5 Easy Steps to Buying Real Estate Property in Nigeria
Buying real estate property in Nigeria is subject to several legal procedures. Engaging a lawyer to conduct a land search on the property and look into the title document is the first important step in buying a property in Nigeria.
Before you take any further steps, it is crucial to have a lawyer with experience in property law. Due to Nigerian law, only a legal practitioner can draft documents (instruments) for conveyancing or transferring an interest in land for a fee. This is because a lawyer would ensure that one does not have legal issues with land documentation after purchasing it.
The following are common ways to purchase real estate property in Nigeria:
A gift is something that is freely given without expecting anything in return. Gifts can be written down. However, executing a Deed of Gift is frequently preferred to prevent disagreements in the future. A deed of gift is a legal document executed during the parties’ lifetimes that transfers real estate ownership from the grantor (the property’s owner or legal title holder) to the beneficiary. It should be done voluntarily, which means without force or deception, the grantor must not get paid for the gift they have made since, if they do, it would no longer be a gift but a sale, and the recipient must accept the gift.
2. Letter of Administration/Probate
Probate is the procedure used to confirm a will’s legality. The process of validating a testator’s will is one that the court has mandated. It is the power a beneficiary has to take possession of any gifts or assets left by the testator. The rights or title to real estate cannot be transferred to a beneficiary by a will or codicil on their own; instead, the beneficiaries must apply for and be granted probate to have unrestricted access to the gifts made in the will. The authorization given to an administrator to administer, manage, or distribute the assets of a decedent who passed away without a will is known as a letter of administration.
3. Real Estate Sales
This is a highly common method of buying real estate since it entails giving the buyer desirable consideration in exchange for the vendor’s (the owner or legal title holder of the real estate) transfer of all rights, titles, and interests in a piece of land or a building.
A real estate transaction might involve either natural or legal persons as parties (i.e., a company).
How to Acquire Real Estate Property in Nigeria Through a Sale
For clarity, this will be broken down into pre-contract, contract, post-contract, completion, and post-completion stages.
Stage 1 Pre-Contract Phase
- Inspections must be conducted to determine whether the real estate is free and clear of encumbrances, subject to government acquisition, or compliant with applicable town planning rules.
- The potential buyer may physically inspect the property. By physically visiting the property, it is possible to determine whether it is occupied, how much of it has been developed, the presence of any public facilities (such as telephone or electric poles) on the property, and its general state of preservation.
- The nature of the property can be confirmed by the potential buyer, including whether it is meant for residential, commercial, or even a combination of the two uses. This is a crucial consideration because it would be awful if a company bought a building meant for domestic usage.
Stage 2 Contract Phase
- This step includes making initial inquiries, signing and exchanging a formal Contract of Sale, and paying a down payment for the property.
- The potential buyer is prepared to move forward with the sale at this point since they are definite about the home they want to acquire. The price, terms of payment, and other aspects of the sale are negotiated at this point. The parties also sign and exchange a written contract that documents their deal.
Stage 3 Post-contract Phase
- At this point, the parties have written, signed, and exchanged the formal contract. The buyer is given a chance to research the vendor’s title while the vendor continues to prove his ownership. The vendor proves that he has an excellent title to the property by presenting an abstract or epitome of the title.
- Following a rigorous examination of the vendor’s title, the buyer or their legal counsel may query the vendor about any uncertainties or problems with the vendor’s title. The seller is required to respond to resolve any ambiguity.
Sidenote: In Lagos State, the buyer must search the Lands registration because the register already gives sufficient proof of the vendor’s title; the seller is not obliged to deduce the title.
To make sure there are no encumbrances on the property, the potential buyer should also do searches at the following locations:
- The appropriate land registry;
- The court to find out whether there is a legal conflict involving the property;
- The probate registry, if the vendor received the title through a will; and
- The corporate affairs commission confirms that the company is legitimately registered if the vendor is a corporation.
The main goals of this search are to confirm the validity of the vendor’s title, determine the type and state of the property, and make sure there are no encumbrances. The prospective buyer might re-inspect the property after searching to confirm that the real size of the land is consistent with the size declared at the land registry.
Stage 4 Completion Phase
The parties then complete all procedures and steps required to transfer the title to the buyer. The buyer is now forced to pay the full amount due for the property. The vendor is expected to give the buyer all relevant property documents, including a fully executed Deed of Assignment attesting to the transaction between the vendor and buyer, when the full purchase price has been paid.
Stage 5 Post-Completion Phase
The buyer still holds legal property ownership, pending title perfection. Without the governor’s approval, the assignment deed cannot be stamped and registered, and no legal title to real estate can be transferred.
For federally owned properties, the approval of the minister of housing and urban development is needed; for state-owned lands, the approval of the governor of the state where the land is located is needed. The deed should be appropriately stamped and recorded after obtaining the necessary approval.
The following is a summary of the land sale process:
Pre-contract phase. This is where the buyer physically inspects the property they wish to buy to determine whether it corresponds to the vendor’s description and complies with all applicable zoning and other rules.
Contract phase. This entails negotiating the terms of the transaction, such as the price and the parties’ obligations. At this point, a formal contract is being written.
Post-contract phase. The buyer conducts a comprehensive study of the property’s title. This entails conducting necessary searches on the property to confirm the legitimacy of the vendor’s title.
Completion phase. This completes the sale and acquisition of the property. At this point, the buyer has paid in full for the property, and the seller has executed and delivered all original copies of the title documents, transferring the full title and interest in the property to the buyer. In other words, the buyer now owns the property.
Post-Completion phase. The buyer is obliged to secure their ownership of the property. The title is registered at the appropriate land registration to do this.
To sum up
In Nigeria, purchasing land is often done through a sale. Nevertheless, there are additional ways to acquire real estate, including customary grants, probate or letters of administration, and gifts of land. Real estate sales entail selling and transferring a building’s or land’s title and interest from its owner to the buyer. Real estate acquisition through sale can be a very complicated procedure.
Therefore a buyer should exercise caution before signing a formal contract to prevent fraud concerns.