Lagos State, arguably the most economically important state of the country containing the nation’s largest urban area, is a major financial centre and would be the fifth-largest economy in Africa if it were a country. The Real Estate Industry in Lagos is a goldmine, with prices rivaling and even sometimes surpassing that of apartments in places like Los Angeles and New York City. The unfortunate side to all this is that most people are not aware of the risks associated with venturing into the Real Estate space in Lagos; it serves as one of the easiest avenues for fraudsters to dupe people of their hard-earned money, this is evidenced by the popular saying that almost every Lagosian must have seen at least once throughout their journeys within Lagos State – “This house is not for sale, beware of 419”. This article seeks to create that awareness and give insight into the appropriate ways to carry out Real Estate transactions within Lagos State.
THINGS TO NOTE
In general, there are peculiarities in the purchase of property in Nigeria. The fact is that the state government is the owner of the land and therefore any change in ownership or assignment, in case of a lease, should have the consent of the Governor.
The Land Use Act of 1978 converted all land to State Land. The Governor of the State is responsible for the management of this land on behalf of the people. Therefore, land cannot be owned privately. The Governor´s consent is needed for the assignment of title to use, occupy, and improve property with a statutory certificate. This certificate does not include rights to sell, give, or sub-let. For these, the consent of the State Governor is required.
The sale of real estate does not involve actual selling and purchasing. There is only the transfer of rights from one person to another. This transaction is usually called an ´assignment´. The seller assigns the rights to use and occupy the land to the buyer. After the transaction, the buyer applies for a new (statutory) certificate under his name. In this case, the seller acts as the assignor, and the buyer is the assignee.
STEPS TO TAKE
- ESTABLISH A PURPOSE AND A BUDGET
Like everywhere in the world, there are places in Lagos that are majorly Residential areas and Industrial areas. For a smart choice of location, one must be able to tell areas with a high potential of developing over the next few years. It is important to study the prices of properties in the neighbourhood and their trends, this will not only help you in making informed decisions but the yield – financial and social – will also be invaluable. Do the prices fit into your budget? Is the town becoming dense and overpriced? Then it is time to pay attention to the outskirts. Over the last few years, parts of Ogun state close to Lagos have recorded a high level of immigration, an increase in infrastructures, and more construction of residential buildings and companies. It is important to do research so as to ensure that the Property is not only suitable but fits the purpose for which it was acquired.
- HIRE A QUALIFIED LAWYER AND A COMPETENT REALTOR
It is necessary to hire a lawyer with proficiency in Property Law. Although, it is not always enough to hire a lawyer as there are nuances and issues a Lawyer might not be able to navigate, in which case a Realtor is needed. Realtors typically always help by providing listings that suit the purpose and budget and also facilitate the inspection of the Property while providing key information like the square footage, the features of the Property, etc. The Lawyer and Realtor are very important because they are professionals in the field, and their consultation will prove very useful.
- DUE DILIGENCE
It is one of the common mistakes or traps people tend to fall into from fraudsters. Buying a property without carrying out due diligence is risky, and this is why hiring a lawyer is extremely important. The Lawyer will conduct proper searches, ask the right questions, and request for the right documentation to determine if the seller really is the real owner of the property. This is especially important when the property in question is Family Land; so as to prevent issues with ‘Omoniles’. The Lawyer also goes ahead to examine the appropriate documentation to ensure that the property is free from any encumbrance or pending litigation, that the property is not subject to any Government acquisition, and that the property is not subject to any overriding interests.
After the buyer and seller have satisfied themselves that the deal can proceed, it is now a matter of agreeing on an acceptable price for the land. The Lawyer is also very useful here, as it is their job to advise on what future liabilities exist like Stamp duty fees and other Government fees so that they can be factored into the negotiation. The Realtor is also important to give an independent valuation of the property so as to have a guide regarding the value of the property, and whether the amount being negotiated represents fair market value for the property.
- DOCUMENTATION, COMPLETION, EXCHANGE, AND POSSESSION
If the negotiation goes well and the offer is accepted, the lawyers of the buyer and seller then draft and negotiate all the completion documents. In Land transactions in Lagos, there are three main documents – The contract of sale, The receipt, and The Deed of Assignment.
When the buyer and seller sign and exchange contracts, the buyer then becomes in possession of all the original title documents and transfer documents. The purchase of the property has also been made at this stage. Once all of that is done, the buyer becomes the owner of the property and can take possession.
Perfection of title means registering your title with the Lagos state government. The government agency responsible for land matters – The Bureau of Lands, issues a list of the appropriate documents that need to be provided to register the landed property in the assignee’s (The person to whom the land has been assigned) name. The assignee also gets a list of the fees applicable for each stage of the property registration process. When the documents required are provided and the applicable fees are paid, the application for registration is filed to the appropriate department of the state agency responsible for dealing with such matters. When the registration is approved, the assignee then receives a certificate of occupancy (C of O) from the state government. The C of O bears the name of the person to whom the government has conferred the legal title of occupancy. That is, the assignee’s name. This process is referred to as perfection of title because it legally confers ownership of the property to the assignee from the state government. This last stage most importantly is carried out by the Assignee’s lawyer because of its legal complexities and the time limit associated with each stage under perfection.
In conclusion, it is advisable that every buyer take their time and ensure due diligence is carried out when shopping for real estate. Land transactions are never a seamless one in Nigeria, and it is advised that every intending property buyer retains the professional service of a property solicitor to navigate through the process.
- Property Pro Insider, ‘7 Things You Need to Know Before Investing in Real Estate’: https://www.propertypro.ng/blog/investing-in-real-estate/
- Glory Ademola-Ojerinde, ‘Buying a Property in Lagos: Four Important Things to Consider: https://www.linkedin.com/pulse/buying-property-lagos-nigeria-four-important-things-consider-ademola
- Mondaq, ‘What to know before buying a land & house in Nigeria’: https://www.mondaq.com/nigeria/real-estate/996130/what-to-know-before-buying-a-land-house-in-nigeria
- Lawpadi, ‘10 steps to buying property in Lagos’: https://lawpadi.com/10-steps-buying-property-lagos/
- Nigeria Real Estate Dictionary, ‘Perfection Of Title’:https://www.lagos-nigeria-real-estate-investing-guide.com/nigeria-real-estate-dictionary-definition-define-perfection-of-title-definition-of-perfection-of-title.html