
Introduction
Buying property is a significant investment, whether for residential, commercial, or investment purposes. As with any substantial financial commitment, it is crucial to ensure that the transaction is legally sound to avoid future disputes or losses. Navigating the legal landscape of property acquisition can be complex, especially in a country like Nigeria, where land tenure systems, property laws, and regulations vary from one state to another.
This article provides a detailed guide to the essential legal requirements for buying property, with a focus on ensuring due diligence and protecting your interests throughout the transaction.
1. Understanding the Land Tenure System in Nigeria
Nigeria’s land tenure system is governed primarily by the Land Use Act of 1978. Under this Act, all land in each state is vested in the governor, who holds the land in trust for the people. Individuals or corporate entities can acquire land through leases (usually for 99 years) granted by the state government.
Understanding the implications of the Land Use Act is crucial before proceeding with any property purchase, as failure to comply with its provisions can render the transaction invalid.
2. Conducting Due Diligence
Due diligence is the most critical step in buying property. It involves verifying the ownership, legal status, and suitability of the property for your intended purpose. Skipping or improperly conducting due diligence can lead to serious legal and financial consequences.
Key due diligence steps include:
• Title Verification: Verify that the seller has a valid title to the property. The most common property titles include:
• Certificate of Occupancy (C of O)
• Deed of Assignment
• Governor’s Consent
• Deed of Sublease
• Deed of Mortgage
You should engage a lawyer to assist in verifying the title at the relevant land registry to ensure it is genuine and free from encumbrances such as mortgages, pending litigation, or government acquisition.
• Survey Plan Verification: Ensure the property’s survey plan aligns with the details on the title documents. This can be done by verifying the survey plan at the Surveyor General’s Office in the relevant state to check for discrepancies or any government acquisition of the land.
• Land Use Zoning: Investigate whether the property is zoned for your intended use, such as residential, commercial, industrial, or agricultural use. Some properties may be restricted for certain purposes, and failure to comply with zoning laws can lead to government sanctions.
• Environmental Restrictions: Check whether the property is subject to environmental regulations, such as restrictions related to water bodies, erosion-prone areas, or floodplains. Some properties near canals, water bodies, or reserved areas may be restricted from development.
3. Getting the Necessary Consents and Approvals
Certain property transactions require approvals or consents from the government or regulatory bodies. Failure to obtain these consents can invalidate the transaction. The most notable is the Governor’s Consent, which is required for any transfer of interest in land, particularly in cases of assignment or sublease.
The process for obtaining the Governor’s Consent can be time-consuming and involves paying a fee. It is important to ensure this is obtained to perfect your title and secure your interest in the property.
Additionally, you may need building approvals from the state’s urban planning authority if you plan to develop or alter structures on the land.
4. Engaging a Qualified Property Lawyer
Hiring a lawyer who specializes in property law is essential in any property transaction. The role of your lawyer includes:
• Drafting Contracts: Your lawyer will draft and review all legal documents, including the Contract of Sale, Deed of Assignment, and any other ancillary agreements. The lawyer ensures that all terms and conditions are favorable to you and that the seller’s obligations are clearly defined.
• Negotiating Terms: Lawyers can assist in negotiating the terms of the purchase, ensuring that all legal requirements are met, and that your rights are adequately protected in case of any dispute.
• Perfecting the Title: After the purchase is concluded, your lawyer will help with the process of perfecting your title by ensuring all necessary filings and registration with the appropriate government agencies.
5. Signing the Contract of Sale
Once all due diligence checks are completed and you are satisfied with the property’s status, the next step is to sign a Contract of Sale. This contract outlines the terms and conditions of the sale, including the purchase price, payment terms, delivery of possession, and obligations of both parties.
Ensure the contract covers:
• Adequate indemnity clauses to protect you from any pre-existing disputes or claims on the property.
• Terms on how disputes will be resolved, such as arbitration or litigation, in case of any disagreement after the sale.
6. Payment of Statutory Fees
Buying property in Nigeria involves paying several statutory fees in addition to the purchase price. These fees include:
• Consent Fees: For obtaining the Governor’s Consent.
• Stamp Duty: A tax paid on the legal document transferring the property, typically calculated as a percentage of the purchase price.
• Registration Fees: For registering the Deed of Assignment or other title documents at the relevant land registry.
• Legal Fees: Fees paid to your lawyer, which are usually around 5% of the property’s purchase price.
• Agency Fees: If you are using a real estate agent, their commission is typically 5-10% of the property’s price.
Ensure you budget for these fees, as they are mandatory for perfecting your title and avoiding future legal issues.
7. Property Registration
After signing the Deed of Assignment or other transfer documents, the next crucial step is to register your ownership interest at the relevant land registry. This ensures that the government recognizes you as the legal owner of the property.
The registration process involves submitting all the relevant documents, including the title documents, survey plan, receipts for the Governor’s Consent and other statutory fees, and the executed Deed of Assignment. This step is essential for perfecting your title and avoiding disputes.
8. Post-Purchase Considerations
Even after the purchase is completed, there are a few additional legal requirements that must be fulfilled:
• Land Use Charges: Ensure you comply with state and local property taxes, such as the Lagos State Land Use Charge, which is levied on real estate based on its assessed value. Failure to pay land use charges can result in penalties or legal action from the government.
• Development Levies: In some cases, state or local governments may require property owners to pay development levies or community charges for infrastructural improvements. Verify if such obligations apply to your property.
• Compliance with Covenants: If your property is located in an estate or development with specific covenants, ensure you comply with these, as failure to do so can lead to legal consequences or loss of the property.
Conclusion
Purchasing property is a significant financial decision that requires thorough legal compliance and due diligence. From verifying the property title to registering your interest with the relevant authorities, it is essential to follow all the legal requirements to protect your investment.
The best approach is to engage the services of a competent property lawyer who will guide you through each step of the process, ensuring that your interests are protected and that all necessary documents are in order.
By adhering to the legal requirements outlined in this guide, you can ensure a smooth and legally secure property transaction, safeguarding your investment for years to come.
Contact Us
For premier legal research services in Family law cases in Nigeria, contact Chaman Law Firm today. Our offices are conveniently located in Lagos, FCT Abuja, Ogun State, and the UK. We are readily available to assist you with your legal needs. Whether you require consultation, representation, or ongoing legal support, Chaman Law Firm https://www.chamanlawfirm.com/about-us/is your trusted partner in navigating Real Estate law in Nigeria.
Call us at 08065553671 or email us at info@chamanlawfirm.com to schedule a consultation.
- Land Use Control
- Real Estate Transactions
- Property Rights and Ownership
- Property Taxes
- Property Disputes