The Parliament of Tanzania has recently passed the Written Laws (Miscellaneous Amendments) No. 1 of 2018, an Act that amends certain written laws. The Act amends section 45 and 120 of the Land Act and introduces new sections: 120A, 120B, 120C, 120D and 120E.
The proposed amendments cover the following legal issues:
- Introduction of the new section 120A(1),(2) and (3). The new section allows a person to mortgage any land for the purpose of obtaining money from the local or foreign bank, or local or foreign financial institution for developing his land or for any other investment. The law allows land owners or landholders to use their land to obtain a loan from banks and financial institutions the banks and financial institutions can be both local and foreign. The law is strict on the purpose and use of such money, it restricts the use of the money secured to be used for the purpose of developing the land or any other investment only.
- In addition, the money obtained from the local or foreign bank, or local or foreign financial institution shall, (a) where the mortgaged land is developed, be utilized for further development of the land, for investments or for other purposes; (b) where the mortgaged land is undeveloped or underdeveloped, be utilized to develop part or whole of such mortgaged land. The law also allows where the mortgaged land is already developed to utilize the money to further develop such land or for further investment or for other purposes.
- Also, even if, the mortgaged land is undeveloped, the law allows the money to be utilized to develop part or whole of such mortgaged land. The provision intends to give a chance to mortgagees to increase the value of their mortgaged property.
- A Mortgagor is also required to submit to the Commissioner within six months information showing the manner in which the money obtained from the mortgage is invested to develop the mortgaged land. Then after having obtained the money, the Mortgagor is required by the law to inform the Commissioner for land on how the money is invested to develop the mortgaged land. The provision intends to monitor compliance with Section 120A through mortgagors.
- Introduction of section 120B(1) Money obtained from a mortgage from a local or foreign bank, or local or foreign financial institution referred to under section 120A shall be invested in Tanzania. The law restricts the geographical location where to utilize the money obtained from a mortgage, in the sense that it should be invested in Tanzania only not other places.
- (2) Where the mortgagee is a local or foreign bank, or local or foreign financial institution, the mortgagee shall submit to the Commissioner a declaration that the money obtained from the mortgage is invested in Tanzania. The mortgagee is obliged to submit to the commissioner a declaration that the money obtained is in fact invested in Tanzania.
- The parliament introduces Section 120B for purposes of enhancing the Tanzanian economy. The section defines “local bank” to mean any bank licensed by the Bank of Tanzania to undertake the banking business in Tanzania; “local financial institution” means any entity licensed in Tanzania to engage in the banking business, but limited as to size, locations served, or permitted activities as prescribed by the Bank of Tanzania or required by the terms and conditions of its license; “underdeveloped” in respect of land, means a land which is not developed in accordance with the conditions of relevant rights of occupancy; “undeveloped” in respect of land, means a land without improvement in, on, under or over such land or without any change of substantial nature in the use of such land.
- Introduction of section 120C. The provisions of sections 120A(2),(3) and 120B(1) shall not apply to land held under the Certificate of Customary Right of Occupancy. Failure to comply with the requirements under sections 120A and 120B shall constitute a breach of conditions of right of occupancy provided for under section 45(2). The rationale of putting scope of application of sections 120A (2), (3) and 120B (1) to give lessen the restrictions and give wider room to local Tanzanians who most of them possess land under customary right of occupancy to utilize the money in other economic undertakings. The holders of the right of occupancy and investors has to adhere to the amendment as failure to comply with it amounts to breach of conditions which ultimately can lead to the revocation of the right of occupancy by the President.
- Introduction of section 120E. The procedure for administration and enforcement of section 120A and 120B shall be prescribed in the Regulations. The whole procedures related to mortgage of land under section 120A and 120B will be regulated by a Regulation to be drafted by relevant authority.
In conclusion, the new amendment gives power to the President to revoke a right of occupancy, when a person does not comply or contravenes the requirements set out in Sections 120A and 120B of the Act.