Is There A Need For A Condominium Housing Law In Nigeria?

The word ‘condominium’ refers to a building or complex of buildings containing a number of individually owned units. Each unit is deemed land with each unit owner having the full title to the apartment and a collective right of use of the common facilities on the property such as the elevators, gym, spa, lobby, swimming pool, parking lot, rooftop, stairway, etc. This innovative system of home ownership differs from an apartment building which is owned by one person or a corporate entity but is leased out to people who do not own their own units.

The description of the units, its common areas and any restrictions on their use is captured in a document known as a “Master Deed” or “Condominium Document”. It also establishes the association of owners of the units popularly referred to as Home Owners Association (HOA) which is a corporate entity responsible for enforcing its provisions through a board of directors.

This system of housing has been in place in various parts of the world from as far back as 1967. Some of these jurisdictions are: Ontario Canada, Singapore, England, Wales, Hong Kong, South Africa, United States of America and Finland.

In Nigeria, in order to make up for housing deficits and to cater for the ever increasing population in major cities, especially Lagos, housing structures in this form developed around the early nineties and today, is rapidly becoming the latest mode of home ownership in the Metropolitan City. However, multi-unit development projects remain largely unregulated in Nigeria, and have led to developers individually determining the nature/structure of the developments, the amenities to be provided, the body of rules to govern the unit holders, and the nature of title to be transferred to the unit holders.

According to the Land Use Act of 1978, the system of land holding in Nigeria is that of State ownership which is vested in the Governor of that state with individuals merely having a right of occupancy over the land which is in principle, a leasehold interest over the property for a period, typically ninety-nine (99) years. Further, under this system, obtaining the consent of the Governor or the Local Government Authority as the case may be is a condition-precedent to an alienation of a right or interest over the land by way of sale, mortgage or sub-lease and any alienation without the appropriate consent first sought, is void.

The mode of ownership under the condominium housing system in which each unit is deemed land is not provided for under the Land Use Act (LUA) thus making it difficult to assign title to each unit owner. Consequently, developers have ingeniously adopted the sublease system, as a means for transferring rights to the units, howbeit for a period less one day of the lease term granted by the Governor, thereby retaining the reversionary rights to the Unit. However, this arrangement may have an adverse effect on a unit owner. Most importantly, as a lease or a sub-lease agreement presupposes that reversionary interest in the subject matter of the lease lies with the lessor or sub-lessor as the case may be. I.e. at the end of the term of the lease or sub-lease, all proprietary interest in the subject matter goes back to the lessor or sub-lessor. Suffice it to say that this undermines the very essence of unit ownership, as the unit holder is not at any time the true owner of the rights to the unit.

By contrast, in other jurisdictions where this mode of housing is strongly operated, legislative framework is put in place with its primary focus being the protection of the right and title of unit owners. An example of such legislation is The Condominium Act, 1998 of Ontario, Canada. The provisions of this law are extensive and cover a myriad of issues relating to the setting up, operation and use of condominium housing such as, the requirements for plans and paperwork to start a condominium, ownership and management of the units, mode and process of transfer of the title to the units, rights of unit owners, the establishment of the Home Owners Association (corporation), its powers and duties, creation and enforcement of by-laws, etc.

Having this legislation in place comes with a lot of advantages perhaps the most important being the guarantee of the title of each unit under the Act. Essentially, a prospective developer who has a freehold interest in a piece of land registers a declaration and description for a freehold condominium divided into units. Once registered, the Act treats each unit as real property and the unit owner’s title to it along with the common facilities is recognized and guaranteed under the Act.

Some other advantages worthy of mention are: It ensures that basic constitutional principles as it affects the rights of unit owners are upheld. Also, it makes for uniformity in the creation, management and use of condominium housing which come under the purview of the Act. Further, it helps to mitigate the risk of construction of sub-standard condominiums by usurious developers seeking to maximize profit.

Giving the great advantages of having a legislative framework in place to regulate multi-unit property developments in Nigeria, it is recommended that a Condominium Act, similar to that applicable in the jurisdictions earlier mentioned, is enacted and made alongside the provisions of the Land Use Act. This would result in each unit owner having a distinct title guaranteed by the state without being subject to the developer’s title. Also, it dispenses with reversionary interest of the developer in the property at the expiration of the sub-lease. An additional advantage is that a Condominium Act would stipulate standards to be adopted for every multi-unit development in the country, thereby providing uniformity of standards and regulating the development and management of these units.

Most importantly, a codified body of rules regulating developments of this nature will provide local and foreign investors with a higher sense of security of investment and could lead to improved foreign investment in the Nigerian Real Estate Industry.

On a final note, it is evident that the promulgators of the Land Use Act did not envisage the condo living situation. However, giving its increasing popularity in major cities across the country, there is a dire need for the necessary actions to be taken in order to protect the interests of the present and prospective unit owners.