To most people, acquiring land in Uganda comes with a justified dread of having to navigate a rather tenuous sea of uncertainty regarding what rules they will have to play by, both during and after acquiring property.
Land tenure refers to the systems that govern the ownership of land. Yet this definition may seem unhelpful before we understand the principle that underlies real property law in most of the civilised world; the notion that the ownership of property simply speaks to the holding of a specific “interest” in the property, defined by certain rules. Thus, when we say we own land somewhere, we probably mean we hold an interest in the land depending on the laws that govern that area.
Following from Uganda’s tumultuous history of land ownership, the four terms that the 1995 Constitution and the Land Act, Cap 227 (passed in 1998) give to assist us understand the nature of the interests we hold in land are: freehold, leasehold, Mailo and customary tenure.
But their characteristics and how they overlap can pose mind-numbing challenges to a person that simply wants land to use. This can be exacerbated by many interests recognised by law that seem like ownership of land but are not necessarily so; the likes of lawful and bona fide occupancy as well as tenancy by occupancy come to mind. But every Ugandan must understands what the four terms mean. We shall focus on freehold and Mailo in this article while the next shall concentrate on leasehold and customary land.
Freehold tenure denotes a registered interest in land held in perpetuity, subject to the statutory and common law qualifications such as physical planning edicts and easements. This kind of interest essentially gives someone the fullest form of individual ownership. Key to note though, is the fact that only about 19 per cent of the land in Uganda falls under this tenure system.
The Mailo tenure system, on the other hand, bears a lot of similarities with the freehold system. But it permits the separation of ownership of land from the ownership of the developments made thereon by the lawful or bona fide occupants.
Around 1900, when the colonial authorities, in their wisdom, gave freehold rights to the kings and feudal lords of the age, they essentially created a host of landowners beholden to the inhabitants of that land who inevitably became their tenants commonly known as kibanja holders. This landowner-kibanja holder dichotomy has persisted through succession and to date, plagues many transactions on Mailo land.
Expectedly, the controversy usually arises when someone purchases land expecting what we call “quiet possession” only to be confronted by livid and often intractable tenants seeking either to be compensated or plainly refusing to vacate. On the other hand, some people ostensibly buy land from these tenants, thinking they have acquired more than a tenancy, whereas not. The resultant conflict with the landowners is often grim.
If you want to start a construction project, the challenges of the Mailo system have the potential to drive up the cost of doing business. Whether it is at the point of negotiating a purchase of land, or after the acquisition the price of land increases because the compensation of the tenants inevitably has to be factored in. Besides the financial cost, there is an unavoidable opportunity cost for the developer since they are prone to lose time attending to the multi-tiered interests on the land. Such challenges must thus inform the nature of due diligence to be conducted before concluding a transaction on Mailo land. A search at the registry would have to be supplemented by the more important site visit, as well as discussions with the residents and local authorities. Waiting to do that after the purchase could prove detrimental.
The Land Act, cap 227 laudably makes provision for a Land Fund meant to assist tenants by occupancy in the acquisition of registered interests in the land. The reality, however, seems to be that while some mailo land owners have been compensated out of the land fund, this quagmire is yet to be fully resolved. Protecting the rights of tenants is important, but so are policy measures to streamline real estate business in areas under the Mailo system. Ramping up efforts to have tenants obtain registered interests would be a step in the right direction as it would ease transactions in this pivotal real estate sector.