The scarcity of land has made real estate a very priced commodity with enormous economic value. This is because the cost of land or building increases over the years, which makes real estate transactions one of the most complex transactions in the world today. It can be a plausible reason why people see the urgent need to invest in and acquire real estate.
While it is necessary to buy a land or building, the purchaser should also take precaution before acquiring real estate to avoid issues of fraud and misrepresentation. To this end, this article will highlight the different methods of real estate acquisition and the steps to take in purchasing a real estate in Nigeria.
The common of acquiring real estate acquisition in Nigeria are as follows:
A gift is a voluntary and benevolent act of giving something without compensation. A gift need not be in writing. However, in order to avoid contentions in future, it is often preferable to execute a Deed of Gift.
The deed of gift is a document made during the lifetime of the parties which transfers the ownership of a land, building or other properties from the grantor (the owner or legal title holder of the property) to another who is the beneficiary.
For a deed of gift to be valid, the gift must be made voluntarily i.e. without coercion or fraud, the grantor must not receive compensation or remuneration for the gift they have granted because if compensation is received, it will obviously become a sale and not a gift, the beneficiary must accept the gift.
A probate is the process of verifying the validity of a will. It is a court ordered process where the will of a testator is validated. It is the authority a beneficiary has to assume ownership of any gift or properties bequeathed in the will. The Will or Codicil alone can not convey the rights or title in a real estate to a beneficiary, it is only after the probate has been applied for and obtained that the beneficiaries can have unlimited access to the gifts granted in the will.
The letter of administration is the authority granted to an administrator to administer, manage or distribute the properties of a deceased person who died without a will.
This is a very popular method of real estate acquisition as it involves the transfer of the entire rights, title and interest in a land or building from the vendor (the owner or legal title holder of the real estate) to the purchaser for valuable consideration.
For the purpose of clarity, this will be divided into pre-contract stage, contract stage, post contract stage, completion stage and post completion stage.
This involves carrying out inspections to ascertain any physical defects on the property, whether the real estate is subject to any encumbrance, under government acquisition or is in conformity with the relevant town planning laws.
The prospective buyer can carry out a physical inspection on the property. This is done by going to the location of the property personally to ascertain whether the property is being occupied, the extent of development of the property, the public utilities on the land (such as electric poles or telephone cables) and the overall condition of the property.
The prospective buyer can verify the nature of the premises, such as whether the premises is intended for residential use, commercial use or even a mixture of the two. This is a very important factor because it will be very unfortunate for a business to purchase a building intended for residential use only.
This involves preliminary enquiries, the execution and exchange of a formal Contract of Sale and the payment of initial deposit on the property.
At this stage, the prospective buyer is already certain of the property to purchase and is willing to proceed with the sale. The parties negotiate the terms of the sale at this stage (i.e the price, payment terms, etc.), execute and exchange a formal agreement evidencing their transaction.
At this stage, the formal contract has been drafted, signed and exchanged by the parties. The vendor will proceed to deduce his title and the purchaser is given the opportunity to investigate the vendor's title. The vendor deduces his title by producing an abstract of title or epitome of title which reveals that he has good title to the property.
After a careful perusal of the vendor's title, the purchaser or their attorney can raise questions about any doubts or issues concerning the vendor's title and the vendor is obliged to answer those questions to clear any ambiguity.
Furthermore, the prospective purchaser should carry out a search on the property at following places to ensure that there are no encumbrances on the property:
The essence of this search is to ascertain the authenticity of the vendor's title, the nature and condition of the property, and ensure that there are no encumbrances. After carrying out the search, the prospective buyer can inspect the property again to ensure that the actual size of the land is in conformity with that stated at the land registry.
This is where the parties conclude all actions and processes necessary to confer title on the purchaser. At this stage, the purchaser is required to make a complete payment for the property. After complete purchase price has been paid, the vendor is required to hand over all documents relating to the property to the purchaser including a properly executed Deed of Assignment evidencing the transaction between the vendor and purchaser.
At this stage, the purchaser retains legal title to the property subject to the perfection of the title. A transfer of legal title in a real estate can not be complete without obtaining the consent of the governor, stamping and registration of the deed of assignment.
For state lands, the consent of the governor in the state where the land is located, is required and for lands under the purview of the federal government, the consent of the minister of housing and urban development is required. After the requisite consent has been obtained, the deed should be stamped and registered accordingly.
The most common method of acquiring land in Nigeria is by way of sale. However, other methods of real estate acquisition are:
Sale of real property involves the sale and transfer of the title and interest in a land or building from the owner of the property to the purchaser. The process of acquiring real estate by sale can be very complex and thus a purchaser is expected to be prudent before signing a formal contract to avoid issues of fraud.
The summary of the procedure for sale of land is as follows:
Vivian Umelue is an attorney and legal templates programmer at Wonder.Legal and is based in Nigeria.