Legal Guide On Purchase Of Land In Towns (part 2)

LEGAL GUIDE ON BUYING OF LAND IN TOWNS AND CITIES

Hello, am glad to have your eyes on this page. On last edition I wrote on “legal guide on buying of land in villages” which dwelt on the purchase of land under customary law which often occurs in our villages. I highlighted the legal requirements and steps to a successful land transaction under such law. Now is time for us to takea deep dive into land transaction under our statutory law. It is for land transactions in our towns and cities. I urge you to learn as much as you can and save yourself embarrassments. 

 

 

1.     PURCHASE/ SELL UNDER STATUTORY LAW.

The most popular means of purchasing land in Nigeria is through her statutory laws. It is purchase according to the Acts and Laws invoke at a particular time in Nigeria. Statutory law in this context means Acts enacted by the National Assembly and Laws enacted by different State’s Houses of assembly of Federal Republic of Nigeria. All purchase of land in Nigeria under statutory law must be in strict observance of the provisions of Constitution of Nigeria, Land Use Act 1978, Conveyancing Act 1881(for lands located in the southern and Northern parts of Nigeria only except Abia and Rivers States), the Property and Conveyancing Laws (lands located in former western Region of Nigeria, parts of Lagos inclusive), Registration of Titles law (for some part of Lagos State;(Lagos old colonies; Victoria Island, Jibowo, Ikoyi, Yaba and parts of Mushi) and Stamp Duties Act among others.

The above prevailing Acts have placed lots of restriction for transactions under the statutory law. The restrictions are mandatory.

 

RESTRICTIONS ON TRANSACTIONS UNDER STATUTORY LAW.

 

a.)  Consent of the Governor of the State were the land is located is required before any alienation sale and transfer.

b.)    The Governor of the State cannot grant consent to the sale of land to any person under the age of 21 years old.

c.)   A non-Nigerian cannot be granted a right of occupancy except with the approval of the National Council of States.

d.)  Land and property owned by government authorities, ministries and departments require the consent of the Minister-in-charge as provided in their enabling legislation.

e.)  Certificates of occupancy often restrict the purpose and use of concerned land.

f.)    Environmental, town planning laws and regulations restrict the sale of land at certain areas due to planning and hygiene reasons.

Any sale or purchase of land done in flagrant disregard of the above restrictions is null and void (invalid).

A valid land transaction under the statutes has 3 stages/ steps. None of the 3 steps can be avoided and one comes after another. Below is a step by step guide toward a valid purchase of land under the law.

a)     The Contract Stage:

Unlike transactions done under customary/native law, a land transaction under the statutes must be in writing. Sale of land under the statues shall be invalid if it is not written.  Hence parties to such transaction must have a memorandum or deed of transfer (sale).  Before contracting, the purchaser is expected to do preliminary inquiries to confirm the title, status and presentations of the seller. A seller is bound by law to disclose to a purchaser any not physically noticeable defects on the land (like; non arrears of ground rent, conditions and term of any head-lease, lack of certificate of occupancy etc). A seller is not bound in law to disclose to a purchaser any defect on a land that can be physically noticed on an inspection. Hence the purchaser must visit the land in question, ask questions to neighbours, do search at relevant places during his preliminary/ pre-contract inquiries to enable him decide whether or not to sign contract of sale. Purchaser are advised to engage the services of lawyers to do search and due diligence on land before contracting to purchase such.  

 

After pre-contract inquiry, if a purchaser is willing to contract with a seller, the seller/vendor may demand for a deposit. A deposit may be 10% or more depending on parties’ agreement. Deposit is money paid by purchaser to a seller as a security and evidence of his intention, seriousness and commitment to complete and finalise contract. Where a purchaser after paying a deposit fails to complete the contract of sale as agreed, he will forfeit the deposit to the seller. If it is a seller that fails to complete the sales contract, then the purchaser will receive back his deposit. Deposit is paid before entering into a contract to sale while money paid after entering into a contract is a part payment of an agreed price ensuing from subsisting contract. Payment of deposit is not mandatory but it is advised that vendor request for such for their own safety and benefit. Aside deposit a good contract for sale agreement must contain; agreement for payment of price, capacity of the seller to sale the land in question, right of the seller to convey good right to purchaser, passage of quiet enjoyment and good title to purchaser and completion date of contract. A contract to sale is supposed to be prepared by the seller’s solicitor who sends same to purchaser or his solicitor for signing. The contract starts from the date of exchange of copies of contract for sale between the parties. From there on, the seller/vendor is expected by law to provide all his title documents and proofs of lawful ownership. In states of the Southern and Northern parts of Nigeria; the seller is to show registered deeds or other instruments of transfer, alienation, sale made in his favour. For lands located in parts of Lagos State (old Lagos colonies) where there is Registration of Titles Law, the purchaser is expected to inspect the register to confirm the seller’s title and right to sale. This stage is the foundation of a valid land transaction and the basis for completion stage. This stage affords only equitable interest on the purchaser and not a good and full legal title over land.           

 

b)    The completion stage:

As the name implies it is the stage where parties (seller and purchaser) finalise their transaction and purchaser pays all remaining purchase price to the seller while the seller gives to the purchaser the original documents to purchased land. While the seller receives money the purchaser receives legal title (ownership) over land.  Practically at the stage, there will be payment of balance of purchase price, preparation of deed of sale, execution of deed, issuance of receipt to purchaser, official handing over of title documents, building permits, plans and property keys to purchaser, taking over of possession of property by the purchaser and payment of solicitor’s charges/fee. This stage is where both parties’ smile home with considerations and to celebrate with their families and friends for successful transaction. Well, it might be too early to count the chicks, for all the process done in stage “A” and “B” may be invalidated at stage “C”. Hence stage “C” is the determinant of a successful land transaction.

 

 

c)     The post-completion stage:

A land transaction is never complete and legal unless it receives the approval of the Governor of the state where it is located. Any land transaction without consent of the Governor is null and void (invalid). For a land under a local government, the consent and approval of the local government must be sought. Hence, all earlier transactions are done subject to approval of the governor of the state. The governor of a state is vested with all land in the state, and he determines who gets what, to what extent and for what purpose. In a certificate of occupancy, the duration of term granted by the governor and the purpose for such land must be indicated. The covenants of the a certificate of occupancy, the observance of such and other state issues (environmental hazards, planning and public policy) will be considered by a Governor before approving a transaction of sale of land.

 Hence it is advised that a purchaser includes a return of purchase price clause in a deed of sale/transfer/alienation to quicken his retrieval of his money from the seller should the governor refuse to consent and approve their transaction.

 

Where a Governor approves and consents to a sale of land transaction, he personally or through his commissioner in charge, signs thecopies of the deed of sale of such transaction. For consent of a Governor to be obtained an application for Governor’s Consent must be sent to the state’s ministry of land. For a land under a local government, application for consent of the local government should be sent to their local government authority in charge of where the land is located. It is advised that purchaser should insist that their sellers/vendors personally write and sign applications for Governor’s consent. To be attached to such applications are: copies of deed of transfer, all receipts of payment of all outstanding ground rents, consent fee, other charges on the land and tax clearance certificate.      

 

After obtaining a Governor’s consent the purchaser must go ahead to pay stamp duties in on the approved deed of transfer. Stamp duties must be paid within 30 days of the execution of the deed of transfer/sale/alienation. Failure to pay stamp duties on a sale of land transaction would make the deed of transfer not registrable in the records of the State’s Land Registry. Equally an unstamped deed of transfer cannot be accepted in a court as evidence of a land transaction. To get a deed of transfer stamped, the deed must be taken to a Stamp Duties Office of the State Board of Internal Revenue for assessment to calculate the payable duty. There after the calculated fee is paid either at the State Board of Internal Revenue office or any designated bank, while copies of deed of transfer are impressed with stamp (always in red ink). Often times, the payable stamp duties is merely 2% to 3% of the value of the land in question.         

 

The last of all the stages of a valid purchase of land is the registration of deed of transfer or sale or alienation (or by whatever name such instrument is called). Every State has a Land Registry where records of land, their owners and interests in such land are kept. Some states still keep such records in paper, books and sheets while many have advanced to keep such in computer and internet (Geographic Information System). A deed of transfer or sale bearing the consent and approval of Governor, which has equally been stamped at the States Board of Internal Revenue must be registered at the State’s Land Registry.  Such registration must be made within 60 days of the execution of the deed of sale among the seller and buyer.  In order to have more time, having in mind the bureaucracy in government offices where Governor’s consent may be sought, it is advised that parties do not insert a date of execution on their date until after obtaining Governor’s consent and are ready to stamp and register same. Registration of transfer documents (deed of sale or alienation or transfer) is essential because it gives notice in the records of the purchased land that the new owner really owns such. It warns people from being deceived by fraudster (419ners). Besides, unregistered documents of transfer or sale can never be accepted in court as evidence of ownership of land purchased through them. And if there is a conflict as to who owns a land, the court will consider who has a registered title deed and if both contestants do have such documents, court would considered their time of registration. The first to be registered document prevails and wins over any document later registered; hence early registration of transfer or sale document is highly advised. For registration, send your original documents and photocopy of same to the Office of the Deed’s Registrar in the State’s Land Registry. Original is given back to the purchaser while the registry retains and keeps the photocopies of same. After the due registration of land in strict observance of other previous stages of purchase of land, the purchaser acquires a valid title and ownership of the land in question against any other person in the whole world (subject to the terms of Government’s head- lease).

 

PLACES TO INVESTIGATE BEFORE PURCHASING A LAND.

Before agreeing and contracting to purchase a land, prospective purchasers are advised to diligently search and investigate the state of land and title (ownership) of such land. For a detail and comprehensive due diligence on a land, prospective purchasers should consult and engage lawyers. Below are institutions and places where diligent search and investigation should be carried out before purchasing any land.

 

1.      LAND TO BE SOLD:

At no circumstance should a purchaser contract to buy a parcel of land without having a physical inspection of such land. On inspection it may reveal the level of developments, damage, actual size, presence of public utilities and amenities on land.     

2.     LANDS REGISTRY:

Every state in Nigeria has a land registry where details of land and their owners a kept. The registry is often under the Ministry of Land.

 

3.     PROBATE REGISTRY:

Probate registry keeps records of “Wills” and other testamentary documents. The various High Courts of all States have Probate Registries. A visit at such registry is necessary where there is an issue of death and wills as to prove of titles.

4.     CORPORATE AFFAIRS COMMISSION:

The Corporate Affairs Commission is an establishment of law that registers and regulates companies, business names and incorporated trustees. The commission keeps records of land transactions involving companies. A search in the commission will reveal whether a company has a land and whether its directors consent to sell same.

5.     COURTS:

Courts keep records of cases before them. Hence, a diligent search at a court’s registry would reveal if a land is in dispute. It will further reveal any court order binding any land.

6.     Traditional rulers/family members:

Ownership is a vital issue to be determined before any purchase of a land. Hence, purchaser should seek information concerning land from the traditional ruler/ village head of the location of the land. Such persons occupy positions that can equip them with immeasurable information. A visit, discussion and inquiry from the family members of the owner of proposed land for sale and the owners of adjoining land is equally advised.

A candid observation of the above guide will get you lands in cities without tears. Please consult your lawyer before any purchase.

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Onyekachi Umah

Onyekachi Umah is a husband and a private legal practitioner with amazing experience in criminal law, human rights, intellectual property, transaction and regulation advisory, corporate, commercial and investment law and energy law as well as litigation and arbitration arising from them. He is a certified arbitrator both in Nigeria and the United Kingdom. He is a member of the Chartered Institute of Arbitrators (UK) and a Certified Conflict Management Practitioner. He is a member of prestigious “Young ICSID” of International Centre for Settlement of Investment Disputes (ICSID), Washington DC. Among other, he has a certificate in Law of Contract from a program of Harvard University, a certificate in International Environmental Negotiation from United Nations Institute for Training and Research, Geneva and recently, a certificate in Conflict Management from United States Institute of Peace, Washington, D.C. He also holds a master of laws degree from University of Jos and he is a doctoral student at the faculty of law, Nassarawa State University. 

He is the managing partner of a leading law firm; Bezaleel Chambers International. He is the founder and President of a free law awareness platform known as www.LearnNigerianLaws.com that promotes awareness and understanding of rights and laws of Nigeria (#SabiLaw) and offers free daily law tips (#DailyLawTips). Understanding the challenges of Administration of Criminal Justice in Nigeria, he dedicates his daily law tips every Mondays to promoting Criminal Justice (#CriminalJusticeMonday). Recently, he started a new series on Election Laws tagged (#SabiElectionLaws) to increase legal awareness on elections laws, policies and regulations in Nigeria. He is the convener of the Sabi Law Lecture Series (#SabiLawLectureSeries), travelling around Nigeria delivering free law awareness lectures. He also organises and sponsors a quarterly competition, titled "Sabi Law Video Challenge" (#SabiLawVideoChallenge) were Nigerians win money (over $130.00 per winner) for making videos of themselves talking on any law or right as a way to promote law awareness and have fun. To further promote legal awareness among Nigerians across the world, he started a law awareness show titled "Sabi Law With Onyekachi Umah, Esq" (#SabiLawWithOnyekachiUmahEsq) showing on social media platforms via @LearnNigerianLaws.   

Mr. Umah has written over Three Hundred (300) free to access articles and materials on law with a desire to enlighten the public. He is also the Assistant Secretary of Nigerian Bar Association, Capital Bar, Abuja and a member of the Rotary Club of Abuja, Metro (RCAM), District 9125. Among others, he is serving as a member of the Advisory Committee for Law Clinics Partnership for Reforming Pre-trial Detention in Kuje Prison Project funded by the United States Department Bureau for International Narcotics and Law Enforcement. He has been featured as the Legal Personality of the Week by This Day Newspaper (a leading national newspaper) on its September 11, 2018 edition and was featured on the NigeriaLawyer.com as the Legal Personality of the Week on November 14, 2018. He has won several honours and awards for his innovative legal practise across the world. 

 

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