The Nigerian judicial system has over the years become an intricate web entwined with formality, protocols, and procedures. These protocols and procedures cut across every subject matter in any and all aspects of our personal, professional, and business endeavours.
One major aspect that has been regulated by the law and the courts, is placing a lien on the existing bank account of an individual or any corporation which has its asset in any bank that carries on business in Nigeria.
In simple terms, placing a lien on a bank account arises when a “hold” is placed on a certain amount of money or the whole sum in a bank account. The specific amount placed on a lien, which has been indicated either by the owner of the bank account or through a court order, cannot be withdrawn from such account. The lien on that particular amount on such account will subsist until it is vacated by the authority that placed it.
It is important to note that placing a lien on a bank account in Nigeria can be done through any of the channels below:
- An individual placing a lien on their bank account.
- By a Court order:
- A Court can place a lien on another person’s account where an erroneous or fraudulent transfer was made to that bank account.
- Where a bank account is a subject of criminal investigation
- Through the powers given to banks by the Central Bank of Nigeria, in its GUIDELINES ON INSTANT (INTER-BANK) ELECTRONIC FUNDS TRANSFER SERVICES IN NIGERIA.
- An Individual Placing a Lien On Their Bank Account
An individual can opt to place a lien on their own bank account. This lien may be marked on the individual’s request to limit the amount of money to be withdrawn from their account.
An individual can place a lien on their bank account by simply submitting a written instruction to their bank informing them of their desire to place a lien on a specific sum in their bank account or the entire account itself. The bank attendant will then verify the identity of the individual giving the written instruction and process the written instruction accordingly after the verification process is complete.
It should be noted that the same process has to be taken in order for an individual who placed a lien on their account, to remove such lien.
- By a Court Order: Where an Erroneous or Fraudulent Transfer Was Made To another Bank Account
An erroneous transfer simply means a transfer that was initiated and completed by accident or done in error. Several factors can contribute to the accidental transfers and they include imputing the wrong bank account details of the desired receiver; sending a different amount of money other than the correct amount; selecting the wrong beneficiary from the list of saved beneficiaries etc. in such circumstances, a court order can be obtained to reverse such error made and once obtained, the banking institution of the recipient of the erroneous transfer will reverse the sum of money stated in the court order.
A fraudulent transfer, as the name implies, suggests a transfer that was completed through unscrupulous means. The popular word “419” coined from Section 419 of the Nigerian Criminal Code underscores the meaning of fraud in general terms.
A fraudulent transfer occurs when there is a transfer of funds to an individual or a corporation that falsely represents or purposefully misrepresents the service or act being rendered on behalf of the person who makes the transfer. Thus, a victim can ask the court to grant an order to place a lien on the fraudulent account until he/she is able to fully recover the money sent to the fraudulent account.
- By A Court Order: Criminal Investigation
A criminal investigation involves officials of the law making enquiries into an alleged criminal activity in order to gather evidence which may potentially result in asset seizure, financial penalties or other legal consequences. In situations where there is suspicion of an activity involving money laundering, fraud transfers, embezzlement, extortion or other financial criminal activity, court orders can be obtained to place a lien or for the seizure of such asset and prevent further transactions on such account.
Facts That Need To Be Established In Order To Place a Lien on a Bank Account:
One major fact that needs to be established in order to place a lien on a bank account is indebtedness. Any individual/claimant that approaches the court of law to place a lien on an existing bank account must rightly establish that the owner of the bank account is indeed indebted to the claimant either through a fraudulent transaction or through an erroneous transaction and that such indebtedness is yet to be discharged.
Furthermore, another key fact that must be established by the individual who seeks to place a lien on the bank account of another party is the proof of the transaction taking place. A claimant/individual has to adduce evidence in order to convince the court that the sum complained of was debited from their account and the same sum was credited into the bank account of the other party. In this instance, a claimant who institutes an action in a court of law must establish that they (claimant) sent the money to the account holder’s account, the account holder did receive the money being complained of and that the money has not been reversed.
Note: Placing a lien on a bank account can be limited to the particular sum of money belonging to the sender of the money pending the time a reversal is done or such lien can completely bar the account holder from transacting on their bank account. The latter mostly occurs when there is a criminal investigation being conducted on the holder of the bank account.
Additionally, a party who seeks to place a lien on the bank account of another can simply notify the bank of the account holder with proof of the erroneous/ fraudulent transaction done and the bank can place a lien on that bank account for only a limited period. The Central Bank of Nigeria, in Section 10 of its GUIDELINES ON INSTANT (INTER-BANK) ELECTRONIC FUNDS TRANSFER SERVICES IN NIGERIA provided for dispute resolution in situations where a wrong transfer has occurred between two different bank account owners.
Procedure for Obtaining a Court Order in Placing a Lien on a Bank Account:
In placing a lien on a bank account, the following steps must be taken:
- Briefing/Informing a Legal Practitioner: The importance of briefing a legal practitioner cannot be over emphasized. A legal practitioner is one who has the necessary skill and expertise to institute an action in a court of law on behalf of an individual.
- Instituting an action to obtain the order of the court: Following the briefing and the payment of the professional fees, the legal practitioner files an application in the court of law on behalf of the individual/claimant seeking for an order to place a lien on the bank account of the account holder in the sum that is owed. This application is accompanied by an affidavit which simply means a statement of facts which is used by a Judge to comprehend why a lien has to be placed on the bank account of the account holder. Attached to the application are evidences that support any facts stated in the affidavit. For instance, in the case of an erroneous transfer, the transaction receipt must be attached as evidence to support the claim that an erroneous transfer was made.
- A date in Court: Every application filed in a court of law is given a specific date where it will be heard by a Judge. When the date specified for the hearing of the application arrives, the legal practitioner proceeds to move/explain the application and informs the judge why placing a lien on the bank account of the account holder is necessary.
Note: For the grant of an application to place a lien on a bank account or any other application filed in a court of law, the Judge will always ensure that the interest of justice is served. This simply denotes that if a Judge finds that granting the order to place a lien on the bank account of an account holder will cause injustice to such person, such Judge will refuse to grant the order.
- Subsequent to moving the application to place a lien by the legal practitioner, the Judge grants the application and orders that a lien be placed on the bank account of the account holder.
- A letter is then written by the legal practitioner to the bank in which the account holder uses and subsequently attaches the order of the court to place a lien on the account of the account holder.
- Consequently, a bank will then place a lien on the bank account of an account holder pending the time a reversal order is granted to the claimant.
The complete fulfilment of the above requirements is necessary in order to successfully place a lien on the bank account of an account holder.
Circumstances Where a Lien Placed On a Bank Account Can Be Removed:
- A lien can be removed when the outstanding obligation related to a lien has been fulfilled. This can be the settling of debt in a case of indebtedness. Once the unpaid sum connected with a lien has been satisfied, the lien can then be removed. In some cases, however, the process of the removal of the lien is automatic once financial obligations have been fulfilled.
- A lien can also be removed through an order of the court. Where a lien has been improperly obtained through a court order, a court order will be needed to remedy the improperly obtained lien. Thus, a court order can be used to render an improperly obtained lien invalid.
- A lien can also be removed in circumstances where the lien expires. A lien obtained by a court order may have a time frame/limit placed on it. When such a time frame is reached, the lien is then lifted. Other circumstances such as dispute resolution can result to the removal of a lien. This can be done through negotiations between the parties involved where both parties reach a payment agreement between each other. This method can as well result to the removal of a lien on a bank account.
Procedure for the Removal of a Lien Placed on a Bank Account in Nigeria:
The following are the procedures for removing a lien placed on a bank account:
- Briefing/Informing a Legal Practitioner: As stated earlier, a legal practitioner is one who is fully equipped with the necessary skill and expertise to institute an action in a court of law on behalf of an individual.
- Filing of an application to obtain the order of the court: The legal practitioner files an application before the court of law stating any of requirements mentioned above for the grant of the order to remove the lien placed on the bank account of an account holder.
- A date in Court: The application filed by the legal practitioner for the removal of the lien will be given a specific date where it will be heard by a Judge.
- Subsequent to moving the application to remove the lien by the legal practitioner, the Judge grants the application and orders that the lien placed on the said account of the account holder be removed.
- A letter is then written by the legal practitioner to the bank where the account holder uses and subsequently attaches the order of the court to remove the lien on the account of the account holder.
- Consequent upon the order of the court, the bank will remove the lien placed on the bank account of an account holder.
As stated above, a court order is required to place a lien on a bank account in Nigeria. In the same vein, a court order is also required to remove an existing lien which has been placed on a bank account.
The following are the requirements needed in order to remove an existing lien on a bank account:
- When there is a fulfilment of the obligation of the account holder: In the case of an erroneous or fraudulent transfer, the owner of the bank account in which a lien was placed on can approach the court for the removal of the lien from the bank account when the sum in dispute has been successfully reversed or returned to the rightful owner.
- Time Lapse: In the circumstance where a lien that was placed on the bank account of an account holder had a specific time frame, the owner of the bank account can approach the court for the grant of an order to remove the lien placed on his account. For instance, in cases where the police obtain an order from the court to place a lien on a bank account for a period of six months for the purpose of criminal investigations, the account holder who has a lien on his account can approach the court after the duration of six months to remove the lien placed on that account. However, it is vital to note that evidence of a written statement issued by the police stating that the investigations have been carried out must be attached to the application to the court in order to remove the lien place on the bank account.
To speak with a lawyer on any bank freeze or lien challenge on your account, please contact one of our professionals at www.pelicancrestlaw.com
Email: info@pelicancrestlaw.com
Tel: 09134038074
ABOUT THE AUTHOR
OMOTADE AFONJA ESQ. is a savvy legal practitioner with years of experience in the legal profession.
Over the years, he has honed his legal practice in diverse fields of law including Data Protection, Litigation, Corporate Law, Criminal Law and Alternative Dispute Resolution among others.
He is a firm supporter in the digitisation of the judicial system for much easier access to the judiciary in the modern age and also advocates for better standards of practice for lawyers in Nigeria.
He also leads the team of the Data Protection practice group at Pelican Crest Legal Practitioners which seeks to obtain a pioneer status and a leading voice in Data Protection and Privacy in Oyo State.
As the head of chambers at Pelican Crest Legal Practitioners, he works within a team which boasts of a consistent 93% success rate for the past 3 years, decisively reinforcing the law firms place as one of the leading law firms in Oyo State under 10 years old.