Can Your Estate Association Charge a Development Levy?

The gate needs replacing. The access road has failed after two rainy seasons. The transformer has blown and the DisCo is not coming. The committee works out the cost, divides it by the number of units, and announces a development levy.

Then a third of the estate refuses to pay it.

One-off levies cause more disputes per naira than monthly service charge, and they are where committees most often overreach without realising. This article covers what makes a development levy defensible and what makes it collapse.

Before we start: Home Access builds estate management software. We are not a law firm and this is not legal advice. Levies are one of the areas where estates most often need proper advice. Speak to a Nigerian property lawyer.

First, a naming problem

If you search "development levy" in Nigeria you will mostly find something else entirely. The state development levy is a statutory charge with its legal basis in the Taxes and Levies (Approved List for Collection) Act, deducted from working residents through PAYE, and it has nothing to do with your estate.

What estates call a development levy is a private, one-off contribution agreed among members for a specific project. It carries no statutory backing at all. Its force comes entirely from consent and process, which is exactly why it needs both to be solid.

Some estates call it a special levy, an infrastructure levy or a project levy. The label does not matter. The structure does.

Where the authority comes from

A development levy has no independent legal life. It rests on the same foundation as your dues, which the Megawatts judgment made a good deal shakier than most committees assume.

In Megawatts Nig Ltd v. Registered Trustees of Gbagada Phase 2 Residents' Association (Suit No. FHC/L/CS/982/2020), the Federal High Court in Lagos held that a person presumed to be a member of an association by operation of an alleged custom cannot be compelled to abide by that association's customs against their will, and that membership and the payment of dues and levies is voluntary. Legal commentary on the decision put it plainly: in the absence of membership there is no basis for an association to collect dues or levies from a resident.

Note that levies were named specifically, not just dues.

So the question for any levy is the same as for your service charge. Where does the obligation come from?

From documented consent to membership. The resident signed something.

From a covenant in the purchase documents. The deed of assignment or sale agreement obliges the buyer to contribute to estate infrastructure. This is the strongest footing and many committees have never checked whether their estate has it.

From proper adoption at a general meeting by members entitled to vote on it.

If your levy rests on none of these, you are asking rather than charging. That is not always fatal, but it changes how you should go about it.

The six things that make a levy defensible

1. A named purpose. Not "estate development" but "replacement of the main gate barrier and guard house." A levy for a vague purpose is a levy nobody can hold you to and nobody feels obliged to pay.

2. A stated amount, per unit, with the arithmetic shown. Total project cost, number of contributing units, the resulting figure. Committees that announce a per-unit number without the calculation invite the assumption that it was picked out of the air.

3. Proper approval. Your constitution may require a different majority for a special levy than for a service charge adjustment. Check. Then convene properly, circulate the motion in writing with the notice, take a recorded vote, and minute the numbers for and against. A levy announced rather than voted on is the most challengeable thing a committee can do.

4. A stated duration or end point. Either a single payment, or a monthly amount for a defined number of months, or collection until the project cost is met. Open-ended is not acceptable.

5. A separate account. Levy money should be identifiable, not pooled with operating funds. If a resident asks how much has been collected toward the gate and you cannot answer, you have lost the argument regardless of the merits.

6. Reporting back. What was collected, what was spent, what remains, and photographs of the work. This is what makes the second levy possible. Committees that never report on the first one find the next is much harder.

Where committees get it wrong

Announcing rather than approving. The most common failure. A committee decides the estate needs a new gate, works out the cost, and sends a message. Residents who were not consulted feel charged rather than asked, and the ones who refuse have a real point.

Charging undeveloped plots without a basis. Levies for infrastructure often fall on plot owners who do not live in the estate. There is a fair argument that they benefit, since the infrastructure supports their land value. But it needs to be in the rules and properly adopted, not invented for this project. Absentee owners are the most likely group to refuse and the hardest to pressure.

Continuing after the purpose is met. A levy collected for a specific project should stop when that project is paid for. Estates that quietly keep collecting, or roll the surplus into general funds without saying so, are storing up a dispute and undermining every future levy.

Stacking levies. Three concurrent levies plus the service charge, each announced separately, is how estates lose collection discipline entirely. Residents stop tracking what they owe and start ignoring all of it.

Enforcing a levy like a service charge. If your enforcement ladder was adopted for service charge default, it may not extend automatically to a special levy. Decide and write it down before you enforce, not during.

The developer problem

In estates where the developer is still involved, levies get complicated fast.

A documented Nigerian example: residents of UrbanPrime2 Estate protested publicly against their developer, having paid a developmental levy of ₦1.5 million for electricity connections and other services, roughly ₦5 million in total for facilities at the point of purchase. The dispute escalated to water being disconnected for close to a week, with the developer stating the disconnection followed the residents' association executives' failure to settle utility bills, and residents saying they were being asked for ₦10,000 monthly before water would be restored.

Whatever the rights of that particular dispute, the pattern is instructive. Where a developer collects infrastructure levies at the point of purchase, residents reasonably expect that infrastructure to be delivered and handed over. When the association later levies for the same infrastructure, residents feel they are paying twice.

If your estate is still developer-controlled, establish before levying: what was already paid for at purchase, what the developer remains responsible for, and what has actually been handed over to the association. Levying for something the developer already charged for is the fastest way to lose a room.

A practical sequence

1. Scope the project and get at least two written quotes.
2. Check your constitution for the approval threshold for a special levy.
3. Draft the motion: purpose, total cost, per-unit amount, payment schedule, end point.
4. Circulate it with the meeting notice, not on the day.
5. Convene properly, confirm quorum, take a recorded vote, minute the numbers.
6. Open or designate a separate account.
7. Report progress at least quarterly, with figures and photographs.
8. Stop collecting when the cost is met, and account for any surplus openly.

None of that is difficult. It is simply the difference between a levy residents complain about and one they refuse to pay.

Written by Home Access, a Nigerian estate management platform used by residents' associations to keep auditable records of residents, dues and gate activity. homeaccess.africa

This article is general information, not legal advice. Speak to a qualified Nigerian property lawyer before imposing a levy.