Sale and Leaseback Agreement (Nigeria)

A Sale and Leaseback Agreement in Nigeria sets out the rights, duties and consideration binding the parties to it.

Sale and leaseback transactions in Nigeria are governed by the Land Use Act 1978 (for real property), the Companies and Allied Matters Act 2020 (CAMA 2020) for corporate transactions, the applicable state land registration law, and the general law of contract and property. For real property sale-leasebacks, the sale component requires governor's consent under Section 22 of the Land Use Act 1978, stamping under the Stamp Duties Act (Cap S8, LFN 2004), and registration at the relevant State Land Registry. The leaseback creates a new leasehold interest in favour of the original owner.

Nigerian financial institutions — including banks regulated by the Central Bank of Nigeria (CBN) under the Banks and Other Financial Institutions Act (BOFIA) 2020 and finance companies licensed under the Finance Companies Regulations — engage in equipment and property sale-leaseback financing as a mode of asset-backed lending. The Finance Act 2021 introduced new leasing-friendly tax provisions, including capital allowances on leased assets and clarity on VAT treatment of financial lease payments.

For publicly listed companies, the Securities and Exchange Commission (SEC) Nigeria, under the Investments and Securities Act (ISA) 2007, and the Nigerian Exchange Group (NGX) listing rules may require disclosure of material sale-leaseback transactions as related party transactions or transactions requiring shareholder approval under the NGX Rulebook.

The legal framework governing the Sale and Leaseback Agreement (Nigeria) in Nigeria draws on several key statutes and regulatory bodies. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Parties executing a Sale and Leaseback Agreement (Nigeria) in Nigeria should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Land Use Act 1978 (Cap. L5) sets the foundational requirements.

A Sale and Leaseback Agreement in Nigeria is used in a range of commercial, real estate, and corporate finance scenarios.

A Sale and Leaseback Agreement is needed when a Lagos or Abuja property owner — a company, individual, or institution — needs to raise capital by monetising a property asset while continuing to operate from the same premises. Nigerian companies in the hospitality, retail, and manufacturing sectors have used sale-leaseback transactions to finance expansion, retire debt, or meet working capital needs without relinquishing operational premises.

A Sale and Leaseback Agreement is required when a Nigerian bank or mortgage institution — regulated by the CBN under BOFIA 2020 — structures asset finance for a customer by purchasing the customer's property or equipment and leasing it back, creating a financing arrangement that sits on the bank's balance sheet as a lease receivable rather than a conventional loan.

A Sale and Leaseback Agreement is needed when a logistics company in Lagos or Port Harcourt needs to access the capital value of its fleet of trucks, generators, or heavy equipment by selling to a finance company and leasing back, to redeploy the released capital into operational growth without losing use of the essential assets.

A Sale and Leaseback Agreement is required in the aviation sector, where Nigerian airlines (such as Air Peace or United Nigeria Airlines) may sell and lease back aircraft to foreign lessors, structuring the transaction under Cape Town Convention on International Interests in Mobile Equipment (to which Nigeria acceded) and the CAMA 2020 corporate security framework.

A Sale and Leaseback Agreement is needed when an educational institution, hospital, or NGO in Nigeria sells its physical premises to an investment company and leases them back on a long-term basis to release endowment capital for programme activities.

Parties in Nigeria should prepare a Sale and Leaseback Agreement (Nigeria) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.

A valid Nigeria Sale and Leaseback Agreement must contain the following essential elements.

Parties: Full legal names, addresses, and CAMA 2020 RC numbers of the seller/lessee and the buyer/lessor. For financial institution buyers, include the CBN licence reference and regulatory classification under BOFIA 2020.

Asset Description: For real property — full address, plot number, LGA, state, Certificate of Occupancy number, and survey plan. For equipment — make, model, serial number, year of manufacture, and current condition report. Attach survey plan or asset schedule as a schedule to the agreement.

Sale Terms: The sale price in NGN, payment terms (lump sum on completion or deferred payment), and completion date. For real property, the sale component requires governor's consent under Section 22 of the Land Use Act 1978, stamping at the State Internal Revenue Service, and registration at the State Land Registry.

Leaseback Terms: The lease commencement date (typically the same day as sale completion), the lease term (typically 5-25 years for real property), the annual or monthly lease rental in NGN, payment frequency, and rent review mechanism (typically every 3-5 years indexed to CPI published by the National Bureau of Statistics (NBS) or to prevailing market rents).

Purchase Option: Whether the lessee has an option to repurchase the asset at the end of the lease term or at specified intervals, and if so, the repurchase price mechanism.

Maintenance: Allocation of maintenance responsibilities — for a finance lease structure, the lessee typically bears all maintenance; for an operating lease, the lessor may retain structural maintenance obligations.

Insurance: The party responsible for insuring the asset and the required insurance cover, beneficiary designation, and obligation to produce annual insurance certificates.

Default and Termination: Events of default (non-payment of rent, insolvency, breach of maintenance obligation), the lessor's rights on default including forfeiture of the lessee's option, and notice procedures.

Tax Treatment: Acknowledgement of the VAT treatment of the lease payments (subject to VAT at 7.5% under the Value Added Tax Act as amended by the Finance Act 2020), WHT on rent payments under the Companies Income Tax Act (CITA) Cap C21, and capital allowance entitlements.

Governor's Consent: For real property, condition precedent that the sale component is effective only upon receipt of governor's consent under Section 22 of the Land Use Act 1978.

Additional compliance elements for a Sale and Leaseback Agreement (Nigeria) used in Nigeria include: Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Forms-legal.com provides this template as a starting point for Nigeria-compliant documentation.