. Palmer. The presence of witnesses here is physical and simultaneous when the testator signs or acknowledges his signature. A witness must sign in his own hand and cannot direct another to sign on his behalf as a witness.
The factors to consider when choosing witnesses to attest to a Will are:
A blind person cannot be a witness to a Will even though he can validly make a will with blind person's jurat. Instiful v. Christian, Order 58. Rule 10. HCL CPR.
Another factor to be considered by a testator is the age of the witness. Younger persons are to be chosen and not older ones. An infant can attest to a Will, but he can only validly attest to a Will if there is more than one adult witness. Egenti v Egenti.
A beneficiary or his spouse should not be made a witness to the Will because any gift to such beneficiary or his spouse under that Will fails and is void. See Section 15. Wills Act, Section 8. Wills Law (Lagos). Where a lawyer allows a beneficiary or his spouse to attest to a Will, without properly advising the testator of the effect of that, the lawyer can be sued for professional negligence. See Ross v. Caunters, Re Pooley
The general rule is that a beneficiary to a Will and his/her spouse cannot take the gift made to them under a Will if either of them is a witness to the Will. Any gift made to such person will be utterly void. A benefiting witness/spouse is only disqualified from taking the gift made under the Will, but is a competent witness to testify on the facts of due execution of the Will. Section 15. Wills Act, Section 8. Lagos Wills Law. However, there are exceptions to the above rule of beneficiaries or spouse as witness. If any of these exceptions exist, the gift will not be void. They are:
Where a witness had signed the Will before marrying a beneficiary under the Will. Aplin v. Stone, Thorpe v. Bestwick
Where there are at least 2 other witnesses apart from the beneficiary or spouse of the beneficiary. See Proviso to Section 15. Wills Act & Section 8. Lagos Wills Law.
Where the gift was made in settlement of a debt or obligation owed by the testator.
The gift was subsequently confirmed in another Will or codicil which is not attested to by the beneficiary. Re Marcus, Re Trotter.
The rule does not apply to privileged Wills. Re Limmond.
The witness is subsequently appointed a Solicitor to the Will which contains a charging clause
Where the person present merely signs that he agrees with the contents of the Will but not as witness. In The Goods of Bravda.
Where the beneficiary signed as a trustee and not as witness. See Cresswell v. Cresswell
The rule does not apply to a secret trust. That is, where the testator leaves the gift to the benefitting witness not directly under the Will, but as a beneficiary to a secret trust created under the Will. Even if the beneficiary under the secret trust attests to the Will, his gift will not be void because he takes under the trust and not under the Will. See Re Young.
The ideal qualities of a Witness include:
Credible and trustworthy
Person likely to be available to give evidence in Court
Person younger than testator
Person of good health
Not a beneficiary or the spouse of the beneficiary
Must not be blind
Infant + two adults. Egenti vs. Egenti
Factors Invalidating a Will
The factors which may vitiate the validity of a will include
Delusion
Undue influence
Fraud
Mistake
Suspicious Circumstances
Delusion
Delusion is a belief which no rational person could hold but which reasoning with the testator cannot eradicate from his mind and which is capable of influencing the provision of his Will. Person suffering from delusions can create a valid will where the testator satisfies the test in Banks v. Goodfellow. Delusion must influence disposition to render the Will invalid.
Battan Singh v. Armichsand, Amu v. Amu.
There must be a nexus between the delusion and the disposition of the Will. Where a testator gives instructions with sound disposing mind directly to a solicitor or notary public but before execution loses mental capacity, the Will is still valid if executed with knowledge. Parker v. Felgate, Perera v. Perera
This exception above will not apply where the instructions were given to an intermediary by the testator. Battan Singh v. Armichsand. Where the testator had lucid moments within which he made the Will, the Will would be valid. Banks vs. Goodfellow. Thus, insane delusion in question of facts surrounding a case
Undue Influence
Undue influence is coercion to make a will in a particular way. Hall v. Hall. It occurs where the testator's mind has been subjected to any improper persuasion in such a way he is overpowered and consequently induced to do or forbear. Undue influence must be proven not presumed.
Persuasion/family considerations are not regarded as undue elements e.g. a Solicitor advising the testator to consider giving some legacies to one of his sons he has refused to give anything in the Will. Johnson v. Maja.
Where a man deprives his wife of benefits and gives generously to his mistress: this may not alone prove undue influence. Johnson v. Maja.
Fraud
Where fraud is successfully proven, it will serve to invalidate a Will in all its entirety.
Mistake
A mistake of law may not be fatal to the validity of a Will. However, a mistake of facts will be fatal to the will e.g. where testator mistook Ngozi for Nkiru in devolving his property to her.
Suspicious Circumstances
Suspicious circumstances may arise in a situation where a substantial gift was made to a person who is in a fiduciary relationship with the testator e.g. a Lawyer, Pastor, doctor etc. There will be a presumption that the testator was unduly influenced in making the gifts and the propounders will have the burden to prove that there was no undue influence. Re A Solicitor.
Alteration of a Will
Alterations can be made to a Will. Any alteration in a Will after its due execution will only be valid if after the alteration the Will is executed by the testator in the joint presence of at least 2 witnesses who will also attest to it in accordance with. Section 9. Wills Act.
Any alteration which is not apparent to the ordinary eyes is deemed invalid
Proof of Validity of a Will
A Will may be proved in its common form or solemn form. The onus of proving the existence and validity of a Will is on the propounders, who are usually the Executors of the Will. They can do so by any of the following means:
Affidavit. This is used when:
There is no proper attestation clause
The judge has any doubt as it to the due execution of a Will
Where the testator is an illiterate or blind person.
The affidavit will set out the manner in which the Will was read or interpreted to the testator and the manner in which he signified that he understood and approved of its content. Re Geale, Order 58. Rule 5 & 10. HCCPR
Reliance on the Presumption of Due Execution. Where a Will appears ex facie regular then, in the absence of fraud, the Court will presume its due execution under the maxim Omnia Praesumuntur Rite Esse Acta. The Latin term "Omnia Praesumuntur Rite Esse Acta" means everything that seems regular are deemed properly done. However, for the presumption to apply, the Will must be regular on its face and must have a proper attestation clause. Nelson v. Akofiranmi. However, this presumption is rebuttable with cogent evidence. Banks v. Goodfellow. This presumption can be rebutted by:
Direct evidence of attesting witnesses to negative due execution. Apatira v. Akanke
Evidence by anyone directly affected by any disposition in the Will, showing irregularities directly affecting the due execution of the Will.
Evidence of a handwriting expert showing that the execution of the Will was not done with the handwriting of the testator or some other person authorized by him to execute the Will on his behalf. See Odutola v. Mabogunje (2013).
Any doubt in respect to a Will is resolved in favour of the Will. Section 168(1). Evidence Act.
Positive Affirmative Evidence. In addition, or as alternative to the presumption of sound mind, the propounder may lead positive affirmative evidence to prove that the testator had a sound disposing mind. This evidence may be documentary and oral. Examples of such evidence include:
Statements made at the time of instruction and execution
Evidence that the Will was written by the testator or the instructions were written by him
Evidence of attesting witnesses, which should be corroborated. Adebajo v. Adebajo
Medical evidence by credible doctors who must have examined the testator in the past. Okelola v. Boyle
Evidence of the conduct of the testator before and after making the Will. Maja v. Johnson
Evidence of general habits and course of life of the testator before making of the Will. Adebajo v. Adebajo, Banks v. Goodfellows
Ethical Issues
Counsel to represent client within the bounds of the law He should not contravene the law. Rule 15. Rules of Professional Conduct.
A lawyer should not collude with a Beneficiary to alter order the Will.
Duty not to take undue benefit from a client's property. Rule 23. Rules of Professional Conduct. Where a lawyer is a beneficiary under a Will, he should at the testator to engage the services of another lawyer to do the Will. Wintle v. Nye.
Duty not to charge exorbitant fees. Rule 48. Rules of Professional Conduct
Duty to take instructions in writing
Duty to be devoted and not to be negligent. Rule 14. Rules of Professional Conduct.
Duty of confidentiality. Rule 19. Rules of Professional Conduct.
Duty to disclose any conflict of interest. Rule 17. Rules of Professional Conduct
Duty not to take instruction in client's house exception special circumstances. Rule 22. Rules of Professional Conduct.
Advise client on who can be his Executor and ensure that all the beneficiaries are catered for.
Advise client on the fact that a beneficiary should not have a witness or Executor
A Lawyer should avoid being a witness to a Will he prepared. Rule 20. Rules of Professional Conduct.
Week 14
Wills and Codicils 2
Types of Gifts
Devices: these are realty or landed properties (Immoveable) of the testator. The beneficiary of such immovable is referred to as a "devisee"
Legacy/Bequests: these refer to the personal properties of a testator e.g. chattels, choses in action, money etc. The beneficiary of such gift is referred to as a "legatee"
However, legacy is now used to refer to both movable and immovable gifts.
Classes of Gifts under a Will
There are three major classes of gifts namely:
Specific
General
Demonstrative
There are other classes of gifts which may be either be specific, general or demonstrative. They include: pecuniary legacy, absolute legacy, alternate legacy, accumulated legacy, contingent legacy, modal legacy, residuary legacy, annuity, conditional legacy.
Specific Legacy
This is a gift of an identifiable property that is specific and distinguishable from the other properties owned by the testator. It must be properly and sufficiently described. The gift may be indicated by the use of the word "my" followed by a description of the gift.
Example
A gift of my Toyota Camry car with Reg. No BQ232 AWK to my daughter Bimpe.
I give my diamond ring bought from Agoz Jewelries UK to my niece Nkechi
A gift of my 4 million shares in FBN Plc. to my son Bala
It is not a specific gift if it reads; "A Toyota car for my son dayo"
A specific legacy is not liable to abate where there are insufficient funds or the estate is not enough to satisfy all legacies, obligations and debts. Income from a specific legacy accrues and starts running from the time of death of the testator. However, if the gift no longer exists or cannot be found at the time of the testator's death, it would be said that the gift is adeemed and therefore it will fail. Thus, the Court in construing a clause of a specific legacy leans towards construing it as a general legacy in order to save the gift from total failure by ademption. See Re Rose.
In order to avoid the failure of a specific gift, alternative or substituted gifts are also made to the beneficiary. E.g. "a gift of my Mercedes Benz with Reg. No._____. if it fails, I make a gift of my Toyota Hiace with Reg No.__________ to my son"
General Legacy
There is no specific description of a general legacy and it does not refer to a particular piece of the testator's estate. The testator intends that the gift should be satisfied from the general assets of his estate and there is nothing distinctive about the gift. For example, "A gift of a walking stick to my son Joel". If the testator does not own a walking stick at his death. Executors will provide for it from the testator's general estate. A general legacy is not liable to ademption. However, it will suffer abatement where the estate is insufficient.
Demonstrative Legacy
This is a legacy between specific and general legacies in that the testator directs that the gift is to be satisfied out of a specific fund or pool of property and the testator indicates in his Will where such gift can be sourced. For instance, "I give one of my houses in Awolowo Road, Lagos to my eldest daughter". Demonstrative gift is not subject to ademption and will only abate where the particular fund is not sufficient to take care of the legacy.
A demonstrative legacy is not limited to a gift of money or property e.g. "A gift of my books kept in the shelf in my bedroom" or "A gift of my articles published by Adams & Kings Publishing Company Asaba". Generally, the Courts will treat a demonstrative gift as a general legacy when it fails as a specific legacy. When converted to general legacy, it is liable to abatement.
Pecuniary Legacy (Annuity)
These are strictly money dispositions. It is called an Annuity when it is expressed to be paid at intervals. It could be general, specific or demonstrative. It may or may not give direction of the particular fund where the money should be drawn from. If it gives direction on the particular fund, it is demonstrative legacy. For example, "I give 50,000 naira to my wife Nkechi to be paid to her every month".
Money includes cash and notes at hand, money immediately payable to the testator at call and money at the bank. Re White. However, money cannot be extended to include shares in a Company.
Residuary Legacy
This is the remainder of the property belonging to them after payment and fulfilment of all other gifts and debts, expenses, taxes and liabilities of the testator. It is made up of personal or real property. A residuary clause is usually inserted in the Will to transfer all remaining residue and remainder. Such remainder may have been derived from the following:
Property acquired by testator after making his Will or codicil
Property of the testator which were left out or not disposed of in the Will
All gifts that were renounced or disclaimed
Gifts that failed.
The beneficiaries are called "Residuary legatees". Where the clause is not included, it will lead to partial intestacy. Section 53. Administration of Estates Law of Lagos State. Hence, a residuary legacy lessens the possibility of partial intestacy.
Absolute Legacy
An absolute legacy is a gift with no conditions attached. It vests automatically and takes effect upon the death of the testator
Conditional Legacy
A conditional legacy only becomes effective upon the happening of particular event. For example, "my two storey building in Victoria Island to Wale, if he marries my daughter", "my law firm should be inherited by my children who are lawyers".
Failure of Gifts
Presence of Vitiating Elements/Factors
Vitiating elements in this regard are those that can vitiate a commercial contract. For instance, fraud, undue influence, mistake and suspicious circumstances.
Undue influence: this may lead to the failure of a gift in a Will. See Hall v. Hall, Parfitt v. Lawless. This involves the interference of a third party in a testator's testamentary freedom. There is no presumption of undue influence. It is a question of fact to be proved on balance of probabilities. In law, persuasion, no matter how strong, does not constitute undue influence. Inducement or persuasion, by whatever consideration, though it be immoral would not constitute undue influence if it does not amount to coercion that has the effect of overriding the testator's freewill and testamentary freedom. In Johnson v. Maja, the testator gave preference to his mistress as against his wife and the Court held that immoral consideration in the case did not constitute undue influence.
Suspicious circumstances: they usually arise where there is a fiduciary relationship between the testator and a beneficiary. There are certain relationships which are prone to allegation of undue influence such as where the solicitor who drafts the Will is a substantial shareholder under the Will. In such cases, the court will consider that there are circumstances which may rebut any presumption of the testator's knowledge and approval of the content of the will and where sufficient evidence is not given to dispel the suspicion, the gift may fail. See Wintle v. Nye, Re A Solicitor, Okelola v. Boyle
Mistake: the testator may be mistaken as to the type of document he was executing so that it was not his Will at all. Also, he could be mistaken as to the content of the will, or the intended beneficiary. The person alleging mistake has the duty of proving such mistake. A gift may fail on grounds of mistake. See Okelola v. Boyle, Hastilow v. Stobie.
Fraud: a gift can also fail when fraud is proved on the part of the beneficiary. See Wingrove vs. Wingrove, Wilkinson vs. Joughlin
Abatement
Failure of gift by abatement is where the testator's estate is not sufficient to satisfy the gift. Where an estate is being wound up, the debts and obligations/liabilities of the testator is first settled. The rule of abatement is that residuary estate abates first followed by general legacies, pecuniary legacies, demonstrative and lastly specific legacies. This is however subject to any contrary intention of the testator as shown in the Will. Note that there could be partial abatement.
For the purpose of determining title to property, where two or more persons have died in circumstances in which it is uncertain which survived the other, they are presumed to have died in order of seniority. See Section 164(2). Evidence Act.
In relation to the lapse of a gift due to the death of the beneficiary, if the beneficiary is older than the testator and they die at the same time, it is presumed that the beneficiary died first, thus the gift will fall. Where a gift is granted to several beneficiaries as joint tenants and all of them die at the same time, it is presumed that the youngest of them died last and the gift devolves to his successor-in-title.
The circumstances where a gift will not fail when the beneficiary dies (lapse) before the testator are:
A class gift(s) made to more than one person jointly or in equal shares. The other survivor will take the gift.
Gifts to settle debts or moral obligations will not be affected by the doctrine of lapse, whether or not the obligation is legally binding. Even after the death of the beneficiary, the gift will be paid to the estate of the deceased beneficiary.
Where there is a substitution or alternative gifts (substituted beneficiary)
A gift to a testator's child who dies in the life time of the testator but has a child who is living after the death of the testator. Section 33. Wills Act, Section 24. Wills Law.
Ademption
Ademption involves a situation where a gift ceases to exist as at the time of testator's death. This could be due to sale of the gift by the testator in his life time; or where the gift is shares in a Company and the Company is wound up in the testator's life time and the testator was paid his entitlement under remainder of asset (if any). When a gift made under a Will is sold or lost or destroyed or otherwise ceases to exist in natural character prior to the testator's death, such a gift will be said to have failed by ademption. See Re D(J).
Specific legacies are subject of ademption. Summarily, instances of ademption are:
Gift lost or sold before testator's death. See Re D(J)
Where the natural character of a gift has been fundamentally altered or extinguished, then the gift will fail by ademption. See Re Kupyers. However, a mere change in the name or form of the gift does not adeem the gift where the subject matter is substantially the same. See Re Clifford. For instance, shares in a Company and the Company changes its name. Section 31(6). CAMA; change of street name affecting address of devise.
Where the Property (gift) is subject to a contract, whether completed or not. Remember that at exchange of contract, death of either party does not affect the contract. Thus, the gift will fail by ademption
Where the property (gift) is compulsorily acquired: If the landed property was validly acquired by the government during the life time of the testator and compensation paid to him, any gift of that property made under a Will will fail by ademption. See Re Galway. If acquisition was invalid or if the acquisition, though valid, was done after the death of the testator, there would be no ademption and the beneficiary is entitled to the compensation
Note that ademption relates to the gift while lapse relate to the beneficiary. Note also that there could be partial ademption. That is, where part of the gift fails by ademption. Not all gifts are subject to ademption. Only specific gifts are subject to ademption. It must be noted that a specific legacy would ordinarily not fail by abatement unless and until the entire estate is insufficient to satisfy the liabilities of the testator.
To avoid a situation where the beneficiary would go empty handed on account of the ademption of the gift made to him, it is advisable to add a substitutional gift/substitutional gift clause. For example, "I give my Mercedes benz C-class with registration number xx-888-yy to Joseph John of ____________ or such other car as I have at the time of my death and if I have no car, then some other Mercedes benz car"
Lapse
A gift in a Will will be said to have failed by lapse where the beneficiary pre-deceases the testator; or if the beneficiary is a corporate body, where it ceases to exist by winding up (liquidation) before the death of the testator. It must be noted that by Section 18. Wills Law Lagos and Section 25. Wills Act, where a gift fails by lapse and there is a residuary gift clause, the gift that failed by lapse would fall into the residuary estate. If there is no residuary gift clause, then the gift will fall into intestacy (partial intestacy).
The exceptions under which a gift will not fail by lapse are:
Substitutional Gift or Alternate Beneficiary: the testator can make an alternative or substitutional gift to the beneficiary's children or personal representatives in order to save the gift from failing by lapse. See Darrel v. Molesworth
Class Gift: Where the gift is made to a class of persons, whether as joint tenants or as tenants in common, the gift so made will not fail by lapse on the death of any of the members of the class so long as at least one member of that class still survives. See Lee v. Pain. Note the difference between Joint Tenants and Tenancy in Common for this purpose. The gift would be deemed to have been given to the members of the class as joint tenants where there are no words of severance; For example: "I give the sum of 120 million to my six children". There are no words of severance so, they children hold as joint tenants and on the death of any of them, whether he predeceases the testator or not, the gift will fall to the other surviving members of that class absolutely under the doctrine of survivorship (Jus Accrescendi). However, where words of severance are used, then the gift would be deemed to have been given to the class as tenants in common, in which case, on the death of any member of the class, his share will devolve to the residuary estate of the testator if he predeceases the testator.
Thus, the distinction between joint tenants and tenants in common is very important here as it determines whether the principle of jus accrescendi would apply. Tenant-in-common is where in the devise or bequeath of gifts, words of severance are used – "in equal share", "in 40 - 60 share"; while in joint tenancy, words of severance are not used - "I give to A and B the house situate at…'. Where either of them dies, the surviving party will take the gift absolutely. This is rule of survivorship - jus accrescendi.
Gifts made in settlement of a debt or obligation owed by the testator will not fail by lapse even if the beneficiary predeceases the testator. It will go to the beneficiary's estate. See Re Leach
Where the gift is made to an office, the gift will not fail if the occupant of that office predeceases the testator.
Where the beneficiary is a child of the testator and he dies leaving an issue or is survived by an issue, then a gift made to him will not fail by ademption but will go to his heir. See Section 24. Wills Law Lagos, Section 33. Wills Act, Section 28. Wills Law Western Region, Re Meredith, Re Pearson. The conditions are:
the beneficiary is a child of the testator;
the beneficiary predeceases the testator, but dies leaving an issue.
Entailed gift: a gift made to be inherited by several persons in succession cannot fail by lapse. That is, a gift made to several persons with life interest to each cannot fail by lapse.
It must be noted that by Section 18. Wills Law Lagos & Section 25. Wills Act, where a Will fails by lapse and there is a residuary gift clause, the gift that failed by lapse would fall into the residuary estate. If there is no residuary gift clause, then the gift so failed will fall into intestacy (partial intestacy).
Gifts Void for Uncertainty
This is where there is uncertainty either as to the gifts or the beneficiaries. Where the gifts are made to charity, the Court usually applies liberal construction and as a general rule, charitable gift will not fail for uncertainty of beneficiary
Conditional gifts
A conditional or contingent gift will fail if the condition is not satisfied or if the contingency upon which it was made does not occur. For instance, 'I give my house at No. 7, Udeh Street, Ikoyi, Lagos to my eldest daughter Chinelo if she becomes a lawyer'. If at the time of death of the testator, Chinelo is not yet a lawyer, the gift will fail.
Gifts Void on Grounds of Public Policy or Illegal Purpose
Where the gift is for an illegal purpose, the gift will fail. For instance, a gift to be used for opening and operating a brothel. Also, on ground of public policy, a gift will fail. For instance, if the beneficiary was responsible for the death of the testator, he cannot on the ground of public policy be entitled to such gift.
Disclaimer by the Beneficiary (Renunciation)
The beneficiary can decide to disclaim the gift. This involves the beneficiary stating that he does not want the gift. The gift disclaimed will fail.
By Operation of the Law (Attestation)
The law governing the making of a Will may provide that a beneficiary will not take the gift bequeathed or devised to him under certain circumstances. In such instance, the gift will be said to have failed. For instance, where beneficiary or a spouse of a beneficiary witness to a Will, the position of the law is that such beneficiary or the spouse is not entitled to the gift given to him in the Will. See Section 15. Wills Act, Section 8. Wills Law Lagos (remember that there are exceptions to this rule)
The Rule Against Gifts made in Perpetuity
A gift in a Will is said to be made in perpetuity when a gift is made to a beneficiary with conditions restricting its use, sale or transfer.
The rule against gifts made in perpetuity is that the gift will be valid upon the death of the testator but the conditions will be void. This is because the legal title in the gift has been vested in the beneficiary who can use it the way he likes as the consequence of him being the owner.
Revocation of Wills
One of the features of a valid Will is that it is ambulatory. It has no effect until the death of the testator. Thus during the testator's life time, the testator can validly revoke the Will or change it as many times as he pleases. Basically, a Will can be revoked either voluntarily or involuntarily. These are situations where a valid Will made will be revoked or made invalid either by the acts of the testator or by implication of the Law. A voluntary revocation will occur:
Where the testator makes a subsequent Will or Codicil duly executed
By a written declaration with the intention to revoke the will
By destruction of the Will with the requisite intention to make it invalid
An involuntary revocation occurs by operation of law where the testator engages in a subsequent statutory marriage.
Voluntary Revocation
Revocation by Subsequent Will or Codicil
This will occur where the testator makes a subsequent Will or Codicil duly executed stating that he revokes the earlier Will. He may do this by either:
Express Revocation. This is where the subsequent Will/Codicil contains a revocation clause revoking the earlier Will. However, this will not apply where the clause was inserted by mistake and without the testator's approval or where the two wills relate to different property of the testator. O'leary v. Douglas. It should be noted that general words such as "last and only will" or "Last testament of me…" may not be sufficient to revoke an earlier Will
Implied Revocation. This is where the latter Will is in contrast with the provisions of the earlier Will, thus the latter Will's provisions will prevail. This will occur:
If it covers practically the same grounds as earlier one
Where the latter Will dispose the same properties to either different beneficiaries or in a manner inconsistent with the former Will. Henfrey v. Henfrey. However, it is not a general rule that every inconsistent will revokes the previous one. Biddles v. Biddles.
Loss of a Will does not necessarily amount to revocation. Where a Will is lost or destroyed in such a way that it does not amount to revocation, probate may be granted of the contents of the Will upon proof of such content and attestation of the Will. In Sugden v. Lord St. Leonard (1876) 1 PD 154, the oral testimony of the daughter of the testator as to the contents of her father's lost Will was admitted in evidence as proof of the contents of the Will.
It should be noted that the evidence of a solicitor that prepared the Will may establish due execution and attestation. Re Hannah (1954) NZLR 836. The contents of the Will may be proved from the instructions to the solicitor. Funcham v. Edwards (1842) 3 PD 1. The contents can also be proved by the evidence of an attesting witness to the Will. It does not matter that the attesting witness is an interested party. All that needs to be ascertained is whether the evidence of the witness is credible. Once the evidence is adjudged credible, it will be admitted.
Revocation by a written declaration with the Intention to Revoke the Will
The written declaration may be in the form of:
Memorandum of revocation
A letter
A settlement
An ordinary declaration of intention to revoke a will
The written declaration must be duly executed for it to be valid i.e. duly executed by the testator in the presence of two attestators who must attest to the declaration. However, this must not necessarily be in the presence of each other. Section 9. Wills Act, Section 1. Wills (Amendment Act) 1952, Section 13. Lagos Wills Law, Parker v. Parker, Henfrey v. Henfrey.
Destruction of a Will with the requisite intention to make it invalid.
Under this head, there are two ways of destroying the Will:
Personally by the testator with an intention to destroy same; or
By giving instructions to a third party to destroy the Will
For destruction by giving instructions to a third party to be valid, the following conditions must exist:
The instruction to destroy the Will must be in writing
The testator must be present when it is being destroyed.
It must be at his request or direction
See Section 20. Wills Act, Section 13. Lagos Wills Law.
Where there is non-compliance with the above requirements, the revocation will be invaid. Re Dadds. In The Goods of Bacon, it was held that the destruction of a Will by a third party after the testator's death on the instructions of the testator in his lifetime was an ineffectual revocation.
In carrying out a destruction, there must be a sufficient act of destruction and an intention to revoke by the act of destruction. The act and the intention must be contemporaneous i.e. done at the same time. There can be no subsequent ratification or confirmation of the act which was done without intention. Gill v. Gill
The destruction must be physical and sufficient. It will generally be deemed sufficient where it is effected by:
completely tearing the Will beyond recognition
cutting/mutilation
burning the Will completely
scribbling out the signature of the testator or witnesses
Sufficient destruction of the original copy of a Will is also sufficient revocation of the copies of that Will.
Examples of insufficient acts of destruction include:
Merely squeezing the Will
Drawing lines across the will
Tearing some parts of the Will
In Cheese v. Lovejoy, the testator drew a line according to the Will and wrote the words "revoked" then squeezed it and threw it a waste bin. His maid picked it up, straightened it and placed on the table where it remained until his death. It was held that there was no destruction of the Will. Hence, it was not revoked. Stephen v. Tapirell. In Perkes v. Perkes, the testator tore the Will into four pieces with intention to destroy it. He was stopped by bystanders and the beneficiary who was not pleased with him. He picked the four pieces and gummed them together saying "It is a good job; it is no worse". It was held that the tearing was not a sufficient act of destruction.
Where there is a partial destruction of the Wil, it will only revoke the part torn off/destroyed and not the entire Will. In The Goods of Woodward. However, where an essential part is destroyed or where the destruction renders the remaining part meaningless, the entire will is deemed revoked.
The act of revocation must have been carried out with the intention to revoke otherwise the revocation will be invalid (Animus Revocandi). The intention must be complete. Perkes v. Perkes. An intention to revoke will not be inferred in the following circumstances:
Drunkenness
Insanity
Accidental destruction/mistake
Obliteration of signature without clear evidence of who and why it was done
Conditional Revocation
A conditional revocation occurs where the conditions under which the Will was destroyed and thereby revoked have not and could not have been satisfied. In such cases, destruction will be ineffectual to revoke a Will. A conditional revocation will occur in the following circumstances:
A purported revocation due to a mistakes of fact e.g. where the testator thought his earlier Will was lost or that the legatees were dead.
A purported revocation due to a mistake of law. For example:
where the testator revokes his will believing that his beneficiary will be the sole person to benefit on intestacy
the destruction of a Will will revive an earlier Will
as a preliminary to making a fresh will
the Court will hold that revocation is incomplete until new disposition is in place.
Involuntary Revocation
The Testator engaging in a Subsequent Marriage under the Act.
This occurs where the testator is unmarried at the time of making the Will but subsequently marries under the Act after making the Will. It will also apply where the testator is earlier married under Customary Law with woman A and has made a Will but later goes ahead to get married under the Act to woman B. The earlier Will made will become invalid by Law so that he can make a new Will providing for woman B married under the Act. It should be noted that it is only a valid marriage under the Act that is capable of revoking the earlier Will. A voidable marriage is still a valid marriage until voided and it can also revoke a Will. The exceptions to the above rule are as follows:
Where the Will was made in contemplation of marriage and the real marriage took place with the same person contemplated in the Will. Scallis v. Jones, Section 177(1). English Law of Property Act 1925, Section 47. Marriage Act, Section 11. Wills Law (Lagos), Section 79. Succession Law of Anambra State. The following conditions must be satisfied for this to apply:
The Will must be expressed to be made in contemplation of a particular marriage
The testator must have married the person expressed in the Will
The names of the parties to the contemplated marriage must be clearly stated in the Will. Re Langston
Where the testator was married under customary law and later got married under the Act with the same person. In that case the earlier Will is not revoked by the marriage under the Act. Jadesimi v. Okotie-Eboh, Section 11. Lagos Wills Law, Section 15. Laws of the Western Region.
Where the subsequent marriage is a void marriage under Section 3. MCA. See Mette v. Mette
A Will made in exercise of appointment, not being the personal Will of the testator, cannot be voided by his subsequent marriage unless the persons to take in default of the exercise of the power of appointment take as the testator's heir, executor or administrator. Section 11(a). Wills Law Lagos, Section 18. Wills Act, Re Park
A subsequent marriage under native law and custom does not revoke an earlier Will.
Republication of a Will
This is the means of reviving a valid Will in order to give it a new date (when it is republished). The date of republication is the effective date. Republication of a Will is the confirmation or reaffirmation of the validity and contents of a Will. Republication confirms a Will which has been lying dormant and is unrevoked. Republication changes the date the Will takes effect which will be the date of republication not the date on the original Will.
Revival of a Will
This is to bring into existence a revoked Will. This may be done by either a Will or Codicil. For the purpose of emphasis, revival is for revoked Will or Codicil, while republication is for an unrevoked Will or Codicil. Revival revives a revoked Will and brings it back to life.
This is the act of bringing back to life or operation a revoke Will or codicil so long as it is not destroyed. The date of revival is effective date. Revival may be done through:
Re-execution in solemn form with necessary formalities, in compliance with Section 9. Wills Act; or
A duly executed codicil with the intention to revive the revoke Will.
There must have been a Will which was revoked, if there is nothing revoked, there can be no revival. Section 22. Wills Act, Section 15. Lagos Wills Law.
There must be clear intention to revive the revoked Will or Codicil. The intention must appear on the face of the Will or Codicil by express words referring to a Will or Codicil as having been revoked and expressing the intention to revive it. See In The Goods of Davis. A Will which was revoked by destruction cannot be revived.
Summarily, the republication of Will is the confirmation or reaffirmation of the validity of the contents of a Will. Section 34. Wills Act. The revival of a Will or Codicil is the act of bringing back to life or operation a revoked Will or codicil so long as it is not destroyed. Section 15. Wills Law of Lagos.
The difference between the revival of a Will and the republication of a Will is that the Republication deals with a valid, subsisting and unrevoked Will; while revival deals with a revoked Will provided it was not revoked by destruction.
Therefore, the revival of a Will brings a revoked Will back to life provided that it was not revoked by destruction; while republication of a Will confirms a valid, subsisting and unrevoked Will so as to make it operate as if it was made on the day of republication.
Codicils
This is otherwise known as a miniature or supplemental Will attached to a previously valid Will. For there to be a codicil, there must be an earlier Will. All the formalities required for a Will to be valid also apply to a codicil. The testator must possess the testamentary capacity and the codicil must be executed by the testator in the presence of two witnesses who must be present at the same thing and who shall attest to the codicil. A Will may exist without a Codicil but a Codicil can never exist without a Will. The commencement of a codicil is as follows:
"THIS IS THE FIRST CODICIL TO THE LAST WILL of me, Mrs. Jones Emeka of No. 2 Ejure Street, Isolo, Lagos made the 13 day of June 2012".
A codicil performs the following functions:
It may affirm the contents of a Will
It may alter or amend the provisions of a Will
It may correct a clerical error in a Will
It may revoke a Will
It may revive a Will
It may republish a Will
Several similarities exist between a Will and a Codicil. They are both testamentary, ambulatory, revocable, and depository in nature. However, a Will comes first, a codicil comes last. Furthermore, a Will is independent while a codicil cannot survive in its own.
An unclear codicil is invalid and of no effect. Hence, a codicil which is unclear or equivocal will be declared void by the Court for its uncertainty. Armit v. Hippkins. However, a mis-description of a codicil does not make the codicil invalid nor will it be invalid because it fails to recite the exact date of the Will. In construing a Will containing an ambiguity, a Court may refer to a recital in a codicil to clarify and explain the Will.
As opposed to employing a Codicil, a client should be advised to execute a fresh Will in the following circumstances:
When there is a new or subsequent marriage
When there is excess alteration or mutilation of the original will
When there is change in finances and assets
When there is a change in residence
Ethical Issues
A lawyer should know when to advise for a fresh will.
Advise client on when there could be failure of a gift
Duty of confidentiality. Solicitor not to divulge the contents of the Will. Rule 19. Rules of Professional Conduct.
Disclosure of conflicting interests. Rule 17. Rules of Professional Conduct.
Week 15
Wills and Codicils 3
Limitations to Testamentary Capacity/Freedom
The general rule is that a person has the testamentary freedom to devise his property as he wishes. Adesubokan v. Yunusa. However, the general rule is subject to the following exceptions:
Islamic Law Restrictions
It is a rule that a person subject to Islamic Law cannot make a Will disposing of more than 1/3 of his properties as this is not in accordance with the Islamic Personal Law of disposing same. This restriction has been granted statutory recognition by the Wills Law of certain States. In Ajibaye v. Ajibaye, the Kwara State Wills Law was applied in rendering a Will offending the above rule void. The restriction contained in Section 2. Wills Law Kaduna State may be summarized as follows:
Every person is guaranteed the right to dispose his property by Will
This right does not apply to the Will of a person who immediately before his death was subject to Islamic law
The restriction does not apply only to property but applies to person who are subject to Islamic law.
The case of Ajibaye vs. Ajibaye is to the effect that no distinction exists between a person subject to Islamic Law and a Muslim.
For the above restriction to apply, the state where the person resides must have a Wills Law with a proviso as to Islamic law. For instance, Section 2. Wills Law of Kaduna State provides that it shall be lawful for every person to bequeath or dispose of by his Will executed in accordance with the provision of this law, all property to which he is entitled either in law or in equity at the time of his death provided that the provision of this law shall not apply to the Will of a person who immediately before his death was subject to Islamic Law.
The person can only dispose 1/3 of his property and such disposition must be done fairly. The remaining 2/3 of his property must be disposed in accordance with Islamic law.
In Adesubokan & Ors. v. Yanusa (1971) All NLR 227, where the testator, Yunusa Atanda Saibu, a native of Lagos died without sharing his properties equally amongst his children, the plaintiff/respondent challenged the validity and sought a declaration that the probate dated 29/6/66 granted to the defendant be revoked as the said Yunusa Atanda Saibu (deceased) was a Moslem, died as a Moslem, and left heirs and wives who were all Moslems. The trial Court set aside the probate on the ground that the testator has right to make a Will and must ensure equal share of his properties amongst his sons since his properties were located in Zaria. On appeal, the Supreme Court held that the Maliki Law which favours equal distribution clearly violates the provisions of the Wills Act, 1837 under which a testator can dispose of his properties, real and personal, as he pleases.
By Section 34(1). High Court Law, nothing in the High Court Law shall deprive any person of the benefit of any native law or custom including Moslem law which is not incompatible directly or by implication with any law being in force. And in the above case, the Wills Act, 1837.
Customary Law Restriction
A person who is under Customary Law cannot dispose by Will any property which the testator had no power to dispose of by Will or otherwise under customary law to which he was subject. Section 1. Wills Law Lagos State.
The following conditions must be satisfied for the customary law of disposition to apply:
The law of the state recognizes customary restriction
The custom must not be contrary to natural justice, equity and good conscience.
The custom must not conflict with the Constitution or any other supervening statute.
The custom must be universally accepted in that locality.
Certain States e.g. Abia State, do not have the customary law restriction or the Islamic law restriction. Therefore, the testator enjoys complete freedom to dispose of his property.
The Supreme Court, in Lawal-Osula v. Lawal-Osula and Idehen v. Idehen, held that the customary law restriction is limited to certain properties bound by customary law and not the general testamentary capacity. In Idehen's case, the Court stated "subject to any customary law relating, there is only subject to any customary law affecting the property to be disposed of and not a qualification of the testator's capacity to make a Will". For instance, in Benin kingdom, the eldest surviving son of a Bini man is entitled to the Igiogbe which is the house in which the deceased lived and died in. Thus, a testator cannot by Will give the Igiogbe to any other person than the eldest surviving son.
In the above cases, where the Igiogbe had been given to another person other than the eldest surviving son (an eldest son that had predeceased the testator (Idehen) and a wife (Lawal-Osula), in the action by the eldest surviving son for declaration of the Will to be void for being inconsistent with the Bini customary law, the Supreme Court had held the Will valid except for the part bequeathing the Igiogbe to other persons.
A person is subject to his customary law in this regard even though he is a Christian. The Igiogbe custom does not have extra-territorial application outside Benin kingdom. In Egharevba v. Oruonghae, the testator had once lived in Sapele, Delta state and built a house there. He went later to Benin city where he built a house which he had by Will given the property in Delta state to his first wife for life time and on her death, his daughter. He had given the property in Benin to his first son. On grant of probate to the Will, the defendant had contended that both properties are his Igiogbe and called a witness to testify in Court. The plaintiff/first wife had actually sued defendant for trespass. The Court of Appeal stated that all cases on the point were decided on houses in Benin City. A Bini man having an Igiogbe outside Benin kingdom is a novel custom. It is settled that that custom is a question of fact which should be proved in cases where it has not assumed sufficient notoriety or judicially noticed. It is not enough that the evidence of an isolated case that a Bini man's Igiogbe can exist outside Benin kingdom has assumed the required notoriety. There is need for more cogent and convincing evidence that the custom of Igiogbe has extra-territorial application outside Benin kingdom.
Thus the Igiogbe custom only applies within Benin kingdom. The eldest son must perform the second burial ceremony called (Ukpawari) before he can inherit the house. The following are the instances where the eldest son will not inherit the Igiogbe:
Where the eldest son has not performed the second burial ceremony
Where the eldest son predeceased the testator - Idehen's case
Where the property is communally owned, thus no person can give what he does not have.
Provisions to Dependants
The testator is required by some Laws to make reasonable financial provisions to his dependents (wife, husband and children). Section 2. Wills Law Lagos. Where he fails to do so, the dependents can apply to Court within 6 months of the testator's death to vary the Will. Section 3. Wills Law Lagos
This is the reasonable financial provision for dependant of the testator. The categories of person that can apply had been listed. An adopted child who was adopted in accordance with the adoption law may also apply. Reasonable financial provision would be reasoned in all the circumstances of the case for a husband or wife or wives to receive and whether or not that provision is required for his or her maintenance. In the provisions of the Wills Law of Kaduna, Abia and Oyo state, the categories of dependant are extended to the parent, brother or sister of the testator.
Testamentary Age
A testator must be of the required age limit of 18 years under the Lagos Wills law or 21 years under the Wills Act before he will have the capacity to make a Will.
Professional Expectation in taking Instructions to Draft Wills
The professional should ensure the following:
Advise on the likely persons to attest to the Will
Use simple English in its drafting and ensure that the clauses are not ambiguous
Include a Medical Report as to his Client's mental state of health
Determine suitable persons as Executors of the Will
Ensure that the Client/testator makes the Will voluntary
Instructions Needed to Draft a Will
The full names/nick names (indicated by Alias…), previous names where applicable and address of the testator.
Particulars of the executors
The extent of the testator's properties and those jointly held
If any previous Will had been made or not, and if the new Will is to revoke or add to the previous Will
If gifts of the testator were made inter vivos (while the testator is alive)
The particulars of the beneficiaries and the gifts made to them
What should happen in the event of the death of a beneficiary or in the event of failure of the gift.
The place of origin or ethnicity of the testator in to determine whether there exists any customary law restriction on the disposition of the property.
The religion of the testator to determine if he is subject to Islamic law which restricts disposition of property
Any relatives or dependants of the testator in order to makes reasonable financial provisions for them if they were maintained.
Details of persons who may be appointed as guardians of the infants of the testator.
Any directives the testator may wish to give with respect to his funeral
Custody of the Will
Charging clause
Residuary gift clause
Particulars of wife (wives) and children
Particulars of witnesses (at least 2 witnesses are required)
The advantages of a solicitor drafting a Will include:
The solicitor, being presumed to be versed in law, will comply with this requirements of the law when drafting the will
The skills possessed by the solicitor will be employed to prepare the good Will which will reflect client's instructions
The solicitor is likely to be reliable to keep custody of the Will and produce it in the event of the death of the testator
Solicitors have been found to be very useful witnesses in the event of any dispute to prove the due execution of a Will. Adebajo v. Adebajo
A solicitor should endeavour to ensure the following when receiving instructions on drafting a Will:
The instructions should be written and signed by the client
The instructions may be given in the hand writing of the client
Where the instructions are taken by the solicitor, he may ask the client to sign them even before the Will is prepared.
This is to help in rebutting any allegation of fraud, lack of intention or undue influence.
The Rule in Cradock v. Piper
Where the lawyer is representing himself and other executors
Generally, they are not entitled to remuneration
EXCEPTIONS:
When the remuneration is identified in the Will
In the case of a solicitor representing himself and the executors. If the solicitor is representing himself only, he is not entitled to remuneration.
WHERE EXECUTORS MAKE AN APPLICATION TO THE COURT, THE COURT IS FACED WITH TWO ISSUES:
Generally, they are not supposed to be paid
Where the estate is a complex estate and the time spent by the executors in administering the estate.
Custody of Wills
These are the means of keeping Wills before the testator's death. It can be kept in the following places:
At the Probate Registry of the High Court within the Jurisdiction. Order 58. Rule 1. Lagos
With the testator's solicitor who prepared it
Banks
By the testator himself in a safe place in his house to the knowledge of another person.
With the executors
With a trusted younger friend or relation
If the testator belongs to a club or association that keeps valuables for their members, a copy of the Will can be kept there.
Ideally, the Will should be kept with the Probate Registry. The advantages include:
It complies with the requirements of the law. See Section 35. Administration of Estates fLaw of Lagos State.
It ensures safe custody. Order 49. Rule 16. Abuja HCCPR. A person should deposit his own Will in the Court for safe custody and an original Will shall not be delivered out without Court's direction in writing.
It aids in proof of the Will
It facilitates the grant of probate
Keeping the Will with the testator might be disadvantageous as there is the possibility of his relatives or beneficiaries tampering with the Will when they come across it. Thus, it is better to keep the Will with the probate registry as safety of the Will is ensured and for the purpose of granting probate to the Will as such is handled by the same probate registry of the High Court of a State. By Order 58. Rule 1. Lagos, any person may deposit his Will for safe custody in the Probate Registry, sealed under his own seal and the seal of the Court. By Order 58. Rule 15. Lagos, any person having in his possession or under his control, any paper or writing of any deceased person, being or purporting to be testamentary shall forthwith deliver the original to the probate registrar within 3 months from the day he got knowledge of the death of the deceased. Failure to do so attracts a fine of N50,000. By Order 58. Rule 16. Lagos, upon an ex parte application, the judge may also order such person to produce the document in Court.
Thus, it is better to lodge the Will at the probate registry. Even where the Will is not lodged at the probate registry, it would still be sent to the probate registry.
The reading of the Will is generally done 7 days after the testator's burial.
Formal Parts of a Will
Commencement: Describes the document and the making of the document as his act. This contains the description of the testator. The full names, alias and former names if any, the occupation and address of the testator. Where a testator or testatrix has a former name, it is important to state the name so that properties acquired under such name can be linked to the testator.
"THIS IS THE LAST WILL OF ME Mr. Akiri Akiri formerly known as D Akiri, a Legal Practitioner of No. 1, Adeola Hopewell Street, Victoria Island, Lagos state."
Failure to include the commencement clause will lead to uncertainty.
Date: States the day the Will was made/executed. The date states the day the Will was made or executed. The date is important in the event of proving due execution of the Will.
Also where there are two Wills and it is not known which of the Will is later, a date would be of great advantage in settling the issue. Failure to include date would not invalidate the Will.
"made this ______ day of _________________"
Revocation Clause: This annuls any earlier Will or codicil made by the testator and assists in affirming the present Will as the last testamentary act of the testator. Failure to include it would mean that an earlier Will will be read pari passu with the later Will. However, the later Will will prevail in the event of conflict.
"I REVOKE ALL FORMER TESTAMENTARY DOCUMENTS OR DISPOSITIONS MADE BY ME…"
Appointment Clause: This clause appoints the personal representatives and trustees of the testator
"I APPOINT…"
Charging Clause: This clause permits the Personal Representatives and any persons acting in that capacity to charge for the services they render otherwise their services would be taken rendered gratuitously. Failure to include would mean the executors or professional cannot charge for the services rendered without recourse to the Courts.
"I DECLARE THAT any person, firm or organization engaged in the administration of my estate shall be entitled to charge and be paid all usual professional fees for work done, services rendered and time spent in the administration of my estate."
Or
"I DECLARE THAT my executors shall charge…"
Or
"I authorize my executors to charge…"
Gifts: This is the clause that bequeaths gifts (Legacies and devices) to respective beneficiaries.
"I GIVE ________ TO __________________"
Residuary Clause: This states the person who will be entitled to the residue (remainder) of the estate of the testator. Failure to include means that residuary estate will fall into partial intestacy to be administered in accordance with the rules of administration of intestate estate.
"I DECLARE THAT the remainder of my estate shall be given to _____ of _________________"
Substitution Clause: In case any gift fails or ceases to exist at the death of the testator
Testimonium: This links the testator with the Will.
"IN WITNESS OF WHICH… "
Execution and Attestation Clause: This is where the testator and witnesses sign the will. Failure to include an execution and attestation clause means that the will is void. Section 9. Wills Act.
"SIGNED AS HIS LAST WILL BY THE ABOVE NAMED TESTATOR IN OUR JOINT PRESENCE AND THEN BY US IN HIS PRESENCE. "
Or
"SIGNED BY THE ABOVE NAMED TESTATOR IN THE JOINT PRESENCE OF US AND EACH OTHER WHO IN HIS PRESENCE AND THAT OF EACH OTHER HAVE SUBCRIBED OUR NAMES AS WITNESSES."
Ethical Issues
A solicitor should draft a Will to avoid ambiguity while interpreting. Rule 14. Rules of Professional Conduct.
Duty to advise his client as to the restrictions under Islamic customary laws.
There should be no professional negligence, so that the solicitor is not be liable to the client E.g. A witness cannot be a beneficiary.
A lawyer should not take instructions in client's home execute exceptional circumstances. Rule 22. Rules of Professional Conduct.
If the solicitor is the executor of the Will, there should be mixture of client money or apply with his own. Rule 23(2). Rules of Professional Conduct.
The duty of confidentiality is highly required in making Wills. Rule 19. Rules of Professional Conduct.
The lawyer should always follow the instructions of the client such instructions should be kept in case of challenges in the execution and reading of the Will. The instructions should be in written form.
A legal practitioner shall not make secret profits in the course of handling the Client's matter.
The lawyer is duty bound to disclose any conflict of interest
Contents of a Codicil
Commencement clause
Purpose clause
Testimonium
Attestation and execution clause
Notes
JOHNSON v. MAJA 13 WACA 290
FACTS
It has to do with the Will of the late Alfred Latunde Johnson, who died on the 7th April, 1950. The Will was dated the 27th November, 1943, and a codicil to it was executed on the 27th July, 1945.
The executors applied for a grant of probate; but the testator s widow lodged a caveat against the grant.
The executors as plaintiff sued the testator s widow as defendant and asked the court to declare in solemn form for the Will and codicil, while the widow, as defendant, challenged the Will upon three (3) grounds namely –
1. That it had not been executed as required by law;
2. That the testator was not of sound mind, memory and understanding at the time of the execution; and
3. That the execution was obtained by the undue influence of a woman named Agnes Jokotade who was the mistress of the testator.
At the trial, the judge found that each of the allegations had been proved, and he pronounced against the Will and declared that, so far as the Will was concerned, the testator had died intestate.
On appeal, argument was addressed to the West African Court of Appeal by both counsel upon the question as to where the onus lies in cases of this kind where one party propounds a Will, and the other party challenges not only its execution, but also the mental capacity and free will of the testator.
Lewey J. A. Observed as follows –
"A testator has every right to change his mind at any time before his death provided it is conclusively proved to the satisfaction of the Court that at the time of his executing the Will, he was a free agent and under no influence and that the Will was properly executed."
On issue No. 1 above – "that it had not been executed as required by law",
The court stated that what is there to be said as to proof of the execution of a Will? An examination of the Will shows that it appears to bear the signature of the testator, that it has the usual attestation clause in the form required by law, and that it was witness by Bright Wilson, and A. S. O. Coker.
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On issue No. 2 – "that the testator was not of sound mind, memory and understanding at the time of the execution",
The court stated that it has to do with the testamentary capacity of the testator. Mr. Bright Wilson [a witness], in his evidence, not only said that it was the testator who brought the Will to him for its execution to be witnessed, but stated that the testator was normal at the time, and that he was in active practice as a barrister and solicitor. Two medical men were called, Dr. Omololu and Dr. Maja, both of whom had regularly attended the testator and had also been personal friends of his for years. Each described the cerebral affections from which the testator at one time suffered, but each testified that his mental condition was normal in 1943 when he signed his Will, and indeed two years later in 1945, the year when he executed a codicil to it. There seems to be no dispute that it was the testator himself who prepared this lengthy Will with its numerous and somewhat complex provisions, and that he himself initialled each page of it.
The evidence shows, furthermore, that he continued in the active practice of his profession for some years after the date of the Will, and that he lived for over six years afterwards.
On issue No. 3 – "that the execution was obtained by the undue influence of a woman named Agnes Jokotade who was the mistress of the testator",
The court stated that it is not disputed that when the doctors, in the early part of the year, ordered him to rest, the testator retired to a farm in the country where for some weeks he was away from his wife and was visited by Agnes Jokotade.
Some evidence was also given as to the aggressive and over confident attitude of Agnes Jokotade about this time, and the testator s bank pass-book was produced showing a number of payments at various dates to Agnes Jokotade, the amounts of which were certainly considerably larger during the period in question.
The court stated however that the defendant/respondent has failed to discharge the onus laid upon her. For it must be remembered that something far stronger than reprehensible, or even unnatural, conduct in a husband or father is required in these cases. The immoral conduct of the testator, his preference for his provision for her are far from being sufficient to show that the execution of his Will was obtained by Agnes Jokotade s undue influence. There is indeed, nothing that can be found to connect Agnes Jokotade directly with it. And there is no evidence that Agnes Jokotade even "persuaded" the testator to make his 1943 Will, much less that it was by her fraud or her coercion that it was executed – even taking account of the varied forms which coercion may take.
HELD
The court held that the onus of proof shifts. In the first stage, where there is a dispute as to a Will, those who propound it must clearly show by evidence that prima facie all is in order: Thereafter, the burden is cast upon those who attack the Will and they are required to
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substantiate by evidence the allegations they have made. The decision must ultimately depend upon a consideration (having regard to the shifting burden of proof), of the value of all the evidence given by both sides.
The plaintiffs sufficiently discharged the burden of establishing a prima facie case and the defendant/respondent failed to prove affirmatively the charges made. The court set aside the judgment of the trial court and substituted therefore a judgment pronouncing in solemn form for the testator s Will and the codicil thereto.
The court further held that the Will stands and is effective; no useful purpose can be served by an examination of the law as to republication by a codicil.
The appeal was allowed and the judgment of the lower court was set aside.
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ADEBAJO v. ADEBAJO (1971) ALL NLR 599
FACTS
The main issue is the validity of the Will.
The plaintiff is the widow and one of the persons entitled to share in the estate of Isreal Adebayo Ogunyeade Adebajo (deceased) who died on the 25th day of July, 1969, in the event of intestacy and to have as such a grant of letters of administration of the estate of the said intestate. The plaintiff accordingly claims a declaration that Isreal Adebayo Ogunyeade Adebajo died intestate.
The plaintiff further asserted that at the time when the alleged Will was executed, the testator did not know and approve of its contents. Thus, the deceased at the time when the said alleged Will purports to have been executed was not of sound mind, memory and understanding.
The defendants rebutted the plaintiff s claim and asserted that the deceased personally gave instructions to A. Osijo, Esquire, Barrister-at-Law, to whom he gave detailed and sensible instructions about the dispositions contained in the said Will.
That the deceased at the time of giving instructions to the said A. Osijo, Esquire, and at the time of executing the said Will was of sound mind, memory and understanding and knew and approved the contents of the said Will and acknowledged his approval thereto; and that the said Will was executed with due solemnities by the deceased with a complete understanding and as a free agent without any undue influence or coercion as alleged or at all.
HELD
The court stated that if there be no date to a Will, or if there be an imperfect date only, one of the attesting witnesses or some other person present at the time of execution must supply evidence of the date of execution, if evidence of execution on a definite date cannot be obtained, evidence as to the execution between two definite dates should be given by both witnesses. If neither of the attesting witnesses nor any other person can depose to execution between two definite dates, evidence must be given showing that search has made and no Will of presumably later date had been found. If the date given in the Will is not the true date of execution, evidence of the correct date should be given by an attesting witness or some other person present at the execution.
On the evidence in this case, there was no doubt that the Will was in fact not made on the 21st day of January, 1969 but on the 25th June, 1969 and executed on that day. The fact that the date of the execution differed from the date of the Will was of no consequence.
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The court also stated that the burden of proving due execution, whether by presumption or by positive evidence, rests on the person setting up the Will. Although those propounding the Will must satisfy the court that the testator was of sound disposing mind, yet if the Will is rational on the face of it and is shown to be duly executed and no other evidence is offered, the court will pronounce for it, presuming that the testator was mentally competent. Slight evidence of mental capacity will not disturb this presumption.
The court further stated that the burden of proving unsoundness of mind lies on those who allege it. But when the whole evidence is before the court, the decision must be against the validity of the Will, unless it is affirmatively established that the deceased was of sound mind when he executed. Also, a party who puts forward a document as being the true last Will of the deceased must establish that the testator knew and approved of its contents at the time when he executed it.
The court held that based on the evidence before it, there was more than enough to satisfy the conscience of the court that the instrument so propounded was the last Will of a free and capable testator and to remove any suspicion which might have been cast on the Will. The evidence affirmatively showed that the testator knew of and approved the contents of the Will.
The action brought by the plaintiff was dismissed.
MARRIAGE UNDER NATIVE LAW AND CUSTOM
Customary/Moslem marriage or a marriage according to native law and custom cannot revoke a Will.
In Jadesimi v. Okotie Eboh (1996) 2 NWLR (Pt. 429) 128, the defendant married in 1942 according to Itsekiri native law and custom. In 1947, he made a Will and in 1961, he remarried the same woman under the Act. The issue for determination was whether the marriage of 1961 revoked the Will made by him in 1947. The Supreme Court held that it is common practice in Nigeria for marrying parties to undergo two forms of marriage. The first was under customary law in adherence to the custom of their forefathers, and a statutory marriage in adherence to the Marriage Act. That it is never intended that the marriage under the Act should nullify the customary marriage but to supplement it. The Will was therefore not revoked by the subsequent marriage Act.
WILLS MADE IN CONTEMPLATION OF MARRIAGE
A Will made in contemplation of a marriage will not be revoked by the same marriage contemplated. This is where a Will is made by a testator before his marriage and at the time of making the Will, he or she was in a relationship with the opposite sex with the hope of getting married to that person, and if he makes the Will to the same person and eventually gets married to the same person, the Will made before the marriage will not be revoked by the marriage.
Section 11(b) of the Wills Law of Lagos State provides thus –
"Every Will made by a man or woman shall be revoked by his or her marriage (other than a marriage in accordance with customary law) except –
(a) A Will expressed to be made in contemplation of the celebration of that marriage:
Provided that the names of the parties to the marriage contemplated are clearly stated".
Thus, a Will made in contemplation of marriage is not revoked by that marriage provided it can be gathered from the content of the Will that it was made in contemplation of that particular marriage. In Re Langston (1953) 1 All ER 298, the testator made a Will in November 1935 in which he gave all his property to his named fiancée and in December 1952 he died. It was held that the Will was not revoked because it was made in contemplation
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of a marriage, and the marriage was to the same person named in the Will as sole beneficiary. The Will was therefore valid. WILLS MADE IN EXERCISE OF POWER OF APPOINTMENT Powers of appointment are powers given under some settlement or trust authorising the donee to make an appointment of some or all of the trust property. An appointment may be made in which a donee of the power is authorised in inter vivos settlement or a trust or even in a Will – Re Beatty (1901) 1 WLR 1503, to appoint a specified donee amongst given objects including himself (the donee) – Re Penrose (1933) Ch. 793. The donee may be limited as to the class of persons that falls within the object of the power – Re Park (1932) 1 Ch. 58, or allowed wide discretion to make the appointment. This power of appointment can be exercised by the donee either in a Will or by deed. Where the power is exercised in a Will made by the donee, whether marriage will revoke such appointment in circumstances where it ordinarily revokes a Will, depends on the provisions of the applicable Wills Law. For example, section 18 of the Wills Act, which provides thus –
"Every Will made by a man or woman, shall be revoked by his or her marriage except a Will made in exercise of a power of appointment, when the real or personal estate thereby appointed would not in default of such appointment pass to his or her heir, customary heir, executor, or administrator, or the person entitled as his or her next-of-kin, under the statute of distribution...".
And section 11(a) of the Wills Law of Lagos State which provides thus –
"Every Will made by a man or woman shall be revoked by his or her marriage (other than a marriage in accordance with customary law) except –
(b)A will made in exercise of a power of appointment which the property therebyappointed would not in default of such appointment pass to his or her heir,executor or administrator or the person entitled as his or her next-of-kin underany written law relating to the distribution of the estate of person dyingintestate."
Thus, if the property so appointed in the Will, will not in default of that appointment pass to the person entitled, or to the heirs, executors, or administrators of the testator, under the relevant rules of intestacy, the appointment made in the Will, will not be revoked by marriage contracted by the testator after the making of the Will in which the power of appointment is exercised.
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WILLS MADE BEFORE CELEBRATION OF MARRIAGE UNDER THE ACT BETWEEN PARTIES LEGALLY MARRIED UNDER CUSTOMARY LAW
This exception is a creation of the Supreme Court of Nigeria and not one provided for under the Wills Laws or Act.
Where parties who had been legally married under native law and custom undergo another form of marriage under the Act by going for another marriage (a fresh marriage) under the Marriage Act, the Supreme Court has held that this second form of marriage does not revoke a Will made, by any of the parties prior to the celebration of the new marriage. To the Supreme Court, this is not a new marriage – Jadesinmi v. Okotie-Eboh & Ors (1996) 2 NWLR (Pt. 429) 128.
ETHICAL ISSUES
1.A solicitor should always inform his client on the types of Will available and shouldgive good advice on why a client should choose one instead of another.
2.A solicitor should inform his client on how a legacy can lead to failure.
3.A solicitor should also make his client aware of how a Will can be revoked with itsexceptions.
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JADESINMI v. OKOTIE-EBOH (1996) 2 NWLR (Pt. 429) 128
MRS. ALERO JADESIMI.............................................................. APPELLANT
AND
1. MRS. VICTORIA OKOTIE-EBOH
2. DR. (MRS.) C. R. AKELE
3. JOHN OKOTIE-EBOH................................................................ RESPONDENTS
FACTS
Chief Festus Samuel Okotie-Eboh married the 1st respondent in accordance with Itsekiri native law and custom in 1942. They re-married or rather re-affirmed their marriage under the Marriage Act in 1961 while they were still married under customary law. He died in 1966.
After the demise of Okotie-Eboh, letters of administration without Will of his estate were obtained. It was after obtaining the letters of administration in respect of the estate that the two Wills which the deceased had executed were discovered (the first Will was made in 1947 while the second Will was executed in 1964).
In an action initiated in Lagos State High Court, the appellant as plaintiff claimed against the respondents reliefs seeking to revoke the letters of administration and an order declaring the validity of the Will made in 1947. After due hearing, the trial judge held inter alia that the Will made in 1947 was validly made and was not revoked by the 1961 marriage Act. The trial court granted reliefs which the plaintiff sought.
On appeal against the judgment of the High Court of Lagos State by the 2nd and 3rd respondents, the Court of Appeal allowed the appeal and set aside the judgment of the High Court. The Court of Appeal held that the Will made in 1947 was revoked by the statutory marriage of 1961.
The plaintiff then appealed against the judgment of the Court of Appeal to the Supreme Court.
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VENUE: THE CHAPEL
MINISTERING: Aniekan Udoh
HELD
The Supreme Court stated that the deceased is to be taken to have known all the laws which apply to his estate. That is the fallacy of the law. If it was his intention, after contracting the 1961 marriage under the Marriage Act, that he would vary or change or even revoke his 1947 Will, he would have taken such a step long before he was killed in 1966. Since he did nothing of the sort, it must be taken that he had intended that the Will should remain in force irrespective of the 1961 marriage.
Also, it is never intended by practice that a marriage under the Marriage Act should nullify the customary marriage or engagement but rather that it would supplement practice or custom. The parties are of course aware that by applying the Marriage Act to their relationship, their marriage would become monogamous.
The Supreme Court further stated that the circumstances of Nigeria has influence against the application of section 18 of the Wills Act 1837 to nullify a Will made prior to contracting a marriage under the Marriage Act.
The Supreme Court therefore held that the Court of Appeal erred in its decision that the Will made in 1947 by the deceased was revoked by reason of the 1961 marriage between the deceased and the first respondent.
Thus, the Supreme Court allowed her appeal, setting aside the judgment of the Court of Appeal and restored that of the High Court.
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MY NOTE ON PROPERTY LAW – WEEK 16
WILLS (3) – DRAFTING
CONTENTS
Limitations on the testator................................................................... Page 1 – 2.
Particulars of information required to prepare a Will.......................... Page 2 – 4.
Parts (contents) of a Will..................................................................... Page 4 – 6.
Ethical issues........................................................................................ Page 6.
Sample draft of a Will.......................................................................... Page 7.
Facts and principle on Idehen v. Idehen.............................................. Page 8 – 10.
Facts and principle on Adesubokan v. Yunusa.................................... Page 11 – 12.
Facts and principle on Ajibaye v. Ajibaye............................................ Page 13 – 14.
LIMITATIONS ON THE TESTATOR
In some parts of Nigeria, a Will cannot be made to displace customary and native law, rules and inheritance, because of the duality of the Wills system in Nigeria; it would mean that there are two results that may occur depending on the part of the country where the testator is from.
In some parts of Nigeria, for example, the Northern part, the main law that governs the making and validity of a Will is the Wills Act of 1837 which is a statute of general application. In some other parts Nigeria, for example, the old western region, it is the Wills law of their respective states that is applicable.
Therefore, in the parts where the Wills Act 1837 applies, a testator is at liberty to dispose of his properties as he pleases by his Will. In Adesubokun v. Yunusa (1971) 1 All NLR 225, the validity of the testator s Will was challenged on the ground that as a Moslem who was subject to Moslem law, the testator was not capable of making a Will in accordance with the Wills Act, contrary to Moslem law. The Supreme Court held that a Moslem may by his Will made in accordance with the Wills Act, 1837 dispose of his properties as he wishes. That the Moslem law which provides for equal distribution of a testator s properties in the face of the existence of a valid Will is in breach of section 3 of the Wills Act 1837 by which a testator can dispose of his properties as he wishes.
Also, in Apatira & Anor. v. Akanke & Anor. (1944) 17 NLR 149, it was contended that the validity of a Will made in English form by a Nigerian Moslem should be governed by Moslem law. This contention was flatly rejected by AMES J., when he held that "the fact that
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the deceased was a Nigerian and a Mohammedan cannot make any difference to the requirements of the Wills Act".
Presently, the mode of sharing of a testator who is a Moslem is equal distribution amongst all male children; one eight (1/8) to the wife or wives and not more than one-third (1/3) to outsiders – Adesubukan v. Yunusa.
However, in the states of the old Western region which have enacted their own law, there is a provision prohibiting a testator from disposing of his properties in a Will in a manner that is contrary to native law and custom on inheritance, for example, section 1(1) of the Wills Law of Lagos State. Thus, in the case of Idehen v. Idehen (1991) 6 NWLR (Pt. 198) 382, the testator, a Bini man by his devised his Igiogbe (main residential house) to his eldest son, a medical doctor. At the death of the testator, his eldest son, Dr. Idehen was not alive, thereby predeceasing the testator. The surviving oldest son contended that since the original eldest son to whom the Igiogbe was willed have died before the testator; he was entitled to inherit the Igiogbe being the surviving eldest son. This contention was upheld by the court.
Also, in Lawal Osula v. Lawal Osula (1995) 3 NWLR (Pt. 328) 128, the testator, a Bini chief made a Will in English form. The Will completely omitted the 1st plaintiff and some other children. He succeeded to his father s (testator s) title and performed second burial rites of the testator. The issue before the court was whether the testator could by his Will exclude the 1st plaintiff from inheritance of the Igiogbe, which by custom goes to the eldest son. The Supreme Court held that the power of the testator to make a Will is subject to customary law relating thereto and that the testator could not validly exclude his eldest son from inheriting the Igiogbe.
Another limitation of the testator can be found in section 2(1) of the Wills Law of Lagos State which provides thus –
"Notwithstanding the provisions of section 1 of this law, where a person dies and is survived by any of the following persons:
a) The wife or wives or husband of the deceased; and
b) A child or children of the deceased, that person or those persons may apply to the court for an order on the ground that disposition of the deceased estate effected by his Will is not such to make financial provision for the applicant".
The implication of the above provision is that where a testator fails to reasonably and adequately provide for the maintenance of his surviving dependants in his Will or trust as the case may be, an application may be made to the court for an order for payment to be made for that purpose from the testator s estate.
However, a testator may on reasonable and cogent ground disentitle any of the family member or dependant by stating his reason or reasons for so doing in the Will itself or in a separate document.
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PARTICULARS OF INFORMATION REQUIRED TO PREPARE A WILL
1. Take proper instructions – Solicitor must win the client s confidence. The intentions of the testator is paramount, it is better that the Solicitor should personally take instructions directly from the testator, it is not ideal for a solicitor to delegate his duty to any other person, written instruction are preferable. The solicitor should cover the entire field; the use of checklist is recommended. Where the testator gives oral instruction, copious notes should be taken and no information should be ignored.
2. Diligence and care – When drafting a Will, the solicitor must be meticulous and exercise a high degree of care and attention. The consequence of an error or ambiguity that is undetected until after the death of the testator is fatal and open to unpredictable judicial interpretation. Remember that the solicitor may be liable for his negligence in the drafting of the Will – Ross v. Counters (1980) Ch. 297.
3. Knowledge of the law – When embarking on the task of drafting a Will, the solicitor should bear in mind the importance of compliance with the applicable law on the essential and formal requirements of a valid Will. The testator must possess the requisite testamentary capacity, the witnesses should be contracted and where the testator is under any disability such as illiteracy or he is blind or he is dumb and deaf, the necessary jurat should be inserted and all legal requirements complied with. The place for the execution of the Will should be spacious enough to accommodate all concerned. Solicitors must always use good precedents, which he can modify according to his need.
4. Extent of the testator s property – The solicitor should be furnished with details of the properties owned by the testator. The title, location and value of such properties; information on any gift made inter vivos is also relevant. Information concerning the testator s interest in any company, insurance policy, pensions or any other venture is necessary. Knowledge of the extent of the testator s property is important in advising him and the calculation of estate duty; it may also be useful on the question of hotchpot (that is, the blending and mixing together of property belonging to different persons into a common lot in order to divide it equally). Instruction should be taken in respect of any property of the testator that is subject to customary law; any disposition of such property contrary to the relevant customary law may render the gift void.
5. Composition of the testator s family – The solicitor should be informed about the members of the testator s family and his dependants. Where the testator is married, the solicitor should ensure that adequate provision is made for the spouse to avoid the intervention of the court in making reasonable provisions for family members and dependants. Where the testator is not married, he should be informed of the legal consequence of subsequent Marriage Act on the Will.
6. Former Will – The solicitor should confirm if the testator has any previous Will or testamentary document that is not yet revoked. Where there is, it should be ascertained whether the present Will is intended to revoke the previous Will so as to properly reflect the intention of the testator in the Will. There is no reason why the
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testator should have more than one Will, a codicil may just be sufficient to carry out the testator s instructions.
7. Executors – The testator should be advised on the relevant considerations concerning those to be appointed executors and also whether it is necessary to also make them trustees. Where the executors will carry out professional duties under the Will, the necessity of a charging clause should be considered.
8. Directions as to the mode of burial – Instructions concerning the disposal of the testator s body are sometimes included in the Will. But it is not advisable that its inclusion in the Will is the only means of knowing how his body should be disposed of. In most cases, the dead is buried before his Will is read. This point is more relevant to the Will of a Moslem; under Islamic law, a Moslem is buried within 24 hours of his death according to Islamic burial rites. Therefore, where the testator desires that his body should be disposed of in any particular method, this should be communicated to close relatives, associate or executors of the Will during the lifetime of the testator.
The summary of the above is that a solicitor who is briefed to draft a Will should note the following information –
1. Ask of the testator s name, nickname, date of birth, religion, nationality, state of origin, profession and address.
2. Find out whether he has made any previous Will, and if yes, whether the Will can be made available to you.
3. Ascertain his marital status.
4. The name, profession and address of the executors, and any specific instruction as to the remuneration of the executors.
5. List of legacies to be given out.
6. Properties given out inter vivos.
7. List of his realties (landed properties and the custody of their deeds or document of titles).
8. State the name and addresses of the beneficiaries.
9. Manner of distribution of the estate to the beneficiaries.
10. Ask whether there should be any alternative/substitute beneficiaries, if any of the beneficiaries predeceases the testator.
11. Name, address and occupation of the witnesses.
12. Solicitor s remuneration.
13. Ask if the testator may need to leave any instruction as to his funeral or debt owed by him and note these separately in another document.
14. Ask about his debts and liabilities.
15. Ascertain whether there is need for survivorship provision.
PARTS (CONTENTS) OF A WILL
The various parts of a Will are –
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1. Commencement
2. Revocation clause
3. Appointment clause
4. Directive and Charging clause
5. Gift clause
6. Residuary clause
7. Testimonium
8. Execution and attestation clause
COMMENCEMENT and DATE
THIS IS THE LAST WILL AND TESTAMENT OF ... MADE THIS ... DAY OF...
This provides for the full names (and any former names or alias), address, occupation and the date of the Will.
Where no date is inserted in the Will or if the date on it is contested, the evidence of the attesting witnesses or some other persons present at the time of execution is admissible to prove the date of the Will – Adebajo v. Adebajo (1973) 3 ECSLR 544.
REVOCATION CLAUSE
I HEREBY REVOKE all previous testamentary dispositions made by me...
Every Will should provide for the revocation clause, except where the testator intends that he has other Wills that should be interpreted together, and both may be admitted to probate at his death. Having more than one Will is not good because it could be interpreted as implied revocation of the earlier Will.
APPOINTMENT CLAUSE
I APPOINT... to be the executors and trustees of my Will. AND I DECLARE that the expression "my executors and trustees" shall where the context so admit include...
With or without executors, the Will is valid. It is important that every Will make provision for appointment of executors who may also serve as trustees. The trustees may also act as guardian for the testator s infant children. It is important that the testator appoint a minimum of two and a maximum of four executors. The executors should be persons who are willing and capable to discharge their duties as executors.
DIRECTIVE AND CHARGING CLAUSE
I AUTHORISE MY EXECUTORS TO CHARGE... or I DECLARE THAT MY EXECUTORS SHALL CHARGE...
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This clause is for the benefit of professional executors who are, by this clause, permitted to charge professional fees for jobs done in the performance of their duties as executors.
GIFT CLAUSE
I GIVE TO...
The Will should provide for the various gifts, which may be specific, general, demonstrative or pecuniary. The clause is usually numbered serially.
RESIDUARY CLAUSE
I DECLARE THAT THE REMAINDER OF MY ESTATE SHALL... or I GIVE TO...
This clause provides for how the remaining properties of the testator not given out under the Will should be disposed of.
TESTIMONIUM
IN WITNESS OF WHICH...
The testimonium links the testator with the Will.
EXECUTION AND ATTESTATION CLAUSE
SIGNED BY...
A Will must be executed according to law. A Will is not executed as a deed; it is executed as SIGNED by... Where the testator is illiterate, blind, dumb or deaf, the jurat should be inserted. The names, signature, address and occupation of at least two witnesses must be provided.
ETHICAL ISSUES
1. A solicitor should draft a Will in clear and plain language to reflect the instructions of the maker and not create an ambiguity.
2. Where the solicitor is a beneficiary in a Will, he should comply with the rule laid out in Wintle v. Nye (1959) 1 WLR 284 (that he has the burden of proof necessary to dispel it).
3. The solicitor may be liable in negligence where he fails to advice the testator that a beneficiary to a Will (or his spouse) cannot attest the Will.
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(SAMPLE DRAFT OF A WILL)
THIS IS THE LAST WILL AND TESTAMENT OF______________ (name of the testator) made this _____ day of _____________
I REVOKE all former testamentary dispositions made by me AND DECLARE this to be my last Will.
I APPOINT ___________ (name and occupation of executors) of ___________ (address of executors) to be the executors and trustees of my Will. And I DECLARE THAT the expression "MY TRUSTEES" shall where the context so admits include my trustee for the time being of this my Will.
1. I GIVE my...........................................
2. I GIVE my...........................................
3. I GIVE my...........................................
4. I GIVE my...........................................
5. I GIVE my...........................................
6. I GIVE my...........................................
I DECLARE that if any of my child/children named in this Will dies in my life time leaving issue/issues, such issue/issues shall be entitled to take by substitution the share of my property that may said deceased child/children would have taken if he/they had survived me.
I DECLARE that my said executors/trustees shall be compensated with _____________ for the trouble and time expended by them in carrying out my wishes in this Will.
IN WITNESS WHEREOF I set my hand the day, month and year first above written.
SIGNED, by the within named TESTATOR _______________________
In our presence and attested by us present at the same time, in his presence.
Name....................................
Address.................................
Occupation............................
Signature...............................
Name....................................
Address.................................
Occupation............................
Signature...............................
PREPARED BY: ____________________
SOLICITOR
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IDEHEN v. IDEHEN (1991) 6 NWLR (Pt. 98) 382
FACTS OF THE CASE
Both the appellants and the respondents in this appeal are some of the Children of the late Joshua Iserhienrhien Idehen, a wealthy gentleman of Bini origin who died on the 18th day of September, 1979 leaving a number of real and personal properties. He left a Will dated 10th March, 1973 in which he made several devises and bequests. In his Will, he devised to his eldest son, Dr. Humphrey Idemudia Idehen, his two houses at No. 62 Akpakpava Street and No. 1 Oregbeni Ikpoba Hill, both in Benin City. It was common ground that the deceased lived in these houses in his lifetime and they therefore constituted his Igiogbe. Unfortunately Dr. Humphrey Idemudia Idehen predeceased his father and consequently the 1st respondent became his father s eldest son. Subsequently the respondents, as plaintiffs instituted an action in the High Court against the appellants, who were the executors of their father s estate, challenging the validity of their father s will.
Their claims as finally formulated in their further Amended Statement of Claims, are as follows:
1. A declaration that the document dated the 10th March 1973 purporting and/or pretending to be the will of Joshua Iserhienrhien Idehen (hereinafter referred to as the Deceased) who died on the 18th September 1979 at Benin City is null and void for not being the act of the deceased as well as for non-compliance with the relevant statutory requirements relating to Wills.
2. A declaration that in accordance with Bini Customary Law of succession, the 1st plaintiff as the eldest surviving son of the Deceased succeeds exclusively at all events to the houses and/or properties lying and situate at and known as No. 62 Akpakpava Street and No. 1 Oregbeni Ikpoba Hill, Benin City in addition to the lion s and/or disproportionately large share of the remaining part of the Deceased s Estate which the 1st plaintiff shares with the other children of the Deceased.
3. A declaration that the plaintiffs are entitled to a grant of letter of administration of the Estate of the Deceased.
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4. An Order of perpetual injunction retraining the defendants from administering, expending, disposing of or dealing in any way with the Deceased s estate or any part thereof.
5. An order compelling the defendants to restore to the said Estate any part thereof unlawfully disposed of or dealt with by them.
At the trial, the 1st plaintiff gave evidence and called four other witnesses who testified in support of his claims. The 1st defendant also gave evidence in his defence and called six other witnesses who testified in his support.
HELD
The trial court held that "A declaration that in accordance with Bini Customary Law of succession, the 1st plaintiff as the eldest surviving son of the Iserhienrhien (Deceased) succeeds exclusively to the houses and/or properties lying and situate at and known as No. 62 Akpakpava Street and No. 1 Oregbeni Ikpoba Hill, Benin City. For the avoidance of doubt it is ordered that the first plaintiff is entitled to hold these houses and/or properties in trust for himself pending such time as he may perform any second burial ceremonies as may be required and after which customary title to the said properties will vest in him absolutely."
Dissatisfied with the judgment of the learned trial Chief Judge, both the plaintiffs and the defendants appealed to the Court of Appeal.
In the Court of Appeal, both parties filed briefs of argument and after due consideration of all the issues raised by both parties for determination in that court, the court by a majority decision, allowed the plaintiffs appeal and dismissed the cross-appeal filed by the defendants.
The case went on appeal to the Supreme Court and the decision of the trial court was affirmed. In the judgment of the Supreme Court, Elias, C.J.N. while interpreting the words of Section 3(1) of the Wills Law stated as follows:
"It is not to be supposed that section 3(1) of the Wills Law can confer upon a testator the testamentary capacity to device property by Will which the testator would not otherwise have. The introductory phrase subject to any customary law relating thereto necessarily
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makes the power given to a testator under the subsection dependent upon the particular customary law permitting it. In effect, the power of the testator to devise his real and personal estates by Will is limited by extent, if any to which its exercise is permissible under the relevant customary law."
The Supreme Court further stated that the above passage clearly lends support to the appellants contention that the opening words of the section are intended to relate to the subject matter of the devise. In fact all that happened in Oke v. Oke as was explained by Obaseki, J.S.C. in Olowu v. Olowu (1985) NMLR 372, was that a provision of testamentary disposition in a Will was declared invalid for contravening the provisions of the relevant applicable customary law. Thus, the expression "subject to customary law relating thereto could not have been intended to qualify the testamentary capacity so unambiguously conferred on every Bini citizen by section 3(1) of the Wills Law. It is only subject to any customary law affecting the property to be disposed of. That being the case, the Supreme Court was unable to accept the submission of Chief Williams that Oke v. Oke was decided per incuriam.
The Supreme Court also partly allowed the appeal. The Court of Appeal erred in law in declaring the Will in its entirety null and void. Accordingly, that part of the judgment is set aside. However, that part of the judgment relating to the nullity of the devise of the deceased s Igiogbe stands. The judgment of the High Court is hereby restored.
The appeal was allowed
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ADESUBOKAN v. YUNUSA (1971) 1 All NLR 225
FACTS OF THE CASE
The claim against the defendant is for "a declaration that the probate dated 29/6/66 granted to the defendant in the matter of Yunusa Atanda Saibu (deceased) be revoked as the said Yunusa Atanda Saibu was a Moslem, died as a Moslem and left heirs and wives who are all Moslems. The defendant is the sole executor of the said Yunusa Atanda Saibu.
The relevant paragraphs of the statement of claim are –
Paragraph 3. Save that the defendant will plead res judicata in respect of the distribution of the estate of the testator by the Native Court of Zaria, the defendant denies paragraph 5 of the statement of claim and puts the plaintiff to the strict proof thereof.
Paragraph 7. The defendant avers that the testator was a native of Lagos and was until his death domiciled in Lagos; he was employed by Nigerian Railways in 1930 at Ebute-Metta, Lagos and the Railways transferred him to Zaria where he died on the 31st August, 1965.
Paragraph 8. The defendant will contend at the trial of this action that the defendant at all material times are not bound by nor are they subject to the native law and custom of Zaria and that they are only subject to the native law and custom of Lagos.
Paragraph 9. The defendant will contend at the trial that the native law and customs of Lagos permit natives of Lagos irrespective of their religions to dispose of all their personal and real property by a will.
Paragraph 10. The defendant will contend at the trial that the testator did not make the Will dated 7th July, 1965 under Moslem law, but in accordance with the provisions of the Wills Act, 1837 an Act of general application throughout the Federation of Nigeria.
Paragraph 11. The defendant will at the trial rely on the will dated 7th July, 1965 and its probate granted on the 29th June, 1966.
The learned trial judge in a considered judgment found the following facts:-
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1. That a Moslem of Northern State of Nigeria is entitled to make a Will under the Wills Act, 1837 but he has no right to deprive by that will any of his heirs, who are entitled to share his estate under the Moslem law, of any of their respective shares granted to them by Moslem law;
2. That in the case of a Will of moveable, the testator must comply with his personal law, that is, the native law and custom of his particular locality, unless such personal law is repugnant to natural justice, equity and good conscience or incompatible with any law for the time being in force which does not deprive any person of the benefit of the personal law of the testator; and
3. That where the testator is a native within the meaning of the Land Tenure Law and the Will concerns immovable situated in the Northern States of Nigeria, the testator must comply with the native law and custom, relating to devolution, of the place where the land is situated."
On these facts, the trial judge proceeded in his judgment to set aside the probate of the Will.
Unsatisfied with the judgment of the trial judge, the defendant/appellant appealed to the Supreme Court.
The Supreme Court stated that it was not properly established before the learned trial judge that the doctrine of Moslem law as expounded by the Maliki sect varies between the Northern States and the Southern States of Nigeria as found by him. In any case, the question hardly arises since there is no provision of any law which makes Moslem law, whether of the Maliki sect or any other sect, enforceable, either on its own, as such, or as part of any customary law, in any of the courts of the Southern States.
Thus, the appeal was allowed by the Supreme Court and the judgment of the trial court was set aside.
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AJIBAIYE v. AJIBAIYE (2007) All FWLR (Pt. 359) 1321
FACTS OF THE CASE
The deceased Testator, One Alhaji Disu Ajibaiye from Kwara State in Central Nigeria, made a Will dated 30 September 2002. The Testator died on 29 January, 2004. Only the third and youngest wife of the deceased (appellant) had knowledge and information of the Will. The appellant relied on the dispositions made in the Will, which the respondents objected to, contending that the Testator, being a Muslim could not make a Will. On trial at the High Court, the learned judge found that the Will dated 30th September, 2002 purporting to be the Will of a Muslim, Alhaji Disu Ajibaiye, governed by Muslim personal law, disposing by will all his property in accordance with the Wills Act 1837 of England having regards to section 4(1) of the Wills Law of Kwara State is invalid, null and void…
HELD
The appellant had attempted at the trial to establish by evidence that the deceased could not have been subject to Islamic law because of his lifestyle. This was dismissed by the learned judge and affirmed on appeal; the Court of Appeal held that despite the allegation, the Testator was a Muslim and had not renounced his faith. Further, that even if the Testator had children out of wedlock and had sold and consumed alcohol as alleged, "there is no controversy" about his faith. To say otherwise, is "merely splitting hairs" and making a "distinction without a difference". That assuming "…the deceased...committed any wrong when he was alive…he can only be sanctioned by the law of his faith. It is not for the appellant or anyone to judge." The court found evidence of the faith of the testator (that he was subject to Islamic law) because of the text of the Will, where the Testator directed that "My burial should be done in accordance with Muslim rites without drinking of alcohol either on the date of my death, burial or the days prayer."
HELD
The Court of Appeal answered held that the Will is ab initio void for being contrary to the Wills Law of Kwara State; and thus "the Testator could not have validly made a Will under the Wills Act 1837, a statute of general application which is no longer applicable in Kwara State."
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Secondly the Court held that the properties of a Nigerian Muslim in Kwara State after his death are subject to the dictates of Islamic law of inheritance which does not allow a Moslem to dispose of his properties any how… The properties must be distributed strictly in accordance with Islamic law after the lawful heirs were identified.
Thirdly the Court declared that the testator was a Muslim, and therefore subject to the application of Islamic law of Kwara State, notwithstanding his erroneous belief that he could still, while being a Muslim, elect to be governed by English Law in this regard.
Sample Draft
THIS IS THE LAST WILL of me, Mrs. Aduke Thomas of 12 Aduke Street Ikeja Lagos ("The Testator") made on the 14 day of March 2012.
I REVOKE all previous testamentary dispositions made by me, and I DECLARE this Will to be my last Will.
I APPOINT Dr. Lom Thomas of No. 10 Ikorodu Road Surulere Lagos, Mrs. Denba Gonjuwa of No. 10 Kent Street Ikoyi Lagos State and Mrs. Comfort Musakari of No. 67 Dempe Street, Mushin, Lagos State to be the Executors (Trustees) of my Will.
I DECLARE that my Executors or any Professional or person engaged in proving my Will and administering the estate may charge reasonable fees for their services
I GIVE my two storey building at No. 56 Awolowo Avenue, Ikeja, Lagos to my only son, Dr. Lom Thomas of No. 10 Ikorodu Road, Surulere, Lagos State.
I GIVE the remainder of my estate to my son Dr. Lom Thomas and my daughter Mrs. Gonjuwa of No. 10 Kent Street Ikoyi Lagos in equal share.
IN WITNESS OF WHICH, I Mrs. Aduke Thomas ("The Testator") have executed this Will in the manner below the day and year first above written.
SIGNED by the Testator, in the presence of us both and at the same time who at her presence subscribed our names as witnesses.
___________________________
Mrs. Aduke Thomas
IN THE PRESENCE OF:
Name: Kehinde Dukeson
Address: _________________________
Occupation: Civil Servant Date:
Signature: _________________________
Name: Ewahin Dillyton (Witness)
Address: ____________________________
Occupation: Legal Practitioner
Signature: ___________________________
Date: _________________________________
………………………………………………………………………………………………………………………………………...
Codicil
THIS IS THE FIRST CODICIL to the last Will and testament of me, Mrs. Aduke Thomas of No. 12 Aduke Street, Ikeja Lagos ("The Testator") made on the 10 day of May 2012.
I REVOKE clause 5 (five) of my Will made on the 2012, and confirm the Will in all other respects.
I GIVE all my residuary Estate to my sister, Funke Thomas of No. 1 Agege Road, Ikeja Lagos, Dr. Lom Thomas my son and Mrs. Gonjuwa my daughter in equal shares.
IN WITNESS OF WHICH, I Mrs. Aduke Thomas ("The Testator") has executed this Will in the manner below the day and year first above written.
SIGNED by the Testator in the presence of us both and at the same time who at her presence subscribed our names as witnesses.
_____________________________
Mrs. Aduke Thomas
IN THE PRESENCE OF:
Name: Kehinde Dukeson (Witness)
Address: __________________________
Occupation: Civil Servant
Signature: _________________________
Date: ______________________________
Name: Ewahin Dillyton (Witness)
Address: ___________________________
Occupation: Legal Practitioner
Date: _____________________________
Signature: _______________________
THIS IS THE LAST WILL AND TESTAMENTARY DISPOSITION OF ME JOSEPH JOHNSON of No 3 Law School Drive Lagos (formerly known as _______ OR also known as ________________) MADE this ___________ day of ___________, ____________
I REVOKE ALL FORMER TESTAMENTARY DISPOSITIONS MADE BY ME.
I APPOINT _______ of _______________ and _____________ of ____________ to be the executors of my Will
I DECLARE that any individual, firm or organisation engaged in the administration of my estate shall be entitled to charge and be paid all usual professional fees for work done, service rendered or time spent in the administration of my estate.
I GIVE _______ to __________
I GIVE _______ to __________
I GIVE _______ to __________
I DECLARE that the remainder of my estate be given to ____________________
IN WITNESS Of WHICH I, Joseph Johnson (testator) have executed this Will in the manner below the date and year first above written
Signed by
_______________________
Joseph Johnson (Testator)
IN THE JOINT PRESENCE OF THE UNDERSIGNED WITNESSES WHO SUBSCRIBED TO THE WILL IN THE PRESENCE OF THE TESTATOR
________________________
Koko Bwai (Witness 1)
No 5 Zaria Terrace, Jos
________________________
Nimbe Bons (Witness 2)
No 4 Utan Lane, Jos.
Prepared by:
K. O. Okwor Esq
Star Chambers
No 6 SRQ, Jos.
Week 18
Probate and Letters of Administration
Meaning of Probate
Probate is an official verification of a Will; admitting the Will. It is granted only where:
There is a valid Will
Executors were appointed in the Will
Preliminary matters towards obtaining probate include:
Search for the Will at the Probate Registry or Bank etc.
If the Will is found, send it within 14 days to the Court within the jurisdiction where the testator died
The Will is to be read 7 days after the testator's burial in the presence of persons interested.
See Order 55. High Court of Lagos (Civil Procedure) Rules.
Personal Representatives
The Executors, also known as the propounders, are to prove the Will for the grant of Probate in respect of it.
A Limited Liability Company and an adult individual can be appointed Executors. However, a minor and a person of unsound mind cannot be appointed executors. The qualities to be sought when appointing executors or personal representatives include:
Availability and willingness to act as Executors/Personal Representative
They should be persons of younger ages
Honest and reliable
The personal representatives should be made up of people that can work together
They must not have any conflict of interest in the estate to be administered
They should be knowledgeable and experienced in administering estates of deceased persons
They are resident in places that are of relative cost and proximity to the estate
An Executor/Personal Representative may be appointed by any of the following means:
They may be appointed expressly by being named in the Will
Impliedly or by the tenor of the Will
By operation of the Law, e.g. when the chain of executorship will not be allowed to be broken when all the executors granted probate are dead. The executor to the last Executor who died will be allowed to apply for Letters of Administration to continue with the execution of the Will left by the dead Executors. Section 28. Administration of Estate Law of Lagos State.
Substitutional executors
By authorization of another to appoint the executors
By description
Appointment by the Courts when there is a Will but no executors so appointed therein.
A maximum of 4 Executors are to be appointed. No minimum number of executors are required to be appointed. This differs from the position with respect to Administrators as a minimum of 2 administrators are to be appointed and a maximum of 4. However, a single administrator may be appointed where:
The Sole beneficiary in the Will is appointed sole Executor
Where a Trust corporation is appointed to be the Executor of a Will.
Section 9 & 24. Administration of Estate Law Lagos.
Probate will not be granted to an executor where:
He is an infant
The executor is outside the country
He is mentally incapacitated
The executor was discovered to be the murderer of the testator
The executor renounces his appointment as executor
The executor appointed has been earlier removed as executor by the Court
Before Probate is granted, it can be renounced by filing Form 71 of the High Court of Lagos State (Civil Procedure) Rules 2012 to the Probate Registrar. The renunciation must be total in all respect to execution of the estate under a Will. This should be done after the testator's death but before probate is granted. However, an Executor de son tort may be prevented from renouncing probate because he has already started administering the estate of a deceased.
Double Probate
Double probate arises when an executor applies for a second grant of Probate after a first one has been granted to other Executors duly appointed in a Will. The instances where double probate will be granted are:
The applicant is an infant executor who was denied a grant because of his age. Upon reaching maturity, he will be granted a double Probate.
Where a vacancy exists in the number of Executors, the reserved executors, if more than 4 were appointed in a Will, will apply to fill it by a grant of double Probate
An Executor was abroad and arrived after the grant of probate. He can apply for a double probate.
Types of Probate
Common Form Probate. This is a non-contentious Probate as it is granted without any action in Court challenging the validity of the Will.
Solemn Form Probate. This is a contentious Probate which is granted only after the action in Court challenging the validity of the Will has been determined.
The factors that make a probate to be contentious include:
Where the will was not validly made
People who applied for the probate are not the appropriate persons to obtain such grant
Placement of caveat at the Registry.
Procedure to Obtain Probate
The procedure to obtain probate is as follows:
Order 58. HCCCPR Lagos.
Step 1
Discovery of the Will.
Where the Will is discovered, the solicitor or the Executor will need to intimate the Probate Registry of the discovery the Will, the testator might have already deposited the Will at the Probate Registry
The executors will apply via a letter to the Probate Registrar for the grant of Probate attaching:
CTC of the Will
Copy of the testator's death certificate
All relevant information required to be disclosed.
Step 2
A date is fixed for the reading of the Will. On the fixed date, the registrar then brings out the Will breaks the sealed wax on it and reads the Will in the presence of persons present and makes a record of the proceedings of the day. Ajibaiye v. Ajibaiye
The Probate Registrar will, after receipt of the application for probate, give the Probate Forms to the Executors to be completed and returned to him:
Step 3
Assessment of the Estate is conducted by the Registrar and Estate duty will be paid on the total asset chargeable at 10% of the value of the estate.
Step 4
The Forms are duly filled and returned attaching passport photographs of applicants and the witnesses to the Will
Step 5
If satisfied, the Probate Registrar grants Probate to the Applicants with the copy of the Will attached
Proving a Will
The procedure for proving a Will (solemn form probate) is as follows:
The executors apply for grant of Probate or if they fail to do so, a Notice of citation will be given to the Executors to either prove the Will or renounce their executorship within 21 days. Order 55. Rule 7 & 8. High Court of Lagos State (Civil Procedure) Rules 2012.
If any person is objecting to the grant of Probate, he is to file a caveat (caution) which is a notice to the Registrar not to grant Probate until the matter is resolved. The Caveat, when filed, is to last for 3 months once entered. Form 3 or 4. Administration of Estate Law of Lagos, Dan-jumbo v. Dan-jumbo.
In response to the Caveat, the applicants/executors are to file a Warning/citation stating their interest in the testator's estate and requesting the caveator to state his interests within 8 days of receipt of the warning
If the caveator fail to enter appearance by responding within 8 days to the Warning, he is deemed to have abandoned his claim and probate will be granted to the Applicants
An Affidavit is to be filed by the applicants when the Caveator defaults in appearance.
Conversely, if the caveator responds within the 8 days and states reasons for challenging the validity of the Will, issues have been joined and the applicants/caveator will go to trial to prove/disprove the Will in question.
Letters of Administration
This is issued to enable the personal representatives of a deceased who died without making a Will, to administer his estate after the death of the deceased. It is issued where:
A person died intestate (without making a Will); or
The testator made a Will with no executors appointed
If executors were appointed, there is none to act.
When a Will was made but was rejected by the Court
Partial intestacy due to absence of residuary clause
An administrator or personal representative cannot act or deal with the deceased's estate unless Letters of Administration are granted otherwise his acts are void.
Check list of Necessary Documents for grant of letter of Administration
Application for letters of administration
Death certificate of the deceased
Declaration on oath
Oath/justification by sureties on behalf of the applicant in a specific penal sum to guarantee his administration of the estate.
A duly completed bond by the applicants to pay the debts and liabilities of the deceased estate, to distribute the estate and also to make inventory.
An authorization by way of a bank certificate issued by the registrar to a personal representative or applicant to inquire into the details of the bank account of the deceased.
A duly completed inventory specifically listing the properties the deceased person which the administrator wishes to administer
Evidence of Newspaper publications.
Passport photographs of the applicants and sureties.
Declaration of the next - of - kin
Letters of Administration (with Will annexed) is issued when:
No executor is appointed in the Will
The appointment of the executor(s) is void
The executor(s) appointed predecease the testator
The sole executor(s) has renounced Probate
The procedure to obtain letters of administration (without a will annexed) is as follows:
An application is made to the Probate Registrar stating:
The full names of the deceased
The last fixed place of abode of the deceased
The names of the proposed administrators
Attach a copy of the death certificate of the deceased
The applicants should collect, fill and file the Forms from the Registrar as follows:
Application for grant of Letters of Administration (without Will annexed)
Oath for Administrators
Administration Bond
Schedules of debts and burial expenses
Bank certificate
Inventory
Particulars of leasehold properties
Declaration as to Next of kin
Publication will be made in Newspapers for objections within 21 days of the application
If there is no objection, the Letters of Administration will then be granted
The type of marriage contracted by the deceased intestate will determine who will be entitled to make application for grant of letters of administration. If the intestate conducted a Customary Law marriage, then upon his death native law and custom on succession of the deceased intestate's estate will apply. However, where he married under the Marriage Act, then the provisions of the Administration of Estate Law of the State where the deceased intestate was resident before his death will apply.
The priority of persons entitled to a grant of letters of administration under Section 49. Administration of Estate Law of Lagos is as follows:
Surviving spouse, which could be either the husband or wife
The children of the deceased or issues of the children of the deceased
Parents of the deceased
Brothers and sisters of the whole blood and their issues
Brothers and sisters of half blood
Grand parents
Uncles and aunts
Creditors
If there are no creditors, then the office of the Administrator - General of the State can apply
Obusez v. Obusez
Letters of Administration (With or Without Will Annexed) De Bonis Non
This is applied for and granted when Letters of Administration had earlier been granted but the administration of the estate is not completed because of the death of the Administrators.
The executor/administrator to the last deceased Administrator will apply for a grant in order to save the chain of administration. Section 28. Administration of Estate Law of Lagos State.
Special Grants of Letters of Administration
Grant to creditors
Grant pendente lite - pending the outcome of a litigation in proving/voiding a Will
Grant durante absentia - granted when the executors are abroad
Grant ad litem - granted when the executors so appointed are mentally or physically incapacitated
Grant ad colligenda bona - applied for and granted to preserve perishables in the estate of a deceased intestate
Re-Sealing of Grants
This is applied for when Probate or Letters of Administration is granted in one State while there are other real properties of the testator/deceased in other States. The Executors/personal administrators will apply to the Probate Registrar of the High Court of the other State to re-seal the grant in order to be able to administer the properties therein. Section 2. Probate Re-sealing Act.
The procedure for re-sealing of grant is as follows:
An application is made to the Probate Registrar informing him of the need to reseal grant. The application will disclose all the relevant information and attach a CTC of the Probate/Letters of Administration earlier granted requesting that it be re-sealed
The Registrar gives the executors the following Forms to complete and return:
Application for re-sealing of Probate/Letters of Administration
Oath to lead re-sealing
Bank certificate
Inventory
Particulars of freehold and leasehold property of the deceased
Administration Bond
The Forms are completed and returned with the original and 2 CTC of the Probate/Letters of Administration sought to be re-sealed carrying the seal of the Court that granted it
After re-sealing of the grant, the Probate Registrar shall send Notice of it to the Court that made the original grant
It should be noted that grants from commonwealth countries may be re-sealed in Nigeria in the above manner.
Revocation of a Grant of Probate
This is usually the case in Common Form Probate (uncontested grant of probate). The grounds for revoking a grant are as follows:
When a subsequent Will/Codicil superseding the first Will is discovered after a grant
Fraud/misrepresentation in obtaining the grant
When the testator is not dead
When the grant is issued to two executors and one becomes insane, it will be revoked and a new one granted to the sane executor
Where the grant was issued to the Administrator-General; and
Where the person to whom the grant was made consents to its been revoked
An application letter for the grant of probate:
NDU GABRIELLA & CO
BARRISTERS AND SOLICITORS
NO. 15 BROAD STREET, LAGOS ISLAND, LAGOS.
OUR REF: _______________________ DATE: 21 May, 2013.
To:
The Probate Registrar
High Court 12
Ikeja Judicial Division
Lagos State.
Sir,
IN THE MATTER OF THE ESTATE OF LATE MRS ADUKE THOMAS
APPLICATION FOR GRANT OF PROBATE (RE-SEALING OF PROBATE/ LETTERS OF ADMINISTRATION)
We are Solicitors to Dr. Lom Thomas, Mrs. Demba Gonjuwa and Comfort Musakari who are the Executors of the Will of Mrs Aduke Thomas (now deceased) of No. 12 Aduke Street Ikeja Lagos, who we will refer to herein as "our clients".
It is our clients' instructions that we apply for the grant of Probate on the Will of Mrs. Aduke Thomas (deceased) who died on the 10 day of January 2013 and before her death she lived at No. 12 Aduke Street Ikeja Lagos and within the jurisdiction of this Court.
Please find attached the following documents for your kind consideration:
Certified true copy of the Will of Mrs. Aduke Thomas dated 14 March 2012.
Copy of the death certificate of Mrs. Aduke Thomas dated 14 January 2012.
We will appreciate if the necessary Forms to process Probate are made available to us.
Thank you.
Yours faithfully,
________________________________
NDU GABRIELLA
(Principal Partner)
For: NDU GABRIELLA & CO.
………………………………………………………………………………………………………………………………………...
Week 19
Personal Representatives and Assent
The term personal representative includes:
Executors
Administrators
They are the ones appointed or granted the authority to administer the estate/properties of a deceased.
The general rule is that executors are not entitled to remuneration. Re Orwell. The exceptions where they may be entitled to some remuneration are as follows:
Upon a Court Order
Recouping of Out- of pocket expenses
There is a Charging Clause in a Will
The executor is also appointed a Solicitor
Renunciation of executorship can be done by the following means:
Filing of an Affidavit of renunciation. Order 55. Rule 30. HCL CPR
A failure to respond to a citation within 21 days by the executors
The executors died before taking the grant. See Section 6. Administration of Estate Law of Lagos.
Executors De Son Tort (Executorship by One's Acts)
This may arise from the following acts of an individual:
An unauthorized interference with the properties in an estate. Adeniyi Jones v. Martins
Executors intermeddling with the estate without applying for Probate/ Letters of Administration. Order 55. Rule 8. HCL CPR.
A beneficiary intermeddling with the estate.
An executor de son tort must apply for Probate/Letters of Administration within 3 months otherwise he may be liable for any of the following:
Liability for the losses suffered by the estate
Liability to pay for services rendered to the estate during his intermeddling in the estate
Liability to creditors
Liability for personal expenses
Liability for payment of estate duty
Liability to pay fine
He can be cited to take up Probate etc.
Powers of Personal Representatives
Power to postpone the distribution of the estate. Section 47. Administration of Estate Law Lagos
Power to sell, mortgage or lease property in the estate
Power to appropriate assets
Power to deal with and manage the estate
Power to appoint trustees
Power to run the business or trade of the testator
Power to be indemnified his personal cost in running of the estate
Power to invest the estate
Power of right of action to protect the estate
Power or right to carry out action on distress to the estate
Power to insure
Power to delegate
Modes of Appointment of Personal Representatives
Expressly by naming them in the Will
Impliedly or by the tenor of the Will
By operation of the Law, e.g. when the chain of executorship will not be allowed to be broken when all the executors granted probate are dead. The executor to the last Executor who died will be allowed to apply for Letters of Administration to continue with the execution of the Will left by the dead Executors. Section 28. Administration of Estate Law of Lagos State.
Substitutional executors
By authorization of another to appoint the executors
By description
Appointment by the Courts when there is a Will but no executors so appointed therein.
The Duties of Personal Representatives include:
To prove the Will
To ensure the testator is given a decent burial
To gather the estate of the deceased
To issue Assent when necessary
To account and keep records of the administration
The liabilities which personal representatives may be subject to include:
Liability for waste
Liability for conversion
Liability to creditors or beneficiaries
Liabilities for intermeddling with the estate when Probate has not been granted
These are situations when the liabilities so incurred by a personal representative will be waived or forgiven. They are as follows:
By the express provisions in the Will appointing the Executors. An exception is where it is a fiduciary duty that is breached by the executors.
Relief obtained from the beneficiaries/ creditors concerned in a Will
Relief from Court
A plea of Limitation of Statute
To avoid liability, the Personal Representative should take the following precautionary measures in the Administration of the estate:
Keep proper accounts
Operate a separate Bank account for the estate
Make payments by cheque
Avoid payment of estate money into personal account
Obtain receipts for all payments or transactions on the estate
Keep and obtain counter-folds of all receipts issued
The accounts to be kept/filed by the personal representatives are:
Inventory of the property of the deceased
Vouchers
An account of administration to include:
All monies spent
Out of pocket expenses
All debts paid
All assets of the estate
Attach a verifying affidavit
The account is to be filed in Court every 12 months until the administration is completed. Order 55. Rule 46(9). HCL CPR.
An account will be called by the Probate Registrar in the following instances:
Where a compliant of maladministration is made
Where an application that a personal representative be removed is made
When the personal representative has applied to be discharged or surrenders the estate
On completion of the administration
The Doctrine of Relation Back in Exercise of Power to Sue by an Executor
The general rule is that a personal representative cannot sue on behalf of the deceased estate except a grant of Probate/Letters of Administration has been obtained. An exception to the above rule is that the executor(s) can commence an action without a grant (in his personal capacity) but during the pendency of the suit where a grant is obtained, he is to make an application to the Court to reflect the plaintiff's status as Administrator(s) of the estate. When the application is granted by the Court, it will relate back to the date the action was commenced.
The principle of relation back will only apply when the action is commenced in the personal capacity of the executor(s). The Adminstrators of Sani Abacha v. Eke - Spiff.
Assent by Personal Representatives
An Assent is used to vest title in realty on the beneficiaries because it is the rule that title in the estate of the testator is vested in the personal representative. An Assent need not be by Deed. Section 3. Administration of Estate Law Lagos.
The use of Assents will depend on the area and the applicable Law as follows:
In Western Nigeria and in Lagos, an assent must be used to vest title over a leasehold property on the beneficiary because the deceased real property first vests in the personal representative before same can be later vested in the beneficiary. Renner v. Renner.
In States of the former Northern and Eastern Nigeria (covered by the Conveyancing Act), a formal Assent is not required and the beneficiary takes his gift from the Will.
It should be noted that it is only personal representatives/ executors that can grant and confer Assent, trustees cannot do so except by a Formal conveyance. An Assent is not a registrable instrument and no stamp duty is expected to be paid on it because estate duty was earlier paid before a grant of Probate/Letters of Administration was made. Section 40(11). Administration of Estate Law of Lagos.
For an Assent to be valid, it must satisfy the following conditions:
Must be in writing
Signed by all the personal representatives/executors
The property to which the assent is granted must be certain
The beneficiary must be stated
Renner v. Renner
Discharge of Personal Representatives
This can be applied for in the Court that granted Probate/Letters of Administration when the personal representative has completed the administration of the estate and final accounts filed.
Certain duties arise for personal representatives to handle after they have been discharged by the Courts. This may arise on any of the below ground:
New properties of the testator were discovered, the personal representative will be called to complete the administration
The personal representative was discovered to have breached his duty of trust
The Sequence/Order in Administering or Winding-Up a Deceased's Estate
Give the deceased a decent burial
Collect the deceased's assets into an inventory
Apply to obtain a grant of Probate/Letters of Administration
Settle all debts and liabilities of the deceased
Distribute the estate in accordance with the Will if any or the Native Law and custom of the deceased intestate
Render accounts of administration to the Probate Registry as required by Law
Apply to the Court to be discharged after the administration of the estate is completed.
The Formal Parts of an Assent
Commencement/date
Parties clause
Vesting clause
Declaration clause
Acknowledgement clause
Testimonium
Execution
Attestation
Assent:
WE, Mr. Tope Bianga of No. 12 Buyo Street, Ikeja Lagos, Dr. Lom Thomas of No. 10 Ikorodu Road, Surulere, Lagos and Mataka Danmusa of No. 17 Edu Close, Ikeja Lagos, THE PERSONAL REPRESENTATIVES (EXECUTORS) of Mrs. Aduke Thomas (Deceased) of No. 12 Aduke Street, Ikeja, Lagos who died on the 17th day of November 2011 and whose Will was proved on the No. 10 day of December 2011 in the Probate Registry of the High Court of Lagos State:
DO HEREBY on this ______ day of _____________ 2012 as such personal representatives, ASSENT to vesting in Dr. Lom Thomas of No. 10 Ikorodu Road, Surulere, Lagos State (the Beneficiary) ALL THAT two storey building at No. 56 Awolowo Avenue, Ikeja, Lagos covered by a certificate of Occupancy No. 876534 dated 12/11/2004 and registered as No. 24 Page 45 and Volume 5647 of the said Mrs. Aduke Thomas at the time of her death.
WE DECLARE that we have not previously given or made any assent or conveyance in respect of any legal estate in the property or any part of it
WE ACKNOWLEDGE the right of Dr. Lom Thomas (the Beneficiary) to the production of the Probate of the Will (the possession of which is retained by us) of the deceased and to the delivery of copies.
IN WITNESS OF WHICH we, Tope Bianga, Dr. Lom Thomas and Mataka DanMusa have set out our respective hands to this Assent the day and year first above written.
SIGNED, AND DELIVERED by the within named
________________________ ________________________ ________________________
Tope Bianga Dr. Lom Thomas Mataka DanMusa
IN THE PRESENCE OF:
Name: _________________________
Address: _______________________
Occupation: ___________________
Signature: _____________________
Date: ____________________________
Week 20
Property Law Taxation
Taxes are compulsory charges by the (government) on the income of an individual, corporation or trustee as well as the value of an estate or gift. It is a compulsory levy imposed by competent authority or organ of government for public purposes.
Generally, taxes are levied directly or indirectly. Direct taxation occurs where persons are taxed to pay for no particular services or goods delivered, but simply for the maintenance of government and its services. Indirect taxation occurs where persons are charged for services rendered to them, transactions conducted or for their activities.
The taxes collected by the Federal Government include:
Companies Income Tax
Withholding Tax on Companies, residents of the Federal Capital Territory and non-resident individuals.
Petroleum Profit tax
Value Added Tax
Education Tax
Capital Gains Tax on residents of the FCT Abuja, bodies corporate and non-resident individuals.
Stamp duties on bodies corporate and residents of the Federal Capital Territory
Personal Income Tax in respect of members of the forces, residents of the FCT Abuja, members of Nigeria Police Force and Staff of the Ministry of Finance and non-resident individuals.
The taxes collected by state government include:
Personal Income Tax (PAYE)
Withholding tax (individuals only)
Capital Gains Tax (individual only)
Stamp duties on instrument executed by individual
Road taxes
Pools betting and lotteries and gaming and casino tax on individuals
Business premises registration fees
Development fees for naming street in a state capital
Markets (where state finances are involved)
Right of occupancy fees over lands owned by state in urban areas of the state.
The place of payment of the taxes payable on a specific transaction depends on the class/status of the party making the tax payment or the location as follows:
If it is a Company, Federal Staff in Government establishments and Military Personnel, Non-resident individuals and persons resident in the Federal Capital Territory, it is to be paid to the Federal Government and is collected by the Federal Inland Revenue Service (FIRS)
If it is a transaction between individuals, or a civil servant or workers in the State, or transactions over State Lands, the State Government collects the taxes through the State Inland Revenue Service.
Taxable transactions as relating to property include:
Sale of Land
Mortgage
Lease.
Overview of Taxes Payable in Property Transactions
Capital Gains Tax (CGT)
These are levies charged on the gains accruing upon disposal of assets as provided for under the Capital Gains Tax Act. Capital gains tax shall be chargeable on the total amount of chargeable gains accruing to any person in a year of assessment after making such deductions as allowed. Section 2(1). CGTA
These gains are those resulting from increases in the market value of assets to a person who does not regularly offer them for sale and in whose hands they do not constitute stock-in-trade. The tax is on the gain of the disposed property implying then that if no gain is made the tax cannot be charged.
The rate of capital gains tax is 10%.
Before computing the gains, "allowable deductions" are to be deducted. Section 13. CGTA. Allowable deductions are expenses that are wholly, exclusively and necessarily incurred for the acquisition of the property. The allowable income includes:
Amount paid for the acquisition of the property
Incidental cost of acquisition
Amount incurred in enhancing the value of the property
Money spent on the establishment, preservation or defending the title or right over the asset.
Cost incidental to the disposal of the asset. Such cost of advertising, costing valuation of asset.
Fees, commission or remuneration paid to professional surveyors, Auctioneers, Agent, Valuers, Solicitors.
The following incidents, however, do not qualify as allowable deductions and cannot be deducted:
Cost of disputing the taxable portion e.g. engaging service of a Solicitor to institute action.
Direct Labour put into improvement of the Property shall not allowed e.g. Mr. A wants to paint the house himself through his family members; he will not be allowed to deduct payment for the direct labour. Oram v. Johnson
A redemption of mortgage and reconveying of the property to the mortgagor does not amount to a disposition of assets for the purpose of Capital Gains. This is because a mortgage transaction is not sale. The devolution of property to beneficiaries by a personal representative does not amount to disposal of interest. Hence, CGT will not be paid.
The following persons and organisations are exempted from capital gains tax in respect of property disposal by them.
Religious, charitable or educational institution of a public character.
Statutory or registered friendly society
Cooperative society registered under the cooperatives society law of a state.
Trade Union registered under the Trade Union Act. Section 26.
Gains accruing to local government
Gains accruing to any Company and authority established by Law to purchase and export commodities from Nigeria. Section 27.
Disposition by way of gift
Section 40.
The formulae for the determination of the Capital Gains Tax payable is as follows:
Calculate the total consideration received in the disposition of the property
Determine the cost of Purchase of the property
Subtract the Cost of Purchase from the Consideration received for the property [Consideration received – Cost of Purchase] to determine the Capital Gain
Determine the Allowable Deductions and subtract from the Capital Gain [Capital Gain – Allowable Deductions] to determine the taxable income
Capital Gains Ta payable is 10% of the Taxable Income.
Stamp Duties
These are duties (taxes) imposed on and raised from stamps charged on instruments, parchments and other legal documents. Stamp Duty may be Fixed or Ad Valorem. Some documents attract duties at a Flat or Fixed sum e.g. Powers of Attorney registered with AGIS. Other documents attract Stamp Duties Ad Valorem i.e. Percentage based.
When the stamp duty is paid, the document is stamped by an impression of a red wax or other mark being made on the document. The federal Government (national) has the right to legislate on stamp duties. The rate of 3% is charged as stamp duties on the value of transactions in many States in Nigeria.
Fixed Stamp Duties are to be paid within 40 days. However, Ad Valorem Stamp Duties are to be paid within 30 days
Where a document is unstamped, the following will apply:
The document will not be admissible in evidence. However, the Court may order it to be admitted in evidence upon immediate payment of the stamp document. Okwuwobi v. Ishola.
The document will not be registered.
It will attract a penalty.
3. PERSONAL INCOME TAX
Personal income tax is tax paid on profits of an income as opposed to profits arising on the disposal of capital assets.
It is payable by individuals, communities, families, trustee, or executors, partners in partnership S 2, 4, 8, PITA.
INCOME CHARGEABLE UNDER PERSONAL INCOME TAX
Gain or profit from any trade, business, profession or vocation.
Any salary, wage, fee, allowance or other gain or profit from employment including compensation, bonuses
Gain or profit including any premiums arising from a right granted to any other person for the user or occupation of property
Dividend, interest or discount.
Any pension, charge or annuity
Any profit, gain or other payment.
TAX CLEARANCE CERTIFICATE
Tax clearance certified (TCC) on the income of a person for the 3 years immediately preceding the current year of assessment may be issued to a person under the following circumstances.
TAX CLEARANCE CERTIFICATE IS ISSUED WHEN:
An individual has fully paid his personal income tax or
Where no tax is due on his income.
When an individual is not liable to pay income tax
S. 84 (1) of the Personal Income Tax Act.
CONTENTS OF A TAX CLEARANCE CERTIFICATE
Chargeable income
Tax payable
Tax paid
Tax outstanding
WHEN DOES A CLIENT NEED TO TENDER HIS TCC
Transfer of interest in land
Application for loan from government
Application for subsidy and aids in agriculture
Signing as a Surety for Bad
Application for a grant of Certificate of Occupancy
Application for registration of a company or Business
Approval of Building Plans
Application for allocation of market stalls
SECTION 85(1) PITA.
4. TENEMENT RATES
Tenement rates are charges imposed on houses and buildings within a state.
The major features of tenement is the presence buildings and also occupation of the building by persons.
NB Tenement rate is the same as Land Use Act which is obtainable in Lagos State.
The State House of Assembly prescribe Legislations for assessment of tenement although the ultimate beneficiaries of the rates are the LOCAL GOVERNMENT IN THE STATES.
5 MISCELLANEOUS CHARGES AND FEES
These are other forms of charges made in the course of property transfers, though not described as tax, are charge imposed with the aim of raising revenue for government.
Ground Rent: Usually charged by the Governor of a state for grant of right of occupancy
SECTION 5 LAND USE ACT.
Consent fee
Registration fee: This is a requirement for the grant of the Governor's consent for alienation of property subject to a right of occupancy under S. 22 LUA. It is also a requirement for registration of any clear of transfer or mortgage or lease.
Tenement Rate: Charges on buildings and occupation: It is shall not be charged on buildings occupied and used as:
Religious centres
Cemeteries and burial grounds
Non-profit making institutions engaged in charitable and educational purpose.
b. Value Added Tax (VAT): This is a consumption tax: It is tax payable on manufactured goods and on services rendered or employed by consumers.
It is levied at each stage of the consumption chain and borne by the final consumers.
VAT is administered and managed centrally by the FEDERAL INLAND REVENUE SERVICES (FIRS) in close cooperation with Nigeria Custom Service (NCS)
- DISTRIBUTION OF THE PROCEEDS.
15% to Federal Government;
50% to State Government & FCT
35% to Local government.
LIABILITY FOR FAILURE TO PAY TAX
PAYMENT OF TAXES IS COMPULSORY
CIVIL LIABILTY-: An action may be instituted to person to recover the tax as debt.
CRIMINAL LIABILITY/PENALTY: S. 40 FIRS Act
On conviction, such a person shall be liable to pay the tax withheld in addition to a penalty of 10% of the tax and the prevailing CBN minimum ____________and imprisonment for a period of more than ______________.
If notice of demand to pay is served on the persons income tax and he fails to do so within one month, attracts a penalty S. 96(4) PITA.
Where personal income tax is not paid and TCC obtained through fraudulent means, misrepresentation. It is a crime punishable with N500.00 fine imprisonment on both.
After contest of assessment, and there is no all (ie the assessment is final and conclusive), the goods and other assets of the person liable to pay will be distrained in order to satisfy the sums out against him.
NB
LEVY is a compulsory payment imposed by government which includes taxes, fines
ETHICAL ISSUES
Duty to act within the bounds of the law R. 15 Do not advise a client to work towards tax evasion. Tax evasion as distinct from tax Avoidance.
Duty to keep record of all taxes paid by client.
Duty not be professionally negligent as to incur excess costs.
Do not delay the payment of tax so as to avoid bringing the client within penalties.
Do not misappropriate taxes and fees payable to the state R. 23.
Do not deliberately pay to the wrong authority, pay to the appropriate authorities.
All money collected from client must be deposited in the Client Account.
Duty of confidentiality R. 11.
Duty to pay taxes on fees collected by the Solicitor for professional services.
note
Section 12 Personal Income TAx
Every person other than a Governemtn employee must keep record of his personal incomes for tax purposes.
Default attracts fine
N100,000.00 for individuals
N500,000.00 for corporate bodies.
Withholding Tax: There is a duty imposed on individuals deduct tax and permit same to the government. Failure to do so is called withholding.
CLASS EXERCISE
Chief Clifford Sanusi brought a plot of land from state government in 1970 for N100,000.00 He completed building consisting a block of four flats (3 bedrooms each). He spent N900,000.00 to complete the project.
In 2007, he sold the block of flats to Alhaji Rita Odia, the Sebe-sebe of Oyo State for N5 million after renovating the building with N500,000.00
Vike Idris Esq. is the solicitor handling the sale on behalf of the parties. He advised Chief Clifford Sanusi to pay his capital gain tax.
Assuming the Solicitor was paid N500,000.00 compute the capital gain tax to be paid.
ANSWER
1. Consideration received N5 million
2. Cost of purchase of property N100,000
3. Gain = 5,000, 000 – 1000,000 = 4,900,000
4. Allowable income
Building cost 900,000
Renovation 500,000
Solicitors fees 500,000
1960,000
5. Gain less total allowable income 4900,000
1900,000
3,000,000
6. 10% of (total Gain – Total allowable income)
= 10/10 x 3,000,000
Capital Gain Tax = N300,000.00
REVISION QUESTIONS
WHAT IS THE EFFECT OF THE CONSTITUTION ON TAX JURISDICTION
Nigeria being a Federation, the tax jurisdiction is influenced by the division of legislative powers under the CFRN, a unit of government can only impose tax on matters it can legislate on. –S.4(1) CFRN 1999
IF AN ESTATE VALUER SELLS PROPERTY, WILL HE PAY CGT?
No, he will not. Such taxes will be paid by him as Personal Income Tax or a Companies Income Tax. This is because such property sold (or selling such property) is his stock-in-trade which sale does not qualify as a disposal of assets to warrant the charging of capital gains tax.
WHO TAKES THE PROCEEDS OF CAPITAL GAINS TAX
STAMP DUTIES
Where CGT and stamp duties are collected by state.
They will be deposited into a consolidated fund of the state.
Even where the Federal Government collects CGT and stamp duties, it is expected to remit it back to state based on Duration formula ie based on how much was collected from each state.
There must be an Act of the National Assembly specifying how such tax is to be shared.