INTRODUCTION
On the 7th February, 2022, the Executive Governor of Lagos State (the State), His Excellency, Mr. Babajide Sanwo-Olu signed the Lagos State Real Estate Regulatory Authority (LASRERA) Bill into Law.1 The LASRERA Law ("the Law") is intended to regulate real estate transactions in Lagos state as well as protect individuals from illegal real estate transactions and fraudulent persons/organizations in the real estate sector in the state.2 The Law makes provision for the interpretation of the terms that are essential to real estate transactions and administration in Lagos state such as 'Abandoned Buildings or Structures', 'Broker', Client, 'Field Worker', 'Memorandum of Understanding', 'Off-plan Arrangement', 'Real Estate Transaction', 'Stakeholders' amongst others.3
This article highlights salient provisions of the Law with the objective of enlightening the public on the innovations introduced to the real estate landscape in Lagos state.
SIGNIFICANT INNOVATIONS INTRODUCED BY LASRERA LAW
Establishment and Functions of the Lagos State Real Estate Authority
Section 2 of the Law established the Lagos State Real Estate Regulatory Authority ("the Authority"). The Authority, like any other statutory body, has a juristic personality, with perpetual succession and a common seal and the power to sue and be sued. It also can acquire, hold and dispose of any property or interest to carry out its functions under the Law.4
The Law establishes the Governing Board of the Authority whose composition includes a chairman, a legal practitioner, and other practitioners in the real estate sector amongst others, who in the opinion of the Governor are of good character and integrity.5 The Law further specifies the power of the Board amongst others.6
The functions of the Authority include:
- Formulation of policies for proper dealing in real estate transactions in Lagos state in line with global best practices;
- Recommendation of policies to the State Government that will enhance real estate transactions in the State;
- Maintenance of a comprehensive and updated register of permits of real estate service professionals;
- Setting up monitoring teams and conducting inspection to ensure compliance with the Lagos State Tenancy Law, the Criminal Law as it relates to transactions and other applicable legislations on real estate transactions;
- Receiving and investigation of petitions and complaints from members of the public;
- Ensuring the protection of citizens from illegal real estate transactions.7
In addition, the Authority shall maintain a register of operations relating to transactions containing details of persons or organizations dealing in the real estate sector as the Authority deems appropriate, and ensure the register is made available for inspection to members of the public as well as update the list of all realtors and transactions forwarded to it by a person or organization dealing in the real estate sector.8
Dispute Resolution Power of the Authority
The Authority is empowered to act as mediator in disputes reported to it by parties to real estate transactions.9 It assists and ensures that parties settle their disputes amicably and timeously through mediation. The law provides for the establishment of a Committee of Inquiry responsible for the hearing and determination of reports of misconduct, complaints or petitions from the public against persons or organizations dealing in real estate in Lagos State.10
The Committee is to consider reports it receives from the public; give the person or organization that deals in real estate against whom a complaint has been made to make oral or written representation within two (2) weeks of the notice of the complaint by inviting such person or organization.11
It is pertinent to state that the Authority has the power to prepare a Memorandum of Understanding (MOU) between disputing parties.12 The MOU, which must be in writing, represents the full and final settlement between the parties and it is enforceable in a Court of Law.13 The parties must recognise the MOU as binding on them once it is endorsed by a Magistrate or Judge as appointed by the Chief Judge.14 For a party to enforce the MOU, such a party must present a duly authenticated original copy of the MOU or a duly certified copy of it.15 The enforcement of any MOU, upon leave of Court, shall have the same effect as a judgment or Order of the Court.16
We anticipate that parties to these disputes shall require mediators to assist them in presentation of their claims/defences before the Committee of Inquiry. Legal practitioners who have undergone some formal training in mediation or have garnered professional experience in this regard, are eligible for this role before the Committee of Inquiry.
Registration of Practitioners in the Real Estate Sector
The Law confers eligibility for registration on a person or organization dealing in real estate business in the state.17 However, such an entity must meet certain criteria as stipulated by the Authority.
For an individual, these requirements must be complied with:
- The individual must be a Nigerian;
- Must possess a valid work permit (for a non-Nigerian);
- Must be at least eighteen (18) years of age;
- Must possess the Lagos State Residents Registration Agency (LASRRA) number;
- Have an ascertained business premises or office within the State;
- Must possess a minimum educational qualification of WASC, GCE or NECO;
- Have proper records of transactions and operate a separate client account;
- Have three (3) years Tax Clearance Certificate preceding the date of registration; and
- Register at least a business name with the Corporate Affairs Commission.18
For a corporate applicant, these requirements must be complied with:
- Evidence of registration with the Corporate Affairs Commission (CAC);
- Proper records of transactions and operating a separate client account;
- Have at least one Director in the company who possesses the conditions stated for an individual;
- Ensure that all non-Nigerian Directors have a valid work permit and comply with all laws in respect of foreigners; and
- Have three (3) years Tax Clearance Certificate preceding the date of registration.19
It is worth noting that before the Authority can issue the necessary permits to engage in real estate transactions in the State to stakeholders dealing in the real estate sector, either as a property developer, facility manager or property management company, such person or organization must register with the Authority specifying any project it is undertaking as at the time of registration.20
Where an individual or a corporate entity default in complying with the registration requirement, such default amounts to a criminal offence and the individual will be liable, on conviction, to a fine of not less than ?250,000.00 (Two Hundred and Fifty Thousand Naira Only), while in the case of the corporate entity, the fine shall not be less than ?1,000,000.00 (One Million Naira Only).21
Restriction of Foreign Involvement in Real Estate Transaction in Lagos State
The Law provides that every foreigner or foreign company who desires to invest in real estate in the State must seek and obtain the permission of the Governor through the Authority.22 Noteworthy, where a foreigner invests in any land in the State, the same shall not exceed twenty-five (25) years, including any option to renew.23 This is subject to the provisions of the Acquisition of Land by Aliens Law24 and any other applicable laws on real estate within the State.
We anticipate that Joint Venture transactions within the State where foreign participation occurs are subject to the regulatory oversight of the Authority. Hopefully, the consent requests for foreigners are expeditiously determined, else the fast-paced nature of such transactions are likely to be affected.
Issuance and Validity of Permits
The law provides for the procedure for the issuance of permit. A real estate stakeholder qualified for registration is required to pay a fee as prescribed by the Authority, to the Authority for the issuance of the necessary permit. The purpose of the permit is to properly monitor the activities of real estate stakeholders in the State.
A permit is valid for one (1) year and may be renewed on the satisfactory performance of the condition for its renewal.25 An issued permit can lose its validity on the happening of any of the following:
- Revocation by the Authority;
- Expiration of the permit;
- Voluntary surrender by the holder;
- Revocation or declaration of its invalidity by a Court of competent jurisdiction.26
Compilation of Abandoned Buildings
The Authority is empowered to compile all identified abandoned buildings or structures within the State and forward same to the relevant Ministry, Department and Agency (MDAs) for necessary actions and revert to the Authority within the period specified in the notice served.27 Also, where the relevant MDA(s) recommends the completion of or remedial activities on a building or structure within a specified time and the owner or occupier fails to comply with such, the Authority shall give a final reminder to the relevant MDA(s) to render identified abandoned buildings or structures to the Authority, within three (3) months of service of the relevant statutory notices.28
Section 38 (1) of the Law lists the characteristics of an abandoned or uncompleted building which are: buildings that have not been developed due to lack of funds; constitute a nuisance; is a safety risk; contribute to environmental degradation and are used as a ground for the perpetration of criminal activities. The Law grants the relevant MDAs the discretion to serve a notice on the owner of any building that falls into the categories listed above to complete the construction of the building or structure or do certain things within three (3) months or such period as the Authority may deem fit.29 The MDA can further grant an additional three (3) months where the owner or occupier of such abandoned or uncompleted building or structure fails to complete construction of the building or structure or do certain things within the period specified in the notice.30
Power of Acquisition, Compensation and Demolition
The Law empowers the Authority to revoke the subsisting right of occupancy in the abandoned or uncompleted structure in accordance with the Land Use Act, 1978 where the owner or occupier of such structure fails to comply with the notice or is unable to convince the Authority of the ability to complete the building or structure.31
Section 42 of the Law compels the payment of compensation for the revocation of a right of occupancy to be compliant with the provisions of the Land Use Act 1978 and must be made within a reasonable time. This is important as it ensures that the legislations do not contradict themselves.32
The Authority has the responsibility of reporting to the appropriate governmental MDAs that is empowered to demolish any abandoned or uncompleted structure which, in the opinion of the Authority constitutes a danger to the health and safety of the public.33
Power to Borrow
Section 47 of the Law empowers the Authority to borrow money for and in connection with the exercise of its functions under the Law as may be allowed under the financial regulation of Lagos state. This power is subject to the approval of the Governor of the state.
Pre-Action Notice
The Law compels the Authority to be given a pre-action notice of one (1) month before any suit can be commenced against it by an intending claimant.34 The pre-action notice shall include the cause of action; particulars of claim; name and place of abode of the intending claimant; and claims or reliefs sought by the intending plaintiff or claimant.35 The processes of service of the pre-action are enumerated in section 44(3) of the Law.
Offences & Penalties
Section 48 of the Law generally provides for the penalties for contravening the provisions of the Law. Some of the penalties include:
- the revocation of the permit or a fine of ?100,000.00 (One Hundred Thousand Naira Only) and a fine of ?10,000.00 (Ten Thousand Naira Only) for each day of non-compliance in the case of a registered individual;
- a fine of ?100,000.00 (One Hundred Thousand Naira Only) and a fine of ?25,000.00 (Twenty-Five Thousand Naira Only) for each day of non-compliance in the case of an unregistered individual;
- the revocation of the permit or a fine of ?500,000.00 (Five Hundred Thousand Naira Only) and a fine of ?30,000.00 (Thirty Thousand Naira Only) for each day of non-compliance in the case of a registered organization; and
- a fine of ?500,000.00 (Five Hundred Thousand Naira Only) and a fine of ?50,000.00 (Fifty Thousand Naira Only) for each day of non-compliance in the case of an unregistered organization.36
The Law is silent on whether the fines are final or if an appellate authority can review these fines.
CONCLUSION
The Law is a welcome development in the real estate sector as it establishes the Lagos State Real Estate Regulatory Authority, as the watchdog of an efficient and safe real estate ecosystem. The Law has explicitly clarified the nature of stakeholders in the real estate sector and seeks to regulate their activities through various measures-permits, fines, consents etc.
Although, there have been criticisms of some provisions of the Law, it is envisaged that the emergence of the Law will curtail the fraudulent activities of persons who claim to be licensed developers and real estate agents.
Footnotes
1 Sanwo-Olu signs bill regulating real estate transaction, two others into law (premiumtimesng.com) accessed 15 April 2022.
2 https://guardian.ng/property/new-lagos-law-will-protect-real-estate-transactions-says-official/ accessed 15 April 2022.
3 Section 1 of the Law.
4 Section 2(2) of the Law.
5 Section 4(1) of the Law.
6 Section 5 of the Law.
7 Section 6 of the Law.
8 Section 25 (a) & (b) of the Law.
9 Section 7 (a)-(c) of the Law.
10 Section 33 (3) of the Law.
11 Section 33 (4) of the Law.
12 Section 36 (1) of the Law.
13 Section 36 (2) (b) of the Law.
14 Section 36 (2) (d) of the Law.
15 Section 36 (3) of the Law.
16 Section 36 (4) of the Law.
17 Section 26(1) of the Law.
18 Section 26 (2) (a) - (i) of the Law.
19 Section 26 (3) (a) - (e) of the Law.
20 Section 27 of the Law.
21 Section 48 (a) of the Law.
22 Section 28 (1) of the Law.
23 Section 28 (2) of the Law.
24 CAP A1, Revised Laws of Lagos State 2015 ("ALAL").
25 Section 29 (3) of the Law.
26 Section 30(1) of the Law.
27 Section 37 (1) of the Law.
28 Section 37 (2) of the Law.
29 Section 38 (2) of the Law.
30 Section 38(3) of the Law.
31 Section 41 of the Law.
32 Section 42 (1) & (2) of the Law.
33 Section 43 of the Law.
34 Section 44 (1) of the Law.
35 Section 44 (2) of the Law.
36 Section 48 (b) of the Law.
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