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Analysis > Analysis and Strategy

Securing land rights in Mozambique

Zaida Kathrada, Director, Norton Rose Fulbright
April 27, 2017, midnight
724

Word count: 1118

Post Mozambique’s independence from Portugal and its emergence from civil war, the government focussed on creating legal frameworks governing land while encouraging investment. The rationale behind the Mozambican Land Law and its Regulations was to protect land rights of communities, women and farmers.  There is therefore no private ownership of land in Mozambique. In terms of the legal system, land and its associated resources are the property of the State and cannot be sold, mortgaged or alienated in any way.  The Land Law however, provides for a lesser real right - the right to use and benefit from the land known as Direito do Uso e Aproveitamento da Terra (DUAT). DUATs provide their holders with the right to use the land for specific and authorised purposes subject to certain limitations imposed by the Land Law. 

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Post Mozambique’s independence from Portugal and its emergence from civil war, the government focussed on creating legal frameworks governing land while encouraging investment. The rationale behind the Mozambican Land Law and its Regulations was to protect land rights of communities, women and farmers.  There is therefore no private ownership of land in Mozambique. In terms of the legal system, land and its associated resources are the property of the State and cannot be sold, mortgaged or alienated in any way.  The Land Law however, provides for a lesser real right - the right to use and benefit from the land known as Direito do Uso e Aproveitamento da Terra (DUAT). DUATs provide their holders with the right to use the land for specific and authorised purposes subject to certain limitations imposed by the Land Law. 

In terms of the new Mozambican penal code, law nº 35/2014 of December 31, sale of land is a criminal offence with a penalty of imprisonment for up to eight years on conviction. 

DUATs can be acquired in both urban and rural areas. In rural areas DUATs are created by: 

  • occupation by individual persons and by local communities, in accordance with customary norms and practices not contrary to the principles of the Mozambican Constitution; 
  • occupation by national individual persons who have been using the land in good faith for at least 10 years; and 
  • by an authorisation by the relevant administration – this is the only method available to foreign entities. 

For foreign corporate entities and individuals to be holders of DUATs they must have an investment project, duly approved by the Investment Promotion Centre of Mozambique (Centro de Promoção de Investimentos) (CPI). Corporate persons need to be established or registered in Mozambique and in the case of individual persons be resident in Mozambique for at least five years. 

All applications requesting DUATs are authorised provisionally subject to the fulfilment of an exploration plan. Provisional authorisation is granted for a period of two years to foreign persons and five years to national persons.  A final application can only be issued once the exploration plan is fulfilled and (for economic activities) it has a maximum duration of 50 years renewable for the same period.  DUATs acquired through occupation and customary norms and practice are not conditional upon an exploration plan and are not provisional but final. 

The authorisation process for investors seeking DUATs is complex and lengthy. DUAT’s in rural areas are issued, depending on the extent of land required, by the following authorities: 

  • Provincial Government - for areas up to 1000ha; 
  • Ministry of Agriculture - for areas between 1000ha and 10.000ha; and 
  • Council of Ministers – for areas above 10.000ha. 

A public consultation precedes the issuance of the relevant DUAT.  This process is guided by the Provincial Services of Geography and Cadastre. 

The mining sector is one in which rights can supersede those of other DUAT holders.  The law ranks mineral resources and mining activities with priority over other forms of land use unless the social and economic benefit of the activity for which the land is being used exceeds the benefits resulting from mining activity.  Existing DUATs, may be extinguished, following payment of compensation and re-issued in favour of the holder of a mining concession, a mining certificate or a mining pass. 

Transfer of Land Rights 

Land rights may be transferred by i) inheritance and the process of transfer is governed by the Civil Code or ii) by means of sale of the buildings, improvements and infrastructure erected on the land. In these cases, requirements differ according to whether the land concerned is regarded as an urban tenement (prédio urbano) or rural tenement (prédio rústico). In relation to urban tenements the transfer of the right of ownership of the property implies the automatic transfer of the DUAT.  In the case of rural tenement, the transfer of the property does not imply the automatic transfer of the DUAT, which is subject to approval by the same entity which approved the DUAT. 

In terms of the Land Law, it is not the location of the land that determines into which category the tenement will follow but the primary source of its economic value.  If the source of income derives from the land itself one is dealing with a rural tenement but where the source of income derives from the building built on the land then one is dealing with an urban tenement. 

A DUAT holder may cede the right of use of part or the whole portion of the land subject to the provisions contained in the DUAT, this is known as cession of rights (cessão de exploração). 

The creation, modification, transfer and termination of DUATs are subject to registration in terms of the Land Law. Although the Land Law does not impose this, registration of a right is recommended; as it creates a presumption that the right exists and belongs to the person in whose name it is registered.  In the event of a dispute the principle “first in time, first in law” applies.  The right registered first will take preference over the right registered later with respect to the same property.  The order in which the deeds were registered with the relevant Real Estate Registry Office determines priority, irrespective of what is set out in the deed itself, although parties are free to regulate the ranking of their security pursuant to an intercreditor agreement. 

Securing Credit 

DUATs may not be sold or mortgaged, which means that they cannot be used as collateral for any form of borrowing.  However, buildings, infrastructure, improvements built on a land may be mortgaged. 

Since land and buildings are regarded as immovable property and the fact that the law allows for the automatic transfer of an urban tenement together with its DUAT, the general understanding is that an urban tenement can be mortgaged and this is the interpretation and practice that financial institutions have adopted.  This interpretation does not apply to land in a rural tenement. 

Extinguishing of the DUATs 

For economic activities, DUATs are granted for a limited period of time and do not last in perpetuity. DUAT can be extinguished in the following ways: 

  • failure by the holder to comply with the exploration plan without reasonable grounds; 
  • on grounds of public interest (nationalisation or expropriation), subject to fair compensation;  
  • expiry of the time period or the renewed time period; and  
  • waiver by the holder of the DUAT.   

All non-removable improvements made on the land are forfeited in favour of the State. 

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