Investment in landed property is no doubt one of the most tangible investment any investor can make. No wonder land is called “real estate”- when done right, it truly is the realest investment one can make. On the flip side, no other investment type has proven to be the trickiest – particularly in Nigeria. Although the sale of landed property is not the only type of land transaction, this piece is set to explore land sale transactions in Nigeria. Land sale generally requires a consciously diligent level of investigation before it is safe to wire funds to the vendor. One of the biggest mistakes many buyers have made is to wire funds to a vendor before consulting a legal practitioner, and other relevant counsel e.g. land surveyors, with respect to the object of the land transaction. There is probably no other commercial transaction where the words: “look before you leap” apply more than real estate transactions- particularly when it involves the sale and purchase of landed property. There is definitely a lot of effort and professional advice that you will require so as to properly verify the land you intend to purchase.
Please take note that land purchase transactions are not just about sending a document to your lawyer for review. It involves airtight due diligence processes, physical inspections, street survey, land survey, title deduction, drafting of requisite documents having in mind the peculiar facts of the case. Diligently verifying the genuineness of the title to a land will enable you to save yourself from being sold a piece of land that is either disputed or has government interest on it.
The following checks will ultimately guide you as a prospective buyer of landed property in Nigeria.
- Examine the Vendor’s Root of Title
You want to ascertain what kind of title or interest a vendor possesses. It goes without saying that when a land seller’s root of title is defective, the purchaser ultimately acquires a defective title upon acquisition. A good root of title must confer both the equitable and legal interest of the real estate. From the get go, kindly endeavor to have a holistic description of the land as well as the extent of interest being conveyed by the vendor. The document showing the title holder must clearly state the owner of the land and nothing should cast any doubt on its validity.
An example of a good root of title includes:
- Deed of gift,
- Duly perfected Deed of Assignment,
- Deed of legal mortgage
- Land certificate-Title acquired by a subsequent purchaser of registered estate under the RTL (Registration Title Law)
- Certificate of purchase further to a court process.
- Assent and probate and
- Deed of Conveyance etc.
Please note that a C of O, i.e. Certificate of Occupancy can sometimes not be a good root of title, as it is merely a prima facie evidence that raises a presumption that the holder of the C of O is in exclusive possession and has a right of occupancy over a land in question. It is at this point that it must be highlighted that this presumption is rebuttable because it can be displaced by the production of a better title.
- Investigate the Capacity of the Vendor
It is important that the proposed purchaser investigates the interest held by the vendor in the land. He must ascertain the capacity in which the vendor is conveying the interest in the title of the land. Some of the capacities in which the seller may be described with respect to the land are: trustee, beneficial owner, personal representative, mortgagee, or settlor.
- Probe for Encumbrances
It is a smart purchaser that ensures there is no encumbrance against the proposed land sale. An encumbrance is a burden, interest, lien, hindrance, or claim against a property by a party that is not the owner. An encumbrance may also be a mortgage interest held by a third party e.g. a bank, over the property.
- Probe for Third Party Impediments to Free Possession
It is prudent to ensure that a property in question is free from all physical and legal etc. impediments to quiet possession, enjoyment and ownership thereof. A physical inspection of the property is advised so as to ascertain vacant possession and zero impediments that can interfere with the free enjoyment of the landed property.
- Physical Inspection of the Property
Many buyers overlook this critical step. In the event that you are not able to be physically present to inspect the landed property, it is advisable to entrust the inspection to a trusted person, perhaps a trusted relative or tested agent. However way you chose to do it, we advise that you endeavor to have the land inspected.
- Conduct a Search at the Lands Registry
Conducting a comprehensive search at the State’s lands registry is essential to determine the authenticity of the title offered to you. You will also be able to find out whether the seller is the authentic owner of the land. Please note that if a piece of land is under government acquisition or in dispute, conducting a search will reveal that to you.
- Restrictions
Certain lands are subject to restrictive covenants that govern how and in what manner the land in question can be used or developed. The most common uses of lands are: commercial, residential, agricultural, recreational, and transportation. It is wise to ascertain the permissible uses of land in the area that a purchaser is looking to buy a property in.
- Regulatory Restrictions
Please take note that town planning laws and regulations may restrict you from purchasing certain lands, particularly when the intended purpose of purchase of the land is contrary to town planning regulations. Kindly ensure that there are no regulatory restrictions that may impede your proceeding with the land sale transaction.
- Confirm if the Real Estate is Family Property
Nigerian culture has a fundamental influence on the manner in which land is conveyed in Nigeria. It is worthy of note that the family head and the principal members of a family are required to consent to the conveyance of a land transaction in the event that the land in question is a family land. It is advisable to learn about the tenable culture of the area in which the land is situated – as any purported sale by a member of a family without the required consent is voidable.
- Investigate for Pending Law Suit
This is referred to as the doctrine of lis pendens. You want to ascertain that the land in question is not subject to any pending law suit or dispute. It is important to note that some unscrupulous vendors may intentionally hide some facts and mislead trusting purchasers to purchase a land which is the subject of a lawsuit. This is why it is advisable to conduct a thorough investigation before purchasing real estate.
Bottom-line
Above all, the process of land transactions is never a seamless one in Nigeria. It requires the counsel of a property solicitor, land surveyors and also counsel from the members of the street or area from which the land is situate. Please endeavor to ask the right questions and retain the professional services of all required professionals.
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About the Author
Taiwo Lawal Esq. is a corporate and transactional lawyer. With about half a decade’s experience servicing startups and providing requisite advisory on real estate transactions (including on transactions regarding intellectual property rights), she is the founder of Unicorn Valley Law, doing what she loves the most- providing bespoke advisory from the “well of water” within her.
Taiwo is happy to read from you and provide bespoke solutions to your startup’s legal and commercial needs. Kindly write her via hello@unicornvalleylaw.com or schedule a call via calendly here: (get in touch).
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