Legal Tips for First-Time Real Estate Investors in Nigeria
Real estate is one of the most lucrative investment opportunities in Nigeria, but it also comes with legal complexities that can either make or break an investor.
As a first-time investor, understanding the legal aspects of real estate is crucial to avoiding pitfalls such as fraud, litigation, and financial loss. This guide provides a comprehensive breakdown of essential legal tips to safeguard your investment and ensure a smooth real estate transaction.
1. Conduct Thorough Due Diligence
Due diligence is the foundation of a successful real estate investment. Before committing to a property, ensure that you verify its authenticity, ownership, and legal standing. Many unsuspecting buyers fall victim to fraudulent sales, multiple allocations, and encumbered properties due to negligence in this crucial step.
Steps for Conducting Due Diligence:
Verify the Ownership: Request and inspect the title documents to confirm that the seller is the legitimate owner. Cross-check the details with the Lands Registry in the state where the property is located.
Investigate Land History: If dealing with family-owned land, ensure that all family members have consented to the sale to avoid future disputes.
Check for Encumbrances: Some properties have pending litigation, mortgages, or government acquisition. A legal search at the Land Registry, Corporate Affairs Commission (CAC), and court records will reveal any encumbrances.
Engage a Real Estate Lawyer: A professional lawyer will conduct a comprehensive background check and advise you on the risks involved.
2. Understand the Various Types of Land Titles in Nigeria
A property’s title document determines its authenticity and legal standing. Without proper documentation, you cannot claim ownership or legally develop the land. Some of the commonly used title documents in Nigeria include:
Legally Recognized Land Titles:
Certificate of Occupancy (C of O): This is the most recognized document issued by the state government. It grants a 99-year leasehold interest in the land.
Deed of Assignment: This document transfers ownership rights from one party to another and must be registered at the Lands Registry.
Governor’s Consent: Under the Land Use Act of 1978, any land transaction involving an existing owner must receive the Governor’s approval for it to be legally valid.
Registered Survey Plan: This document defines the land’s size, location, and coordinates. A surveyor must lodge it with the Surveyor-General’s Office for proper verification.
Excision & Gazette: Lands that were initially under government acquisition but later released to the original owners through excision must be recorded in a gazette before they can be legally sold.
Deed of Sublease: Used when purchasing a property within an estate, indicating that the land has already been assigned but can be subleased.
Red Flags to Avoid:
Receipt Without Proper Documentation: A purchase receipt is NOT a title document. Ensure you obtain a legally recognized Deed of Assignment or C of O.
“Omo-Onile” (Land Grabbers) Issues: Avoid lands that lack clear ownership or where multiple parties claim rights over the same property.
3. Ensure Proper Documentation & Registration
Once you purchase a property, proper documentation and registration are necessary to protect your ownership rights. Without registration, the property can be resold, contested, or acquired by the government.
Documents You Must Obtain:
1. Deed of Assignment – A legally binding document transferring ownership from seller to buyer.
2. Governor’s Consent – Required to validate all land transfers under the Land Use Act.
3. Stamp Duty Payment – Payable on every executed property document to make it legally binding.
4. Survey Plan – A surveyor must confirm and register the land coordinates.
5. Certificate of Occupancy (C of O) or Registered Title – Depending on the property, ensure it is officially registered in your name.
Where to Register Your Property:
State Lands Bureau or Lands Registry – For C of O, Governor’s Consent, and title registration.
Federal Inland Revenue Service (FIRS) & State Revenue Office – For payment of stamp duty and capital gains tax.
4. Confirm Land Use & Zoning Regulations
Not all lands are suitable for every type of development. Certain lands are zoned for specific uses, such as residential, commercial, industrial, or agricultural purposes. Investing in a property without checking zoning regulations can lead to demolition by the government.
How to Verify Land Use:
Visit the Town Planning Office or Ministry of Urban Development in the area.
Request a zoning confirmation letter to ascertain permissible land use.
Ensure the property complies with building regulations before commencing construction.
5. Avoid Buying Property Under Government Acquisition
The Nigerian government regularly acquires land for public projects, and such properties cannot be sold legally unless excised or regularized.
How to Check if Land is Under Government Acquisition:
Conduct a search at the Lands Bureau to determine the land’s status.
Request for an Excision Gazette if the seller claims the land has been released.
Avoid properties with unconfirmed excision claims to prevent future repossession.
6. Be Wary of “Omo-Onile” (Land Grabbers) & Illegal Sales
In some parts of Nigeria, especially Lagos, “Omo-Onile” (land grabbers) are notorious for disrupting land sales, demanding illegal levies, and reselling the same property to multiple buyers.
How to Avoid Omo-Onile Problems:
Buy from reputable real estate firms rather than individuals.
Obtain all necessary land documents before making payments.
Engage a real estate lawyer to handle the transaction.
Avoid verbal agreements and insist on a legally binding contract.
7. Know Your Tax & Legal Obligations
Real estate transactions in Nigeria come with various taxes and legal fees that investors must comply with.
Taxes Associated with Real Estate Investment:
Stamp Duty – Paid to the government upon execution of property documents.
Capital Gains Tax (CGT) – A 10% tax on profits from property sales.
Land Use Charge – An annual tax levied by the state on properties.
Development Levy – Sometimes required for new estates and commercial areas.
Failure to pay these taxes can lead to penalties, fines, or revocation of property rights.
8. Work With a Qualified Real Estate Lawyer
Real estate transactions involve complex legal procedures that require expert legal guidance. A real estate lawyer will:
Conduct due diligence to verify property authenticity.
Draft and review contracts to protect your interests.
Register title documents and handle property transfers.
Provide legal advice on tax obligations and compliance.
Having a legal expert by your side will prevent costly mistakes and ensure a smooth investment process.
9. Consider Investing Through a Real Estate Company or REITs
For first-time investors looking for less risky real estate options, consider Real Estate Investment Trusts (REITs) or purchasing from reputable real estate firms.
Benefits of Investing Through a Real Estate Firm:
Pre-verified properties with genuine titles
Reduced risk of fraud and litigation
Expert legal and investment guidance
Flexible payment plans and financing options
10. Have a Clear Exit Strategy
Real estate is a long-term investment, and having an exit plan ensures you maximize returns.
Exit Strategies for Real Estate Investors:
Rental Income – Lease the property to generate steady income.
Flipping – Buy, renovate, and sell at a higher price.
Joint Ventures – Partner with developers for large-scale projects.
REITs & Property Funds – Sell shares instead of physical assets.
Final Thoughts
Navigating real estate investment as a first-time investor requires a thorough understanding of the legal landscape. By conducting due diligence, securing proper documentation, and working with a competent real estate lawyer, you can avoid legal troubles and maximize your investment.
Need expert legal guidance? Contact Chaman Law Firm for professional real estate advisory services.
📍 115, Obafemi Awolowo Way, Allen Junction, Beside Lagos Airport Hotel, Ikeja, Lagos.
📧 chamanlawfirm@gmail.com
📞 08065553671 | 08096888818
🌍 www.chamanlawfirm.com
Would you like personalized legal assistance for your real estate investment? Let me know how I can assist further!