I am not going to go into detail about the importance of landed property; throughout the history of man this has been established and crosses all societies and ethnic groups.
When I first moved back I was alarmed at the rate of interest most property sellers in Nigeria enjoyed. In England, if you buy property for £100k and sell for £115 five years later, you have made a great profit. In Nigeria it is not unheard of for someone to have bought a piece of land for 400,000 and sold 5 years later for 7 million.
Unfortunately many people around the world still see property investment in Nigeria as a high-risk investment. They often stress that for everyone who has “hammered” there are like 10 people who have “fallen mugu”.
Over the years I am sure we have all heard of instances where people have been swindled while trying to buy property. This does not have to be the case, and it is actually easily avoidable when the purchase is done property.
This article talks about the key factors buyers must consider when buying property.
Investigation of title
For obvious reasons it is imperative that through investigations be done before purchase negotiations are finalized. It is advisable that the following searches are conducted:
It is important to confirm that the purported size of the property is the actual size of the property by checking that the dimensions in the survey plan are accurate. Where the sale is for a developed property, a physical inspection will also clarify if there are any undisclosed structural defects that might reduce the value of the property.
Judgments of the court
This search is to confirm that the property is not the subject matter of any litigation, and or the possible outcome of any previous litigation. The buyer is advised to search the State High Court of the state in which the property is situated.
Lands Registry search
The buyer is advised to start the search at the relevant state Lands Registry. Here they will be able to view all registered documents pertaining to the land, as well as ascertain the true owner of the property.
Where a community or a family is selling the property, it is important that the buyer investigates the principal members of the family or community, thus verifying the identities of the persons purporting to sell the property. The buyer must confirm that the title the seller has to the land is not void or voidable (i.e. subject to government acquisition) and that the relevant consents have been obtained.
Probate Registry search
This search is conducted to determine whether the property is the subject matter of the grant of probate, or where the property belongs to a deceased individual, to determine the executors and or personal representatives of a testator.
Corporate Affairs Commission search
Where the seller of the property is a registered company, in conjunction with all other searches, the buyer will also be required to conduct a search on the company at the CAC. This search is to ascertain whether there are any charges or encumbrances on the property.
Deed of assignment
Technically, it is the seller’s lawyer who has the legal burden of preparing the Deed of Assignment, however for extra protection, many buyers prefer to draft the Deed Assignment, and then send same to the seller for review before signing. This is done to ensure that the terms in the agreement are favorable to the buyer. A copy of the original survey plan for the property is usually attached to the Deed of Assignment and referred to in the body of the document.
After both parties have signed the deed of assignment the seller will provide the original title documents for the property and the buyer pays for it.
Again, it is the duty of the seller of a piece of property to apply for Governor’s consent and perfect the buyer’s title to the property. However, in reality, due to the obvious risks involved, buyers tend to prefer to handle this themselves. As discussed in my previous article about Governor’s consent, there is a legal requirement for the State Governor to consent to the sale of any land within the state. Prior to the buyer acquiring the Governor’s consent, the sale is incomplete and legal title in the property will not be deemed as having been transferred; all that would have happened is that an equitable interest in the property will have been created in favor of the buyer.
Registration enables future persons conducting a search on the property (for any reason) to see the buyer’s interest in the property. This helps in the prevention of fraud and other possible issues that may be encountered with the property.
Although usually done after the acquisition of Governor’s consent, it is advisable that the buyer of any property registers the Deed of Assignment at the Lands Registry of the State, pending perfection of title. This will act as notice to any person who does a search on the property, effectively informing interested persons that the property has been sold. I also always advise that an irrevocable power of attorney clause be included in the Deed of Assignment. This will further strengthen the buyer’s position and make void any action the seller purports to do with the property after the date of signing the sale agreement.
It is advisable that persons purchasing bare land, develop it in some capacity. This would mean immediately fencing the property.
I must stress that in an instance where 2 or more people have an interest in a piece of property, it is established case law that it is the person who first registers their interest in the property who has the stronger title to the property.
The nature of the investigation will very depending the type of property being purchased. Also, where the property is a developed property (either off plan of a brand new building) it would be advisable that the buyer investigate the developer; this can be either by word of mouth or by going to view other completed developments. This will help verify the quality of the building materials being used and might shed light on any other possible issues previous buyers might have experienced.