Understanding the basic steps for land purchase in Nigeria

In Nigeria, people value land highly. The growing value of land in Nigeria increased by over 50% between 2011 and 2021, according to a report released by the Nigerian Bureau of Statistics in 2021. Because of this value, investing in land can be an easy and effective way to make money.

Nevertheless, despite the advantages of buying land in Nigeria, several unethical practices make the process difficult. The sale of land through touts, fraud, and landowners selling to multiple buyers without notice are just a few of the unethical practices that exist.

This article explains the procedures to take and tricks to avoid when buying land in Nigeria.

Before we start, you need a lawyer

The majority of Nigerians hire attorneys after the terms of the land purchase agreement are complete. The implication of this is that the buyer would deal directly with the seller without having access to the legal due diligence that is necessary before buying land.

It is customary for attorneys to be involved in a land transaction from the moment the buyer and seller first speak. A lawyer must be present during every step of the land purchase process.

Steps to follow when purchasing land in Nigeria

When buying land, there are typically five steps to be taken. These steps must be followed religiously; failing to do so could result in serious losses for the land buyer in the long run. 

The steps involved in buying land are:

1. Negotiation;
2. Contract;
3. Due diligence;
4. Assignment, and
5. Perfection.  

From the negotiation to the completion stages, this article shall look into the activities that occur in each stage and how such activities affect land purchase in general.

1. Negotiation Stage

At this point, the seller meets the buyer for the first time to go over all the details of the property. The attorney develops pertinent inquiries about the land’s past owners, its dimensions, its condition, and other issues. If the land has been owned historically, the seller must demonstrate whether the first owner obtained it from the state or another source before passing it on to him.

The distinction between patent and latent defects must also be made at this point. Patent defects are flaws in the property that are visible to the buyer; for instance, flaws like swampy land are easily visible with the unaided eye. Latent defects, on the other hand, are flaws that are not immediately apparent upon inspection, such as a problem with the land’s title. A seller is required to disclose to the buyer any latent defects in the property but is not required to disclose a patent defect.

A lawyer is necessary at this stage because negotiations are arguably the most important of all stages.

2. Contract Stage

Following the negotiations, the attorney drafts a contract that the parties can sign. This contract is merely a guarantee that other things being equal, the land will be sold. This contract does not represent the final document in the sale of the property. 

The contract created at this point isn’t the final document on the purchase of land, so it can be thrown out if the next step doesn’t work out.

3. Due Diligence Stage

Another crucial phase of buying land is the due diligence phase. All inquiries and conclusions on the land have been established at this point. Your attorney will need some documents to complete this stage for you.

Due diligence can take time, so the contract between the parties as specified in the 2^nd stage must be drafted before this stage. The contract assists in preventing the seller from selling to a new buyer without providing the present buyer with notice while this process is going on.

Documents proving title to land, as well as other important documents like a survey plan, a building plan (if the land is developed), and a certificate of occupancy, if any, are all needed for due diligence.

If the seller purchased the land from someone else, your lawyer would need the Deed of Assignment given to the seller; if the seller inherited the land through a Will, your lawyer would need an Assent.

A thorough investigation of the land is made at each state’s land registry. If the land is owned by the seller and if it is in any way encumbered, your attorney will determine these facts at the registry.

After this investigation at the registry, your attorney drafts, and issues a search report outlining the search’s details and recommending whether or not the purchase should proceed. The next action would be taken if your attorney clarifies the risks and suggests that the purchase proceeds to the next stage.

4. Assignment Stage

The assignment stage involves the creation and execution of the deed of assignment. The assignment deed serves as proof of title to the buyer, subject to perfection, which is the last step in the land purchase process and is the final document.

All property-related paperwork is handed over to the buyer during the assignment phase. The full amount for buying the land is paid at this point by the buyer as well.

In Nigeria, this is the stage, land buyers often introduce lawyers to the transaction; however, the lawyer was not aware of the various crucial stages until the very end.

5. Perfection Stage

At the perfection stage, the sale of land comes to a final close. This stage involves perfecting the signed deed of assignment to the land. Perfection involves three stages, which are: Governor’s consent; Stamping; and Registration.  

1. Governor’s Consent: According to Section 1 of the Land Use Act, which grants ownership of lands in the Federal Republic of Nigeria to the states, all land purchases require the approval of the governor of the state where the property is located.
2. Stamping: Stamping taxes must be paid on the land after the governor’s approval. Different laws are used by the state revenue boards to impose taxes on land transactions; for example, Lagos charges a stamping fee of 7.5% of the land price.
3. Registration: The deed of assignment must be registered in the state’s land registry as the last step in the process of completion.

Conclusion 

Land sales involve a meticulous process that must be strictly followed; skipping any of the steps can have a negative impact on how much of the land you ultimately own.

Is the Certificate of Occupancy a good land title?

Not always. The certificate of occupancy is a sufficient title to land only when the name of the seller is the name contained on the certificate of occupancy. If the certificate contains the name of a previous owner, it cannot be used to prove the title.

At what point should I inspect the land?

Inspection of the land should be done at the negotiation stage. You must survey the land, walk around, and ask questions about the land from neighbours to fully understand the transaction you are getting into.