BEFORE YOU BUY THAT
LAND/PROPERTY
What you must know prior to, during and after purchase:
For many, buying a piece
of land or real property is all about finding a vendor willing to sell and
meeting the price for the property. Many people fall into the mistake of
dealing with vendors of properties in trust, assuming that the fact that they
have known one another for donkey years or the fact that an agent has assured
them of good title is sufficient to avoid future troubles with respect to the
land or real property.
It is of paramount
importance to take certain steps prior to the purchase of land, during the
course of purchase and even after the purchase has been made for the sake of
securing ones interest in the said property. A willing purchase as a matter of
importance must investigate the title of the vendor to the said land and in
some cases the track record of such vendor in order to forestall any future
legal issues.
INTRODUCTORIES
At this stage parties (vendor (or agent) and purchaser) meet and discuss on the
property: price, mode of payment, nature of vendor’s title etc. After parties
have agreed on the purchase price a Contract of Sale Agreement is drawn up
pending when the Purchaser would carry out investigation to deduce the nature
of the Vendor’s title to ascertain that the property truly belongs to the
Vendor and is free of any encumbrance.
At the point where the
contract is exchanged the vendor is deemed to hold the land in trust for the
purchaser till he pays, and all conditions therein fulfilled. The essence is to
deduce a good root of title from the vendor. Until the execution of the
contract of sale there is no obligation on the vendor to establish that he is
the owner of the title which he intends to convey, but once the contract has
been exchanged, he is under duty to do so. The Contract of Sale Agreement may
include terms as agreed by parties. It is not unusual for parties to agree to a
deposit on the total value of the property at this point pending the result of
the investigation of title by the purchaser.
INVESTIGATION OF
TITLE STAGE
After the execution of the contract, the purchaser would collect title
documents from the vendor. These documents should be sufficient in themselves
without any extrinsic evidence to establish the title to the land. Such
documents include Certificate of Occupancy, Deed of Assignment/Conveyance and Survey
Plan, Registered Title, Court Vesting Order etc.
Once the relevant
documents (usually copies) have been obtained from the vendor, the Purchaser’s
solicitors proceed to carry out an investigation to confirm the vendor’s title
and to ascertain that there are no defects in the said title to the property.
Investigation involves several searches at various registries where records of
properties and encumbrances are kept. Searches can be conducted in the
following ways –
• Search at the Lands Registry – The Land Instrument
Registration Law of each State establishes a land registry for the State, where
documents relating to land within the territory are kept, and it varies from
one State to another.
• Search at the
Corporate Affairs Commission (CAC) – This is necessary where the
vendor or past owner is a company incorporated under Companies and Allied
Matters Act. Apart from the searches at the land registry, there should be a
further search at the CAC to reveal whether or not there is an encumbrance or
any charge whatsoever on the property.
Companies are required to file annual
returns yearly with the CAC which is always accompanied with a company’s
financial statement; the financial statement will reveal the company’s assets
(where there are any) as well as any charges or encumbrance on same.
• Search at
Probate registry – This is a search conducted to reveal whether or not
probate has been granted on any estate and to ascertain the personal
representatives or executors of a testator in cases of properties belonging to
the estate of a deceased. Without a grant of Probate and/or letters of
administration, the vendors do not possess the requisite authority to sell the
property of a deceased person.
• Traditional
evidence – This is done by investigating or verifying from the
principal members of a family or from the community and heads of the community
where the property is subject to family or community ownership. It is crucial
to verify that all relevant consents have been obtained and that the title is
neither void nor voidable.
• Court judgments –
This is a search conducted to see if the land is subject to any court
litigation, and if any, the outcome of the dispute; or whether the vendor is a
personal representative or beneficiary in a probate dispute which entitles him
to convey the property.
• Physical
inspection – This is a personal visit to the property in question in
order to find out if there is any issue with the property, or to ascertain the
actual size of the land and whether it conforms to the dimensions on the survey
plan at the Lands registry.
In addition to the above,
investigation of real property could take a different turn depending on the
type of property and the caliber of persons involved in the transaction. For
instance, due to the recent development of collapsed and collapsing buildings
in Lagos State, it is advisable for clients who are looking to purchase high
rise buildings to request for Profiles of the developers of the property,
certificate of structural integrity/stability, kind of foundation on which the
building is erected etc. (Better safe than sorry).
For properties located in
choice areas which cost large sums of money, it may not be out of place to
investigate the profile and record of the vendors to ascertain such persons are
not on the watch list of agencies such as the Economic and Financial Crimes
Commission, the ICPC or the Federal Government. This would prevent the risk of
confiscation of the property by the Federal Government or any anti-corruption
agency. (Yes it is that serious!).
DEED OF ASSIGNMENT
STAGE
After the purchaser
through his solicitor has ascertained that the vendor has a good title to the
land, the next stage is the preparation of a Deed of Assignment/Conveyance and
execution of same by the parties with respect to the property to be sold.
The Deed of assignment can
be prepared by the purchaser’s solicitor and vetted by the vendor or his
solicitor after which several copies would be produced (usually called
engrossed copies) then the documents would be executed by parties and their
witnesses. At this stage any outstanding sum or balance would be paid by the
Purchaser.
After this, the Vendor
shall submit all original title documents to the purchaser and in the case of
an already developed property shall hand over the keys to the purchaser. In the
event that there are tenants in the property this would be the appropriate time
to introduce the new owner of the property to the tenants usually via a notice.
It is important to note
that the Deed of Assignment is to be accompanied with the survey plan of the
property in question as these are part of the documents required for perfection
of title which is the next stage.
It is compulsory that
every deed of assignment contain a consent section for the governor of the
relevant state where the land/property sold is situated.
After the purchase
PERFECTION STAGE
Many people who are
oblivious to legal requirements usually think that after executing deeds of
assignment or conveyance as the case may be that they have done all that is
required of them and continue to enjoy their newly acquired property. However,
there is still a lot more to be done to “perfect” the title to the newly
acquired land. These include application for Governor’s consent, payment of
stamp duties and registration of conveyance or assignment at the Lands
Registry. This is done in order to ensure compliance with relevant statutes and
protect the legal validity of the purchaser’s title to the property.
Application for Governors Consent:
The Land Use Act prohibits
alienation of statutory right of occupancy without the consent of the Governor
. It makes it mandatory for the holder of a statutory right of occupancy to
seek and obtain the consent of the Governor of the State where the land is
situated before alienation or sale of interest in land, otherwise the
transaction shall be void.
Where the property however
is subject to a customary right of occupancy, the consent required is that of
the local government where the land is situated .
The purchaser should always endeavour to make sure the vendor signs the
application letter for consent, this is because it is the duty of a holder of
the right of occupancy to seek consent of the Governor to alienate.
The following documents
are required for processing an application for governor’s consent (this is as
it applies specifically to lands in Lagos State; other jurisdictions have
slight differences, otherwise the procedure is largely similar):
• Dated letter of application with address and telephone numbers
• Completed form 1c
• Certified true copy of
grantor’s title document
• Vendor/Grantor’s tax
clearance certificate and development levy receipt
• Purchaser/Grantee’s tax
clearance certificate and development levy receipt
• Four executed Deed of Assignment
• Four Chartable survey
plans
• Evidence of payment for
charting, endorsement and form 1c
• In case of an
undeveloped land, an Affidavit in lieu of Tenement rate.
• Building plan and
photograph of property.
The application letter and
documents listed above are to be submitted at the Land registry of the state in
question, same would be received and referenced. The status of the land is then
investigated through charting at the Surveyor General’s Office. The property
would subsequently be assessed to determine the fees to be paid at the
designated bank which includes assessment fee, registration fee, consent fee,
charting fee, stamp duty, capital gains tax etc.
After the above, a demand
Notice will then be issued to the purchaser who is required to proceed to make
payment and forward treasury receipts of payment of fees to the registry. The
documents shall then be approved and stamped accordingly.
Failure to pay stamp duty
renders the document unacceptable for registration and inadmissible in evidence
in a court of law .Penalty would also apply where relevant documents are
stamped outside thirty days.
Registration:
Registration of Title is done in order to avoid fraud and problems arising from
the suppression or omission of instruments when title is deduced, in case of
subsequent transactions it would show a registered interest in the said
property.
While registration does not cure any defects to title to property, it is
important to register such documents as they are documents affecting land in
which one party confers, transfers, limits, charges or extinguishes in favour
of another party a right or title to or interest in land. Registration gives an
indication that a property is encumbered and any subsequent purchaser would be
duly informed upon carrying out a search at the registry.
Documents transferring
title to land are registerable instruments and failure to so register them
would render them inadmissible in court.
After the Governor’s
consent has been obtained and the Deed of Assignment duly registered, one can
then proceed to obtain Certificate of Occupancy. The procedure for Obtaining
Certificate of Occupancy is as follow (using Lagos State as a case study):
1. Submission of Application Letter addressed to the Executive Secretary – Land
Use and Allocation Committee (LUAC), at the Lands Registry with the following
documents attached:
Ø Vital Information Form for
Certificate of Occupancy with receipt
Ø
Completed Certificate of Occupancy Form with receipt.
Ø
Land Information Certificate with receipt.
Ø
Four original Survey Plan (2 cloth copy and 2 paper copy).
Ø
Four Passport Photographs with white background.
Ø
Sketch Map of the Site Location
Ø
Purchase Receipt Duly Stamped.
Ø
Evidence of payment of Income Tax
Ø
Current Development Levy
Ø
Publication Fee
Ø
Capital Contribution Fee
2. Compilation of Applicants names for
publication, Title Search for previous Registration and Site Inspection.
3. Certificate of Occupancy Engrossment (by Land Use Allocation Committee
{LUAC}).
4. Recommendation for execution of C of O (by E.S. LUAC, SSA LANDS & P.S.
Lands).
5. Execution of Certificate of Occupancy (by His Excellency).
6. Stamp Duty (by Commissioner for Stamp Duties).
7. Registration of Certificate of Occupancy (by Lands Registry).
8. Collection of executed and registered Certificate of Occupancy.
Once all these are done
and dusted, one can then rest easy and be assured of a solid title to any
property acquired or land purchased. The above processes could take a long time
and one is required to be patient as there are no short cuts to perfection of
title to land and real property in general.
This write-up is written
by Mary Akin-Ajayi, an associate with the Firm of Argyle & Clover Attorneys
at Law.
Ed’s Note: This article was originally published by Argyle & Clover Attorneys at Law here.
