Implications of the Tribal Land Act No. 1 of 2018

Bonolo Selelo | Monday May 9, 2022 06:00

Land PIC: MORERI SEJAKGOMO

Are you a holder of Tribal Land?

If you are the holder of Tribal Land (including companies that hold tribal land) whether in terms of a Certificate of Customary Land Grant (Certificate) or a Common Law Lease (Lease), you are now required, in terms of section 23, 24 and 25 of the Act to apply to the Land Board within six months of April 20, 2022 to register or re-register such Certificate or Lease with the Deeds Registry. If you are the holder of Tribal Land that was allocated to you by a Kgosi before the old Tribal Land Act came into being and you do not have a Certificate or a Lease you are still required to submit an application within six months of April 20, 2022 for the registration of the rights.

The process of registration is handled by the relevant Land Board. A person must submit an application to the Land Board concerned in the prescribed form. The form has not been prescribed as yet as no regulations have been promulgated to go with the new Act.

The application must be submitted together with the current original Certificate or Lease and once the Land Board is satisfied that indeed the land belongs to the applicant the Land Board then submits the application to the Deeds Registry and the Deeds Registry will issue a Deed of Customary Land Grant (the Grant) if the applicant is a citizen or a lease if the applicant is a non - citizen. The Act does not stipulate how registration is achieved for tribal land awarded by a Kgosi where there is no existing Certificate or Lease.

Whether your rights to the land were held in the form of Certificate or a Lease, once the registration or re-registration process is carried out the old Certificate/Lease will be replaced with a Deed of Customary Land Grant (the Grant) if the applicant is a citizen or a lease if the applicant is a non - citizen. The definition of citizen in the Tribal Land Act includes a company whose shares (100%) are wholly beneficially owned by citizens. This means that the usual definition of a citizen company as one with 51% shareholding does not apply in respect of ownership of tribal land or any rights in tribal land. If any shareholding of a company is held by a non-citizen then such company would not be considered to be a citizen for purposes of the new Tribal Land Act. If you fail to make an application to the Land Board within the six months period prescribed, or if the Land Board has tried to locate you and has failed, the Land Board has the power to sign all necessary documentation and proceed to submit the application for registration on your behalf without your input. The risk with this is that the Land Board will, without surrender of the previous original Certificate or Lease be able to effect registration or re-registration and the issue of a new Deed of Customary Land Grant or a new Lease with the result that there could be two (2) Certificates/ Grant or Leases in respect of the same property in circulation at the same time. This seriously impacts on security of land tenure. The Deed of Customary Land Grant will be issued on terms and conditions to be stipulated by the Land Board with the consent of the Minister. Since the Act is silent on what those terms and conditions are, we cannot at this stage state what these conditions will be.

No transactions of whatsoever nature can be carried out in respect of tribal land without the consent of the Land Board. This mean you cannot lease the property for a period of more than five years, or mortgage the property or sub - divide or carry out any act of disposing it without getting the Land Board’s consent. This includes selling, transferring, donating or giving away shares of a private company that holds tribal land. This introduces a restriction, which did not exist before because prior to this you could mortgage and lease out your property for a period of less than 10 years without needing the Land Board’s consent.

The only exception in relation to the requirement for consent is where property is acquired by a citizen through a sale in execution, registration of a bond in favour of a citizen or where the property is being inherited. The Land Board does not have the power to issue a non-citizen with a Deed of Customary Land Grant unless that non-citizen has been specially exempted or they fall into a category of person exempted by the Minister in writing. The above means that a non-citizen only qualifies to hold tribal land with a Lease not a Deed of Customary Land Grant.

The Land Board is empowered to issue a Lease to a non-citizen without the need for the Ministers consent, as was previously the case in the old Tribal Land Act. In terms of the new Act any transaction involving tribal land entered into with a non-citizen such as them acquiring the land or any rights in the land or passing a bond /bondholder or as a lessor/lessee has to be advertised by notice in the Government Gazette and one other newspaper with full details of all the parties, the nature of the transaction, the consideration and giving any citizen interested the priority to take part in the transaction.

The only exception is where a non-citizen acquires the property by way of inheritance or as a result of a court order in divorce proceedings.

The new Tribal Land Act makes it mandatory for all the holding in tribal land to be registered at the Deeds Registry. This means that the transaction to apply for the registration of the Certificate /Lease or re-registration of a Lease has to comply with the Transfer Duty Act. This means that the transaction has to be submitted to BURS for transfer duty assessment.

The Transfer Duty Act requires that all submissions for transfer duty assessment have to be accompanied by a valuation of the property that is not older than two years issued by a registered valuer. Where the value of the property exceeds the threshold (currently P1, 000, 000.00 (One Million Pula) for citizens) transfer duty will be payable at five percent of the value of the property after deducting the said P1, 000, 000.00 (One Million Pula). In relation to non-citizens they would have to pay 30% of the value of the property. The Minister has the power in terms of the Transfer Duty Act to waive payment of transfer duty in writing by citizens.

This means that every registration /re - registration of a Certificate and/or a Lease will require that the property must be valued and where applicable transfer duty be paid. The new Tribal Land Act does not state who would be paying for these valuations. It must be noted that the definition of citizen in the Transfer Duty Act includes a company where a majority of its shares are owned by citizens which definition is different from that in It must be noted that the definition of citizen in the Transfer Duty Act includes a company where a majority of its shares are owned by citizens which definition is different from that in the new Tribal Land Act.

In the event a person seeks to transfer tribal land the transfer has to be done through the Land Board in terms of the amendment to DeedsRegistry Act at Section 17A as read with the Deeds Registry (Amendment) Regulation, S.I. No. 139 of 2020. This also means if a person is purchasing tribal land through a bank loan it is not clear whether the Land Board would be able to have a linked transaction with the law firm registering the mortgage bond and the Land Board registering the transfer.
Land Boards are notoriously slow in making any decision as it is let alone the new decision making and administrative processes it is being called upon to undertake. They have not had an increase in manpower or engaged persons with knowledge of conveyancing.

This means the process will be extremely slow especially if the Land Boards continue to rely on Land Board meetings before any decisions regarding tribal land can be made. The other practical impact is that loan applications by owners of tribal land who wish to use the property as security will also be significantly slowed down by the requirement to obtain the consent of the Land Board for the registration of a mortgage bond. Bondholder/Financial Institution

The principle effect of the new Tribal Land Act on all financial institutions/bondholders which currently hold security over tribal land is that the registration of Certificates of

Customary Land Grant and Common Law Leases will result in the issue of a new title deed called a Deed of Customary Land Grant. This registration will require that the existing mortgage bond be cancelled and replaced with a new mortgage bond over the new title deed or at the very least have these mortgage bonds endorsed on the new Deed of

Customary Land Grant or Lease with the necessary amendments to such mortgage bond.

The question is will financial institutions/ bondholders willingly agree to release their

original deeds of security to the Land Board or consent to the cancellation of their current

mortgage bond or its endorsement on the new title deeds? The other question is are Land

Boards equipped to handle what is essentially a conveyancing transaction? Original deeds will need to be secured and kept safely whilst the registration application is being assessed by the Land Board to determine whether it will send it to the Deeds Registry for registration as the application to the Land Board has to be accompanied by the original certificate or Lease.

The risks with having to go about it this way is that firstly the bondholder would have to agree to release its original deeds to the Land Board, agree to cancel its mortgage bond and register a new mortgage bond or have the mortgage bond amended for purposes of endorsement when the loan still remains outstanding in respect of the new Deed of Customary Land Grant or Common Law lease. There are three provisions in particular that should be of concern to bondholders of tribal land.
The provisions of section 23 (8) are potentially the most concerning as this section provides that if a person fails to register/re-register the land board can (after diligent efforts to get the owner to register or failing to locate the owner) complete and submit the application itself accompanied by an affidavit explaining the circumstances and the Registrar of Deeds shall register and issue the new deed. If the property is hypothecated this means that the bondholder will find itself with a deed that is no longer valid and whose security it cannot or would be difficult to enforce.
The other provision of concern is section 43, which empowers a Land Board to cancel a deed of grant where amongst other things the holder of the grant is no longer eligible to hold land under the provisions of the Act, which could compromise the financial institution/ bondholder’s security.
The third provision is section 34, which requires that all transactions in relation to tribal land where one of the parties is a non-citizen are subject to a type of land control. The details of the transaction including the names of the parties, the land concerned, the details of the transaction and the consideration for the transaction have to be published in the Government Gazette and a local newspaper with a notice to the effect that any citizen interested in the same transaction has priority.

The effect of this is that transactions involving non-citizens (which many financial institutions might be) is that these will be slower than normal and potential bondholders might be less willing to give loans in those situations as people’s personal information would have to be disclosed to the general public. In short a bondholder will now need to be much more careful when accepting tribal land as security and to be cognisant of the effect of the Act on the rights of the tribal landowner and the bondholder.

*This is not legal advice, it is simply our interpretation of the tribal land act no. 1 Of 2018. Please feel free to contact us if you wish to discuss the implications of the tribal land act in relation to your particular circumstances