Introduction
Purchasing property in Nigeria is a significant investment that requires careful consideration and due diligence. However, many buyers make critical legal mistakes that lead to disputes, financial losses, or, worse, losing their hard-earned investments entirely. These mistakes often stem from a lack of awareness or reliance on shortcuts that bypass proper legal processes.
This article highlights the top 10 legal mistakes property buyers make in Nigeria and provides actionable steps to avoid them. If you’re planning to buy property, this guide will help you make informed decisions and protect your investment.
1. Failing to Conduct a Title Search
One of the most common mistakes buyers make is failing to verify the ownership of the property they intend to purchase. A title search involves checking the records at the relevant land registry to confirm the seller’s ownership and ensure the property is free from encumbrances, disputes, or government acquisition.
How to Avoid This Mistake
Engage a qualified property lawyer to conduct a thorough title search.
Ensure the property has a valid title, such as a Certificate of Occupancy (C of O) or Deed of Assignment.
2. Ignoring Land Use Regulations
Under the Land Use Act of 1978, all land in Nigeria is vested in the Governor of each state. Buyers often overlook the fact that land use is regulated, meaning certain areas may be designated for residential, commercial, or agricultural purposes. Purchasing land without understanding its designated use can lead to legal issues.
How to Avoid This Mistake
Verify the zoning and permissible use of the land from the state’s urban and regional planning authority.
Consult a lawyer to ensure compliance with applicable land use regulations.
3. Skipping Survey Plan Verification
The survey plan is a crucial document that identifies the exact location and boundaries of the property. Some buyers either skip verifying the survey plan or fail to confirm that it aligns with official records.
How to Avoid This Mistake
Ensure the survey plan is charged with the state surveyor-general’s office.
Use a registered surveyor to confirm the property boundaries and avoid encroachments.
4. Trusting Verbal Agreements
Property transactions require written agreements to be legally binding. Many buyers rely on verbal agreements or informal receipts, which are not recognized by law and provide little protection in disputes.
How to Avoid This Mistake
Insist on a Deed of Assignment or Sales Agreement that is properly drafted and executed.
Have all agreements reviewed and witnessed by a lawyer.
5. Overlooking the Need for Governor’s Consent
Under the Land Use Act, any subsequent transfer of property ownership must receive Governor’s Consent to be legally valid. Ignoring this requirement leaves buyers vulnerable to invalid ownership claims.
How to Avoid This Mistake
Obtain Governor’s Consent after the purchase to validate the transfer of ownership.
Work with a lawyer to handle the application process at the Lands Bureau.
6. Neglecting Tax Clearance Requirements
Both buyers and sellers have tax obligations in property transactions, such as paying Capital Gains Tax (CGT) and Stamp Duty. Buyers who fail to fulfill these requirements may face penalties or delays in processing ownership documents.
How to Avoid This Mistake
Ensure the seller provides an up-to-date Tax Clearance Certificate (TCC).
Budget for applicable taxes and ensure prompt payment to avoid complications.
7. Buying from Unregistered Landowners or Omo Onile
In Lagos and other parts of Nigeria, dealing with Omo Onile (land grabbers) is a notorious issue. Buyers who fail to verify the legitimacy of the seller often find themselves in disputes or lose their investments.
How to Avoid This Mistake
Avoid buying land without legal documentation from recognized and registered landowners.
Verify the seller’s authority to sell the land through proper channels, including the land registry and community leaders.
8. Failing to Verify Encumbrances
An encumbrance is any legal claim or lien on a property that could restrict its use or transfer. Buyers who neglect to check for encumbrances risk purchasing properties tied to unresolved debts, mortgages, or litigation.
How to Avoid This Mistake
Conduct a thorough title search to ensure the property is free from encumbrances.
Request an encumbrance certificate from the land registry as part of the due diligence process.
9. Underestimating the Role of Legal Representation
Many property buyers attempt to save costs by skipping professional legal services, relying instead on agents or brokers who may not fully understand the legal requirements. This often results in costly mistakes.
How to Avoid This Mistake
Hire an experienced property lawyer to guide you through the transaction process.
Avoid relying solely on real estate agents for legal matters.
10. Ignoring Dispute Resolution Clauses
Some property buyers fail to include dispute resolution clauses in their purchase agreements, which can lead to lengthy and expensive court battles in the event of a disagreement.
How to Avoid This Mistake
Ensure your purchase agreement includes an arbitration or mediation clause to resolve disputes amicably.
Work with a lawyer to draft a comprehensive agreement that protects your interests.
Bonus Tip: Not Budgeting for Hidden Costs
In addition to the purchase price, buyers must budget for ancillary costs such as survey fees, legal fees, registration fees, and taxes. Failing to account for these costs can lead to financial strain.
How to Avoid This Mistake
Consult your lawyer for a breakdown of all potential costs involved in the transaction.
Set aside an additional 10-15% of the property value to cover hidden expenses.