THE RECENT AMENDMENTS ON THE LAND ACT IMPOSES RESTRICTIONS ON LEGAL MORTGAGES TRANSACTIONS.
On 9th February 2018, the Written Laws (Miscellaneous Amendments) Act 2018, Act No. 1 of 2018 which
amends several laws including the Land Act was gazetted.
That the Land Act is amended by adding immediately after Section 120 the following new sections:
SECTION 120A
- Subject to the provisions of this Act, a person may mortgage any land for the purpose
of obtaining money from the local bank or financial institution for developing his land or
for any other investment. - Where a land mortgaged under subsection (1) is undeveloped or underdeveloped, the
money obtained from the local bank or financial institution shall be utilized to develop
part or whole of such mortgaged land. - A mortgagor shall within six months submit to the commissioner information as to the
manner in which the money obtained from the mortgage is invested to develop the
mortgaged land.
SECTION 120B
- Money obtained from a mortgage from a local bank or financial institution referred to
under section 120A shall be invested in Tanzania. - Where the mortgagor is a bank or a financial institution, the mortgagor shall submit to
the commissioner a declaration that the money obtained from the mortgage is invested in
Tanzania. - A mortgagor shall within six months submit to the commissioner information as to the
manner in which the money obtained from the mortgage is invested to develop the
mortgaged land.
SECTION 120C
Failure to comply with the requirements under section 120A and 120B shall
constitute a breach of condition of right of occupancy provided for under section 45 (2).
The abovementioned amendments towards the Land Act, impose restrictions that all moneys obtained from a
mortgage from a bank or financial institution, whether local or foreign, must be invested in Tanzania.
Also, the amendments retain the position that if a mortgaged land is “undeveloped” or “underdeveloped”
land, money obtained therefrom shall be utilized to develop part or whole of such mortgaged land. This
implies that third party mortgages on undeveloped or underdeveloped land cannot now be used by banks or
financial institution.
Furthermore, the amendments make it clear that non-compliance with these new conditions amounts to a
breach of the terms of the Right of Occupancy and the Right of Occupancy in issue can be revoked, likely,
notwithstanding the existence of a mortgage. However, where the mortgaged land is a developed land,
money obtained from it can be used in any other investments which however must be within Tanzania.
However, the law provides that these restrictions do not apply to lands held under the Certificate of
Customary Right of Occupancy.
The law imposes a further obligation on the mortgagor to submit to the Commissioner for Lands, within six (6)
months of creation of the mortgage, information as to the manner in which money obtained from the mortgage
is invested to develop the mortgaged land.
The law also imposes an obligation on the mortgagee, local or foreign, to submit to the Commissioner a
declaration that money obtained from the mortgage is invested in Tanzania. The procedures for administration
and enforcement of these restrictions, will be prescribed in the Regulations.
FURTHER INFORMATION:
This editorial is intended to give you a general over view of the Law. If you would like further information on any issue raised in this column, please contact.
Patrick Sanga
Partner
E: p.sanga@vemmaattorneys.co.tz
M: +255 686 999 993
Bernard Nkwabi
Legal Officer
E: b.nkwabi@vemmaattorneys.co.tz
M: +255 653 374 414