Debre Berhan University

School of Law

Land Law

November, 2023
 Chapter one
Land Law in General
Major Concepts: Property, Land, Real Property, Real
Estate and Immovables
Property defined:
• Property is everything that has material or moral value
for human beings…and guaranteed and enforced by
law.1

• For legal scholars, “property” refers to entitlements to

resources protected by formal legal institutions.2

• The paradigmatic legal property right would be full title

to a parcel of land or an object like a car, real property
and personal property (or “chattels”), respectively.
 Land defined
• Different disciplines define “land” differently, in
a manner that suits their objectives.
• In legal documents, mostly, it is considered as
the surface of the earth and any fixtures on it,
such as buildings, fence, tree plants, and
improvement to the land.
• Ownership of land “involves ownership of what
is above and below it.”(552–554 of the French
Civil Code) Unless restricted by statutes, the
owner of a land is considered as owning also
the minerals inside the land and the airspace
above the land.
 Land definition
• Under Ethiopian law, property is either
movable or immovable (Article 1126 of the
Civil Code). Land and buildings are considered
as immovable (Article 1130 Civil Code).
• the Ethiopian Civil Code treats “land” and
“buildings” as two separate types of
immovable.
• Hence, land signifies the ground and other
fixtures to the land such as trees, grass, crops,
excepting buildings and other similar
erections.
 Real Property, Real Estate, and Immovable

• Property law in systems derived from English common law,

is divided into personal and real property.
• Real property concerns itself with rights in rem, or relating
to land.
• Personal property concerns itself with rights in personam,
or relating to chattels.
• In the civil law system, there is a division between
movable and immovable property
• Movable property roughly corresponds to personal
property, while immovable property corresponds to
real estate or real property, and the associated rights and
obligations thereon.
 Concepts… continued
• In Ethiopia, the properties of land and any
fixture to land are termed as immovable which
are otherwise understood in England or the
United States as real estate or real property.
Art.: 1126. Various kinds of goods
All goods are movable or immovable.
Art. 1130. Immovables
Lands and buildings shall be deemed to be
immovable.
Types of Rights Over Land
 Ownership
Definition:
• The French Code Napoleon of 1804 in a similar manner defines
ownership of property under article 544 as: the right to enjoy and
dispose of property in the most absolute manner, provided that one
does no use it in a manner prohibited by law or regulation.”
• Similarly the 1960 Ethiopian civil code defines ownership right as
follows:
Art. 1204. - Definition.
(1) Ownership is the widest right that may be had on a corporeal thing.
(2) Such right may neither be divided nor restricted except in
accordance with the law.
Art. 1205. - Scope of right.
(1) Without prejudice to such restrictions as are prescribed by law, the
owner may use his property and exploit it as he thinks fit.
(2) He may dispose of his property for consideration or gratuitoualy, inter
vivos or mortis causa
 Definition ---ownership
• In former times ownership was regarded as
trinity of rights, described by Latin as utendi,
fruendi, abutendi-
– a right of using,- which implies exclusive use and
excluding others from using it;
– enjoying the fruits, such as collecting fruits, rents,
bank interests etc; and
– Thirdly abusing, which signifies the destruction or
in its constructive sense transferring the thing by
way of sale, donation or inheritance.
 Forms of ownership
Private Ownership
• This is the kind of land totally owned by private
individuals.
• It belongs absolutely to an individual and as such the
law provides an absolute protection against any
intervention on such right by any other party.
• In principle individuals have an absolute right of use,
exclusion, and disposition of their property.
• However, in reality private ownership right is not an
absolute one for the state and the public using the law
may limit such right.
 Private…continued
• The Ethiopian Civil Code under article 1205
describes private ownership as the widest
right man can exercise over his property.
• The present Ethiopian constitution basically
prohibits the private ownership of land.
• According to the FDRE constitution Article
40(3) the right to ownership of rural and
urban land as well as of all natural resources is
exclusively vested in the state and the people.
 Communal Ownership
• Communal ownership of land refers to such
property of land commonly owned by a
community of a certain village or locality.
• In most cases common grazing lands, water
wells, irrigation lands or river systems,
common use forestry and mountains, fishing
lakes etc are categorized under this system.
 Communal…continued
• In Ethiopia, although such kind of system is
envisaged in more general way in the constitution,
Federal and regional land laws provide specific rules
for the protection of community land such as
grazing and irrigation lands.
• Proclamation 456/2006, a proclamation that is
provided for the Rural Land Administration and
Land Use, defines “communal holding” under article
2(12) as "communal holding" means rural land
which is given by the government to local residents
for common grazing, forestry and other social
services.
 State/Public Ownership
• This type of property constitutes all lands which are not
owned by individual person/s or the community.
• In most countries, mountains, public highways, public
halls, parks, trans-boundary Rivers and forest lands,
lakes etc are owned and administered by the state.
• It must be noted that in western countries lakes,
mountains and forestland can be owned by private
people.
• The common similarity all countries show on the other
hand is that public highways and trans-boundary Rivers
are owned by the state.
 State/Public Ownership
• In Ethiopia, as stated above the state and the people
together own these properties, and it seems the public
in general or the state itself are also prohibited the
absolute power of disposition of land in Ethiopia, sale.
• The Federal Land Administration and Land Use
Proclamation identifies under article 2(13)
“forestlands, wild life protected areas, state farms,
mining lands, lakes, rivers and other rural lands,” as
state holding lands.
• The civil code under articles 1444 and following tries
to identity the kinds of real properties classified as
state or public domain or properties.
 Joint Ownership
• In some systems it is a type of ownership of
land by two or more persons in which each
owns undivided interest in the whole.
• This kind of system, based on the kind of rules
adopted by each and every country, may
include starting from simple joint ownership of
plot of land by two people up to ownership
rights of hundreds of people in condominiums.
• In Ethiopia, the principle of joint ownership
right is governed by the civil code or other land
related recent laws as the case may be.
 Chapter Two
History of Land Tenure System in Ethiopia
Tenure defined:
• “land tenure,” is concerned with the complex
relationships that exist between categories of
individuals and groups in reference to land and
other natural resources.
• They define how access is granted to rights to
use, control, and transfer land, as well as
associated responsibilities and restraints.
• In simple terms, land tenure systems determine
who can use what resources for how long, and
under what conditions
 Tenure Systems in Pre-1975 Ethiopia:

• For many centuries in Ethiopia, land was

controlled by the king and the ruling elites in
Ethiopia.
• Land holding and use in north and south Ethiopia
is different (Gult-Rist in the North)
• gult (fief) rights confer the ruling class (bale-gult)
rights of collecting tribute, judicial and
administrative powers as well as military
mobilization over the people occupying the land.
• And those people who actually occupy and farm
the land had a rist (use) right to the land.
Land tenure system in north Ethiopia
• the gult holder had no rights of produce over
the land although he may cultivate part of the
land for his private purpose using free local
labor.
• gult was a kind of public office instead of land
right, as a matter of principle, it was not
transferable by inheritance or by sale.
• when the ruler/emperor wishes, the office
might be passed to descendants.
 Rist…

• Rist rights, in contrast to gult rights, were

land-use rights. In principle, they were
hereditary and could be held by lords and
peasants alike.
• Rist rights were land use rights claimed by a
member of a kin from members of his/her
generations of same ancestor.
• rist land was like private ownership except the
holder lacked the right to sell the land. The
peasant could be able to use, rent, and inherit
the land to family members.
 Rist

• የዕርስት መሬት በሰሜንና መካከለኛው የአገሪቱ ክፍል የነበረ አሠራር

ሲሆን መሬት በቤተሰብ ሀብትና ንብረትነት የተያዘና ማናቸውም የዘር
ሀረጉ ዕርስት ለማካፈል የሚያስችለው ሰው የስር ዘር አረጉን መዝዞ
በዕርስት የተያዘውን መሬት የሚካፈልበት፣ የሌሎቹን ዕርስት ተካፋዬች
ፍቃድና ስምምነት ሳያገኝ ተካፍሎ የያዘውን መሬት ከመጠቀም ውጭ ለመሸጥ
ወይም በወለድ አገድ ለማስያዝ የማይችልበት የመሬት ሥሪት ነው፡፡
• “የዕርስት” የመሬት ሥሪት ተብሎ የሚጠራ ሲሆን የመሬት ባለ እርስት
የሆነ ሰው ንጉሱ ለሚጠራው ዘመቻ ለመዝመት ሁል ጊዜ ዝግጁ ሆኖ
የመጠበቅ፣ ለዘመቻ ሲጠራ ሳያቅማማ ግዳጁን መወጣት፣ በየደረጃው ላሉ
ሹሞች መማለጃና ዳረጎት የመክፈል ግዴታ የነበረበት፣ “ባለዕርስቱ”
እነዚህን ግዳጆች በአግባቡ ካልተወጣ ከዕርስቱ የሚነቀልበትና መሬቱ
ለሌላው ዕርስት ተካፋይ ወይም ለሌላ ሰው ይሰጥበት እንደነበርና ይኸ ዘዴ
ነገስታቱ በአገሪቱ ሰሜንና መካከለኛ ክፍል ይኖር የነበረውን አርሶ
አደር የሚያዙትን ማናቸውም ግዳጅ ፈፃሚ ሆኖ በታማኝነት እንዲሰለፍና
እንዲገዛ ለማድረግ ያስቻላቸው መሆኑን በዚህ ዙሪያ የተደረጉ ጥናቶች
 Government land
• land owned by the government was distributed to
different people on the condition of serving the state at
different levels.
• Such land was distributed to soldiers, priests, local
administrators, judges, and state servants at various levels
as remuneration for their service throughout the country
• Such land might be reverted to the state in the event of
non fulfillment of the obligation by the holder of the land.
• land was provided to different people based on the
service they rendered to the state and the names given to
the land rights correlated to the obligations attached to
them.
 Church Land
• The Ethiopian Orthodox Church had been the
biggest beneficiary of state land grant since its
establishment in the early fourth century at
Axum (Ethiopian capital from 1st BC–8th AD).
• There is certain amount of evidence to
suggest that the Cathedral of the Saint Mary
at Axum, the monasteries of Abba Garima,
and Debre Damo and several other religious
establishments received grants of land at this
time from the state.
 Land tenure in south Ethiopia

• Land who become under the control of nobles , after victory, were
distributed to nobles them selves, soldiers, church and the people
as gebars.
• The amount of land distribution was 1–3 gasha (1 gasha is 40 ha)
for a soldier, 10 gashas for hamsa-aleqa (commander of fifty), 20
gashas for meto-aleqa (lieutenant), 30 gashas for shamble
(captain)70 and so on. Such land was granted on the basis of
different conditions or names.
• Because of Menelik’s decree passed in 1905 (1897 E.C), the rights
of local gentries were remained unaffected because it declares
that in every land allocation to northern nobles, a third or in some
cases half of it should be kept to the local balabat, gentry.
• The basic characteristic of the southern land tenure was that the
introduction of private ownership of land tenure. Land was
transacted through sale from state to individuals and among
individuals.
 Laws that changed gult and rist systems

The 1941 Land Tax Decree

• Emperor Hailesellassie passed a land tax
decree in 1941 that mainly contains three
things:
– first, the law entitled all government officials and
agents to salaries;
– second, all the taxes paid by the gabbars were to
be sent directly to government treasury; and
– Thirdly, it abolished all ‘manual labor, firewood,
grass and miscellaneous dues and taxes’ imposed
on the cultivators.
 Laws….
The Land Tax Proclamations of 1942 and 1944
• The 1942 proclamation brought one important
change to the Ethiopian land tax system; it
proclaimed that henceforth all land tax should be
paid in Ethiopian printed dollars rather than in kind.
• Article 3(ii) of the proclamation put the amount of
taxation based on the size of land area in gasha and
its fertility rate.
• It classified the land into fertile, semi-fertile and poor,
and imposed 15, 10, and 5 Ethiopia dollars
respectively for each gasha land holding.
 The 1960 civil code
• The legal modernization effort of the emperor
reached its pick with the adoption of the 1960
legal codes.
• The 1960 civil code abolishes all customary
rules and introduced new modern laws from
continental Europe.

Read Article 3334 and the ff provisons

 Land rights in the 1960 civil code
• As far as land rights is concerned, by the
cumulative reading of ar. 1205, 1211 and 1209,
the code provides for the adoption of private
ownership of land and hence the owner has
the full right of use, enjoyment and disposition
as she or he thinks fit.
• However the effect of this provision was
subject to registration of land and since no
registration was made these provision was not
implemented until 1975.
1975 dergue regime: land to the tiller
• The 1975 derg proclamation effectively abolished
the landlord-tenant relationship and introduced
public ownership of land.
• The proclamation provides to expropriate the land
of land lords that owned large tracts of land and
who has tens and hundreds of tenants working for
them and made it the land of the government.
• Compensation was not provided for expropriation
of rural land, forests, and tree corps but for
movable properties and permanent works on the
land
 The 1975 Derg Proclamation
• Once the land was confiscated from the land lords it was
distributed for each peasants proportionally.
• Article 3/2/ abolishes land ownership by the persons (natural
or legal)
• Transfer of land is also prohibited by the proclamation. No
person may sell, exchange, or give on succession, mortgage
and lease or otherwise transfer his holding to another.(art 5)
• The proclamation again establishes a peasant association in
each areas to effect land redistribution. The members was
tenant, landless person, hired laborer and landowner.
• Each association has 250-270 members and 800 hectares of
land for distribution. Around 20,000 Pas are established in the
country.
• Criteria of redistribution are also provided in the proclamation.
Urban land policy during derg regime
• Derg had a proclamation that nationalized all urban
lands and extra rentable houses.
• Article 3(1) declares that as of the effective date of the
proclamation, all urban lands should be property of the
Government; and no person, family or organization was
allowed to hold urban land in private ownership
• Besides, all extra houses, houses other than one
residential house and another business house were
nationalized.
• although the loss of houses through nationalization
was said to be compensable, in reality no
compensation was paid for the nationalizations of
houses.
Urban land …the derg….continued
• all urban land became the property of the
Government, it was prohibited to transfer
urban land through sale, mortgage, succession
or otherwise.
• Instead of ownership, urban residents were
given lifetime use right (usually referred as
permit system) to the urban land except that
holders of the land were obliged to pay urban
land rent (Article 9) and housing tax (Article
11.4).
How could one define the current
land tenure system?

Art 40 of the FDRE constitution

 The FDRE constitution
Article 40 of the constitution 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.
• The general message of this provision is that “
land is not privately owned’.
 The current land tenure system
• After a serious of debates among different peoples, the
1995 FDRE constitution decided to keep all rural and
urban land under public ownership.
• According to the FDRE Constitution, all urban and rural
land is the property of the state and the Ethiopian people.
Accordingly, sale, exchange and mortgage of land are
prohibited.
• As far as ownership over land is concerned, two
antagonistic political discourse can be posed in this regard:
(1) the discourse of fairness and state protection(tenure
security) that is arguing for state ownership and (2) the
discourse of privatization and efficiency.
Basic arguments from the side of state ownership

1. fairness(social equity)
• Fairness is invoked by the government given the history of
domination by land lords over tenants and has the purpose to
treat all Ethiopians equally.
• The FDRE Constitution as well as other Federal and Regional
Land Laws ensure the free access to agricultural land.
• The amount of land to be provided to peasant farmers, as far
as possible, is made equal.
• Accordingly, the policy objective is to ensure equality of
citizens in accessing the land.
 Basic arguments…continued
2. Tenure security:
• According to the government, state ownership of
land prevents large number of farmers from
selling, mortgaging, or transferring their land and
becoming landless; land concentration in the
hands of rich peasantry; and urban and non
indigenous business men and elites from buying
up rural land leading to increase of tenancy.
• Hence, State ownership of land is considered to
be the best mechanism to protect the peasants
against market forces.
 Arguments from proponents of private
ownership
1. Freehold as Human Rights (freedom of choice)
• Groups who are advocating private ownership of land
come from the angle of human rights, sustainable
development, efficiency and environmental protection.
• privatization of landholdings means the fulfillment of
peasants’ self determination as part of the unrestricted
economic rights any farmer should enjoy. The economic
liberty can be seen from the side of freedom of choice.
• the peasants needs to be set free to look for alternative
economic activity in case they need from subsistence
farming. Hence, freehold can give them the leverage and
the base finance to venture to new business.
Arguments for private ownership.. continued
2. State ownership doesn’t promote tenure
security
• They conclude that farmers would not sell their
land conclude that farmers would not sell their
land because most farmers would rather rent
their land during stressful periods compared
with any other alternative, such as selling it.
• state ownership of land by default creates
tenure insecurity since, they argue, the
government may use land as political weapon
by giving and taking it away as the case may be.
 Proponents of freehold…continued
3. Efficiency
• Since land holders do not mortgage their land
to get credit, they can’t effectively use their
land.
• State ownership creates fragmentation of land
due to overpopulation. Hence land remains a
dead capital.
• Farmers will not be motivated to protect and
invest in the land fearing confiscation by the
government any time.
 Chapter Three
Rural Land Legislations
The constitution:
• Article 55 (2)(a) of the constitution gives
power for federal government to enact laws
concerning the utilization of land and other
natural resources.
• Whereas, states are given the power to adopt
laws on the administration of land and other
natural resources in accordance with Federal
laws( article 52(2) (d)).
 Rural land laws
Proclamation no. 456/2005)
• The federal Rural Land Administration and Use
Proclamation (the federal proclamation)
provides the general framework concerning
the utilization of rural land in country.
• Many of the regional states ( such as Tigray,
Amhara, Oromia,SNNPRS, Beni Shangul Gumz,
and Afar) have adopted their own RLAUPs in
order to implement the Federal Land
Proclamations.
 Access to Rural Land
• The constitution provides that Ethiopian
peasants have right to obtain land without
payment and the protection against eviction
from their possession. (40 (4))
• The Federal proclamation follows the
constitutional principle that creates free
access to rural land. It declares that “peasant
farmers and pastoralists engaged in
agriculture for a living shall be given rural land
free of charge.”
 Access..
• A person, above the age of 18 years may claim
land for agricultural activities, and women
who want to engage in agriculture shall also
have the right to get and use land.
• children who have lost their parents under 18
years old have the right to aquire land to
support their livelihood through their legal
guardians.
 Access …
• This principle of free access to rural land has also been
reproduced in the regional rural land administration
and use proclamations (hereafter Regional RLAUP).
• The conditions attached to this right are, firstly, the
person must want to engage in agricultural activities. In
other words, agriculture must be his/her main means
of livelihood or profession. Secondly, s/he must reside
in the area where the agricultural land is located.
• Private investors have the right to acquire, in line with
the land use plan from the regional government
through lease contract or in rental agreement made
with any rural landholder
Nature and Duration of Land Rights
• Farmeres Lacks private of ownership over rural
land. The right they have is named as ‘holding
Right’.
• It is the right of peasants and pastoralists “to use
rural land for purposes of agriculture and natural
resource 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” (Article 2.4).
 Nature …con’d
• The phrase “holding right” of this Article,
includes rights of transferring of land in hand
to third parties via succession or donation,
exchanging by other rural land as well as
renting, mortgaging to lending organizations,
being served by a land or any kind of wealth
produced on land or both.
 Nature …
• peasant farmers will have all the rights of an
owner except sale and mortgage.
• They can use the land for agriculture
production, have full ownership to the produce
collected there from, have right to rent to fellow
farmers (sharecropping), lease to investors, and
inherit and donate (as a gift) to family members.
(can they build house for living)
• The amhara proc. Further permits peasants to
mortgage their rural land to lending institutions.
(8(2)
 Duration…
• Peasants shall have such rights for lifetime and beyond,
since they can donate and inherit it to others.
• It has been declared that “…rural land use right of
peasant farmers, semi-pastoralists and pastoralists
shall have no time limit.
• Any person’s rural landholding is protected by law.
Hence, any person is not obliged to leave his land
without his consent unless it is for using the land to
public service.
• Any person given the right to use rural land may not
lose this using right by any reason except as provided
by law.
 Transfer of rural land use rights
• It is noted that the FDRE constitution provides
for public ownership of land and strictly
prohibits transfer either via sale or otherwise
• Short of transfer ownership, transfer of use
rights is possible and there are mechanisms
where this could be possible.
• These are lease/rent, gift/donation and
inheritance
 Lease/ rent/ temporary transfer
• In principle a person with holding right is permitted to rent
his/her land under the terms and conditions provided by law
”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.” art 8
• There are two conditions attached to this right. First The
person should be a true holder and must demonstrate it
through a holding certificate. Second the rent must not
displace the lawful user of the land.
• Third, with the reading of the provision, the minimum holding
size according to the regional laws must be respected.
 Inheritance/permanent transfer/
• Any person who is a member of peasant family may have
the right to get rural land from his/her family through
inheritance or donation (Article 5.2 of Proc. 456/2005).
• A family member is defined as “any person who
permanently lives with holder of holding right sharing the
livelihood of the latter” (Article 2.5).
• The requirements are basically two: residency and
management. It means, first, the beneficiary must
permanently live with the farmer under the same roof
(residency element); and second, s/he must totally rely
on the peasant farmer for her/his livelihood and has no
other income of her/his own.
 Gift/donation
• Gift and donation is possible with two
conditions
– The recipient should show interest to live in
agriculture.
– The minimum holding size for both should also be
met (0.5)
– Donation should consider children
• Can one donate his whole right and quite
farming? Not clear
• The ANRS land proclamation seems to suggest
that one can donate his full land for a period
provided in the law.
 Duties and restriction of rural land use
rights
• Proper use of land is the guiding principle that
every farmer should comply with. Hence, a farmer
may be required by law to use his rights in some
fashion than another. a holder of rural land “shall
be obliged to use and protect his land.
• For instance, a farmer may not cultivate land
having 30° slope, without putting terraces on the
land (Article 13.4).
• When the land gets damaged, the holder of the
land shall lose his use right (Article 10.1).
 Reasons for termination
The following may be considered as reasons for the loss or
termination of rural land rights:
• Permanent employment of the farmer that brings him an average
salary determined by government.
• Engagement in professions other than agriculture and for which
tax is paid
• Absence of a farmer from the locality without the knowledge of his
where about and without renting the land for more than 5 years
• Following the land for three consecutive years without sufficient
reasons
• Failure to protect land from flood erosion
• Forfeiting land right upon written notification
• Voluntary transfer of land through gift
• Land distribution (the loss will be partial)
• Expropriation of land without replacement of another land.
 Chapter Four
Urban Land Holding system
The constitution
• Concerning urban land, the Constitution said nothing about
the acquisition and transfer of land by urban dwellers.
• Nevertheless, some interpret Article 40(6) that deals with
“right of investors” to get land, as one that includes urban
dwellers as well.
• Article 40(6) of the constitution envisages that private
investors may get land on the basis of payment
arrangement.
• In other words, unlike peasant farmers and pastoralists,
investors must pay a reasonable fee for the land they get
from the state.
 The cons…continued
• Literally, an investor is a person who uses the land
for business activities and his main objective is to
reap profit. So, it is obvious that urban dwellers
cannot be categorized as investors.
• Noticing this problem, it seems, some regional
Constitutions replace the word “investor” by
another word “proprietor.”
• The effect of such change is that urban dwellers
may be included in this definition, since the word
proprietor may also include any person who owns a
property.
The urban land lease proc No.721/2011
Old possessions and lease system
• As a matter of principle, all land in urban areas shall henceforth
be transferred into lease system.
• But, concerning old possessions, it is said that their fate will be
decided by the Council of Ministers upon detailed study to be
made in the future.
• The law, however, requires the conversion of old possessions into
lease system in one of the following events:
1. Where a property attached on an old possession is transferred to
a third party through any modality other than inheritance (Article
6.3)
2. Informal settlements that have been regularized pursuant to the
regulations of regions and urban administrations (Article 6.4)
3. Where an application to merge an old possession with a lease
hold is permitted, (Article 6.6)
 Modalities of Land Acquisition
Tender
• As a matter of principle, every land needed for
residential, commercial (agriculture, industry, or
service), and other purposes will be transferred by
tender.
• Bidders will use the “lease benchmark price” as a
base to offer their price, and the highest bidder will
be identified based on the “bid price and the amount
of advance payment he offers” (Article 11.5).
• To make it more transparent, accessible and free
from corruption, the law allocates more detailed
provisions (Articles 8–11) to the tender process.
 Modalities…continued
Allotment
• As exception, however, city municipalities may give
land by allotment to selected bodies which have
paramount importance to society.
• “Allotment” is defined in the proclamation as “a
modality of land use right transfer applied for providing
urban lands by lease to institutions that could not be
accommodated by way of tender” (Article 2.10).
• Whether or not allotment requires payment of the
minimum lease bench price is not known. But, at least,
in some cases (such as replacement land
 Allotment…continued
The following list includes entities or persons eligible to get land by
allotment (Article 12 of the proclamation):
(a) office premises of budgetary government entities,
(b) social service institutions run by government or charitable organizations,
(c) places of worship,
(d) public residential housing construction programs and government
approved self help housing constructions,
(e) use of diplomatic missions and international organizations,
(f) manufacturing industries, and (g) projects having special national
significance and considered by the president of the region or the mayor
of the city administration and referred to the cabinet (Article12.1).
(g) a person who is displaced from his house/land (an old possession or
leased one) as a result of urban renewal (like in case of expropriation)
shall get a replacement plot by allotment.
(h) A lawful tenant of government or Kebele owned residential house
outside Addis Ababa shall be entitled to allotment of residential plot of
land at benchmark lease price if displaced due to urban renewal
program.
 Transfer of Lease Right

• “a lessee may transfer his leasehold right or use it as collateral or

capital contribution to the extent of the lease amount already
paid” (Article 24.1)
Barring repeated transfer
• the proclamation prevents people who repeatedly transfer
leasehold right, without completion of construction, in
anticipation of speculative market benefit, from participation in a
future bid (Article 24.7).
Supervision of sale
• as per Article 24(2) of the proclamation, “If a lessee, with the
exception of inheritance, wishes to transfer his leasehold right
prior to commencement or half completion of construction, he
shall be required to follow transparent procedures of sale to be
supervised by the appropriate body.” it is necessary to involve a
government agent to assess the value of construction and
 Transfer…continued
Limitation on transfer of unfinished property
• transferring only leasehold right (bare land) or leasehold
right with only half-completed construction gives no
benefit at all to sellers.
• According to the law, a lessee who wishes to transfer his
leasehold rights before commencement of construction
or half completed constructions will get first, the effected
lease payment including interest thereon, calculated at
bank deposit rate; second, the value of the already
executed construction; and third, 5 % of the transfer lease
value (Article 24.3).
• This 5 % relates to the difference between the lease
purchase price paid and the sales price; in effect, it must
be referred to the gain or profit made by the transfer
 Calculation…
• A further assumption that is made is that the current lease value of
land in a similar location is 5,000 birr per ms and this sums up to a
total value of 1,000,000 birr.
– Decision (Average value is 900,000)
1. The buyer shall pay birr 900,000
2. The seller (lessee) will get the following:
2:1. 80,000 birr (lease price paid)
2:2. 4,000 (5 % of 80,000)
2:3. 40,000 (construction cost)
2:4. 5,000 (5 % of 100,000 birr profit (900,000–800,000)
3. Total = 129,000 (net Profit for seller = 9,000).
4. Government profit = 95,000 birr.
• On the other hand, if the construction is completed or becomes
more than half, then there is no limitation as to the value of the
sale price.
 Mortgage of leasehold right

• As stated above, leasehold right is subjected to any form of

transaction including sale, lease/rent, inheritance, donation,
mortgage, and as capital contribution to a company. But again,
as mentioned previously, the right to mortgage is limited to the
“extent of lease amount already paid” (Article 24.1).
• This “already paid lease amount” may be the initial down
payment and the yearly installment, if the lease agreement was
made before a year and more.
• if the lessee used his right as collateral prior to commencement
of construction, then the amount of loan will be a much lesser
one. It is declared that, this time, from the loan to be extended,
a reduction of 7 % of the total lease price agreed in the
contract and the total lease price unpaid (if any) starting from
the time the land was delivered to the lessee shall be made.
 Mortgage…continued
• To support this with an example, assume the lessee has got the
land for a total of birr 1.2 million.
• He made a down payment of 10 % (120,000 birr) and continued
to pay for the next 3 years, an annual lease rent of 40,000 (total
of 120,000) birr. So far the total lease price paid is birr 240,000.
Suppose also that there is no construction activity made on the
land.
• If he wants to mortgage the lease right, what he can get is only
birr 223,200 (i.e. 93 % of the total lease price paid). What about
if a construction of some value is made on the land? Then the
calculation will be completely different. He will get the whole
lease price paid, i.e. 240,000 birr.
• The above calculation is mandatory. Concerning the valuation of
the construction, complete or incomplete, made on the land, the
right is given to the lending banks to make the valuation.
Formation and Termination of Lease Contract
Formation of contract
• Any person permitted urban land lease holding in accordance with
this Proclamation shall conclude a contract of lease with the
appropriate body (Article 16.1).
• The lease contract shall include the construction start-up time,
completion time, payment schedule, grace period, rights and
obligations of the parties as well as other appropriate details (Article
16.2).
Termination of contract
• The proclamation introduces three situations that may lead to the
termination of the lease contract (Article 25.1):
1. failure to use the land in accordance with Article 21(1), (violation of
contract)
2. expropriation of the leased land, and
3. expiry and non-renewal of contract.