Land has been regarded as the most acceptable tangible security for bank lending. This is because of its reliability and marketability and the fact that the value appreciates from year to year. However, the advent of the land use Act has characterized the regime of real securities into a comatose state and made such transactions a less attractive option.

Land is the very basis of commercial and industrial enterprise in Nigeria. It is the most important factor of production in industry as well as agriculture. Its usefulness and importance cut across all forms of businesses and professions.1 Businessmen require land for buildings, factories and warehouses; professionals in practices such as law, medicine, etc, need land to locate their offices, chambers, clinics, etc. Indeed, every citizen in Nigeria and all over the world needs a piece of land to use for one purpose or the other.

Accordingly, everyone stands in some relation to the land either as occupier, holder, tenant, licensee, pledgee or mortgagee. In this way, land law touches upon a vast area of social orderings and expectations, exerting a fundamental influence on the life-styles of the people.2 Every person requires land for his support, preservation and self actualization within the general ideals of the society. Land is the foundation of shelter, food and employment. Man lives on land during his life and upon his demise, his remains are kept in it permanently.3 It is as a result of this great value attached to land that man craves its use as subject matter of mortgage transactions. Mortgage transactions and the taking of land as security dates back to ancient history

In early Nigeria, pledges were encouraged, rather than outright sales, as land was held to belong to the community or family rather than the individual.5 This went on smoothly as the indigenous people had their indigenous ways of resolving their issues, until the promulgation of the Land Use Act 1978,6 which overhauled mortgage transactions in a tremendous manner. The Act sets out in its section 1 to assert the state ownership of land. Hence, the power of control and management over land in Nigeria is conferred on the government.

Section 1 of the Act provides thus: “Subject to the provision of this Act, all lands comprised in the territory of each state in the Federation are hereby vested in the Governor of that state and such land shall be held in trust and administered for the use and common benefit of all Nigerians in accordance with the provision of this Act”.

The implication of the foregoing provision is that the erstwhile owners are divested of their ownership of land whether occupied or unoccupied. Thus, by virtue of section 1 of the Land Use Act the concept of radical title to land existing in the owner prior to the Act has been abolished and substituted with the limited title in the form of a Right of Occupancy. By section 5 of the Act, the governor is empowered to grant statutory right of occupancy to any person for all purposes, and any such grant by the governor operates to extinguish all existing rights to the use and occupation of the land7 From Sections 21-23, the Act firmly established the Governor’s supervision and control over all land in the urban area of the state such that no transaction would take place in property without his consent having first been sought and obtained.8The effect of this is that individuals, communities and families who hitherto had the freedom to do as they pleased with respect to their portions of land were stopped in their tracks. All of a sudden they now hold the land at the mercy of the Governor. However, by the combined effects of Sections 34, 35, 36 And 51(1) Paragraphs 3 And 15 Of Act, the rights of any person or community using or occupying land in accordance with customary law are preserved though in a limited form of a Right of Occupancy under the Act. Also, the devolution of right under customary law upon death of the holder of a Right of Occupancy is preserved subject to section 24 of the Act, thereby sustaining the concept of family property.