THE LAND (PROCEDURE FOR MORTGAGE OF LAND) REGULATIONS HAVE FINALLY BEEN PUBLISHED VIA GN NO. 245 OF 2019.
These Regulations have arisen after
- The amendment of Section 120 of the Land Act Cap 113 [R.E. 2002} through the Written Laws (Miscellaneous Amendments) Act No. 1 of 2018 Part IV which brought in new conditions for mortgage financing in Tanzania
- It added Sections 120A to E to the Land Act, where by any finance from either a local or foreign banks (or financial institutions) obtained by way of mortgages;
- of any land in Tanzania, must be invested in Tanzania;
- of any undeveloped or under developed Tanzanian land, must be used to develop that specific land; and
- any developed Tanzanian land, can be used to:
- further develop that specific land, or
- for investments, or
- for other purpose
And any breach of the above is a breach of the Right of Occupancy.
The amendments specifically stated under Section 120 E that a procedure for administration and enforcement of section 120A and 120B shall be prescribed in the Regulations which were at the time yet to be made.
Hence these Land (Procedure for Mortgage of Land) Regulations which are subject to Section 120E of the Land Act Cap 113 provide for procedure for administration and enforcement of section 120A and 120B of the Land Act Cap 113.
The regulations have come up with a clear definition of what is termed as undeveloped or underdeveloped land in Tanzania.
- Undeveloped land is land which is vacant, without unexhausted improvements be in, on, under or over such land and without any change in the substantial nature of the use of the land.
- While land shall be deemed to be underdeveloped only if it is fenced, hedged, leveled, ploughed, cleared, a cleared or partially cleared site of some former development and inadequately developed contrary to the relevant conditions of the right of occupancy
- Land shall be deemed to be inadequately developed by the Commissioner through a time limit set for development of the land for either agricultural, pastoral or mixed farming purposes as per the Regulations.
In brief the procedures for mortgage of any land in Tanzania which is acquired by a right of occupancy, lease of right of occupancy or a derivative right is as follows;
- Must submit a declaration in triplicate to the Land Commissioner in the prescribed form stating that the mortgage money shall be invested in Tanzania which declaration shall contain among other details a statement as to the purpose of the loan; the place where the money will be utilized and it is upon the satisfaction of the Commissioner of the information provided is when he shall endorse the referred form.
- It is now requirement that while submitting necessary documents for registering the charge with the Registrar of Titles you must also submit the above mentioned signed form by the Commissioner endorsing the mortgage and a valuation report duly prepared by a Registered Valuer and approved by Chief Government Valuer and this Valuation report must be submitted with twelve months of its preparation.
- After six (6) months of registering a mortgage of a undeveloped or under developed land a mortgagee will be required to submit to the Commissioner in the prescribed form a clear statement of how the money secured from the mortgage has been utilized to develop the mortgaged land (if the mortgage money is released in installments this requirement will apply with each installment).
- This report will contain necessary mortgage details including details of the mortgaged property, name and address of the mortgagor and mortgagee, installments received, amount of money utilized to develop the mortgaged property, photographs depicting the current status of the development, balance of money from the mortgage if any, and any other information that the Commissioner may consider necessary to submit at the time. It should be noted that if the Commissioner considers the information submitted on the amount of money spent to be false he shall instruct the Government Valuer to establish the correct amount spent.
- The regulations also creates an offence to any person submitting false information to the Commissioner who shall be liable to a fine not exceeding one million shillings or an imprisonment term of two years or both.