Land Acquistion / Purchase In Nigeria

Staff | November 16, 2007

4. THE ACQUISITION/PURCHASE TRANSACTION PROPER 4.1. Where the Purchasers Solicitor is satisfied with the title, and a sale price agreed upon by the parties, he will draft the necessary documents of sale which include the following: 4.1.1. 4.1.2. 4.1.3. 4.1.4. 4.1.5. An Agreement for Sale of Land (preceding the actual sale). A Deed of Assignment of title to Land. A Power of Attorney to deal with the land. A Purchase Receipt. Form for application for Governors consent (Form 1C)

4.2 These documents (especially the Sale Agreement and the Deed of Assignment) must contain the names and descriptions of the parties, proper description of the property, the agreed purchase price, the acknowledgement of receipt of that amount, the capacity in which Vendor is selling, a Warranty that he has a right to sell in that capacity, condition that the contract shall be conditional on the obtaining of any requisite consents to the transaction, etc. 5. THE EXCHANGE OF CONTRACT 5.1. After ascertaining good title and preparing the necessary documents, the contract of sale is exchanged between the parties. The contract is engrossed in two parts and forwarded to the vendors solicitor for purposes of certifying the correctness of the contract, its approval and obtaining the vendors signature before sending back to the purchasers solicitor in exchange on payment of the agreed price. 5.2. The exchange of contract creates a binding agreement between parties to entitle either party to specific performance (i.e. to execute the Deed of Assignment). What is preferable is that signed documents are exchanged for the purchase price (either a transfer or payment by bank certified cheque). Although a common practice today is to have the purchaser credit the account of the vendor prior to any exchange of documents, I strongly advice against this. 5.3. On exchange of contact and after obtaining Governors consent the Assignor [Vendor] becomes a trustee of the legal estate while purchaser becomes a Beneficial owner and acquires equitable interest. He could deal on the land and becomes entitled to all improvements and increases in the value of property. Compiled by Sola Adun (sola(at)ngex.com)

Before You Purchase That Lagos Property..

Staff | January 02, 2008

3. BEFORE YOU PURCHASE THAT LAGOS PROPERTY.. 3.1. Acquisition of land and its documentation involves a number of procedures that call for due diligence and caution on the part of the purchaser. Retaining the services of a good professional could help get through these procedures in the best interest of the Purchaser. 3.2. The Purchasers lawyer will usually carry out the investigations of title of the Vendor and all other processes prior to the purchase of the land (payment of the purchase sum). 3.3. The primary objective at this stage is to ascertain that the Vendor has a good root of title. A good root of title in this context means the following: 3.3.1. that the Vendor is the rightful (beneficial) owner of the land. 3.3.2. that the land is free from any encumbrance or pending litigation. 3.3.3. that the land is not the subject of any Government acquisition. 3.3.4. that the land is not subject to any of the overriding interests in land (e.g. short leases, easements, licenses, road or right of way). 3.3.5. that the Vendors are acting in good faith (for instance where the land is family owned land) 3.4 Investigation of title is carried out at the Lands Registry or New Towns Development Authority (whichever is applicable) by the Purchasers Solicitor shortly after inspection and expression of interest in the land using copies of the key title documents, evidence of payment of levies, approved building plans, survey plans, excision plans, etc. Sometimes investigations may include visiting the neighbours to the property and making direct enquiries in respect of the land n question. 3.5 If the property falls within the Excision Area (i.e. areas exempted from Government acquisition such as Ajah and its environs), the investigation will include the verification of the red copy of the Excision Plan of the Layout where property is situated. The Excision Plan itself is a vital document and a prerequisite for Registration of Title to property at the Lands Registry. Very often, an area covered by an excision plan will also be published in the Government Gazette for the avoidance of doubt. 3.6 It is always prudent to verify the Excision Plan by re-confirming the survey beacons around the land. Where there is no Excision

Plan, an application for the approval and registration of one will have to be made to the State Government in the prescribed form by the original title holder/ beneficiary of the Government Excision. The process is usually an expensive procedure depending on the size of the property and the valuation of the property. Compiled by Sola Adun (sola@ngex.com) www.ngex.com

DOCUMENTING TRANSACTIONS

NIGERIA'S

LAND

By Chike Ekwueme LLB (Hons) BL, Partner, Ekwueme, Ekwueme & Ekwueme (Solicitors) Lagos - Nigeria.Tel: 234 (1) 4628940 e-mail: chike@ekwueme.com Internet: www.ekwueme.com We attempt to examine here the proper documentation for effecting land transactions in Nigeria. There are, of course, several interests acquirable in Nigerian real estate, some giving the holders thereof rights akin to outright ownership. The question of applicable documentation, and the appropriate methods of processing such documentation, would be best addressed by first considering the particular land interest being acquired. We shall discuss the issue of land transaction documentation under three heads: Documentation with regard to Rights of Occupancy; Documentation of Long Leases; and Documentation of Tenancies. DOCUMENTATION REGARDING RIGHTS OF OCCUPANCY Under the Nigerian Land Use Act the highest form of land interest which may be held by an individual is a 'right of occupancy'. Other subordinate interests to rights of occupancy include long leases, and tenancies (which are themselves granted by holders of rights of occupancy). It would be recalled that the Land Use Act ('the Act') vests all land in any State of Nigeria in the State Governor; individuals hold interests in those lands by being granted rights of occupancy by the Governor. Where such a right is actually granted by the State Governor, it is in the nature of a lease, typically for 99 years. The documentation involved in this case consists of a 'certificate of occupancy' issued by the Governor to the new

holder. Regularly, however, a 'letter of allocation' is issued by the Government authority concerned until other steps are taken leading to issuance of a certificate of occupancy (these steps include payment of various charges, fees, and levies / taxes). The Certificate of Occupancy is considered the highest form of documentation evidencing an interest in land. DOCUMENTATION OF LONG LEASES Although rights of occupancy actually granted by the State or Local Governments, are virtually leases for a limited period of 99 years each, ordinary rights in land held by individuals prior to the promulgation of the Act are of various kinds. Some are freehold interests - for an infinite period of time (this includes land held under customary tenure e.g., communal land). Those alienating such freehold interests may give a long lease of 99 years or more to the prospective holder. They may also assign all of their interest, effectively an outright sale of the land. The transaction in the latter instance is effected by the execution of a document called a 'conveyance'. Where the interest granted is a lease of part of the interest, a deed of lease is issued. Communal land may be sold without writing, pursuant to customary law. Therefore, the common documentation consists of a simple receipt. However, where the new holder wishes to take further steps in a bid to securing his interest, he would typically ask that a deed of transfer be prepared, to which the consent of the state Governor is subsequently endorsed, etc. If the holder were granting a lease for, say, 99 years, a 'deed of lease' would be prepared. Where the interest in the land was less than freehold (i.e., less than virtual ownership) the person transferring his interest could assign the remaining portion of his interest - the residue - to the investor. This would be done by executing a deed of assignment. Finally, in certain parts of Lagos State, a Land Certificate is issued. This document, unlike the others is issued by the government which in fact attests to the new holder's title in the land. DOCUMENTATION OF TENANCIES

A tenancy is regularly a lease of 3 years or less. By Nigerian law, any lease of 4 years and above must be in writing and other requirements must be met for validity. Where a lease is less than three years, usually a tenancy agreement is prepared. Where such an agreement has an option to renew the tenancy subject to terms which enable several renewals, it could effectively constitute a long lease. A long lease of this nature avoids various formalities which are not avoided by the other kinds of documentation. In conclusion, it should be noted that a final instrument known as a power of attorney giving the person granted the capacity to do such things as to manage, let, sell, bring and defend legal actions, in respect of, particular property can constitute an effective sale of the property in question. END NOTE 1 This article is a follow-up to 'Acquisition of Land In Nigeria' which featured in an edition of Nigerian Property News. A worthy appreciation of the terms contained in this piece would thus be aided by first reviewing the initial article.2 Technically, however, a much longer term may be granted by the Government.3 It is noteworthy that we have never seen the expiration of a leasehold right of occupancy as the oldest actually-granted of such interests would expire 99 years from 1978, at the earliest. Therefore, the question of whether there would be a renewal after its expiration, and on what terms, has not yet arisen.4 However, other instruments are nonetheless as efficacious - indeed in a number of cases, interests already held by valid holders have been purportedly issued to yet other persons, and embodied in certificates of occupancy; a scenario rendering the certificate and its alleged attendant right of occupancy null and void. Thus, unless the issuance of certificates of occupancy is part of a general housing or other scheme it is imperative that proper investigations be conducted by professionals before a prospective holder applies for a certificate of occupancy from the government. www.ekwueme.com