What is the Procedure For Buying Landed Properties?
What are the laws regulating property transactions in Nigeria?
Legal requirements for buying landed properties in Nigeria
Buying a landed property in Nigeria is not as straightforward as going to the grocery store to buy an item. There is more to owning a house or a land. It goes beyond just paying the purchase sum, receiving the evidence of payment or moving into the property. In buying a landed property, a purchaser ought to engage a solicitor who by law has certain mandatory tasks to perform. This article discusses the legal procedure for buying a landed property as well as the duties of a solicitor in conveyancing transactions.
Various provisions of the law dictate the complex but crucial role a solicitor plays in property purchase transactions. Failure to comply with the provisions of the statute may have severe consequences on the purchaser some of which will be discussed in this article.
It is worthy to note that in a transaction for the sale of landed property, the parties under the law are the vendor (the seller) and the purchaser (the buyer). Both parties have certain obligations that should be fulfilled and the usual practice is that both follow a laid down procedure in order to validly complete the transaction.
Requirements and procedure of buying a landed property in Nigeria
The Nigerian law of conveyance is quite similar to those obtainable in other jurisdiction. The only difference however is that unlike in some other jurisdiction, the Nigerian law does not recognize absolute ownership of land. All land belongs to the Governor of a the state and can be obtained by anyone upon application to the Governor. However, the Governor holds a reversionary right over all land devised. So in other words, buying a land is more or less a leasehold as the Governor of the state is the head leasor. Any further sale is therefore nothing more of an assignment of the remainder terms of years held by the sub leasor.
This article does not pretend to be a complete and proper guide to purchasing a property in Nigeria but rather a skeletal overview of the requirements and procedure for buying landed property in Nigeria. Thus the reader is advised to consult with the author through the communication channels below or consult with any other lawyer of his/her choice. The author hereby excludes liability for any loss suffered from acting solely upon the content of this article.
Several laws and statutes on land ownership require that purchase and sale of land must be documented. This requirement is made to ensure that there is a solid proof of the transaction and to prevent against fraud. For instance section 4 of the Statute of Fraud Act of 1677 states that no action shall be brought upon any contract for sale or other disposition of land or any interest in land, unless the agreement upon which such action is brought or some memorandum or note thereof is in writing, signed by the party to be charged or by some person by him lawfully authorised.
What this provision of the law and other similar laws recommend is that a contract to buy landed property must be in writing. The contract could either be a contract of sale of land or a simple receipt describing the land, the parties and the consideration involved.
Requirement of Deed
When it comes to buying or selling of land, the contract of sale or receipt of purchase does not sufficiently transfer or convey a valid legal title of the land. Thus the law requires that a deed be prepared to evidence the intentions of the parties. A deed is a legal document that is signed and delivered, especially one regarding the ownership of property or legal rights. Without a deed, legal interest in the landed property cannot be conveyed.
Section 77 (1) of the Property & Conveyancing law cap 100 Laws of Western Region of Nigeria states that all conveyances of land or interests in land for the purposes of creating any legal estate are void unless they are made by deed.
It means that where the land transaction has been purportedly completed but no deed was prepared to evidence the transfer of title from the vendor to the purchaser, then the legal title will be said to have not been transferred.
Title, Possession and Ownership
Buying land is complex due to the concept of the title. Title simply means ownership. Possession however is not the same as ownership as a person could be in possession or have the keys to a premises but not be the true owner.
The vendor of the property must have a valid title or else the sale would be invalid. Only a person who has a title can validly transfer same as it is trite law that you cannot give what you do not have.
Notwithstanding, under the Nigerian law, there is no obligation on the vendor to prove that he is the owner of the property he is trying to sell. The onus therefore rests on the purchaser to seek to know the status of the property and establish the title of the vendor.
Verifying title of the property is also a way to ascertain if the vendor whether in possession or not is the true owner of the property. By virtue of the relevant laws, only the true owner of a property can validly transfer his title to another. Thus where the vendor lacks title to the property, he cannot validly pass the title of the property to the purchaser.
Different types of titles exist under the Nigerian Law some of which includes Family Ownership, Joint Ownership, Beneficial Ownership, Legal Title and Equitable Interest. Also, a person with a power of attorney or a mortgage interest who may not be the legal owner may, however, be authorised to dispose of the landed property.
Verifying title of a property goes beyond merely sighting receipt of previous purchases or contracts of sale or any document that purports to act as evidence of ownership. It involves several verification steps conducted by a Legal Practitioner. Hence, before a purchaser takes steps to acquire a property, he is required to engage the services of a solicitor who will accompany him on a journey of physical and legal due diligence.
The law also requires that all instrument used in the transfer of title to land must be registered. The rationale behind this is to ensure that there is a proper record of all transactions bordering on the interest in land which shall serve as a notice to subsequent purchasers. Thus the land registry of each state in the country allows for inspection by members of the public in order to investigate the root of title of any landed property within the state. The Lagos land registry, for instance, has a record of all registered land transactions dating back to as far as 1863.
Section 26 of the Land Instruments Registration Law CAP 62 provides that the registrar shall allow searches to be made at all reasonable times in any register book or register, or file of registered or filed documents in his custody.
Another benefit of the land registration is that it allows owners of landed properties to obtain Certified True Copies of property documents if misplaced. Also, the land registry allows for the registration of court judgments relating to landed properties within the state.
From a combined reading of the laws relating to landed property transactions, one can easily infer that a solicitor ought to be involved in every property transaction. The rationale behind this requirement is that Solicitors are trained professionals who understands, can draft and interpret land documents. A solicitor can easily detect if a vendor has a valid legal title or if the property is encumbered. The solicitor’s duty is to carry out due diligence and offer proper legal advice to his client. Thus having done his own investigation, he would help his client decide whether to buy or not.
A solicitor is a person who is licensed to practice law in Nigeria. Under the Nigerian Law, a legal practitioner who has been called to the Nigerian bar and eligible to practice law is both a solicitor and a barrister. The work of a barrister is to represent clients in court or before any tribunal while a solicitor is more involved in the preparation of documents, agreements and offering of non-court room legal work.
Apart from conducting the legal due diligence on the property, the solicitor is also empowered under the various laws to draft the required documents. According to Section 22 of the Legal Practitioners Act, only a legal practitioner can prepare any instrument relating to immovable property or relating to or with a view to the grant of probate or letters of administration. The same section defines “Instrument” as any document which confers, transfers, limits, charges or extinguishes any interest in the property. And further, the same section 22 makes it a criminal offence which can attract a penalty of two years imprisonment for a non-lawyer to prepare land documents.
The Role of the Solicitor in Purchase of Property
- Draft All Contracts
A purchaser who has physically inspected a property is satisfied with the property and has completed negotiation on the price of the property is at risk if he makes full payment without first verifying the title of the vendor. Hence a contract needs to be drawn to stipulate the terms of payment, length of investigation of title etc. Usually the contract is prepared by the vendor’s solicitor and exchanged and executed by both parties.
At this stage and upon agreement between both parties, the purchaser may pay a deposit amount to the vendor (or to an escrow account) to signify that the purchaser is serious about making the purchase.
- Investigate Title
Having exchanged the contract, the vendor is expected to hand over copies of the title documents to the purchaser who then have his solicitor proceed with an investigation of the title. Once the veracity of the vendor’s claim over title has been established, further terms of the contract can then be fulfilled which includes payment of the purchase sum.
On another note, if the investigation reveals that the vendor is not the true owner of the property or that the property is under some sort of encumbrance or acquisition, the solicitor is duty bound to advise his client not to proceed with the purchase. Upon investigation of title, the solicitor may discover that the vendor has a defective title or a valid title.
Defective Title includes any of the following:
- Where the land is under Government Commitment or Acquisition
- Where the property is encumbered by a mortgage transaction or other claim on the property.
- Where the vendor is the successor of a deceased owner and has not obtained a grant of probate or letters of administration
- Where the vendor is an Executor or administrator who does not have the consent of the beneficiaries of the estate to dispose of the property
- Where the property is family property and the vendor is acting without consultation with the head and principal members of the family
- Where the property is the subject matter of a court dispute
- Where the vendor’s title is neither registered nor perfected
If any of the above appears in the solicitor’s search report, then the advice to the purchaser will be to either not proceed or to proceed with caution.
The solicitor must also ensure that the if there are tenants on the property, he conducts an interview with them or notify them of the new ownership. It is important to know the status of the tenants, the amount of utility bill owed and other factors affecting the outward appearance of the property. For instance it should be ascertained if the property requires renovation or refurbishment.
Also the solicitor ought to investigate to determine if all dues such as tenement rates, ground rent, land use charge or other levies payable to the government have been paid.
- Prepare Title Deeds
Payment of the purchase sum does not itself serves as conclusive evidence of transfer of title from the vendor to the purchaser. At best, it only serves as proof of the parties’ intention to enter into a binding contract and equally bestows on the purchaser an equitable interest in the property. The problem with the equitable title is that it can be overridden by the holder of a better equitable title or by the holder of a subsequent legal title.
Thus, it is indeed expedient that the purchaser’s solicitor takes all necessary steps in drafting the documents that transfer the title of the vendor to the purchaser and ensure that the title is registered. This is often done through a deed of assignment or a deed of conveyance.
- Perfection of Title
Having executed the title deeds in favour of the purchaser, the purchaser is now expected to perfect his title. Usually, this takes the form of Stamping the documents and obtaining the consent of the Governor of the state or applying for Certificate of Occupancy. According to section 22 of the Land Use Act, it shall not be lawful for the holder of a statutory right of occupancy granted by the Governor to alienate his right of occupancy or any part thereof by assignment, mortgage, transfer of possession, sublease or otherwise however without the consent of the Governor first had and obtained.
- Registration of Title
By registering the deeds documents at the land registry within the jurisdiction of the property, the purchaser has thus created a form of security for his property. Registration of Deeds and Registration of Title are two very crucial concluding parts of the transaction as any property transaction which is registered serves as a notice to the whole world of the existence of such transactions.
It is clear from the foregoing that buying a landed property is not just a shop and goes process. A lot must be done and lots more must be taken into consideration. To effectively buy a property does not end by paying the vendor the purchase sum but also taking all necessary steps as provided by law. The wish and hope of anyone buying a property are that his ownership of the property is secured and devoid of any likely intrusion. Buying a landed property with a defective title could lead to forfeiture of the property, forfeiture of the purchase amount and lengthy battle in court for recovery of the purchase sum. Thus it is always in the best interest of the purchaser to follow the required procedure as laid down and discussed above.