Land Law

Overview

Our last discussions focused on the general significance and application of registration of real property. In this section, an attempt will be made to consider the understanding and coverage of registration of real property in our country. Both the strong sides and limitations will be highlighted taking into account both the legislative framework and practices.

Objectives

This section will help the student:

• explain the importance of detailed laws covering many parts of registration of real property and related matters,

• identify the provisions of the Civil Code addressing registration of real property and limitations thereto.

• distinguish the present federal and regional legislations addressing rural land registration, and

• evaluate the urban real property registration system and problems thereof.

The Need for Legislation

One feature of an effective cadastre is that it is founded on a strong and practical legislation. All systems depend on a sound legal framework of land laws and specific laws on land registration and cadastre. Land laws must establish an effective cadastre and indicate registrable rights including those other than ownership. In this regard, governments must play the role of facilitating the operation of a land and property market, enable a mortgage market to function and ensure that citizens enjoy security of tenure by providing particular laws.

Land registration must be established on solid legal ground. John Manthorpe recognises seven important elements that land registration laws have to address which are:

• Creating the institutional authority responsible for ensuring the impartial maintenance of land registers.

• Determining the method by which a register for the whole jurisdiction is to be compiled (systematic or sporadic).

• Establishing systems and procedures for land transfer and registration of other interests in land.

• Specifying if the land titles are to be guaranteed by the State (such as paying compensation in case of error).

• Defining rules for original adjudication of registered title.

• Specifying if the land register is title system or deed system, and

• Creating arrangements whereby subordinate rules and regulations can be made by the registration body to facilitate development and administrative change.

The 1960 Civil Code 

Though inapplicable, the fundamental legislation on real property registration is the Civil Code.  One title, Title X, is devoted for this purpose and is entitled as “Registers of Immovable Property”. The title includes 93 articles governing this important area of high economic significance. These provisions are contained in 4 chapters. The Code does not provide different chapters or sections for cadastre and land register; it regulates cadastre and land registration in a unified approach. 

It is of particular importance to mention that the title on register of immovables is not yet applicable as its operation has been suspended. Sadly, the Civil Code provides the following provisions:

Art. 3363. - Registers of immovable property.

(1) Title X of this Code relating to registers of immovable property shall not come into force until a date to be fixed by Order published in the Negarit Gazeta.

(2) Until such date has been fixed, the provisions of the following Articles in this Chapter shall apply in lieu of the provisions of Title X.

Art. 3364. - Transfer or extinction of ownership.

The customary rules relating to the formalities to be complied with so that the transfer or extinction of the ownership of immovable property may be set up against third parties shall apply.

Art. 3365. - Easements and restrictions to ownership.

The customary rules relating to the formalities to be complied with so that easements, promises of sale, rights of pre-emption or provisions preventing attachment or assignment may be set up against third parties shall apply.

From the above provisions, we understand that the provisions on register of real property are not binding. Instead, customary law will be applicable to govern different situations.

Though this is unfortunately the case, we shall discuss the major parts of the Title on register of immovables for different reasons. Firstly, we are very hopeful that the government will soon take measures to apply these provisions as the importance of real property registration for sustainable development is understood quite better than any time before. Secondly, although, these provisions may not be complete and up to date due to the various changes that occurred in Ethiopia after their adoption, they meet the minimum standards for cadastre and land registration and could, if applied, contribute irreplaceably to the country’s development. Third, the awkward customary practices far behind in the administration of real property including cadastre and land register.[1]

Coming back to our main discussion, Chapter 1 of Title X regulates “keeping of registers and publicity”. The principle of registration of real property is provided under Art. 1553:

Art. 1553. Principle

Registers of immovable property shall be kept, in each Awradja Guezat of the Empire of Ethiopia, by the keepers of registers of immovable property.

What do you learn from the reading of the above provision? What makes and what does not make sense?

We can understand that the provision has already recognized the irreplaceable importance of real property registration, i.e. registration of land and buildings irrespective of the mode of ownership to land. It is also clear that this provision invariably includes both cadastre and land registration. In other words, in our context (context of the Civil Code) “registers of immovable property” means real property registration which in turn means cadastre and land registration.

The word “Awradja Guezat” is an obsolete word at present and may contextually mean “Region”.

Please carefully read the following 4 provisions:

Art. 1556. - Principal registers.

In each place of conservation and for each district, a register of property

and a register of mortgages shall be kept.

Art. 1557. - Register of immovables.

Where the state of the cadastre allows the adoption of such system, a register

of immovables shall be kept in each district.

Art. 1558. - Register of owners.

Where the state of the cadastre does not allow the drawing up of a register of immovables, a register of owners shall be kept in each district instead of such register.

Art. 1559. - Other registers.

The Ministry of Agriculture may, by a general directive, or by a directive specially applicable to one or more places of conservation, prescribe the keeping of additional registers.

What are the main types of registration of an immovable property? How many types of real property registration are envisaged by the above provisions?

There are two principal types of real property registration, namely, a register of property and a register of mortgage. In addition, where the situation allows, a register of immovable shall be maintained. If the situation does not allow the establishment of a register of immovable, a register of owners shall be kept. The law also makes it possible the keeping of additional registers. Let us try to explain the meaning, nature, and content of each of these types of registration of real property.

Register of property

What is property? Property here refers to the interests or rights attached to an immovable object, i.e. land or buildings. And what is register of property?

Art. 1567. Register of property. - 1. Principle.

All acts, public or private, made inter vivos or mortis causa purporting to recognize, transfer, modify or extinguish the right of ownership of one or more persons over an immovable shall be entered in the register of property.

So register of property means registration or record of acts such as contracts which establish, transfer, modify or extinguish ownership right over land or building. But we should understand that the interest or right over an immovable is not only ownership; it can also be other such as use right and possession. This definition conforms to what is normally referred to as land registration as we saw earlier.

What are acts? Please carefully read the following provisions of the Civil Code:

Art: 1568. 2. Particular acts concerning property.

In particular, the following shall be entered in the register of property

in conformity with Art. 1567:

(a) acts of sale, donation, contribution in a partnership, partition compromise and contracts creating joint ownership, where such acts have an immovable as their subject-matter; and

(b) acts by which an heir or a legatee accepts a succession or a legacy relating to an immovable; and

(c) judgments which pronounce the annulment, revocation or dissolution of the acts abovementioned; and

( d) judgments which give a decision as to the ownership of an immovable upon an action for the recovery thereof; and

(e) judgments which pronounce the sale by auction of an immovable as a consequence of an attachment effected by the creditors.

Art. 1569. - 3. Acts concerning other rights over immovables.

The following shall also be entered in the register of property:

(a) all acts purporting to create, recognize, transfer, modify or extinguish a right of bare ownership or usufruct or a right of habitation over an immovable; and

(b) all acts purporting to create, recognize, modify or extinguish a servitude; and  

(c) all acts purporting to create, transfer, modify or extinguish a contractual restriction of a right of ownership or of usufruct relating to an immovable.

Art. 1570. - 4. Legal actions.

Legal actions which aim at obtaining a judgment recognizing, transferring, dissolving or extinguishing the right of ownership or another right in rem over immovables shall also be entered in the register of property.

Art. 1571. - 5. Leases and acts concerning rents not fallen due.

The following shall be entered in the register of property:

(a) leases relating to a dwelling-house or apartment, concluded for a period of more than five years; and

(b) assignments of rents not fallen due, covenanted for a period of more than three years; and

(c) discharges for rents not fallen due given in advance to a lessee or farmer-tenant for a period of more than three years.

We understand that all types of acts related to ownership, those related to rights other than ownership, leases and court judgements relating to immovables are registered in the register of property.

Register of Mortgages

As you may study in your course on Security Devices, Mortgage is a system by which debtors may borrow money by giving their immovable as a security. Actually in Ethiopia, it emanates from contract and the law or court judgment. The Nature and formation and effect of mortgage is discussed under article 3041 and following of the civil code, while its registration is discussed somewhere else.

And what is register of mortgage?

Art. 1573. - Register of mortgages. - 1. Principe.

The following shall be entered in the register of mortgages:

(a) all acts purporting to create, modify or extinguish a right of mortgage or antichresis; and

(b) all acts purporting to transfer a debt secured by a mortgage or a right of antichresis or purporting to assign the benefit of priority attributed to such right by the law.

Art. 1574. - 2. Attachment.

Applications for the judicial sale of an immovable on the initiative of a creditor, whether or not enjoying a right of mortgage on such immovable, shall also be entered in the regjster of mortgages.

In the modern economy, mortgage plays a tremendous role by enhancing financial transactions in the credit market and security for creditors. Recording the acts that establish such an important mechanism is by far important. This is achieved through register of mortgages.

Register of Immovable

The third type of registration of real property in the Civil Code is register of immovables.

Art. 1575. - Register of immovables. - 1. Principle.

( 1 ) Every immovable existing within the district shall be registered in the register of immovables under its number in the cadastre, and a leaf be assigned to it.

(2) The register shall contain, on each of its leaves, a summary description of the immovable made with the object of its individualization.

(3) All acts subject to registration which concern the immovable shall be mentioned on the leaf with an indication of their reference number in other registers and of their date.

Art. 1576. - 2. Conformity with cadastra1 survey plan.

(1) The registration and the description of each immovable in the register of immovables shall be made according to the measurements and indications of the cadastral survey plan.

(2) The register of immovables shall be kept in permanent and absolute conformity with such plan.

What do you understand from the reading of the above provisions? Register of immovable involves the entrance of an immovable property in a cadastre system having a distinct number and leaf. It also involves the description of the immovable property unit which involves, among others, the area, location, boundary description and level of fertility. This is in conformity with what we traditionally refer to as cadastre as we mentioned before.

Moreover, all acts subject to registration which concern the immovable shall be mentioned on the leaf with an indication of their reference number in other registers mainly in the  register of property. From this we can understand that the different types of registration of real property such as register of property and register of immovables are interdependent and support each other.

Another important point worth mentioning here is that registration and description of real property during register of immovables is made based on the cadastral surveying that precedes the registration. The register of immovables shall be kept in permanent and absolute conformity with the cadastral survey plan.

Do you recall the meaning of cadastral surveying? If not, please go back and refer to the term.

Register of Owners

As was mentioned, when register of immovables is not feasible in the circumstances, then register of owners shall be kept. What does register of owners mean?

Art. 1583. - Register of owners. - 1. Principle.

The register of owners shall contain, classed in alphabetical order, leaves relating to each one of the persons who, in an act registered in one of the principal registers, are indicated as being owners of an immovable situate in the district.

Art. 1584. - 2. Immovable owned in common

(1) Where an immovable belongs to several owners a leaf shall be drawn up in the name of each joint owner.

(2) The position of each one shall be mentioned in the leaf relating to him.

Art. 1585. - 3. Ownership of several immovables.

Where a person owns several immovables in a district, there shall be drawn up in his name as many leaves as he has separate immovables.

Register of owners involves the registration of the names of the persons who are indicated as owners of a real property according to acts relating to register of property or register of mortgages. It does not matter whether a single real property is owned or possessed by several persons or a single person owns or possesses several immovable objects.

Effects of Registration

Certainly, registration of real property has some legal effects.  Please read carefully the following provisions and try to apprehend some of the major effects of registration.

Art. 1637. - Duty to register acts.

(1) The keepers of registers of immovable property may not decide on the validity of acts which are presented to them for registration in the registers.

(2) They shall register such acts without delay when the formalities required by the law have been performed by the interested persons.

(3) The registration of an act in the registers of immovable property shall not constitute a decision as to its validity.

Art. 1638. - Certain date.

The registration made in the registers of immovable property shall confer a certain date to the acts to which such registration relates or which are filed in the archives of the place of conservation as complementary or supporting documents.

Art. 1640., - Ignorance of a registration.

(1) No person may take advantage of the fact that he did not know of a registration entered in the registers of immovable property.

(2) Nothing shall affect the liability of the keeper of the registers and of the State, where such ignorance is due to a fault in the functioning of the service.

Art. 1641. - Conflict between two registrations.

( 1) Where two persons have required from the same person a right subject to registration, the one whose right has been registered first in the registers of immovable property shall be preferred.

(2) The right of the second shall be extinguished insofar as it is in opposition to the right which has been registered first.

(3) Nothing shall affect the rights of such second person against the person from whom he has acquired the immovable.

Art. 1642. - Rights registered on the same day.

( 1) Where two rights which are incompatible with each other are entered in the register on the same day, preference shall be given to the person whose title is the older.

(2) Where the titles are equally old or the priority of one in relation to the other cannot be established, preference shall be given to that number of the registration which in the register comes before.

Art. 1644. - Bad faith.

(1) The bad faith of the person who has requested the registration or required the right to which the registration relates shall not affect the validity of the registration.

(2) In such case the person to whom the registration is prejudicial may claim damages by proving in a clear manner the bad faith of the defendant.

Art. l646. -- Notice of registration to the owner.

(1) The person who has registered a right in the registers of immovable property shall, within eight days, serve on the owner of the immovable to which such right relates a copy, certified by the keeper of the registers, of the form which has been entered in the registers.

(2) He shall be liable for the prejudice that may be caused to the owner of the immovable or to third parties by reason of his failing to comply with such formality.

One important thing mentioned here is the relationship between registration and validity of the act such as contract relating to the immovable. Registration has nothing to do with validity of the contract/act.

Do you remember factors affecting validity of contracts in your study of Law of Contracts course? Please once go to Art. 1678 of the Civil Code and recall them. Here we are clearly told that “The registration of an act in the registers of immovable property shall not constitute a decision as to its validity.” If so, legally speaking, what has registration to do with? It has to do with publicity. Please read the following provisions of the Civil Code:

Art. 1561. - Publicity of registers.  1. Principle.

The registers of immovable property are public.

Art. 1562. 2. Registers of immovables and of owners.

( 1) Keepers of registers shall, on request, deliver a certified true copy of the leaf concerning a particular immovable which is to be found in the registers of immovables.

(2) They shall, on request, deliver a certified true copy of the leaf or leaves concerning a particular owner which are to be found in the register of owners.      

(3) They shall, where necessary, deliver a certificate showing that the leaf of an immovable does not contain any registration or that no leaf concerning a particular owner exists in the register.

Art. 1563. - 3. Principal registers or supporting documents.

(1) Keepers of registers of immovable property shall on request deliver certified true copies of the acts which are registered in the registers of property or of mortgages.

(2) They shall on request deliver certified true copies of the supporting documents kept by them.

Art. 1564. - 4. Form of copies or certificates.

All copies and all certificates delivered by the keeper of registers of immovable property shall be of no effect unless they bear the seal of the place of conservation, the signature of the keeper or of a person authorized to deliver the copy or the certificate, and an indication of the date on which the copy or the certificate was delivered.

Art. 1565. – Fees  to be charged.

(1) The Ministry of Agriculture shall fix the fees to be charged in respect of the various registrations in the registers of immovable property.

(2) It shall fix the fees to be charged in respect of the delivery of copies or certificates by the keepers of registers.

What we understand is that the registration of real property is open to the public and that the registration authority or officer has the primary task or duty of giving any requested information as to the various types of register-property register, register of mortgages, register of immovables and register of owners. Any interested part has the right to have access to this land related information for any purpose or transaction with owners, possessors, or immovables. The government will in return get considerable income by charging fair fees for the important service it is rendering through efficient supply of immovable information. Dear student this is actually just the most important operation of Land Information Systems in almost all parts of the world today.

Once the registration is kept public and accessible to the public, no one can argue on the ground of lack of knowledge about any information contained in the register of any type. In fact, the real property registration officer can be held liable for any professional fault committed relating to the task.

Have you now seen that by virtue of the Civil Code provisions just mentioned here, registration does not affect the validity of the contract as between the contracting parties?  But we should mention here that today on the part of the courts this issue is very controversial and that the Federal Supreme Court has recently decided that registration affects validity of the contract on a real property. What is your position? Please read the attached case?

Rural

Dear student, the Civil Code provisions on registration of real property do not make specific reference to rural and urban land separately. It may be understood that they apply to both rural and urban land. Indeed, there is no strong reason to have different laws and structures for registration of property with respect to rural and urban land.

Nowadays, the Ethiopian government has issued various land legislations both at federal and regional levels. Such laws also principally deal with registration of real property. It is really a big question if these provisions are as complete as the provisions of the Civil Code on registration, and if they are meant to serve same purpose as the Civil Code.

Setting aside that issue, the Government of Ethiopia proclaimed the Federal Rural Land Administration proclamation no. 89/1997. On top of this, the Federal Government recently enacted the Federal Rural Land Administration and Land Use proclamation no. 456/2005 by repealing the former one. This law is generally directed towards addressing land tenure problems.

More specifically, the need to establish a conducive system of rural land administration that promotes the conservation of natural resource is considered as a means to solve the later. In addition, putting legal conditions in place which are conducive to enhance and strengthen the land use rights of farmers, pastoralists and private investors are stipulated as objectives in the same provision. Above all, the necessity to establish an information database that enables to identify the size, direction and use rights of the different types of land holdings in the country is also one area of interest to the Federal Government. In the official document of the Federal Government called SDPRP, it is stated that the users’ rights of farmers shall be protected through registration and provided with certificate of user rights.

In addition, the Federal Government five years strategic plan document explains some action to be taken pertinent to land administration and land management issues. According to the same document, it is believed that “to develop and strengthen the natural resource information system, the establishment of database at Woreda level will be conducted.  The plan encompasses the establishment of natural resource database in 550 Woredas that are found in the country. The same source further states that, in the next five years around 6.7 millions households will receive first level certificate. In addition to this, studies and research will be conducted in the next 5 years in pastorals and Agro-pastoralist area of the country which focus on the identification of the property rights and the development of methodology to record these rights.

The Federal constitution Article 52 (2) (d) empowers Regional states to Administer land and natural resources. However, member States of the Federal Government land and natural resources laws shall be implemented in accordance with the law enacted by the Federal Government.

After 1997 some policy initiatives are made towards establishing sound land management and land administration system through rural land registration and certification in Oromia, Amhara, Tigray and Southern Nation Nationalities and People Regional States.  Accordingly, several of these states have adopted rural land administration laws. For example, ANRS has endorsed its own land law proclamation no. 46/ 2000. This proclamation enables the state to determine the administration and use of the rural land. Article 6(3) of the same states that, “so long as the land users utilize the land according to the established rules, this proclamation assures and secures their holding and use rights” It further states that “The objectives of the rural land administration and use policy and proclamation are directed towards enabling the peasant to work for sustainable development and making the same the beneficiary of such development by ensuring tenure security” To implement the objectives of this law the state enacted proclamation no. 47/2000 that established the agency called Environmental Protection, Land Administration and Use Authority ( EPLAUA).

The Regional council of ANRS later replaced the Rural Land Administration and Use Proclamation no. 46/2000 by proclamation no. 133/2006 for several reasons. This law dictates that, “any Rural Land given to the right users shall be measured and the cadastral maps get prepared by the authority in traditional way or modern tool. Hence, a system of unique identifier shall be designed and implemented to clearly understand each parcel of land. The demarcation that indicates the boundary shall, also, be made on the land”

On the other hand, Article 23 of the same is dealing about rural land registration and data maintaining. Sub-Article 1 of this Article stipulates that any land measured by the authority shall, pursuant to this proclamation be registered in rural land registration book. To implement the provision indicated under sub-Article 1 of this Article the land registration shall be carried out including the information explaining the full name of the land holder, the means of holding acquired, boundaries of the land, the fertility status, the land use type and the obligation of the land holder.

On top of this, Article 24 sub-Article 1 of the same states that any person, granted rural land shall be given the land holding certificate in which the details of the land is registered by the authority prepared by his name and his photograph fixed thereon. Accordingly, the holding certification is deemed to be legal certificate of the holder. Proclamation no. 133/2006 is supplemented by a regulation.

Other regional laws include A Proclamation Provided to Determine the Administration and Use of Rural Land in Tigray Proc.No.23/1997 (amended in 2002), A Proclamation to Provide for Oromia Rural Land Use and Administration Proc.No.56/2002 (and a regulation thereof in 2003), and A Proclamation to Provide for Rural Land Use and Administration in the Southern Nations, Nationalities and Peoples of 2003.

For a comprehensive understanding, please look at the following table which gives a summary of each of the pertinent laws based on the criteria of certification.

Table: Synopsis of Rural Land Administration and Use Proclamations on certification

Urban

Dear student, it was already mentioned that the Civil Code provisions on registration of real property do not make distinction as between rural and urban land. Apart from that, while there are emerging laws with regard to rural land registration, urban real property registration, if at all exists, is done with out legislations; there are different customary activities here and there.

It is worthy of mention here that the various laws on rural land use and administration have followed a separate direction in the sense that they address rural land and disregard the urban one. That leaves the urban land registration almost unregulated which is really astonishing and even dangerous.

In a recent study made regarding real property registration in Bahir Dar city, many experts (both local and international) preferred that the urban real property registration be made by the same body and laws relating to the rural land registration in the respective region.

The responses from 20 interviewees (10 from EPLAUA and 10 from the Municipality and Bureau of Urban Works and Development) is shown in the following table:

.Institutional arrangement in operating real estate registration in Bahir Dar

The justifications given for choosing EPLAUA for handling the real property registration both in rural and urban areas are many. The first is the far better available human, legal, technical and financial resources already available in EPLAUA. The second justification is related to the commonality of the nature, principles, objectives and significances, evaluation frameworks and technologies of real property registration in respect of both the rural and urban land. The third reason is the saving of human, financial and technological resources. The fourth is related to the need for the uniformity of the responses given to similar various problems in land administration. The fifth reason is related to payment of compensation during expropriation. This needs to be done based on similar rules to attain the required fairness and equality. The last reason pertains to the urban expansion that is happening in Amhara region at an alarming rate. With similar institutions and laws being involved in the land administration in the region, it will be quite easy to administer the newly incorporated rural lands to the urban territory. We can add to these the current global trend in the world towards multipurpose cadastre and cooperation.

What is your position with regard to this issue? Do you agree with the above assertions? Why? Why not?

Real Property Registration Authorities

It is now time to say few words about the institutional set up of real property registration in Ethiopia. The Civil Code has the following to say about this matter:

Art. 1553. - Principle.

Registers of immovable property shall be kept, in each Awradja Guezat of the Empire of Ethiopia, by the keepers of registers of immovable property.

Art. 1554. - Organization of the places of Conservation of registers.

(1) The appointment and the status of the keepers of registers of immovable property and of their assistants shall be as prescribed by the Ministry of Agriculture.

 (2) The same Ministry shall prescribe the material organization of the places of conservation of the registers of immovable property and ensure the regularity of their functioning.

(3) It shall take the necessary measures for the keeping and the conservation of' registers of immovable property.

What these provisions tell us is that registration of real property will be widely applicable in all parts of the country. And it is the Ministry of Agriculture that has the primary task of establishing the registration offices together with the required personnel and other matters.

Actually, at present, the authorities of registration of real property are different for rural real property and urban real property. As to the rural property, the federal land administration and use proclamation makes it clear that the regional governments can establish authorities for the purpose. Accordingly, states have established public organs for addressing environmental protection, land administration and use activities. For, example in ANRS, the Environmental Protection, Land Administration and Use Authority was established in 2000 by proclamation. The same is true for other regional states.

Regarding urban real property, it is again important to remember that legislation is non-existent to address registration of property, especially the land register component. Even worse, the registration practice is presently quite incomplete, covers very few urban places, and quite traditional. For example, in Bahir Dar cadastre was started in September 1999. Spatial data collection was done through detail topography surveying work. Parallel to the surveying work, field investigation (collection of attribute data) was done. When we see the scope of the project coverage and work performed at that time, ground surveying and socio-economic data collection work was completed in 8 Kebeles (former Kebeles 03,04,05,06,12,13,15 and 16) out of the former 17.  The completed number of plots was 7,100 on an area of 820 hectares.

But, since 2004, the data collection and updating activities had stopped, which hampered the completion of the intended project. That means the real property registration process had ceased to operate.  The reasons for this are: lack of general awareness of cadastre, lack of understanding the significance of cadastre on the part of the administrators in the municipality, operating the system by simple guess with out clear guidelines and procedures (e.g., no regulations), lack of correct attribute and socio-economic data, lack of fairness and independence where the powerful people were advantaged at the cost of the weaker people, non-conformity with the physical planning resulting in such as closing roads. These problems in turn resulted in division of opinion among the task force themselves- whether it should continue or not in that way; and chaos in the urban people. Only in 2006, a new project was designed to commence the stopped real estate registration system. Time will reveal if the new project is going to be successful.

Other cities also experienced such cadastral practice in quite sporadic fashion. In Ethiopia, the cadastral systems, when they exist, are handled by municipalities. The municipalities normally attempt the activity without any coordination with the rural authorities of same purpose. On the other hand, land register, i.e. registration of contracts of sale of building are conducted by Justice Offices whose related tasks are given by various legislations. In fact, in the land registration process, the copy of these acts will also be archived in the municipalities after the justice offices prove that the contracts are made in validity.

Additional Reading

Please read the following excerpt regarding land registration procedure in Addis Ababa city and Bahir Dar City.

The Addis Ababa Municipality has been practicing in transferring and registering immovable properties for long without authority. There are proclamations 49 and regulations 50 as to the establishment of the town of Addis Ababa as an at body and as to the issue and registration of new title deeds in case of sale and gift of property for the registration of any contract concerning land respectively. The collection of fees and issuance of new title deeds is possible if and only if there is registration.

But later on a legislation is issued which obliges the Urban Administration to effect the registration of ownership right of immovable, especia11y houses, and the transfer of ownerships. So it is the Urban administration, particularly the "contract and Registration Main Section”, which transfers ownership rights over immovable properties when, for example, the owner sells his property to a certain buyer.

The Need for Modern Real Estate Management in Urban Ethiopia: the Case of Bahir Dar City (MELKAMU Belachew Moges, Ethiopia) from www.fig.net

Land Registration Procedures (in Bahir Dar)

For land registration to be effected, there has to be some act or decision based on which ownership is transferred from one person to the other. This could be sale, donation, succession, or court decision for debt. The direct observation of the practice reveals that the procedure is different depending on the cause of transfer.

In the case of sale and donation, the parties must first go to the Justice Office. Whereas in the case of succession or will they need not go to the Justice Office and instead can go directly to the Municipality though the Office can register the will document in case of request. This is true of transfer due to court decision with regard to debt. The Municipality checks and receives the court decision and transfers ownership title to the applicant.  In these cases of succession and debt based transfer, the amount of fee to be paid by the applicant is decided by the court.

Looking at the steps of land registration in the more common situations of sale and donation, the procedure is the result of the interplay between the Justice Office and the Municipality. The parties to the contract must bring together the valid contract of sale, acquisition document, the parcel map, the design plan, and receipt for tax payment during their application for registration. The ‘notary’ ensures that all these are fulfilled before ordering further process.

Having insured the fulfilment of all required documents, it sends a letter to the Municipality requesting to check if the building is really located in the place as mentioned in the sale contract, if it is free from debt or court attachment, and requesting the estimated value of the property. At the same time, it sends another letter to the Ethiopian Commercial Bank if the Bank has not taken the building as security for debt.  The requested bodies respond accordingly including statement as to the date of acquisition, the type of land use, address and area of the property.

Then the Justice Office sends the estimated value of the building to the Finance Unit (located in the Municipality’s compound) in a letter. This Unit charges 2% of the value as tax and the Justice Office is notified about this fact.

Finally, the Justice Office approves the sale or donation contract, and maintains its own file for each applicant which contains the contractual document, acquisition document, the parcel map, the design plan, and receipt for tax payment. It then sends a letter to the Municipality stating that it has approved the contract and requests the transfer of ownership title to the applicant. The Municipality does so and opens a new file for the new owner. The file of the transferor is considered as dead file but is kept in the archive for any future reference.

Summary

Registration of immovable properties includes cadastre and land registers, which are important means of developing efficient information systems not only in Ethiopia but also in any country. A cadastre is just a system of writing or recording individual land parcels or real properties. In other words, it is a systematic description of the land units within a given area. Technically, this description is made by the cadastral maps which represent the graphical indices of the individual parcels showing the relative location of all parcels in a given region, and by written or textual records which represent the attribute files of the cadastre, in parallel. The most essential information in the textual files is the identification number and the area of the unit, usually differentiated by the type of land use. It normally provides parcel-based information.

Cadastre serves quite several purposes: it brings about a guaranteed ownership and secured land tenure, it provides security for credit and improves investment, it helps develop and monitor land markets, it highly enhances taxation, it helps reduce land disputes, it helps facilitate urban planning and infrastructure development, and so on.

Land register or land registration, on the other hand, refers to Land as a legal object. Stated otherwise, it refers to the public provision of security of property rights to land such as ownership, mortgage, easements and leases. 

For long, these two methods have been handled by separate registry and institutions. However, nowadays, they are increasingly coming together to form a unified or integrated registry. Some countries such as Austria, Hungary, and Sweden (the Land Data Bank System) have this harmonised or unified land registry system called multipurpose cadastre.

In Ethiopia, the fundamental legislation on real property registration is the Civil Code though inapplicable.  One title, Title X, includes 93 articles governing this important area of high economic significance. The code envisages two principal types of real property registration, namely, a register of property and a register of mortgage. In addition, where the situation allows, a register of immovable shall be maintained. If the situation does not allow the establishment of a register of immovable, a register of owners shall be kept. The law also makes it possible the keeping of additional registers.

The Civil Code does not make distinction as to rural land registration and urban land registration. However, the Ethiopian government has issued various rural land legislations both at federal and regional levels. Such laws also principally deal with registration of real property, i.e. rural land.

It is worthy of mention here that the various laws on rural land use and administration, unlike the provisions of the Civil Code, have followed a separate direction in the sense that they address rural land and disregard the urban one. That leaves the urban land  unregulated especially in matters of registration; and the registration practice is presently quite incomplete, covers very few urban places, and quite traditional.

At present, the authorities of registration of real property are different for rural real property and urban real property. As to the rural property, the federal land administration and use proclamation makes it clear that the regional governments can establish authorities for the purpose. Accordingly, states have established public organs for addressing environmental protection, land administration and use activities. For, example in ANRS, the Environmental Protection, Land Administration and Use Authority was established in 2000 by proclamation. The same is true for other regional states.

In urban areas, municipalities handle the cadastral systems, when they exist. The municipalities normally attempt the activity without any coordination with the rural authorities of same purpose. On the other hand, land register, i.e. registration of contracts of sale of building are mostly conducted by Justice Offices whose related tasks are given by various legislations. In the land registration process, the copy of these acts will be archived both in the municipalities and the justice offices; however practices may vary from place to place in the country.

Overview

In the last section, we have seen cadastre as one main method of Land Information Systems. We discussed about the nature of cadastre, cadastral agencies and its essential contribution to the economy. In the present section, we shall discuss about land registration, a very related matter to cadastre and another important means of maintaining Land Information Systems. Specifically, we shall see its meaning, importance, and procedures. Further, we will see the agencies involved in land register.

Objectives

Having read this section, one can:

• Define land register.

• Distinguish between cadastre and land register.

• Explain the importance of land register.

• Compare and contrast rural and urban land register systems in Ethiopia, and

• Identify the institutions of land register.

Meaning and Importance of Land Register

In an attempt to understand land registration and especially its relationship with cadastre, a hair-splitting mode of identifying terminologies is indispensable. It seems that it is possible to use the term cadastre in a broad and narrow sense. Broadly, it can be understood to include land registration. In a narrower sense, it does not include land registration as it is understood to mean simply a systematic description of the land units within a given area. Now we should be interested to identify land registration from this narrow meaning of cadastre.

Some writers refer cadastre as ‘land register’ but this is clearly confusing as the term ‘land register’ is used to denote the register of title, i.e., land registration. Hence, if at all distinct terminology is apt to be used, we should never use land register or land registration to refer to cadastre. It has been suggested by some that land registration be called ‘legal cadastre’. This term seems to be interesting as it shows the traditional focus of land registration, as will be explained below. Gerhard Larsson prefers to use the term ‘(legal) land register’. But here we prefer to use the term ‘land register’ or land registration at least for precision.  But what is land register all about and how does it differ from cadastre?

We have mentioned before that land can be used in three respects- land as a physical object, land as a fiscal object, and land as legal object.  Land as a legal object refers to the public provision of security of property rights to land such as ownership, mortgage, easements and leases. This is what we call here land register or land registration. This is a legal land record which does not serve the purposes of valuation for taxation or the description of land units, but is intended to include the description and the determination of rights to the land and encumbrances thereto. Land register is normally an up-to-date and ownership-based record unlike cadastre which is normally an up-to-date and parcel-based information system.

In light of this, Professor Jo Henssen provides:

Land registration is a process of official recording of rights in land through deeds or as title on properties. It means that there is an official record (land register) of rights on land or of deeds concerning changes in the legal situation of defined units of land. It gives an answer to the questions who and how.(emphasis added.)

Land registration answers the question who because it is ownership or owner-based; and the question how because it answers the manner by which the ownership title is transferred from the previous owner to the new one, such as sale transaction. As we mentioned before, cadastre answers the question where and how much. The ‘where’ refers to the location of the land parcel and its boundaries; and the how much refers to the size of the land parcel.

We can summarise the basic differences between cadastre and land registration in the following table.

Table1.Summary of the traditional distincticon between cadastre and land register.

It is advisable to note that this is more of a conceptual differene and that it is not practically useful. In the practical aspect of land management, the difference becomes much gray than black and white. Thus when we talk of cadastral information system, we inevitably deal with the owners or possessors; similarly, when we talk of land registration, we inevitably deal with cadastral mapping referring to the land parcel (especially in the title registration) and the location and size issues, and so on. Gerhard Larsson has observed:

Even though there is a conceptual difference between the cadastre and the (legal) land register, it must be admitted that in practice a clear distinction is not always evident. There is, however, still a distinctive difference in essence, purpose, and focus between the two types of registers.

Having observed the small distinction between the two registers, a question will crop up in our minds: why is there traditionally such a widely-told distinction (theoretical) between cadastre and land register? It seems that this has to do with institutional and profession-related matters. It was initially believed that land registers, taking in mind that they are legal aspects, are better handled by legal institutions and professionals who better understand the legal (both substantive or validity and procedural) requirements. These could be Ministries of Justices, Courts and Lawyers. On the other hand, cadastres being technical matters were believed to be well managed by different institutions and professionals such as Cadastral Authorities, Surveyors or Engineers. We can easily observe this in the institutional set up of many countries in world relating to real estate registration.

Additional Reading

Regarding the importance or purpose of land register, please go back and recall the importance of cadastre as they are very similar in this regard. For your better understanding, please read the following interesting excerpt from Hernando De Soto.

Hernando De Soto, The Mystery of Capital: WHY CAPITALISM TRIUMPHS IN THE WEST AND FAILS EVERYWHERE ELSE, (Great Britain, Black Swan edition, 2001)

…Walk down most roads in the Middle East, the former Soviet Union or Latin America, and you will see several things: houses used for shelter, parcels of land being tilled, sowed and harvested, merchandise being bought and sold. Assets in developing and former communist countries primarily serve these immediate physical purposes. In the West, however, the same assets also lead a parallel life as capital outside the physical world. They can be used to put in motion more production by securing the interests of other parties as 'collateral' for a mortgage, for example, or by assuring the supply of other forms of credit and public utilities.

Why can't buildings and land elsewhere in the world also lead this parallel life? Why can't the enormous resources we discussed in Chapter 2 - $9.3 trillion of dead capital - pro­duce value beyond their 'natural' state? My reply is: Dead capital exists because we have forgotten (or perhaps never realized) that converting a physical asset to generate capita by ­using your house to borrow money to finance an enterprise, for example - requires a very complex process. It is similar to the process that Einstein taught us whereby a single brick can be made to release a huge amount of energy in the form of an atomic explosion. By analogy, capital is the result of discovering and unleashing potential energy from the trillions of bricks that the poor have accumulated in their buildings.

There is, however, one crucial difference between unleash­ing energy from a brick and unleashing capital from brick buildings: while humanity (or at least a large group of scientists) has mastered the process of obtaining energy from matter, we seem to have forgotten the process that allows us to obtain capital from assets. The result is that 80 per cent of the world is undercapitalized; people cannot draw economic life from their buildings (or any other asset) to generate capital. Worse, the advanced nations seem unable to teach them. Why assets can be made to produce abundant capital in the West but very little in the rest of the world is a mystery.

Clues from the past (from Smith to Marx)

To unravel the mystery of capital, we have to go back to the seminal meaning of the word. In Medieval Latin 'capital' appears to have denoted head of cattle or other livestock, which have always been important sources of wealth beyond the basic meat they provide. Livestock are low-maintenance possessions; they are mobile and can be moved away from danger; they are also easy to count and measure. But most important, from livestock you can obtain additional wealth, or surplus value, by setting in motion other industries, including milk, hides, wool, meat and fuel. Livestock also have the useful attribute of being able to reproduce them­selves. Thus the term 'capital' begins to do two jobs simultaneously, capturing the physical dimension of assets (livestock) as well as their potential to generate surplus value. From the barnyard, it was only a short step to the desks of the inventors of economics, who generally defined 'capital' as that part of a country's assets that initiates surplus pro­duction and increases productivity.

Great classical economists such as Adam Smith and Karl Marx believed that capital was the engine that powered the market economy. Capital was considered to be the prin­cipal part of the economic whole - the pre-eminent factor as in such phrases as capital issues, capital punishment, the capital city of a country. They wanted to understand what capital is and how it is produced and accumulated. Whether you agree with the classical economists or not, or perhaps view them as irrelevant (maybe Smith never understood that the Industrial Revolution was under way, maybe Marx's labour theory of value has no practical application), there is no doubt that these thinkers built the towering edifices of thought on which we can now stand and try to find out what capital is, what produces it and why non-Western nations generate so little of it.

For Smith, economic specialization - the division of labour and the subsequent exchange of products in the market - was the source of increasing productivity and therefore 'the wealth of nations'. What made this specialization and exchange possible was capital, which Smith defined as the stock of assets accumulated for productive purposes. Entrepreneurs could use their accumulated resources to support specialized enterprises until they could exchange their products for the other things they needed. The more capital was accumulated, the more specialization became possible, and the higher society's pro­ductivity would be. Marx agreed; for him, the wealth capitalism produces presents itself as an immense pile of commodities.

Smith believed that the phenomenon of capital was a con­sequence of man's natural progression from a hunting, rural and agricultural society to a commercial one where, through interdependence, specialization and trade, he could increase his productive powers immensely. Capital was to be the magic that would enhance productivity and create surplus value. 'The quantity of industry', wrote Smith, 'not only increases in every country with the increase of the stock [capital] which employs it, but, in consequence of that increase, the same quantity of industry produces a much greater quantity of work.

Smith emphasized one point that is at the very heart of the mystery we are trying to solve: for accumulated assets to become active capital and put additional production in motion, they must be fixed and realized in some particular subject 'which lasts for some time at least after that labour is past. It is, as it were, a certain quantity of labour stocked and stored up to be employed, if necessary, upon some other occasion.'2 Smith warned that labour invested in the pro­duction of assets would not leave any trace or value if not properly fixed.

What Smith really meant may be the subject of legitimate debate. What I take from him, however, is that capital is not the accumulated stock of assets but the potential it holds to deploy new production. This potential is, of course, abstract. It must be processed and fixed into a tangible form before we can release it - just like the potential nuclear energy in Einstein's brick. Without a conversion process - one that draws out and fixes the potential energy contained in the brick - there is no explosion; a brick is just a brick. Creating capital also requires a conversion process.

This notion - that capital is first an abstract concept and must be given a fixed, tangible form to be useful - was familiar to other classical economists. Simon de de Sismondi, the nineteenth-century Swiss economist, wrote that capital was 'a permanent value, that multiplies and does not perish ... Now this value detaches itself from the product that creates it, it becomes a metaphysical and insubstantial quantity always in the possession of whoever produced it, for whom this value could [be fixed in] different forms.'3 The great French economist Jean Baptiste Say believed that 'capital is always immaterial by nature since it is not matter which makes capital but the value of that matter, value has nothing corporeal about it'4. Marx agreed; for him, a table could be made of something material, like wood, 'but so soon as it steps forth as a commodity, it is changed into something transcendent. It not only stands with its feet on the ground, but, in relation to all other commodities, it stands on its head, and evolves out of its wooden brain grotesque ideas, far more wonderful than table-turning ever was.

This essential meaning of capital has been lost to history. Capital is now confused with money, which is only one of the many forms in which it travels. It is always easier to remem­ber a difficult concept in one of its tangible manifestations than in its essence. The mind wraps itself .around 'money' more easily than 'capital'. But it is a mistake to assume that money is what finally fixes capital. As Adam Smith pointed out, money is the 'great wheel of circulation', but it is not capital because value 'cannot consist in those metal pieces'.6 In other words, money facilitates transactions, allowing us to buy and sell things, but it is not itself the progenitor of additional production. As Smith insisted, 'the gold and silver money, which circulates in any country, may very properly be compared to a highway, which, while it circulates and carries to market all the grass and corn of the country, produces itself not a single pile of either'.

Much of the mystery of capital dissipates as soon as you stop thinking of 'capital' as a synonym for 'money saved and invested'. The misapprehension that it is money that fixes capital comes about, I suspect, because modern business expresses the value of capital in terms of money. It is hard to estimate the total value of a collection of assets of very different types, such as machinery, buildings and land, with­out resorting to money. After all, that is why money was invented; it provides a standard index to measure the value of things so that we may exchange dissimilar assets. But as use­ful as it is, money cannot fix in any way the abstract potential  of a particular asset in order to convert it into capital. Third World and former communist nations are infamous for inflating their economies with money while not being able to generate much capital.

The Potential Energy in Assets

What is it that fixes the potential of an asset so that it can put additional production into motion? What detaches value from a simple house and fixes it in a way that allows us to realize it as capital?

We can begin to find an answer by using our energy analogy. Consider a mountain lake. We can think about this lake in its immediate physical context and see some primary uses for it, such as canoeing and fishing. But when we think about this same lake as an engineer would by focusing on its capacity to generate energy as an additional value beyond the lake's natural state as a body of water, we suddenly see the potential created by the lake's elevated position. The challenge for the engineer is finding out how he can create a process that allows him to convert and fix this potential into a form that can be used to do additional work. In the case of the elevated lake that process is contained in a hydroelectric plant that allows the lake water to move rapidly downward with the force of gravity, thereby transforming the placid lake's energy potential into the kinetic energy of tumbling water. This new kinetic energy may then rotate turbines, creating mechanical energy that may be used to turn electro­magnets that further convert it into electrical energy. As electricity, the potential energy of the placid lake is now fixed in the form necessary to produce controllable current that may be further transmitted through wire conductors to far­away places to deploy new production.

Thus an apparently placid lake may be used to illuminate your room and power the machinery in a factory. What was required was an external man-made process, which allowed us, first, to identify the potential of the weight of the water to do additional work; and, second, to convert this potential energy into electricity that may be used to create surplus value. The additional value we obtain from the lake is not a value of the lake itself (like a precious ore intrinsic to the earth), but rather a value of the man-made process extrinsic to the lake. It is this process that allows us to transform the lake from a fishing and canoeing kind of place into an energy-producing kind of place.

Capital, like energy, is also a dormant value. Bringing it to life requires us to go beyond looking at our assets as they are to thinking actively about them as they could be. It requires a process for fixing an asset's economic potential into a form that may be used to initiate additional production.

Yet, while the process that converts the potential energy in the water into electricity is well known, the one that gives assets the form required to put in motion more production is not known. In other words, while we know that it is the penstock, turbines, generators, transformers and wires of the hydroelectric energy system that convert the potential energy of the lake until it is fixed in an accessible form, we do not know where to find the key process that converts the economic potential of a house into capital.

This is because that key process was not deliberately set up to create capital, but for the more mundane purpose of  protecting property ownership. As the property systems of Western nations grew, they developed, imperceptibly, a variety of mechanisms that gradually combined into a process that churned out capital as never before. Although we use these mechanisms all the time, we do not realize that they have capital-generating functions because they do not wear that label. We view them as parts of the system that protects property, not as interlocking mechanisms for fixing the economic potential of an asset in such a way that it can be converted into capital. What creates capital in the West, in other words, is an implicit process buried in the intricacies of its formal property systems.

The Hidden Conversion Process of the West

This may sound too simple or too complex. But consider whether it is possible for assets to be used productively if they do not belong to something or someone. Where do we confirm the existence of these assets and the transactions that trans­form them and raise their productivity if not in the context of a formal property system? Where do we record the relevant economic features of assets if not in the records and titles that formal property systems provide? Where are the codes of conduct that govern the use and transfer of assets if not in the framework of formal property systems? It is formal property that provides the process, the forms and the rules that fix assets in a condition that allows us to realize them as active capital.

In the West this formal property system begins to process assets into capital by describing and organizing the most economically and socially useful aspects about assets, preserving this information in a recording system - as insertions in a written ledger or a blip on a computer disk ­and then embodying them in a title. A set of detailed and pre­cise legal rules governs this entire process. Formal property records and titles thus represent our shared concept of what is economically meaningful about any asset. They capture and organize all the relevant information required to con­ceptualize the potential value of an asset and so allow us to control it. Property is the realm where we identify and explore assets, combine them and link them to other assets. The formal property system is capital's hydroelectric plant. This is the place where capital is born.

Any asset whose economic and social aspects are not fixed in a formal property system is extremely hard to move in the market. How can the huge amounts of assets changing hands in a modern market economy be controlled if not through a formal property process? Without such a system, any trade of an asset, say a piece of real estate, requires an enormous effort just to determine the basics of the transaction: does the seller own the real estate and have the right to transfer it? Can he pledge it? Will the new owner be accepted as such by those who enforce property rights? What are the effective means to exclude other claimants? In developing and former communist nations such questions are difficult to answer. For most goods, there is no place where the answers are reliably fixed. That is why the sale or lease of a house may involve lengthy and cumbersome procedures of approval involving all the neighbours. This is often the only way to verify that the owner truly owns the house and there are no other claims on it. It is also why the exchange of most assets outside the West is restricted to local circles of trading partners.

As we saw in the previous chapter, these countries' prin­cipal problem is not the lack of entrepreneurship: the poor have accumulated trillions of dollars of real estate during the last forty years. What the poor lack is easy access to the property mechanisms that could legally fix the economic potential of their assets so that they could be used to produce, secure or guarantee greater value in the expanded market. In the West every asset - every piece of land, every house, every chattel - is formally fixed in updated records governed by rules contained in the property system. Every increment in production, every new building, product or commercially valuable thing is someone's formal property. Even if assets belong to a corporation, real people still own them indirectly, through titles certifying that they own the corporation as ‘shareholders’.

Like electric power, capital will not be generated if the single key facility that produces and fixes it is not in place. Just as a lake needs a hydroelectric plant to produce usable energy, assets need a formal property system to produce significant surplus value. Without formal property to extract their economic potential and convert it into a form that can be easily transported and controlled, the assets of developing and former communist countries are like water in a lake high in the Andes - an untapped stock of potential energy. Why has the genesis of capital become such a mystery?

Why have the rich nations of the world, so quick with their economic advice, not explained how indispensable formal property is to capital formation? The answer is that the process within the formal property system that breaks down assets into capital is extremely difficult to visualize. It is hidden in thousands of pieces of legislation, statutes, regulations and institutions that govern the system. Anyone trapped in such a legal morass would be hard pressed to figure out how the process works. The only way to see it is from outside the system - from the extralegal sector - which is where my colleagues and I do most of our work.

For some time now I have been looking at the law from an extralegal point of view, to understand better how it functions and what effects it produces. This is not as crazy as it seems. As the French philosopher Michel Foucault has argued, it may be easier to discover what something means by looking at it from the opposite side of the bridge. 'To find out what our society means by sanity', Foucault has written, 'perhaps we should investigate what is happening in the field of insanity. And what we mean by legality in the field of illegality.'8 Moreover, property, like energy, is a concept; it cannot be experienced directly. Pure energy has never been seen or touched. And no one can see property. One can only experience energy and property by their effects.

Classification of Land Register

Throughout the world, there are two basic types of land registration component of the cadastre. They are the deeds system and the title system. The differences between the two concepts relate two the degree of state involvement and judicial setting of the country. In the deed system only the deed or document or transaction is registered. “A deed is a record of a particular transaction and serves as evidence of this specific agreement, but it is not itself a proof of the legal right of the transacting parties to enter into and consummate the agreement.” Deeds systems provide a register of owners focusing on “who owns what”. They are rooted in the Roman culture (France, Spain, Italy, Benelux, in South America, and parts of Asia and Africa which are influenced by this culture) and in most of the United States.

On the other hand, in the title system, the title/ownership itself is registered and is itself a proof of ownership and its correctness is secured or guaranteed by the state.  While deed registration focuses on the owner, the title system focuses on the land parcel and registers properties by presenting “what is owned by whom”. The title system is rooted in the German and is found in central European countries –Germany, Austria, and Switzerland. Different versions of this system are also found in Eastern European and Nordic countries, UK, and Australia (Torrens system).

Object                        legal transaction                         subject

Subject                       legal transaction                         object

Fig.2 Difference of focus between deed system and title system.

Although deed registration can generally be implemented more quickly cheaply than the other alternative and the laws and procedures of title registration systems (including examination of documents and cadastral plans) may be more complex, the latter systems are considered more useful.  The FIG statement on the cadastre has this to say:

….in principle, title registration systems have benefits in terms of greater security of tenure and more reliable information. Furthermore, users do not have to search through old documents to find information on ownership; they can rely on the information on the title register. This usually results in lower transaction costs.

Due to these and other reasons such as the progress of IT, the title system is being accepted as a better solution. As a result, the difference between the two concepts has become grey.

Unifying Land Register and Cadastre: Trends to a Multipurpose Cadastre

Overview

In the last sections, we have dealt with the important methods of land management-cadastre and land register. In this section, we shall briefly look at the growing trends towards treatment of the two methods in a unified fashion.  Traditionally, the two systems were conceived as being distinct subjects because of the difference in historical emergence.

For long, land register and cadastre have been handled by separate registry and institutions. However, they are increasingly coming together to form a unified or integrated registry. Some countries such as Austria, Hungary, and Sweden (the Land Data Bank System) have this harmonised or unified land registry system called multipurpose cadastre. Also most experts assume that the functions do not require two separate registries. As we have seen before, Cadastre 2014 replaces the traditionally separate institutions of cadastre and land register and represents a comprehensive land recording system.

There are many reasons for the highly growing need for multipurpose cadastre. Firstly, we have globalisation and technology development which support and facilitate the establishment of multifunctional information systems with regard to land rights and land use regulations. The other global driver is sustainable development which demands for comprehensive information on real estate and on environmental conditions. Stig Enemark once said, “The concept of sustainability also includes the demand for establishing comprehensive land policies, including institutional issues such as good governance and equitable access to land and property.”

Mario BLAZEVIC enumerates the following direct benefits of harmonisation of land registry:

• Create an efficient land administration system and real property market,

• Faster registration,

• Harmonise data between the two systems,

• Improve customer relations and service provision; organize awareness campaigns among stakeholders, aimed at supporting professionals, financial institutions and real property holders.

It is highly advisable to note that the two words are highly interrelated both in meaning and importance. Though there is as we mentioned some conceptual difference between them, we should remember that usually one leads to the other and vice versa.

Introduction

Problems concerning the appropriate use of land resources and improved management of land are important all over the world.  Due to this, they must be given greater attention.  Information related specified units of immovable property units is a cornerstone of Land Information Systems since data concerning ownership and other property rights, boundaries, areas, land uses, market and assessed values, buildings, etc., are all interrelated. This chapter is devoted to the problem of developing efficient information systems based on such land units by way of putting in place efficient land registration and cadastre. It presents the meaning and nature, types, and purposes of cadastre and land register. It also treats the types of institutions of cadastre and land registration.

Objectives

At the end of this Chapter, the student will be able to:

• Define registration of immovable properties.

• Explain the significance of cadastre and land register.

• Distinguish between various types cadastre and land registration.

• Identify the types of institutions of registration of immovable property.

Cadastre and Cadastral surveying

Overview

Cadastre is one main method of Land Information Systems. Cadastre is just a system of writing or recording individual land parcels or real properties. In this section we shall try to elaborate the concept and meaning of cadastre, cadastral agencies and its essential contribution to our legal system and economic growth.

Objectives

Having read this section, one can:

• Define cadastre.

• List down the advantages of cadastre.

• Compare and contrast rural and urban cadastre systems in Ethiopia, and

• Identify the institutions of cadastre.

Meaning of Cadastre and Cadastral Surveying

A cadastre is just a system of writing or recording individual land parcels or real properties. In other words, it is a systematic description of the land units within a given area. Technically, this description is made by the cadastral maps which represent the graphical indices of the individual parcels showing the relative location of all parcels in a given region, and by written or textual records which represent the attribute files of the cadastre, in parallel. The most essential information in the textual files is the identification number and the area of the unit, usually differentiated by the type of land use.

A cadastre normally provides parcel-based information (parcel-based Land Information System). A parcel is a unit of land with homogenous tenure interests, having a unique owner/tenant, land class and use, and bounded by wall, fence, bond or boundary markers. The information is geographically referenced to unique and well defined units of land. The individual parcels are defined by formal or informal boundaries demarcated or permanently marked with stones, concrete beacons, fences, hedges, ditches and so on. Each parcel is given a unique code or parcel identifier which may include addresses, co-ordinates, or lot numbers shown on a survey plan or map.

The definition of cadastre has varied from time to time depending on the increased improvement it witnesses. A very authoritative definition is given by Professor Jo Henssen:

Cadastre is a methodically arranged public inventory of data concerning properties within a certain country or district, based on a survey of their boundaries. Such properties are systematically identified by means of some separate designation. The outlines of the property and the parcel identifier normally are shown on large scale maps which, together with registers, may show for each separate property the nature, size, value and legal rights associated with the parcel. It gives an answer to the question where and how much.

This definition is very appropriate for the existing cadastral situations. Nevertheless, another even more authoritative definition, called Cadastre 2014, is given implying the highest stage of improvement for cadastre:

Cadastre 2014 is a methodically arranged public inventory of data concerning all legal land objects in a certain country or district, based on a survey of their boundaries. Such land objects are systematically identified by means of some separate designation. They are defined either by private or public law. The outlines of the property, the identifier together with descriptive data, may show for each separate land object the nature, size, value and legal rights or restrictions associated with the land object.

In addition to this descriptive information defining the land objects, Cadastre 2014 contains the official records of rights on the legal land objects.

Cadastre 2014 can give the answers to the questions of where and how much and who and how.

The basic differences between these two definitions can be summarised in to three. Firstly, in Cadastre 2014, the land parcel can be demarcated or defined by either private or public law; but Henssen’s definition seems to refer only to the private property law aspect. Secondly, Cadastre 2014 clearly suggests that the cadastral data may show also restrictions on top of the rights for each parcel. But Henssen’s definition does not or does so only impliedly. Finally but most importantly, Cadastre 2014 represents a comprehensive real estate registration system by going to the extent of replacing the traditional, separate institutions of ‘Cadastre’ and ‘Land Registration’. To the contrary, Henssen recognises the two institutions distinctly.

The Cadastre is a public, up-to-date land information system (LIS) that efficiently supports public administration of real estate. There is a growing need all over the world for land information as a basis for planning, sustainable socio-economic development and control of land resources. LIS is an important concept. The best known definition for it is given by FIG:

A Land Information System is a tool for legal, administrative and economic decision-making and an aid for planning and development which consists on the one hand of a database containing spatially referenced land-related data for a defined area, and on the other hand, of procedures and techniques for the systematic collection, updating, processing and distribution of the data. The base of a land information system is a uniform spatial referencing system for the data in the system, which also facilitates the linking of data within the system with other land related data.

There are different opinions regarding the relationship between LIS and systems for geographical information (GIS). The above definition seems to place GIS under the umbrella of LIS. But the more convincing claim is that LIS is the subset of GIS. This opinion is expressed in the following figure.

 Fig. 1 Hierarchy of geographical information systems

In any case, cadastre and LIS are just the two sides of a coin. Nobody can understand the one without the other. Land which is the nucleus of the two concepts can be viewed from three different respects: land as a physical object, land as fiscal object and land as a legal object. Land as a physical object refers to the land use planning. Land as a fiscal object is addressed through a public valuation as a basis to levy land related taxes, important public revenue.  Land as a legal object refers to the public provision of security of property rights to land such as ownership, mortgage, easements and leases.

In order to cope with the great diversity of needs, the Bogor Declaration states that cadastral systems should:

• Be simple and effective,

• Be adaptable to rates and patterns of populations,

• Provide access to land, security of tenure and trading of land rights,

• Provide a vast array of options,

• Include all types of lands- state or private, and

• Be part of a national spatial data infrastructure.

Only then we can consider a cadastral system as an effective tool for safeguarding the society’s property rights thereby promoting economic development.

What do you think is cadastral surveying? Have you ever heard the word “surveying” before? You do not have to necessarily be an Engineer or surveyor in this regard. Nowadays, these words are becoming very powerfully used within the legal regime.

Boundaries are the main object of cadastral surveying. Normally other features, such as roads, water courses, land use boundaries, buildings, etc. are included, but the primary purpose of cadastral surveying is to define the land unit both on the ground and in the cadastre and land register. Cadastral surveying essentially involves the determination of the boundaries on the ground, the survey of the boundaries, and the demarcation of the boundaries.

What then is demarcation?

Demarcation is an operation which includes both legal and technical aspects. Let us consider two types of cases.

1. The exact position of the boundaries is fixed on the ground in the presence of the parties. If dispute arises, the boundary should be determined by an officer or a court. After the positions of the boundaries have been fixed, they are permanently marked with pipes, stones, concrete beacons, etc., if existing fences, hedges, and ditches are not considered sufficient demarcation.

2. The boundaries are, as far as possible, recognized on the ground. When necessary, they may be surveyed or identified in aerial photos in combination with simple ground surveying.

Classification of Cadastre      

There are many ways by which cadastres are classified. Though the ultimate purpose is fundamentally the same, that is to support sustainable development, there are different forms of managing cadastre among countries all over the world and even within a single country. The factors that influence the format and management of cadastre are the variations in history, culture, pre-existing land tenure arrangements, area, physical and economic geography, population size and distribution, the level of technology, traditional institutional arrangements, land and property law arrangements, and land policy priorities.

Thus cadastres may be classified based on the primary function for which they are established. Some cadastres may be formed for taxation, others for supporting real estate transaction, and still others for land distribution. Cadastres may be classified based on the types of rights registered. For example, some cadastres may record ownership rights as in many European countries, others use or possession rights as in present Ethiopia, and still others may register other interests such as mineral leases. Cadastres may be classified according to location and jurisdiction. Hence some countries may have separate cadastral institutions for urban and rural areas while many others may have a unified cadastre.  Also some countries may have a centralised cadastre and others may have a decentralised one. Cadastres may also be classified based on the method of collecting land information. These can be collected through ground surveys tied to geodetic control, also called conventional system, or through uncoordinated ground surveys and measurements also called non-conventional system, or through aerial photography, or by digitising existing historical records, etc.

Purposes of Cadastre and Sustainable Development

Why does a society need cadastre? What are the justifications for an effective cadastre? How does it accelerate sustainable development? These questions must be clearly and adequately addressed to help policy and decision makers at various levels adopt a clear vision and strategy for land administration.

Firstly, a cadastre helps a society to ensure its sustainable development in quite many ways. Cadastre brings about a guaranteed ownership and secured land tenure. The compilation of land information in the cadastre should provide formal identification and, in some systems, legal proof of ownership. All interested persons should be certain as to which people have interests in the land parcel and to what extent (limitations).

Cadastre provides security for credit and improves investment. Certainty of ownership and knowledge of all the rights that exist in the real estate provides confidence for banks and financial organisations to provide funds so that land owners can invest in their land. Mortgaging real estate is one way to acquire capital for investing in improvements. Real estate owners can then construct or improve buildings and infrastructure or improve their methods and management of the land, for example by introducing new farming techniques and technologies.

Further, developing trusted and enduring systems of land tenure and land transfer encourages investment in a wider sense. This means where confidence is lacking in land tenure (ownership or possession), no investment will be risked, no improvement or development will be made onto the real estate, and consequently no economic or social benefit will be achieved thereby rendering cadastre impotent to contribute to the development of the economy.

Cadastre helps develop and monitor land markets. As the famous Hernando de Soto nicely puts, “Any asset whose economic and social aspects are not fixed in a formal property system is extremely hard to move in the market.” On the other hand, the introduction of a cheap and secure way of transferring real property rights means that those who wish to transact in land can do so with speed and certainty. There is no way for dispossessing owners without their interest as their property right is guaranteed. A real estate owner or possessor can see the status of his/her property right as an underlying principle of cadastre is that it must be public. Any person irrespective of who he is and where he comes can buy/lease a real estate with full confidence knowing that the person whose name is recorded in the cadastre is the only guaranteed and true owner/possessor.

Cadastre being the clear means of formally representing real estates, whether by paper or computers, helps all persons across the world convert their tremendous assets (e.g., houses, land parcels, forests, etc.) into a usable capital and wealth. In his widely accepted book ‘The Mystery of Capital’, Hernando de Soto has adequately demonstrated that the major stumbling block that keeps the Third World, as clearly opposed to the West, from benefiting from capitalism is its inability to produce capital. The reason for this inability is the failure to set an effective cadastre and land registration or formal representation. Hernando de Soto puts this in succinct terms:

Capital, like energy, is also a dormant value. Bringing it to life requires us to go beyond looking at our assets as they are to thinking actively about them as they could be. It requires a process for fixing an asset’s economic potential into a form that may be used to initiate additional production. (Emphasis added).

Cadastre highly enhances real estate taxation. Effective cadastre will improve efficiency and effectiveness in collecting land and property taxes by clearly identifying the real estate owners. The more so because developing countries like Ethiopia need to increase their tax-based revenue from land to reduce aid dependence. Fiscal cadastre has been historically the starting point for modern cadastre in many parts of the world.

Cadastre is an effective tool to protect State lands. Some land may be reserved for the State to benefit the community. The State land or property must be protected for example from encroachment by farmers onto land beside roads, schools, or prison office lands, etc. or from attempts by squatters to settle on vacant land that is being held for future use.

Cadastre helps reduce land disputes.  Cadastre involves surveying of land boundaries and demarcation. This can reduce the dispute over land and its boundaries which otherwise gives rise to expensive court litigation there by creating court congestion. Land cannot be put onto the market or to better use where a lawsuit is pending as no potential investor is likely to be committed to develop the land in such a scenario.

Cadastre plays quite a significant role in formulating, facilitating and monitoring land reform or policy. It provides excellent opportunities for identifying problems associated with the development and implementation of land policies.  The FIG Statement on the Cadastre identifies many matters which can be monitored and controlled with the assistance of Cadastre:

• The size of parcels, both maximum and minimum, for instance to prevent excessive fragmentation,

• The shape of parcels, to avoid uneconomical subdivision design or inefficient road and water system, etc.,

• Reallocation of land rights to improve social and economic policies through subdivision, land consolidation, land reallotment, etc.,

• Land use, for instance agriculture or to ensure that low-cost public buildings are allocated to the right group of people,

• Control and measures taken to implement social programs to improve access to land ownership by women and minority groups,

• Valuation of land for the collection of government taxes and rates,

• Collection of contributions to improve common facilities, such as water systems, etc.,

• The value of land as a result of development, and

• Acquisition of land for public or common purposes.

Cadastre can effectively facilitate urban planning and infrastructure development. Urban centres need redevelopment and effective land use and infrastructure development planning. An effective cadastre should permit the integration of records of real estate ownership, land value and land use with sociological, economic and environmental data in support of physical planning.

Cadastre supports environmental management. An effective multi-purpose cadastre can be used to record conservation areas and give details of archaeological sites and other areas of scientific or cultural interest that may need to be protected. It can further be used in the preparation of environmental impact assessment and in monitoring the consequences of development and construction projects.

Cadastre is used to produce statistical data. Statistical data is important to decide for long-term strategic planning and short-term operational management.

In summary, we can observe that a secure and complete documentation or representation of legal and physical land objects significantly supports the efforts to create sustainable development. The Bathurst Workshop underlies:

Land is equally an asset for economic and social development. As an object with secure land rights it has the capacity to underwrite and accelerate economic development through the treatment of land rights as marketable commodities. Its capacity for wealth generation, for attracting and locating investment, and for opening up opportunities for the development of the financial sector is critical to sustainable economic and social development. On the other hand, for many communities the ‘commodification’ of the land may not support sustainable development or, alternatively, the concept of treating land rights as a commercial commodity may be unacceptable. Such communities may regard sustainable development as an integral part of the social structure.

Cadastre can also help create political stability. The type of land tenure and land rights happens to be strong subjects of social and political debates. They have also a strong influence on the emotional feelings of individuals and organisations about the role they play within a society. As a result, no country can sustain stability within its boundaries unless it has a cadastre system that promotes internal confidence between its people, its commercial enterprises, and its public organs. Recognising that land is the source of all wealth lies at the heart of good government and effective public administration with strong legal and political basis.

Finally, cadastre supports the economy in a different sense. Once an effective multi-purpose cadastre is in place any interested individual or institution can get complete information related to a single land parcel. These helps the users save their time, energy and money. Economically, these savings will be passed on to the customers making products and services less expensive. Hernando de Soto is quoted to have said:

I predict that in the next 150 years the countries in Latin America and elsewhere joining these 25 (countries with a developed economy) will be those that spend their energies ensuring that property rights are widespread and protected by law, rather than those which continue to focus on economic policy.

Features of Effective Cadastre

It is a good thing to put some guide lines as to what an effective or modern cadastre should consider.  The first thing is that of scope. Geographically, it should be set at a country wide level to fully meet its goals and also avoid some unwanted results such as economic inequality. It should have permanent continuity. Second, it must be of an official nature run by a trusted and independent administrative agency. Third, a cadastre must function based on sound, detailed and practical legislation. Fourth, a cadastre should be available to any interested users through well developed procedures that are well publicised, simple to follow, inexpensive and responsive to customer needs (user -driven). Fifth, a good cadastre should develop a well-functioning financial regime. While the cost of initially establishing the cadastre is usually fully borne by the government investment, its subsequent maintenance should be based on cost recovery system, or even could be designed to generate additional revenue for the government. Sixth, a good cadastre should develop a career structure that ensures that staffs are well motivated and trained in their respective tasks.

Lastly, IT should be widely applied in maintaining the cadastral system. However, computerisation should not be considered to replace the wider cadastre. Fernando de Soto argues quite persuasively that property creation programmes will fail as long as governments believe that only perfectly knowing and having all the physical or technical things- surveying, mapping, and computerising- will guarantee all information required to issue property titles. He observes:

The propensity in some countries to squeeze the issues related to property into the departments of mapping and information technology has obscured the real nature of property. Property is not really part of the physical world: its natural habitat is legal and economic. Property is about invisible things, while maps are resemblances of physical things on the ground. Maps capture the physical information of assets but miss the big picture. With out the pertinent institutional and economic information about extralegal arrangements (and then replace these by the law and formal property system) they cannot capture the reality outside the bell jar. They are thus unable to do their real job, which is to help anchor the property aspects of assets in physical reality so as to keep virtuality and physicality in sync.

This, however, should never give the message that IT and mapping are not important to cadastre. It means that cadastre should be appropriately adapted to work in an extra legal environment, and geared toward avoiding the legal and political problems which means replacing the extralegal, the informal by the legal and formal system.

Rural Land Lease

General

Rural land lease can also be termed as agricultural land lease as known elsewhere. However, in Ethiopia, there is another form of lease of rural land for investment purpose. The purpose of this part of the discussion is to discuss briefly the types of rural land leases recognized by Federal and Regional rural land proclamations. For the purpose of clarity we shall use the Rural land Proclamations of the Federal (Proc. No. 456/2006), Oromia (Proc. No.130/2007), Amhara (Proc. No. 133/2006) and Tigray regions (Proc. No. 136/2007).

Lease is one form of land holding rights recognized by rural land proclamation. The Federal rural land administration and use proclamation No. 456/2006 in its definition of “holding rights”, among others, include lease as one form of right. Hence, rural farmers are allowed to lease or rent their land to any person who wishes to involve in the agricultural sector.

Types of Rural Land Lease Arrangements

The readings of the federal rural land proclamation and that of others reveal that there are three types of lease arrangements concerning rural land holding.

Leasing farm land to other farmers

Leasing farm land to investors

State lease land to investors

Leasing to fellow farmers

Conditions

Farmers usually rent out their land to a fellow farmer on the basis of share cropping or on cash base. Studies show that the first one is prevalent. Farmers may rent their land to fellow farmers for different reasons, some of which may be need of cash money, lack of capacity to farm the land (because of old age, widow or divorcee woman, sickness, poorness, large area, temporary departure from the area etc.) The law makes a limitation as to the size of the land which should be rented, which is “a size sufficient for, the intended development in a manner that shall not displace them…” It means, at least, the farmer should not rent all his land or a significant part of which would left him with insufficient produce for his livelihood.

The second requirement seems that the farmers need to have a land holding certificate. As you shall see it in the next chapter, efforts are being made in every region to identify and register every plot of rural land so as to issue possession certificate to farmers. Hence, the practicality of this prerequisite is depending on the issuance of such certificates.

The third requirement is that consent of some interested person. The federal legislation needs the consent of other “members who have the right to use the land” (Art. 8(2)), while the Tigray needs the approval of a spouse (Art. 6(2). The Oromian one comes up with different approach, in that the rent is valid “if it is registered and approval by Oromia Agricultural and Rural development Bureau Art. 10(3).”

Lease Period

Although not mention in the Federal Proclamation, the maximum lease period is fixed in the regional proclamations. According to article 10(2) of the Oromian law, “duration of the agreement shall not be more than three years for those who apply traditional farming, and fifteen years for mechanized farming.” The Tigray legislation agrees with the three year period concerning the traditional farming mechanism but prescribes 20 years for the modern farming mechanism one (Art. 6(3).

Leasing to investors

The farmer may lease out his land to an investor, a licensed person who wishes to involve in agriculture. This kind of arrangement is made between the holders of the land and the investor only. Of course, the above requirements are also applied for this type of lease agreement. The difference between the first and this one is that the lessee in the first one is a fellow farmer, and here an investor. The question that can be raised is whether the investor can use the land for other investment purposes or not? The purpose of the law seems that to provide investors an opportunity to rent land for agriculture purpose. It is also against the interest of the farmer and the locality to use the farming land for other purposes. The other good reason is that since each farming plot shall be designated as farming land (according to land use regulations) it is highly improbable to change the land use right (agriculture) to other purposes, such as mining and etc.

The law also provides a mechanism that enables the landholder to develop his land jointly with the investor. Hence, without losing a substantial right, the farmer may be benefiting from the material and technology of the investor.

State lease of land to investors

The FDRE Constitution, under Art. 40(6), gives an opportunity for investors to get land in rural areas. Accordingly the government is obliged to “ensure the right of private investors to the use of land on the basis of payment arrangements established by law.” the Federal and Regional rural land legislations have also upheld this principle. The leased land may be for the purpose of agriculture, like big commercial agricultural lands, or for any other investment purposes (mining, quarry, industry.) The common type of such investment activity in Ethiopia is the horticulture investment wherein investors heavily lease rural land for the growing and collection of flowers and commercial fruits.  As we shall see it later on, such investment is possible to mortgage.

Selected Readings from the Federal and Oromia Rural Land Proclamations

Federal

Transfer of Rural Land Use Right

Peasant farmers, semi pastoralist and pastoralist who are given holding certificates can lease to other farmers or investors land from their holding of a size sufficient for, the intended development in a manner that shall not displace them, for a period of time to be determined by rural land administration laws of regions based on particular local conditions,

The rural land lease agreement to be concluded in accordance with Sub-Article (1) of this Article shall secure the consent of all the members who have the right to use the land and be approved and registered by the competent authority,

A landholder may, using his land use right, undertake development activity jointly with an investor in accordance with the contract he concludes. Such contract shall be approved and registered by the competent authority.

An investor who has leased rural land may present his use right as collateral.

Oromia

Art. 10. Renting of Private Holding

Without prejudice to Article 7(1) any peasant, pastoralist or semi pastoralist has the right to rent out up to half of his holding.

Duration of the agreement shall not be more than three years for those who apply traditional farming, and fifteen years for mechanized farming.

Land renting shall be valid before the law, if and only if it is registered and approval by Oromia Agricultural and Rural development Bureau. The agreements made prior to this Proclamation shall be treated according to this proclamation.

Necessary support shall be made to make the valuation of land for renting coincide with the prospective return from that land.

Any organ who rented rural land is obliged to apply proper preservation and conservation for the duration he holds the land.

Any agreement made on land renting shall bear the consent of all individuals who have rights on that land.

For any rented land, the land tax shall be paid by the name of the landholder.

Any land holder, having the right to use land, can make special agreement with any investor to develop his holding. The agreement shall be registered and approved by Agricultural and Rural development office in the vicinity.

Art. 11. Land Renting by Government

The government can rent out the land not held by the peasants or pastoralists or semi pastoralists.

The agreement to be made by Sub-Article 1 of this Article shall protect the benefits of the peasants, pastoralists or semi pastoralists.

The renting price of rural land by government shall be subject to revision as necessary.

The duration of the renting agreements shall be decided by the government.

Art. 12. Investment Land

In accordance with the existing investment law of the Region, any private investor shall have access to rural land and is obliged to conserve accordingly.

Private investors are obliged to plant indigenous trees at least on 2% of the given land.

The investment land shall be determined in the way that it shall protect the natural recourses of the surrounding.

Urban Land Lease

Scope

Today, in Ethiopia, lease is the “cardinal” and “exclusive” land-holding system to transfer urban land to users in accordance with the master plans of each urban area. Hence, unlike the housing sector, urban land is governed by a special legislation, namely, the Lease Holding of Urban Lands Proclamation No. 272/2002. And yet the civil code may be applied whenever necessary. The scope of application of the law is “to an urban land held by the permit system, or by lease-hold system or by other means prior” to the coming of the proclamation “as well as to an urban land permitted hereafter.”

Leasehold right

The leasehold right is a right to use the land for fixed period of time against payment of agreed amount of money. The assumption is that any person who fulfills the requirements is entitled to get land by way of lease. Pursuant to article 4 of the urban landholding lease proclamation, an urban land shall be permitted to be held by lease:

in conformity with plan guidelines where such - a plan exists, or, where it does not exist, in conformity with the law which Region or City government makes, as the case maybe, and

on auction or through negotiation ;or

according to the decision of Region or City government.

The Amharic version of sub-c is different from the English one in that the former is applicable to urban dwelling houses. Means the regional government may approve directive which allows urban dwellers to get land for housing free of charge, without negotiation etc. This is said because in practice this is happening in all urban centers of the country. The lease regulation of the city of Addis Ababa and other regions clearly show that urban dwellers may get a fixed land for residential houses free of charge. This is one character this lease legal framework shares with the proc. 47/1975.

Once a person gets land by one of the three mechanisms, he/she is entitled to get leasehold title deed. This is a certificate that proves the lessee’s rights to the land. What kind of rights does this title deed provide? Once if a person buys the lease right s/he has the right to construct a building of different nature (residential, commercial, industrial) as per the agreement and the master plan. Hence the right of use and enjoyment is one right conferred on the lease right holder. Another right is that the lease right can be inherited, donated, or mortgaged provided that the beneficiary’s rights are limited by the period of the lease term. Finally, the lease can be sold or exchanged to any person. Article 13 of the proclamation provides the kinds of rights. As per sub-article 1 of this article “any lease holder may transfer, or undertake surety on (mortgage), his lease-hold; and he may also use it as a capital contribution to the amount of the lease payment he has made.”

It must be noted that this right shall be enjoyed so long as some form of construction/activity has been taken place; in other words bare land is not subject to all the above rights. This point is also understandable from the reading of Article 12 and Article 13(2) (3) of the proclamation. Article 12 requires the leasehold possessor to “begin to use the land for the prescribed activity or service within the period of time set…” The time set for commencement of activities may vary from 18-30 months as the case may be as emphasized in different municipal regulations. The second point is that the concept of real estate that we discuss in the beginning, that land constitutes the ground and the building, is reemphasized once again under article 13.  This article in short says that mortgaging a use right of land includes a building constructed on it and the accessories thereto, and conversely the mortgage of a building and its accessories includes the use right of the land. Similarly, sub 3 of same article says that land right and the construction upon it are inseparable in that during default of payment both rights should be transferred to the creditor.

As one can clearly observes that leasehold right provides all the rights and privileges that private land can do. The only difference is the degree of security and restriction. Concerning this point, Farvacque and Mc Auslan give interesting explanation:

Essentially, the crux of the legal difference between freehold and leasehold is that the freeholder (private owner) is bound by the laws of the land and nothing else. Whereas the leaseholder is bound, in addition, by the terms of the lease laid down by the landlord. The leaseholder is then less free and unrestricted in his or her use of land than is the freeholder (p.199.)

As we shall discuss below even private ownership is not an absolute one, it is subject to different limitations, such as town plan, public interest, environment etc. The clear difference between the private ownership of land and the leasehold right is the time element, in that the latter is limited by time as we shall discuss it later on. The limitation in time may create some how insecurity on the lessee and as a result inhibits the lessee from making further investments. On the other hand it can be said that for those lease agreements taking longer years, such as 99 or 70 years, people may not be inhibited from making additional investments.

Additional Reading

As part of the public/private land ownership debate, many people argue in favour and against the system from leasehold point of view. Those who argue in favour of public ownership of land claim that the urban land lease holding arrangement is beneficial as practiced in many countries including China. Nega Woldegebriel (Who are Benefiting? The Urban Land Lease Policy, Case study of Addis Ababa, Lund, Sweden,  2005 pp. 10-11,12) forwards the following argument.

Leasehold tenure-ship and its implication

Land tenure could be expressed as the possession and use of land by individuals or groups for limited or unlimited period of time. According to Oxford dictionary (1998), tenure is defined as the condition or form of right or title, under which real property is held. Ethiopia has endorsed different tenure systems.

In theory, public leasehold does appear to be a compromise because the system allows the state to remain as the landowner and lease the development. The use rights of land go to private individuals. However, in practice, it does not matter who the landowner could be. It could be the government or private landlords who have real control over land but what matters would be depending on how lease conditions are constructed (Bourassa and Hung Hong 2003).

Chen (1990) has pointed the comparison of the land policies of China and western countries. He has stated out that,

What distinguishes the private ownership and public ownership over land is their differing point of departure. In the west, where land has long been privately owned, the state exerts control by regulation: in China, where the point of departure is state ownership, similar results are achieved in a more proprietary manner- through the use of leasing contracts.

What is being reflected by Chen (1990) sounds quite right for countries in transaction. What was discovered one among the most reasonable route to the transaction into a vibrant land and housing market has been the adoption of a public leasehold policy. This option could be regarded as a transitory alternative to the building of a well functioning market economy. This is what Ethiopia is trying to achieve. In particular a shift of land holding from strict public ownership to semi-private or to full private would bring social unrest. It needs to consider the steps performed a country like China where there was a profound communist regime and a country with a highest population of the world. Moreover, China’s experience in this regard is often cited as one of the best practices in stimulating the urban land and housing sector along the free market lines. Thus, Tung Pi Chen’s conclusion in this case is an additional testimony to the success story.

As Knaap et.al. (2003) have described regarding the separation of use rights and land ownership.

In the current property rights regime, use rights for specified period (eg 40 to 70years) can be obtained from the state through the up-front payment of land use fees. The fees are determined by the location, type and density of the proposed development. This separation of land ownership and use rights allows the trading of land use rights while maintaining state ownership of land.

Knaap and his colleagues have point out three advantages, which the Chinese government has achieved. First, market mechanisms could help and guide the allocation of land resources; second, land use fees would provide local government with a new resource of revenues, and third, by retaining state ownership, social and political conflict would be minimize.

Theoretically, leasehold would bring social, economical and environmental benefits. All would agree with the idea of the economic advantage of land.

Economists frequently refer to land along with labour, capital, and management as one of the basic factors of production. Land as property has legal connotations and could be described as individuals or groups have been exercise rights of ownership and use they hold in land. And from stand point of the average investors, land must be purchased or leased like other capital goods, so land could be described as capital.

(Raleigh Barlowe 1958)

….Where land is state owned, the mere advantage of the local governments is, they can reserve land for housing construction and infrastructure developments. In addition, the purpose of land lease would be reserving land for residential uses with no cost. Otherwise the high cost of land would affect the low and middle income groups. For instance in Canberra Australia, among all purposes of land leasing, reserves land for buildings, foreign embassies and other public infrastructure appears to be most achievable (Bourassa and Hung Hong 2003).

Lease periods

As we try to touch it in the preceding part, lease is different from private ownership because its enjoyment right is limited in time. Unlike rural land, urban land is granted to urban dwellers and investors on the bases of restriction. In the current property right situation, use rights are provided for a specific period (it could be for 15 or 99 years) obtained from the landowner who shall be the state through ground rent payment. Therefore the landownership and use rights are separated and make the state out of full control over the land. Article 6 of the proclamation provides different periods of years for different types ground leases.

Art. 6: Period of Lease

1) The, period of lease shall vary depending on the level of urban development and sector of development activity or the type of service and shall have the ceiling of:

1. a) In any town:

up to 99 years for housing (personal and leasable), science, technology; research ,and study, government office, non-profit-, making philanthropist organization, religious institution; ,

up to 15 years for urban agriculture;

as per government agreement for diplomatic missions and international organizations;

(b) In Addis Ababa and in a town designated as of the grade of Addis Ababa:

up to 90 years for education, health, culture, sports;

up to 60 years for industry;

up to 50 years for commerce;

up to 50,years for others.

(c) In other towns not designated as of the Grade of Addis Ababa;

up to 99 years for education, health, culture, sports;

up to 80 years for industry;

up to 70yem for commerce;

up to70 years for others.

Students are invited to make more research on what the law means by cities designated as grade of Addis Ababa. It is also a good research area to investigate the different lease regulations issued by the city of Addis Ababa and other regions concerning the ceiling of the lease period and manner of payment, area of land allowed free of charge for residential areas and etc.

Now the next logical question is what will happen after the expiry of the period of the lease agreement? Should the lease continue or be terminated? What will happen to the improvements made to the land? Think about it and compare your guess with what we shall discuss below.

Renewal and Termination of lease permit

Lease holding right may be terminated for good reasons; the state has no right to revoke this right whenever it wishes. Like any contractual agreement the expiry of the lease contract may be a reason for termination of the lease hold right. However, unlike lease of housing, the lessee has a better position. The municipality may not take back the land whether before or upon the expiry of the lease agreement unless the land is needed for public interest based works.

The lease hold possessor has the right to request for renewal of the period of lease agreement, 10 to 2 years before the final day of the agreement.

Art.7: Renewal of Period of Lease

1) Period of lease may, upon the termination thereof, be renewed for the lease-hold possessor as per the agreement to be reached, unless the urban land is wanted for public interest. Where the lease period is not renewed upon termination on account of the land being wanted for public interest however, compensation shall not be paid to the lease-hold possessor.

2) Period of lease shall be renewed for the lease-hold possessor in pursuance with the stipulations of Sub-Article (1) of this Article if only he has applied in ,writing to the appropriate body, to that effect within 10 years and not exceeding2 years before the termination of the period of lease.

3) The appropriate body must notify to the applicant in writing its decision within 1 year after the application has been lodged with it. It shall be deemed as though it has agreed to the renewal if it fails to do so within I year after the receipt of the application

One can clearly see that renewal is the rule. The lease holder must apply as early as possible to secure his/her rights. The municipality is given a maximum of one year to notify its decision to the lessee. The assumption is that unless the ground is needed for more socially advantageous activities (for public interest) the municipality shall renew the agreement. It must also be noted that the terms of agreement especially the rent and manner of payment as well as other conditions shall be based on current conditions. In other words, the renewed lease agreement may not contain similar particulars as that of the expired one.

This approach is also well known in different countries. The reason behind protecting the lease hold possessor is that because of the investments already made on the ground. People may build residential houses, commercial, agricultural, industrial and so on buildings on the ground, and it would be unjust and unfair if the government is going to take back the land just to sale it to another person. This would create insecurity upon lease holders which would again discourage them from making additional investments on the ground land they leased. It is also categorically against the interest of the state for demolition and reconstructing of structures is expensive one. Secondly, people will not build good buildings for fear of losing them.

Art. 15. Termination of Lease-hold and Payment of Compensation

1) The lease-hold of urban land shall be terminated:

where the lease-hold possessor has failed to use the land in accordance with Sub-Article (1) of Article 12;

where it is decided to use the land for a public interest; or

where the period of lease is not renewed

The lease proclamation provides three basic reasons for the termination of the contract. It seems the first and third reasons are happening on account of the failure of the lease-hold possessor him self. Because, failure to commence the activity on the ground within the agreed time and in accordance with the plan and failure to request renewal of the lease agreement are impugned on the lease-holder himself. The second reason is however, accountable to the state, and as a result the lease-hold possessor shall be “paid commensurate compensation” for his lose of the property. In case of the first and third cases however there is no any compensation to be paid.

Expropriation of leasehold right and Compensation

 As we shall dealt it with, when discussing expropriation at the last part of this material, expropriation is one means of land acquisition for the state. It is a procedure whereby the state takes away private owned land property for public interest without the consent of the owner and against payment of fair amount of compensation. The subject of expropriation is not only privately owned land and building but also leased land. The lease proclamation gives hints of such possibilities under articles 7(1), 15 (1) (b), and 16. Expropriation of leasehold land may be effected during the expiry of the lease agreement (7(1)), or before the expiry of the agreement as can be inferred from Article 15 (1) (b), and 16 (1). According to article 7, the state may refuse renewal and take back the land when the land is needed for public purpose. The law also emphases that in such case compensation is not to be paid. Hence we can argue that the taking back of the land doesn’t amount to expropriation. Only leasehold right which is active is compensable. Do you think it is just to deny compensation for the property constructed?

Art 16: Clearance of Urban Land

The appropriate body may clear and take over an urban land which it decides it is necessary to commit for a public interest by issuing clearance order in writing to the concerned person. It shall also publicize the order through other alternative means.

The point is that where a leasehold right has been taken away by the state for good reasons/public interest (such as to build hospital, roads, schools, etc), the state must compensate the leasehold possessor for the property on the land and the remaining lease rent. Regulation No.135/2007 that provides for “The Payment of Compensation for Property Situated on Landholdings Expropriated for Public Purposes,” under article 13 provides the formula. Now concerning compensation for buildings the amount of compensation should be calculated by taking the following in to consideration:

cost of construction ( current value) .

cost of permanent improvement on land

the amount refundable money for the remaining term lease contract

The leasehold possessor is going to be refunded if he had made full or prior payments the rent.

The fact that lease hold right is a secured one and can give protection to the holder is even more clear when one looks to sub article 2 of article 16 which concerns squatting. That illegal settlers (squatters) may be evicted from the land they hold with out any payment of compensation.

Summary

Lease of land in Ethiopia, as we discuss, can be classified in to housing, urban land (ground land lease) and rural (agricultural) land lease.  Since buildings are privately owned lease or rent of houses is based on freedom of contract than some social policy, as favored by many western countries. The ceiling of the rent is not fixed and the agreement can be terminated upon expiry of the agreement, it doesn’t give the lessee the sole right to continue the lease.   Rural farmers have been given a hereditary lifetime possession right to the land which includes right to use, inherit, donate and rent or lease. Rural farmers may lease their holding to a fellow farmer or to an investor. The government may also lease part of its holdings in rural areas to investors who wish to engage in agriculture or other areas of investments. The urban lease system is a complex one and a source of huge income to municipalities. The government compromises the policy of state ownership of land by introducing the lease system to hold land in urban areas. It is believed that this will allowed Ethiopia to develop a real estate market in the absence of land ownership. The role of the State as landowner is thus effectively restricted to the allocation of undeveloped land. 

Scope and Definition

“Lease” under the FDRE lease proclamation 272/2003 has been define as “lease-hold system in which use right of urban land is transferred or held contractually (Art. 2(1). The 1960 Ethiopian civil code under article 2896 on its part defines lease as follows:

 The lease of an immovable is a contract whereby one of the parties, the lessor, undertakes to ensure to the other party, the lessee, the use and enjoyment of an immovable, for a specified time and for a consideration fixed in kind or otherwise.

Hence the concept of the word “lease” which is employed in the above laws is one similar to what is coined in the common law as “Leased fee” which means an ownership interest held by a landlord with the rights of use and occupancy transferred by the lease to others. The rights of the lessor (the leased fee owner) and the lessee are specified by contract terms contained within the lease. And “leasehold” means the interest held by the lessee (the tenant or renter) through a lease transferring the rights of use and occupancy for a stated term under certain conditions.

Here the definition and scope of lease provided in the proclamation is different from the scope of the term defined in continental legal system. A typical definition of lease is one given by Planiol which states lease as: “A contract whereby one person engages himself to furnish to another person the temporary enjoyment of a thing for a price proportional to the time.”

The similarity one can find in all the above definitions is that firstly, lease right emanates from contractual agreements. Secondly, the right transferred to the lessee (tenant) is the use and occupancy of the property. Thirdly this interest is transferred for consideration- that the lessee must pay in the form of rent. And fourthly, in both systems lease right provides only personal rights to the lessee, not real rights for the lease right generally may not be sold or mortgaged. The basic difference one can observe from the definitions however Planiol’s definition of lease can encompass movable and immovable, for the word “thing” can connote both movable and immovable. In the common law as well as under the Lease proclamation no. 272/2003 leases are applied to real property or land. A systematic search and analysis of the civil code also shows that the code follows the common law approach.

Additional Reading

On the definition and scope of the term “lease” K.W. Ryan in his book An Introduction to the Civil Law, The law book co. of Australasia Pty Ltd, 1962, pp. 98 provides the following:

In Art. 1709 C.C.(in France), a lease is defined as a contract by which one party undertakes to let another to have the benefit of a thing for a certain time in exchange for a certain price which the other undertakes to pay him. The German definition is more restrictive. Art. 535 B.G.B. provides that by a lease the lessor is bound to allow the lessee the use of the leased thing during the term of the lease, and the lessee is bound to pay the lessor the agreed rent. It will be seen that a German lease (Miete) gives the lessee only the use of the thing. An agreement granting him the use of the thing and the enjoyment of its fruits is termed a Pacht, and is separately regulated in the B.G.B. The distinction between a   Miete and a Pacht, between a lease according the bare use of property and one according the enjoyment of its fruits and profits is of Germanic origin. A further matter which appears from both definitions is that the term “lease” is used for agreements relating to the temporal use of movable as well as immovable property. This is in accord with the Roman, in which the object of locatio conduction rei could be property of any kind. The Civil law of letting is at the same time the law of hiring. Nevertheless, in both French and German law the distinction between a lease of immovables and the hiring of movables is far from unknown and it has been accentuated in the post-war emergency legislation.

Use and purpose of lease

Lease is another means of land holing system. Lease may be of private or public one. For both the state and private individuals lease is a means of income for it is also another form of land market. The income from land lease has significant part in the over all GDP of a country in general and in the real estate transaction income in particular. In the absence of an effective land taxation system, one of the means by which local governments increase revenues is through public land leasing. There is evidence that land leasing has been happening on a large scale. Some countries secure a particular place for lease purpose. For example, the city of Sydney, in Australia, is a good example. In Sydney the only means of land acquisition is lease.  They call is ground lease for the state or municipality, as the case may be, transfer the ground land by way of lease. In other words, to collect rent from transfer of land by way of lease, states may reserve particular land for this purpose. On the other side of the coin, lease is a means of acquisition of land. In industry and agriculture lease is preferable since the business may not be long lasting. Some times it is easy, if not cheaper, to get land by way of lease rather than purchasing. Eve the procedure, for example in Ethiopia, is shorter and easier than land grant for land lease policy is more responsive to demand of land supply. From private lease point of view, those who could not afford to buy land from the land lords had the only choice of leasing land.

Lease of Houses/Tenancy

This is a place where we shall discuss about lease of housing. The housing that we are talking about may be residential or commercial. In countries where the real property market is flourished these are very common systems of conveying one’s house to another renter. Yet for public purpose and social welfare reasons most counties in the western world regulate the ceiling of rent that should be paid for a residential house. In Ethiopia, there are two systems of rental: private and public. The government owns a lot of urban houses after it nationalized them using Proc. 47/1975, a proclamation to provide for the ownership of urban land and extra houses. The Rental Agency administers these houses. It puts a regulated and mostly fixed rate of rent for its tenants. On the other hand, private owners of residential and commercial houses are at liberty to put the market price for rent. This is a contract that is totally controlled by the civil code. In this section a discussion will be made based on the civil code tenancy provisions (2896-3018).

General principles

Lease of immovable is a contract (Art. 2896) and hence the general rues of Contract in general (Arts. 1675-2026) may be applied whenever necessary, especially concerning formation and effect of contract, as indicated under Art. 1677. A combined reading of articles 1723 and 2898 reveals that a lease contract needs not to be made in writing. More over, articles 1571 and 2899 strengthen this fact by dictating that lease agreements made for more than five years and do not enter into registry may not affect third parties. Article 2946 stipulates that the municipality may prepare a model contract form for the lease of houses with in its jurisdiction. Yet it is not mandatory for the parties to follow it. It seems, the option is left to the contracting parties.

Lease provides an interest to the lessee, which may not be affected by any encumbrance made on the property or transfer of the property itself. Unless otherwise expressly agreed between the lessor and the lessee, a contract of lease may be set up against a third party who acquires the ownership or usufruct of the immovable given on lease after the delivery of the immovable to the lessee (art. 2932). The only exception is in case of expropriation where the state may take away the property for reasons of public benefits.

Concerning the duration of the lease agreement, the contract may be made for determinate or indeterminate period of time. In any case it may not be fixed for more than 60 years and any contract mad for more than 60 years shall deemed to have been made for 60 years (Art.2927).

Obligations of Lessor

Delivery of property and warranty of peaceful enjoyment

The lease imposes on the lessor various obligations all of which spring from a single principle: the lessor is bound to procure for the lessee the enjoyment of the premises for the duration of the lease. This principle is embodied in our civil code under articles 2900 (Delivery) and 2911(peaceful enjoyment of immovable). The lessor shall deliver the lessee the immovable given on lease and its accessories, in a state to serve for the use for which it is intended in terms of the contract or according to its nature (Art. 2900). The lessor has also the obligation to deliver the house in good condition or free of defect. As per article 2904(1) “where at the time of delivery, the thing has defects of such nature that its normal use is appreciably diminished, the lessee may demand the rescission of the contract.” Besides to the rescission of the contract, the lessor may also be subject to liability of payment of damages as envisaged under articles 2905-06. However, if the defect was apparent, means if the defect on which the lessee’s claim is based is apparent or where he knew or should have known of the defect on the making of the contract, he may not revoke the cancellation of contract and or payment of damages. Read article 2907. In other words, the lessee must first look in to the house and ensure whether it is suitable and ok. An exception to the apparent rule is provided in the next article 2908(1) which states: “Where the thing is in such a state as to constitute a serious danger to the life or health of the lessee or of those who reside with him or of his employees, the lessee may require the rescission of the contract even in a case of an apparent defect or of a defect of which the lessee knew at the time of the contract.” And sub article (2) emphasizes: “Any stipulation to the contrary shall be of no effect.”

Note: is a cracking on the wall which is visible apparent? What about a licking roof? Or noisy neighborhood? What about a wall that sends electric vibrations and currents?

Comment: generally speaking the lessor has the duty to inform all about the defects, if any. If one looks to what the lessee justifiably can anticipate, the responsibility of the lessor would be very far reaching. As a limitation of this responsibility, there is the duty of examination for the lessee.

It can be point out that in the extent that one might speak of a duty to inform, this is not as general as regarding the examination of duty for the lessee. It can therefore not be claimed that the lessor is obliged to inform the lessee of every default to his knowledge in order to escape responsibility. The lessor is especially responsible for defects which cannot be found through normal examination.

Art. 2911. The lessor shall warrant to the lessee the peaceful enjoyment of the immovable during the currency of the lease.

Peaceful enjoyment of the leased house is the main interest of the lessee. Our civil code (under articles 2912-2915) provides rules which guarantee this enjoyment. First point is that the lessor must refrain from any personal act which would interfere with the lessee’s enjoyment of the property. For example, the law provides that the lessor may not make alterations in the house without the consent of the lessee (art.2912) since it disturbs his peaceful enjoyment. Another one is that the lessor warrants that the lessee will not be disturbed by third parties who have legitimate claims on the leased property. This concept is envisaged under article 2913. The general point made in this article is that third party claimant of the leased property should made their claims against the lessor not the lessee. The lessee shall be entitled to reduction of rent in case of molestation by such party.

On the other hand, the lessee is not warranted for illegitimate claims and molestations made by a third party. In such a case the lessee may take action in his own name against such third parties (Art. 2914(2)). The third point is that the lessor shall pay the burdens and taxes charging the immovable (Art. 2915).

Note: which of the following is warranted by the lessor

• A third party brings a possessory action against the lessee/tenant.

• A neighborhood hooligans disturbing the lessee

• A third party brings an action against the lessee for tort based damages which is caused by the fall of a brick from a fence.

Repairs

A house let needs a periodic repair and maintenance for its enjoyment and habitability. The lessor shall maintain the immovable in good condition and make therein during the currency of the lease such repairs as are necessary and are not repairs incumbent upon the lessee (2916). Basically, the duty to repair a house leased may be determined by the contract of lease. Hence, based on the contractual agreements both the lessor and the lessee are duty bound to repair the house (Read Arts. 2916, 2919, 2953). In the absence of such a clause in their contract, however, the code comes up with a solution under article 2954.

Art. 2954. - 2. Which repairs are incumbent upon lessee.

1) The repairs which in the contract of lease are placed at the charge of the lessee shall be deemed to be repairs incumbent upon him.

(2) Unless otherwise agreed, repairs necessary to the doors, windows, floorboards, tiling, taps and water drains shall be deemed to he repairs incumbent upon the lessee.

(3) The works of cleaning and maintenance which become necessary by the enjoyment of the thing shall also he deemed to be repairs incumbent upon the lessee.

Art. 2955. - Old age or force majeure.

(1) No repairs which are deemed to be incumbent upon the lessee shall be at the charge of the lessee where they are occasioned only by old age or force majeure.

(2) The contract of lease may derogate such rule by an express stipulation

When the type of repair is at the charge of the lessor and because of their urgent nature cannot be repaired without delay by the lessor, the lessee may repair them at his cost and may retain the cost from the rent (read art. 2920).

Obligations of the Lessee

Necessary Care

The lessee can do nothing which diminishes the usefulness or agreeableness of the premise let. To emphasize this point the code under article 2921 underlines two things, first that the lessee should use the property with “care” and for the “purpose” it is intended to be used. Secondly, the lessee may not make alterations in the immovable or its mode of exploitation that would extend beyond the period of lease. In particular, the lessee is duty bound to furnish the house in a way that suits its nature and purpose (read art. 2949).

Another point worth mentioning here is the duty of concern for neighbors. The lessee shall have the consideration which is due to the other persons who dwell in the house a part of which has been given to him or lease (art. 2948(1)). So this applies to co-tenants who share same building or premises. But, what about neighbors? The general rules on ownership under property laws may be applied here mutatis mutandis, and one provision of such nature is article 1225 which forbids abuse of ownership in a way that causes nuisance or damage to neighbors. This may happen by sending smoke, soot, unpleasant smell, noise or vibration in excess of good neighborhood.

Examples: Comment

• A lessee who leased a residential house used it for a grocery

• A lessee above two story apartment uses firewood to cook his food. The apartment was not including traditional

• A lessee emits high volume sounds from his tape recorder during party hours of mid night.

Payment of Rent

A lease is made generally for consideration and receiving rent is an important benefit to the lessor. Hence payment of rent is second important obligation of the lessee. The time and amount of rent shall b decided by the free agreement of the parties in their agreements (Arts. 2923, 2950). As we try to mention above the ceiling of rent in many countries today is fixed and control for economic, social and moral reasons. Our code simply adopts the principle of freedom of contract and allows the parties to decide about the amount.

What are the pros and cons of controlling rent ceilings?

Additional Reading

Most countries in Europe have controlled the ceiling of rent of urban residential houses. This is in an attempt to control the unreasonable high prices of lease prices and also to ensure the right to housing. The International Covenant on Economic, Social and Cultural Rights recognizes the right of all individuals to an adequate standards of living, including adequate food, clothing, and housing (Article 11). General comment 4 stresses that “housing” includes adequate privacy, space, security, lighting, and basic infrastructure-all at a reasonable cost. Ratifying parties are required to report their housing policies and their success in meeting housing needs every four years. Should affordable housing be a basic right that every society assures its citizens? Following are related excerpts of such nature.

John Sprankling, Raymond Coletta and M.C. Mirow, (2006) Global Issues in Property Law, American casebook series, Thomvson West. Pp61-63

Introduction

Understanding the Ethiopian land tenure system is important to student of land law for it gives students general historical and factual ideas about the land holding system in the country. The Ethiopian land tenure system is also the concern of history, sociology, agriculture, and economics and as a result different writers from all these disciplines have written a lot of materials. In here we shall briefly discuss the types of land holding system in three broad historical periods and the content of the laws used for such systems: before the 1974 revolution, during the Derg Era, and the present system. The pre-evolution period is treated in one section because the land tenure system was basically the same for long period. Only the coming of the revolution fundamentally changed the millennia based land holding system.

Objectives

After finishing the study of this chapter, you will able to:

• Understand the concepts of Rist and Gult two tenure concepts of the pre 1974 era

• Know the land tenure system before the revolution

• Comprehend the implication of the revolutionary time land tenure laws

• Appreciate the stand of the FDRE constitution regarding the land holding system

Before the 1974 Revolution

Northern Ethiopia

Ethiopia was governed by kings and emperors for over two thousand years. The land holding system was generally a customary one in that there are no written laws which govern the holding system. A historical review of the land holding system of the feudalistic Ethiopia reveals that all land was owned by the king. Other private people, family or the church derived their claim to the land from imperial land grants, otherwise known a gults. Hence, land was predominantly owned or possessed by a few landlords, the Church, and sometimes individuals, especially in the north.

Based on historical and political factors, the land tenure system in the northern and southern parts of the country were different. In the north, from time immemorial land had been owned based on a lineage system. This land once entered in to the hand of individuals by way of grant, or inheritance etc continues to remain within the family. This was called rist. It signified the usufructuary rights enjoyed under the kinship system. All land so held was considered to be held by hereditary right, because the holder was ipso facto a descendant of the ancestral first holder. In the north, thanks to this kind of land-holding system, a peasant could claim a plot of land as long as he could trace his descent. Hence, individual’s rights over rist-land holding were decided essentially on the bases of his or her membership to the lineage. These rights, as described by Markakis, “were inherent and hereditary, which could neither be abridged nor abrogated under different pretexts, such as absence of an individual from the locality.” The same social customs prohibited an individual from alienating or selling the land. The holder of the rist land, called ristgna, had unchallengeable control, use and inheritance rights over his or her possession. When a person died, his/her land was divided equally among all his/her children regardless of sex or birth order. Some argue that the use-right was secured in the sense that political authorities, including the Emperor, or landlords were refrained from interventions. As a result, “there was less tenure insecurity or fear of being evicted from the rist land.”

As discussed above gult lands were lands derived by imperial grants and unlike rist lands, which were not subject to sale and exchange, gult lands were sold and donated freely. Donald Crummey, in his book, Land and Society in the Christian kingdom of Ethiopia, has recorded the sale, inheritance, and donation of gult land especially during the Gonderian period of the 16^th and 17^th century of Ethiopia.

The land grant condition reached its apex during the twentieth century. During Menelik’s period, the emperor had been giving a vast amount of gult land to the ruling elite as a reward for loyal service to the régime, and to religious institutions as endowments. The individual or institution that held such land had the right to collect taxes from those who farmed it, and also exercised judicial and administrative authority over those who lived on it. Thus, a single estate of gult land, comprising perhaps one or two square miles, often included within its boundaries strip-fields, held as rist by scores (50-150) of farmers.

Southern Ethiopia

The pattern of land allocation in the southern territories incorporated into the empire by Emperor Menelik II, differed in important ways from the pattern in the north. The gult system was introduced in the southern part of the country in the 19^th century, following Menelik’s expansion to the region. From the 1870’s under Menelik to the 1970’s under Haileselassie, the crown alienated land which was occupied by local tribes in common. It was distributed to members of the imperial family, the clergy, members of the nobility, Menelik’s generals, soldiers, and local agents of the state. Unlike the condition in the north, here most of the land was occupied not by peasants, but by the people of the upper ruling class. These people, by means of land grants, became absolute land owners. This kind of land ownership system was called gult. Peasants on such land became tenants (gabar) of the grantee and paid rent in addition to the usual taxes and fees. As explained by J:M Cohen: “those who received government land grant need not farm it themselves but could rent it under quite profitable arrangements to tenant farmers or lease it out to large-scale mechanized producers.” After the Second World War and the expulsion of the Italian forces from Ethiopia, Emperor Haileselassie also continued this process. According to one study conducted by Gebru Mersha and et.al, of the nearly 5 million hectares allotted after 1941, only a few thousands reached the landless and the unemployed. 

In the south, land measurement and property registration for tax purposes was introduced. This promoted private ownership and land sale. In northern Ethiopia, traditional land tenure had had a communal character, with peasants enjoying only usufructuary rights over the land rist land. In the southern part, especially, in the twentieth century, the steady process of privatization set in, with its implication of sale and mortgage. Some land lords even forced their peasants to buy the land. The historian Bahiru Zewde observes:

The privatization process had a number of consequences. At the conceptual level, it was attended with changes in the connotation of some important terms. Rist, in origin of the usufructuary rights enjoyed under the kinship system, now denoted absolute private property. Likewise, the term gabar lost its exploitive associations and assumed the more respectable connotation of taxpayer. Absolute private ownership rights to land above all entailed unrestricted freedom to dispose of it, most significantly through sale.

This process was not without negative impact to the indigenous society, however. The renowned sociologist and expert on Ethiopian tenure system, Markakis, has concluded that the effects of the land grants and alienation were “eviction of a large number of peasants, the spread of tenancy, and emergence of absentee landlordism.” Generally speaking, private tenure was recognized as the most dominant system during the final days of the Imperial regime, affecting some 60 percent of peasants and 65 percent of the country’s population. Under this system, land was sold and exchanged; however, given that all the land was originally state property and that private holders had no absolute rights, this was different from the general concept of a freehold system. Serious land concentration, exploitative tenancy and insecurity have characterized the private tenure system.

Additional Reading on the institutions of gult and rist

The concepts of the institutions of gult and rist are too complex as they are differently applied in different part of the country. Even scholars give different pictures as described in the following. Additional reading is hereby provided from Habtamu Mengistie(2004) Lord, Zega and Peasant: A study of property and agrarian relations in Rural Eastern Gojam. Forum for Social Studies, Addis Ababa University, pp.7-10.

The nature of rest and gult rights are fully encompassed by the definition that Hoben gives to the terms in his widely read book (Land Tenure among the Amhara of Ethiopia: The dynamics of the cognatic descent, Chicago/London, 1973). Hoben writes that gult rights entail “fief-holding rights” whereas rest rights confer “land-use rights.” He adds that “[i]n its most general sense, rist refers to the right a person has to a share of the land first held by any of his or her ancestors in any line of descent.” According to Hoben, rest refers to the theoretically inalienable and inheritable land right of peasants. The peasant had the right to claim rest land through both the paternal and maternal lines. The individual rest holder could have only a usufractary title because the ultimate title to the land lays in the “descent corporation” or the lineage. This evokes the view that under such system of land tenure no right of alienation by individuals could exist. This implies that the rest system of land holding has a communal character because of the undifferentiated complex of rights. What all this means is that many individuals could have concurrent and miscellaneous rights over piece of land.

For Hoben , gult confers material advantages to and forms the basis of political power for the elite. It also plays a useful role in the administration of land and the people occupying it. The bundle of rights which the state transfers to the balägult could include adjudication, governship, and the right to collect tribute. Taddese Tamirat also shares essentially the same view with Hoben as regards the role of gult in the administration of the country and adds that it was equally significant in military mobilization. The bälägult simply enjoyed the right to tribute in the form of part of the annual produce from the land. However, they could not claim tributes as owners. Hoben writes that both rest and gult rights extended over the same land they complemented each other as such: “it is of fundamental importance to remember that rist and gult are not different types of land but distinct and complementary types of land rights.” Thus the exact scope of right of bälägult and resängä is some what blurred or overlapping. These assertions by Hoben regarding the nature of rights of rest and gult have almost attained the status of the basic principles and have become “established” points of departure for analysis of class relationships and the land tenure system. Some difference of detail notwithstanding, this view shared by a number of scholars, including Donald Crummey.

Crummey argues that in regions where the rist system predominated, gult was the tribute right exercised by the non-farming elite, and that the bälaägult, in his capacity as pure tax and tribute collector, had absolutely nothing to do with the production process and with the land. He asserts, like Hoben, that the ristägnä had mastery over the means of production and enjoyed absolute autonomy of production.…Without abandoning the view that gult was essentially a tribute right Crummey  further argues that tribute rights had acquired a character of property, being transferred by sale or otherwise without necessarily involving the state. In other words, the individuals at the receiving end of the buying an the selling process could accumulate tribute rights over large amounts of property. Tribute rights were thus exchanged, negotiated, fought over, etc. The selling and buying of tribute rights over land (i.e gult) provides additional evidence to the argument that gult was given and taken away only by the kings was incorrect, and that the gult holders exercised the right of transfer without necessarily obtaining permission or sanction of the kings.

Defining and delimiting the meanings and scope of gult and rist rights,  Merid (Merid Wolde Aregay. “Land Tenure and Agriculture Productivity, 1500-1855”, Proceedings of the Third Annual Seminar of the Development of History. Addis Ababa, 1986) writes that gult “has never been a form of land tenure”; it was, he says, only “a system of defraying remuneration for services out of taxes and tributes which could have been collected in kind. Gult rights only conferred partial usufruct rights.” He goes on to state that even rist rights did not allow “absolute ownership rights on the individual. It has done so on the lineage or descent group only.” According to Merid, though the individual members of the descent group enjoyed perpetuity of tenure they could not have an absolute interest in an allotted portion of the descent property in land. The justification for the inalienability of rist land, according to Merid, was the desire to preserve it for the needs of the present and unborn individuals in the line of descent; in his words rist could not be alienated “because it belonged to the living and the yet unborn.” One could, of course, give out his or her land on terms of tenancy. Merid adds a few other points to his description of the rist system: one is that membership in rist owning group could be obtained or acquired only through birth. The second is that there was no big private or individual ownership of land because of the workings of rist system of land. Because of the rist system big holdings of landed property soon melted away. The third point is that the most important and overriding interest of the village community and the lineage was to achieve solidarity. He writes in this connection that “throughout history community solidarity and the rist system have been reinforced and preserving each other. Individualism would have no place in the society.” The rist system also created conditions for excessive litigation and invariably acrimonious relationships among members of the descent groups.

At this point it will be apposite to mention the work of a scholar who represents a dissenting opinion on some of the issues from the established scholarship. Shiferaw Bekele, in a work that surveys the literature on land tenure (Shiferaw Bekele. “The Evolution of Land Tenure in the Imperial Era”, Shiferaw Bekele (ed.) An Economic History of Modern Ethiopia 1941-74. Dakar: Codesria, 1995 ), has convincingly showed the inadequacy of existing interpretations of the principle of land holding. For Shiferaw, gult implies more than merely administrative control over land. He argues that scholars have all too often confused gult holdings as simply administrators by claiming the gult entails a right over tribute. In actual fact, when it was granting that gult the state was transferring land to the full ownership of the grantee. It thus involves a propritory right in land. He points out that although there are difference in certain peculiar details from place to place, there was a large measure of commonality in the basic principles and concepts pertaining to land ownership in Ethiopia. This was so particularly from the Gondärine period through early twentieth century Ethiopia. Shiferaw concludes that “…in the Gonderine era, what was granted was the land rather than tribute only.” Unlike many scholars, he argues that the land so given by way of gult did not remain in the property of the original cultivators or ristägnä. There was no concurrent right of a miscellaneous character over land since it was individually or privately owned and the right of the bälägult and risrägnä were very clearly differentiated.

By way of summary, it can be said that although there were different practices in the country the basic point is that gult was a grant of land to individuals and the church for some service rendered to the king. The gult land usually encompasses of large area of land and balagult prefers to put tenants on the land, through time become restägnä. The gultägnä on the other hand has the right to be an administrator, tax collector and adjudicator over the people in his gult land. Rist system is on the other hand a system which may be acquired either by royal grant to individual person and the land continues to be cultivated by is descents, or  by being ristägnä or tenant in some bälägult’s land and continue to benefit on the land.

Urban Land Tenure

Modern urbanization in Ethiopia started with establishment of the capital of Addis Ababa, a third most important capital city in Ethiopia after Axum and Gonder, during the Minelik era. The earliest settlements in the city developed haphazardly around the king’s palace and the residences of his generals and other dignitaries. The emperor granted large tracts of land to the nobility, important personalities of the state, the church, and foreign legations. This land holding system was perpetuated for long time, and as a result, although most land areas in urban areas were private property, most of it was owned by few landlords. As stipulated in the proclamation 47/1975, at that time extensive area of urban land and numerous houses were in the hands of an insignificant number of individual land lords, aristocrats, and high government officials.

The land mark legislation that recognizes private ownership of urban land was decreed in 1907 with 32 articles. The decree allowed Ethiopians and foreigners to purchase and own private land. However, government was allowed to take back the land holding for public interest purpose against payment of compensation.

During the reign of Haileselassie, private ownership of urban land was reemphasized by the subsequent Constitutions of the 1931 and 1955 as well as the 1960 civil code. All recognize the private ownership right of land in urban areas. Up to the coming of the 1974 Ethiopian Revolution land lords in different urban areas invest much in the development of housing for rental. 

The Civil Code

The civil code was introduced in 1960, and enshrined the prevailing pattern of an almost unlimited exploitation of land by the owners (Art.1205). It attempts to regulate under articles 1489 and the following “agricultural communities”-presumably rist, desa, and nomadic tenures-and agrarian tenancies, but made few changes in the traditional arrangements, and was largely ignored. In other words, although the code in principle recognizes private ownership of farm lands, the government had not taken practical measures to attain this goal, such as reforming the land holding system so that poor tenant farmers should get their own private land. It is said that there had been strong resistance for land reform from the landed parliament members. The provisions dealing with tenancies relied upon a freedom of contract which, given gross inequalities in property inequalities in property distribution and bargaining position, could only be exercised by landlords. If the parties were aware of these provisions and if they wanted them to govern their relationship, feudal or patron-client tenure relations could have continued under the guise of neutral facilitative law. Under article 2991 of the code, for example, the large maximum for rents paid in kind was three-fourths of the crop, while the traditional rental was half. Besides to the civil code there were attempts by the government to legislate laws regarding the rural lands.

Paul Brietzke, in his article, Land Reform in Revolutionary Ethiopia, concludes: “traditional tenures remained largely unaffected by the laws enacted, with great fanfare, from 1944 to 1974. Government investment in land reform, in terms of monetary and legal resources, were minimal, and legal maneuvers, far from promoting rural change, seemed to solidify further peasant suspicions of government intentions. As a result, rural people continued to rely on traditional land laws.”

During the Derg Regime

In 1975, the military council, Derg, comprised of representatives of the different armed forces in the country, became successful in ousting the Imperial regime from power. As mentioned above the Emperor was criticized for the failure to implement a land reform. The Derg hence come with the slogan “land to the tiller”. Following its assumption of power, the Derg had undertaken fundamental changes to the Ethiopian socio-economic and political arrangements. Among the many radical measures, the land reform proclamation of February 1975 was said to be the predominant one. Cited as Proclamation No. 31 of 1975, it was a proclamation providing for the “public ownership of rural lands” and generated a great deal of support for the regime, especially from the peasantry population. This is because the land had in essence been given to the tiller. All tenants or hired labourers had acquired possessory rights over the land they tilled. At one stroke, the law abolished all forms of landlordism and tenant-ship, and thereby liberated tenants from any kind of serfdom or payments of rent or debt to the previous land owner (article 6(3)).

This proclamation transferred all land privately owned by landlords, peasants, organizations, the church, and so on to public ownership and prohibited all forms of private ownership henceforth. Large scale farms operated by private individuals or organizations had been either distributed to peasants or transferred to the ownership of the state (art.7). The law also denied any form of compensation for the land and any forests and tree-crops thereon, while providing that fair compensation should be paid for movable properties and permanent works on the land.(Art.3) It should be noted that peasants had only usufruct rights over the land. The law specifically prohibited transfer of land by way of sale, exchange, succession, mortgage, antichresis, lease or otherwise, except that inheritance was possible for one’s spouse, minor children and sometimes children who had attained majority.(Article 5)

Since the fundamental tenet of the proclamation was the equalization of land holdings among the rural peasants and “transformed rural Ethiopia into a society of self-labouring peasants,” it was stated that each farming family should be allotted with 10 hectares of land and any kind of hired labour should be prohibited, except under few circumstances. For example, Article 4 (5) of the proclamation states that this rule did not apply to a woman with no other adequate means of livelihood or where the holder dies, is sick, or old, to the wife or the husband or to his or her children who have not attained majority.

In June, of the same year, the government enacted a new law for the nationalization of urban land and extra rentable houses (proclamation No. 41/75). Accordingly, all urban lands and extra houses of the wealthy urban dwellers were confiscated without any compensation. By extra houses are meant all those dwelling units on which an owner had drawn some amount of rental income prior to the date on which the proclamation was issued regardless of size or amount of monthly rent. The proclamation placed under kebele administration all those units that were rented for 100 Birr or less per month and gave the custody of all those units that had monthly rent of more than 100 Birr to the Agency for the Administration of Rental Housing (AARH).

The policy objectives of the proclamation were mainly two:

1. to provide the broad urban dweller with credit facilities and urban lands for the construction of dwelling and business houses

2. to appropriately allocate disproportionately held wealth and income as well as the inequitable provision of services among other dwellers.

Concerning urban land, as stated above, the proclamation put all land in the hand of the state. No urban land was to be transferred by sale, antichresis, mortgage, succession, or otherwise (Art. 4(1).) a person requiring land for the purpose of building a dwelling house was to be granted free of charge up to 500m²  in accordance with the directive of the ministry of public works and Housing (Art. 5(1).) 

The proclamation also allowed ownership of only a single dwelling house (Art. 11(1).)  the transfer of private houses by succession, sale and barter was permitted (Art. 12(1).) All extra houses became government property and no person, family and organization was allowed to obtain income from urban land or house (Art. 20(1).) 

Summary

The general picture was that the previous landlord was replaced by the state, the latter with even much power to intervene. In urban areas the law prohibited further private investments in housing investments which resulted in acute shortage of houses in urban areas. Concerning rural land, even though at first the land reform was successful, series land distributions and erroneous state policies led to the insecurity of holdings, and thereby gave little incentive for the peasant to invest in his holdings. Some argue that the redistribution of land was neither remarkable compared to the land distribution in Latin America, nor was it equitable. Dessalegn Rahmato, on his part, concluded that the end product of the land reform was that it failed where it succeeded. As a result, the history of Ethiopia during the Derg regime has been partly recorded as a history of growing rural poverty, food shortages, famine, and escalated rural insurgency and civil war.

2.3 Existing Property System

2.3.1 Land Policy

The present government came to power after it ousted the previous military government in May, 1991. It was hoped that it would introduce some major changes in the land holding system. When the present constitution came into the picture in 1995, however, it was confirmed that no major changes were to be made to the previous land tenure system. There are no fundamental differences between the legal framework of the Derg and the present government on rural land issues. In practical terms, there are more similarities in land administration between the two regimes than differences.

Even though the new government adopted a free market economic policy, it has decided to maintain all rural and urban land under public ownership. According to the 1995 Federal Democratic Republic of Ethiopia (FDRE) Constitution, all urban and rural land is the property of the state and the Ethiopian people. As one writer (Gebresellasie) says: “by inserting the land policy in the constitution, the current government has effectively eliminated the possibility of flexible application of policy.” The argument forwarded by the ruling party for the continuation of land as public/state property rests solely on the issue of security. In particular, it has been said that private ownership of rural land would lead to massive eviction or migration of the farming population, as poor farmers are forced to sell their plots to unscrupulous urban speculators, particularly during periods of hardship. Some studies show otherwise, however. The economist Berhanu Nega and et.al conclude that farmers would not sell their land wholly or partially if given the right to own their plots. Another study, conducted by the World Bank, reveals that most farmers would rather rent their land during stressful periods compared with any other alternative, such as selling it. In other words, in addition to all the other benefits of rental markets suggested in the literature, the availability of formal land rental markets will serve as a caution to enable farmers to withstand unfavorable circumstances by temporarily renting their land rather than selling it.

The usual argument against the state/public ownership of land is an opposite argument to the argument given by the state, which is lack of security. Government critics on land policy argue that absence of tenure security for land users provides little or no incentive to improve land productivity through investment in long-term land improvement measures. It may aggravate land degradation through soil mining and problems of common resource use. The fear of the critics and supporters of private ownership of land is, among other things, that government may use land as political weapon by giving and taking it away as the case may be. However, supporters of the public ownership of land reject such fears as groundless; on the contrary claim that government provides more security as is now taken by regional governments. A good example is the land registration and certification processes which are being conducted in Tigray, Amhara, Oromiya, and the Southern regions which enable farmers to have a land certificate for their holdings. This gives protection and security to the holder.

Land Legislations

1. Constitution

Article 40 of the Federal Constitution, which relates to “Right to Property,” provides:

The right to ownership of rural and urban land, as well as of all natural resources, is exclusively vested in the State and in the peoples of Ethiopia. Land is a common property of the Nations, Nationalities and Peoples of Ethiopia and shall not be subject to sale or to other means of exchange. (Sub-Article 3).

Regarding its means of acquisition, sub-article 4 states that Ethiopian peasants have right to obtain land without payment and the protection against eviction from their possession. Likewise, concerning the pastoralists of the lowland areas, sub-article 5 declares that Ethiopian pastoralists have the right to free land for grazing and cultivation as well as the right not to be displaced from their possession. The Constitution has also shown the way to acquire land by private individuals. Sub-article 6 of the same provision stipulates:

Without prejudice to the right of Ethiopian Nations, Nationalities, and Peoples to the ownership of land, government shall ensure the right of private investors to the use of land on the basis of payment arrangements established by law.

Other important provisions concerning the security and rights of land-holders are provided under sub-articles 7 and 8 of the same provision. Sub-article 7 declares that every Ethiopian shall have the full right to the immovable property he builds and to the permanent improvements he brings about on the land by his labour or capital. This right shall include the right to alienate, to bequeath, and, where the right of use expires, to remove his property, transfer his title, or claim compensation for it. The right to land is also secured in that the state has the duty to pay compensation during expropriation. Sub-article 8, which is related to expropriation, states:

Without prejudice to the right to private property, the government may expropriate private property for public purposes subject to payment in advance of compensation commensurate to the value of the property.

The power to enact laws for the utilization and conservation of land and other natural resources in the country is exclusively given to the Federal Government (Art. 51(5) of the Constitution)  Regional governments have the duty to administer land and other natural resources according to federal laws.(Art. 52(2)(d))of the Constitution). The first law of this nature was enacted in July of 1997 and was titled “Rural Land Administration Proclamation, No. 89/1997.” This law has, however, been repealed and replaced by the more recent Proclamation No. 456/2005, otherwise known as ‘‘Rural Land Administration and Land Use Proclamation’’. Likewise, based on such Federal Rural Land Use Proclamations Regional states (Tigray, Amhara, Oromia, and SNNPR) ensue to adopt similar rural land laws.

2. FDRE Proclamation NO. 456/2005

As stated above, this law is entitled as “Federal Democratic Republic of Ethiopia Rural Land Administration and Land Use Proclamation.” It was adopted in July, 2005. It replaces its predecessor, Proclamation No. 89/1997. The scope of application of this law is throughout the country, as envisaged under Article 4 of the proclamation. Regional governments are given the power to enact rural land administration and land use laws, which consists of the detailed provisions necessary to implement this proclamation. (Article 17(1))

Reemphasizing Article 40 of the Federal Constitution, the proclamation states: “peasant farmers/pastoralists engaged in agriculture for a living shall be given rural land free of charge.”(Art.5(1)(a). Any person who is a family member of a peasant farmer, semi pastoralist or pastoralist having the right to use rural land may obtain rural land from his family by donation, inheritance or from the competent authority.(Art.5(2)). Thus, the means of acquisition of rural land is either through family inheritance or donation, or through government provision. Since land is owned by the State and the people, peasants’ title to the land is only of a usufractury nature. In the proclamation this kind of use-right is termed as ‘‘holding-right’’. Article 2(4) defines ‘‘holding right’’ in the following manner:

The right of any peasant farmer or semi-pastoralist and pastoralist to use rural land for purpose of agriculture and natural resources development, lease and bequeath to members of his family or other lawful heirs, and includes the right to acquire property produced on his land thereon by his labour or capital and to sale, exchange and bequeath same.

Hence, the law permits holders to use, lease, and bequeath (transfer to family members by way of inheritance or donation) their holding rights. Similarly, Article 8 of the same proclamation which deals with “transfer of rural land use rights” stipulates in detail the possibilities of leasing holding rights in part to investors, or jointly develop the land with investors. Surprisingly Article 8 (4) says that an investor who has leased rural land may present his use right as collateral. So, if there is someone who is willing to lend money to the investor securing his use right emanating from the lease agreement, then it is possible to hold it as mortgage collateral. The law does not, however, yet allow mortgage of the land by the holder of the right himself or by a fellow farmer who rented the land. The same also applies to sale of such land. One more limitation is that transfer of holding-rights, by way of inheritance or donation, is only applicable to family members. A family member is identified here in a different manner from that of the Federal Family Code. The proclamation defines a “family member” as “any person who permanently lives with the holder of holding rights sharing the livelihood of the later.” (Art. 2(5)). Thus, unlike the Family Codes, in which blood and marital ties are important elements to identify a family member, under the Federal Rural Land Proclamation, living under same roof and sharing the same livelihood with the holder of the right are sufficient conditions. As a result, a hired labourer who has been living for years with the farmer or a maid servant, who likewise lives with the family, may be eligible to inherit the holding rights.

Another important provision of the proclamation related to property rights is Article 7 that deals with the duration of use right. According to article 7 (1), “the rural land use right of peasant farmers, semi-pastoralists and pastoralists shall have no time limit.” This reminds us of the freehold land system of the United Kingdom where all land is symbolically owned by the Crown and the later grants rights to individuals. The essence of the freehold estate in the UK is that it defines the length of time for which the right to the land will last. The two forms of freehold estates existing today are the “life estate” and the “fee simple”. A life estate gives a right to the land for the life of the holder; whereas, a fee simple is a right capable of lasting indefinitely and which will pass on death of the holder by will or through intestacy.

From duration point of view, the Ethiopian land holding system is similar to the fee simple, in that both rights are given for an indefinite period of time. The fee simple continues notwithstanding the death of the grantee (holder of right), and notwithstanding the absence of a will, as there are rules that enable the property to pass intestate to the nearest relative. If there are no relatives within the prescribed classes, then the property will go to the Crown. Likewise, Proclamation No. 456/2005 gives a perpetual right to the right holder. Upon his/her death, the right will transfer to heirs by law, who are family members. Here one difference between the two is that in the case of fee simple the grantee/holder can transfer/inherit it by will to whomsoever he wishes it to have. But in the Ethiopian case, inheritance or donation is possible only to family members. It seems testate (inheritance by leaving a will) is void if the beneficiary is not a family member.

If the “holders are deceased and have no heirs or are gone for settlement or left the locality on their own wish….the land shall be distributed to peasants…who have no land and who have land shortage” (Art. 9(1). Under both systems, if there is no legitimate heir, the land will devolve back to the state. See also article 852 of the civil code 

3. Lease Proclamation No. 272/2002

The other kind of land holding system, which prevails in urban areas of the country, is the lease system. For the last 18 years, leases have been in place as the cardinal landholding system for the transfer of urban land to users, to the extent possible and in accordance with Master Plans. Pursuant to Article 4 of the Lease proclamation, an urban land can be permitted to be held by lease:

1. In conformity with plan guidelines where such a plan exists, or, where it does not exist, in conformity with the law which Region or City government makes, as the case maybe, and

2. On auction or through negotiation; or

3. According to the decision of Region or City government.

The main point is that unlike rural farmers and pastoralists, urban dwellers are not entitled to get land for free. In reality and when municipalities have regulations, under exceptional circumstances, however, when people organize and create an association for the development of residential housing, and when the city municipality considers it as an incentive for the development and expansion of urban areas, land may be granted for free. Moreover, in small towns where the lease law is not operational land may be given free of charge. 

Based on the urban development and type or sector of development, the law provides different time limits for the contract of a lease. Hence, for example, the law sets for any town a maximum ceiling period of time of:

1. up to 99 years for: housing (personal and leasable), scientific, technological study and research facilities, government offices, non-profit- making philanthropist organizations, and religious institutions;

2. up to 15 years for urban agriculture;

3. as per government agreement, for diplomatic missions and international organizations.

For the city of Addis Ababa, 60 and 50 years have been set for industry and commerce, respectively. In other cities and towns, not designated as of the grade of Addis Ababa, 80 and 70 years are stipulated for the above mentioned activities, respectively (Art. 6(1). This holding right, emanating from the lease agreement, may be terminated because of termination of contractual period or because of the need to appropriate the land for public interest, among other reasons.

Summary

The Ethiopian tenure or land holding system as classified in the three historical period is generally shows the policies of the different regimes. The feudalistic Ethiopia was controlled by feudal lords and the land holding system was basically arranged in such away that benefits the feudal lords, not the peasant or urban dwellers. During the imperial eras the notion of private ownership of land was in principle introduced, but was not really enforced for traditional tenure system was more dominant one.  The motto of the Revolution “land to the tiller” was practically applied during the Derg era. And yet the proclamations have taken away the hope of private ownership of land for once and for all. Hence, farmers were given only the use right. The FDRE constitution and following land laws broaden this use right and allowed those rights of inheritance, lease, and donation which were prohibited by the Derg proclamation. The common element of both the Derg and FDRE land policies is however important one which denies individual people from owning and there by having the sole right of exchanging and selling land.

Additional readings

Although the most basic form of property consists of rights in land, some nations do not recognize this form of property. Ethiopia is one of these nations. In the following an attempt is made to show relevant provisions of the states of Vietnam and Saudi Arabia.

Civil Code of Vietnam

Article 205: The land, mountains and forests, rivers and lakes, water resources under ground, resources from the sea, continental shelf and airspace, and the capital and property invested by the State in enterprises and facilities in the branches and fields of economy, culture, social welfare, science, technology, foreign affairs, and national defence and security, and other property stipulated by law to be of the State, come under ownership of the entire people…

Article 221: Legitimate  income, savings, residential houses, means of daily life, means of production, capital, fruit, and other legitimate properties of an individual are privately owned properties.

Basic Law of Government, Kingdom of Saudi Arabia

Article 14: All God’s bestowed wealth, be it under the ground, on the surface or in national territorial waters, in the land or maritime domain under the state’s control, are the property of the state as defined by law….

Additional Reading on debate of the State vs. Private ownership of land

Economists, politicians and social scientists provide arguments pro and against the current state ownership of land. Defenders of private ownership of land argue that it promotes individual liberty, political stability, and economic prosperity. Following is an exemplary and summarized analysis taken from the writing of the publication of the Ethiopian Economic Association /Ethiopian Economic Policy Research Institute (EEA/EEPRI), Land Tenure and Agricultural Development in Ethiopia, 2002. pp. 28-29.

The current debate on land tenure and policy

Despite the constitutional provision that security vested the ownership of land to the state, rural land policy in Ethiopia has remained to be one of the sources of disagreement and focus of debate among politicians, academics, and other concerned parties. This is not surprising given the agrarian nature of the Ethiopian economy and the role of land in the social and political history of the country.

In an assessment of the land policy debate in present day Ethiopia Yigremew Adal shows that there is an unfortunate focus on ownership issues and a dichotomy of views on state versus private ownership. The government and the ruling party advocate state ownership of land while experts and scholars in the field, western economic advisors, international organizations such as the World Bank, and opposition political parties favour private ownership. However, despite some attempts there has not been a thorough and systematic study of the patterns, diversity and rationale of alternative views on land tenure.

The main plank of the view advocating state ownership is that private land ownership will lead to concentration of land in the hands of few people who have the ability to buy resulting in the eviction of the poor peasants and thus aggravating landless potentially leading to massive rural-urban migration of people left without any alternative means of livelihood. The empirical validity of this claim is one of the issues that the rural household survey has to address.

Critics of the current land holding system and those that advocate some kind of free hold largely base their arguments on a set of hypothesis about the behaviour of economic agents and the familiar property rights argument partially backed by some empirical results from Ethiopia and other lands. Since most of the arguments are variations in the same, they can be summarized using the more coherent formulation in Borrows and the Roth directly:

1. Individualization of land tenure (leased and freehold ownership) increases tenure security of the landholders, thereby reducing economic costs of litigation over land disputes.

2. Individualization increases investment by increasing tenure security and reducing transaction costs. Higher tenure security increases expected investment returns, thereby increasing the demand for capital (including credit) for fixed-place investment. The supply price of credit decreases because the cost of lending is reduced by improved credit worthiness of projects, and higher collateral value. Both supply and demand effects increase investment.

3.  Individualization will cause a land market to emerge. Land will be transferred to those who are able to extract a higher value of product from the land as users that are more productive bid land away from less productive users.

Others based their arguments against the present land tenure system from the property rights perspectives. Some of the arguments include:

1. Current rights are not completely specified, so that they cannot serve as a perfect system of information about the rights that accompany ownership.

2. All or some of the current rights are not exclusive, so that all rewards and penalties resulting from an action do not accrue directly on the person/s empowered to take action.

3. current rights are not freely transferable, so that rights failed to gravitate to their highest value use, and

4. Some or all of the current rights are not enforceable and completely enforced.