Contract of Sale of Land in Nigeria: Essential Terms

A contract of sale of land is one of the most important documents in a property transaction.

It records the agreement between the seller and buyer before the transaction is completed and sets out what is being sold, the price, how and when payment will be made, when possession will be given, what each party must do, and what happens if either party defaults.

A poorly drafted sale of land agreement can create disputes over the purchase price, boundaries, possession, title documents, completion, refund of money, or the seller’s obligation to execute the necessary transfer documents.

A properly drafted agreement, on the other hand, gives both parties a clear contractual framework for completing the transaction.

The Supreme Court has stated that a contract for the sale of land is made and concluded where there is final and complete agreement on the essential terms, including the parties, the property, the consideration and the nature of the interest to be granted.

This article explains the essential terms that should be addressed in a contract of sale of land in Nigeria.

What Is a Contract of Sale of Land?

A contract of sale of land is an agreement under which a seller agrees to transfer an interest in a specified property to a buyer in exchange for an agreed consideration.

The agreement establishes the obligations of the parties and provides the framework for completion of the transaction.

It is important to distinguish the contract of sale from the Deed of Assignment.

The contract of sale sets out the bargain between the parties and the terms on which the transaction will proceed. The Deed of Assignment is the formal instrument used to document the transfer of the relevant interest when the transaction is completed and the applicable legal requirements have been satisfied.

For a detailed explanation of the latter, see “Deed of Assignment in Nigeria: What Buyers Need to Know.”

What Makes a Contract of Sale of Land Valid?

The parties must reach a final agreement on the essential terms of the transaction.

The courts have identified the essential matters as including:

1. The parties to the contract;
2. The property being sold;
3. The consideration or purchase price; and
4. The nature of the interest being granted.

Once the parties have reached final agreement on these essential matters, a contract for the sale of land can be concluded.

However, a sound land sale agreement should go considerably further than these basic elements.

The agreement should address the practical steps required to take the transaction from negotiation to completion.

1. Full Details of the Parties

The agreement should clearly identify the seller and buyer.

For an individual, this should ordinarily include the person’s full legal name and relevant address.

For a company, the agreement should use the company’s correct registered name and address and identify the person signing on its behalf in accordance with the company’s authority.

Where a representative, attorney, trustee, personal representative or other agent is involved, the agreement should clearly state the capacity in which that person is acting.

This is particularly important where the person negotiating the sale is not the registered or recognised holder of the property.

The buyer should establish that the person signing the agreement has authority to sell.

2. Accurate Description of the Property

The property must be clearly identified.

The agreement should contain sufficient particulars to distinguish the property from other properties.

Depending on the transaction, these may include:

• Plot number;
• Block number;
• Survey plan number;
• Surveyor’s details;
• Land size;
• Location;
• Street and area;
• Beacon numbers;
• Title or registration particulars;
• Description of buildings or improvements.

Where a survey plan exists, the property description in the agreement should correspond with it.

A buyer should not accept a vague description such as simply “a parcel of land at Lagos” where the property can and should be more precisely identified.

For practical guidance on the documents to examine, see “Documents to Check Before Buying Land in Lagos.”

3. Purchase Price

The total purchase price should be expressly stated.

The agreement should avoid uncertainty about whether the price is:

• The total purchase price;
• The price per square metre;
• The price per plot;
• Inclusive or exclusive of specified charges;
• Subject to adjustment.

If the price is being paid in instalments, the agreement should state the amount and due date of each instalment.

For example:

Purchase price: ₦100,000,000

Initial payment: ₦30,000,000 upon execution

Second payment: ₦40,000,000 upon satisfaction of the agreed condition

Balance: ₦30,000,000 upon completion

The actual structure will depend on the transaction.

The important point is that the payment obligation should be clear.

4. Payment Method and Evidence of Payment

The agreement should state how payment is to be made.

Where payment is by bank transfer, the appropriate account details and evidence of payment should be preserved.

Where payment is made through an agent or representative, the agreement should clearly establish the authority of that person to receive the money.

The seller should acknowledge each payment where appropriate.

This prevents later disputes about whether the purchase price, or a particular instalment, was paid.

5. Conditions Precedent to Completion

A sophisticated land sale agreement should identify matters that must occur before completion.

For example, completion could be made subject to:

• Satisfactory title investigation;
• Confirmation of the seller’s authority;
• Resolution of an identified title issue;
• Production of specified title documents;
• Obtaining required consent;
• Payment of an agreed outstanding liability;
• Vacant possession;
• Execution of the Deed of Assignment.

This is particularly useful where the buyer does not want to pay the entire purchase price before the seller has satisfied important obligations.

6. Seller’s Title and Authority to Sell

The seller should identify the title under which the property is held.

The agreement should also require the seller to represent, where appropriate, that:

• The seller has the authority to enter into the transaction;
• The seller has not previously sold the property to another person;
• The property is not subject to undisclosed encumbrances;
• There is no undisclosed litigation affecting the property;
• The seller has disclosed relevant interests affecting the property;
• The seller will provide the documents reasonably required to establish and perfect the buyer’s interest.

The precise representations should reflect the outcome of the buyer’s due diligence.

A contract should not be used as a substitute for title investigation.

The buyer should independently investigate the seller’s title before committing substantial funds.

See “How to Verify Land Title Before Buying Property.”

7. Root of Title

The agreement should identify the documents forming the seller’s title where appropriate.

Depending on the property, this could include:

• Certificate of Occupancy;
• Deed of Assignment;
• Deed of Assent;
• Governor’s Consent;
• Allocation documents;
• Survey plan;
• Court judgment;
• Probate documents;
• Other documents forming part of the chain of title.

The buyer should understand how the seller acquired the property.

A seller presenting a document does not eliminate the need to investigate the document and the title behind it.

8. Survey and Boundaries

The agreement should accurately identify the land being sold.

Where the property is being sold by reference to a survey plan, the relevant plan should be properly identified.

The parties should also address responsibility for:

• Survey costs;
• Re-establishment of beacons;
• Boundary disputes;
• Verification of measurements;
• Discrepancies between the survey and physical possession.

This is particularly important where only part of a larger parcel is being sold.

9. Inspection and Physical Condition

Where the property includes a building, the agreement should address its physical condition and what exactly is included in the sale.

The buyer should inspect the property before completion.

The agreement can also identify:

• Fixtures included in the sale;
• Fittings;
• Equipment;
• Existing structures;
• Development approvals;
• Tenancies;
• Occupiers;
• Outstanding construction obligations.

If the property is being sold with an existing building, the buyer should not rely solely on the seller’s description.

10. Existing Tenants or Occupiers

Where the property is occupied, the agreement should clearly state whether the buyer is acquiring it:

• With vacant possession;
• Subject to an existing tenancy;
• Subject to specified occupiers;
• With responsibility for terminating a tenancy assigned to the seller or buyer.

The parties should agree who is responsible for dealing with existing occupants before completion.

A buyer who expects vacant possession should ensure that the obligation is expressly stated.

11. Completion Date

The agreement should specify when completion is expected to occur.

“Completion” should also be defined clearly.

Depending on the transaction, completion could involve:

• Payment of the balance of the purchase price;
• Delivery of title documents;
• Execution of the Deed of Assignment;
• Delivery of possession;
• Handover of keys;
• Execution of other completion documents.

A clear completion mechanism reduces uncertainty between the parties.

12. Delivery of Possession

The agreement should state when the buyer becomes entitled to possession.

Possession could be linked to:

• Payment of the full purchase price;
• Execution of the Deed of Assignment;
• Completion;
• Satisfaction of specified conditions.

The agreement should also state whether possession is to be vacant or subject to existing occupants.

13. Deed of Assignment

The agreement should address the seller’s obligation to execute the Deed of Assignment or other appropriate transfer instrument.

It should specify, where appropriate:

• When the deed will be executed;
• Who prepares it;
• Who bears the legal/documentation cost;
• What documents the seller must provide;
• Who is responsible for obtaining consent;
• Who is responsible for stamping and registration.

The contract and Deed of Assignment should be consistent.

The buyer should not discover at the completion stage that the deed describes a different property or a different interest from the one agreed upon.

14. Governor’s Consent

Where the transaction involves the assignment of a statutory right of occupancy, the requirement for Governor’s Consent must be addressed.

Section 22 of the Land Use Act provides that the holder of a statutory right of occupancy cannot alienate the right by assignment, mortgage, transfer of possession, sublease or otherwise without the Governor’s consent first had and obtained, subject to the provisions of the Act.

However, the existence of this requirement does not mean that parties cannot first reach a written agreement setting out the terms on which the transaction will proceed.

The courts have recognised that a written agreement can be entered into in contemplation of obtaining the required consent. The agreement should therefore be structured so that the parties understand the legal effect of the consent requirement and do not treat the agreement as an unconditional completed alienation where consent remains outstanding.

For more information, see “Understanding Governor’s Consent.”

15. Responsibility for Title Perfection

The agreement should clearly allocate responsibility for the steps required after completion.

These can include:

• Governor’s Consent;
• Stamp duty;
• Registration;
• Land Registry processing;
• Preparation of required documents;
• Payment of applicable statutory charges.

The parties should not simply assume that “the buyer will perfect the title” or “the seller will handle everything.”

The contract should say exactly what each party is required to do.

16. Taxes, Government Charges and Professional Fees

The agreement should identify who bears the various transaction costs.

These may include:

• Legal fees;
• Survey fees;
• Search fees;
• Stamp duty;
• Consent fees;
• Registration fees;
• Applicable taxes;
• Other statutory charges.

Where a charge is subject to the applicable government valuation or statutory assessment, the agreement should avoid stating an inaccurate fixed amount unless the parties have a proper basis for doing so.

17. Seller’s Covenant Not to Further Deal With the Property

Once the seller has entered into a binding agreement to sell the property, the contract should contain appropriate protections against the seller attempting to sell or transfer the same property to another person.

The agreement can expressly prohibit the seller from:

• Reselling the property;
• Creating a mortgage or charge;
• Granting a new tenancy;
• Creating another interest;
• Taking any action inconsistent with the buyer’s contractual rights.

This becomes particularly important where completion will occur some time after the contract is signed.

18. Risk and Insurance

Where there is a significant period between the contract and completion, the agreement should address who bears the risk of damage or destruction to the property.

This is particularly important for buildings.

The parties should agree, where appropriate, who is responsible for maintaining insurance and what happens if substantial damage occurs before completion.

19. Default by the Buyer

The agreement should explain what happens if the buyer fails to perform.

Depending on the transaction, consequences can include:

• Notice to remedy the default;
• Interest on overdue payment;
• Termination;
• Forfeiture of an agreed deposit, where legally permissible;
• Recovery of specified losses;
• Other contractual remedies.

The consequences should be clearly stated rather than left to assumptions.

20. Default by the Seller

The seller’s default should also be addressed.

Examples include:

• Refusal to complete;
• Sale to another person;
• Failure to provide required title documents;
• Failure to obtain agreed documents or consent;
• Misrepresentation of title;
• Failure to give possession;
• Creation of an undisclosed encumbrance.

The buyer’s remedies should be clearly preserved.

Depending on the circumstances, remedies can include damages, rescission or specific performance.

The courts have recognised specific performance as an available remedy in appropriate land-sale disputes, particularly because land can have a unique value to the purchaser.

21. Refund of Purchase Money

The agreement should address what happens to money already paid if the transaction is terminated.

It should state:

• When a refund is due;
• The amount refundable;
• Whether deductions can be made;
• The time within which the refund must be made;
• Whether interest applies;
• What happens where the seller is responsible for the termination.

This can prevent a second dispute after the original transaction has collapsed.

22. Representations and Warranties

The seller’s representations should be appropriate to the transaction.

They can address matters such as:

• Ownership or interest;
• Authority to sell;
• Previous sale;
• Encumbrances;
• Litigation;
• Government acquisition;
• Tenancies;
• Third-party claims;
• Accuracy of information supplied to the buyer.

A buyer should not simply accept a generic warranty clause.

The representations should respond to the actual risks discovered during due diligence.

23. Indemnity

An indemnity can protect a buyer against specified losses arising from matters attributable to the seller.

For example, the agreement could provide appropriate protection against losses resulting from an undisclosed claim arising from the seller’s title or conduct.

The scope of an indemnity should be carefully drafted.

An excessively broad clause can create uncertainty, while an excessively narrow clause may provide little practical protection.

24. Dispute Resolution

The agreement should state how disputes will be addressed.

Depending on the nature of the transaction, this could include:

• Negotiation;
• Mediation;
• Court proceedings;
• Arbitration where appropriate.

The parties should also consider which court or jurisdiction will have jurisdiction where court proceedings are necessary.

The dispute-resolution clause should be consistent with the nature of the transaction and the remedies the parties may need.

25. Notices

The agreement should provide a mechanism for formally communicating notices.

It should identify:

• The addresses of the parties;
• Permitted methods of service;
• When a notice is deemed received.

This becomes particularly useful where a party defaults and a formal notice is required before termination or other action.

26. Entire Agreement and Variation

The agreement should state whether it represents the complete agreement between the parties and how subsequent amendments must be made.

This helps prevent disputes over alleged oral promises that were never incorporated into the written agreement.

Where the parties subsequently agree to change:

• The purchase price;
• Payment schedule;
• Completion date;
• Property description;
• Possession terms; or
• Other material terms,

the amendment should be properly documented.

27. Execution and Witnessing

The agreement should be properly executed by the parties.

Where the transaction requires a deed or another formal instrument, the execution requirements applicable to that instrument should be separately observed.

The parties should also ensure that individuals signing on behalf of companies, estates, families or other entities have the necessary authority.

Contract of Sale vs Deed of Assignment

The two documents should not be confused.

The contract therefore provides the framework for the transaction, while the Deed of Assignment is an important instrument for documenting the transfer.

For a detailed discussion of the deed, see “Deed of Assignment in Nigeria: What Buyers Need to Know.”

Can a Contract of Sale Transfer Ownership of Land?

A contract of sale should not simply be treated as though it were the final instrument of title.

The contract establishes the parties’ contractual rights and obligations, but the nature of the interest acquired and the steps required to complete and perfect the transaction depend on the circumstances.

The Supreme Court has recognised situations where an agreement for the sale of property creates an enforceable equitable interest even though the document itself has not passed legal title.

This distinction is important.

A buyer should therefore not assume that signing a sale agreement automatically means that all title formalities have been completed.

What Should a Buyer Do Before Signing?

Before signing a contract of sale of land, the buyer should:

1. Verify the seller’s identity and authority;
2. Investigate the root of title;
3. Conduct the appropriate land search;
4. Verify the survey and property location;
5. Check for government acquisition;
6. Investigate mortgages, charges and litigation;
7. Inspect the property;
8. Confirm the purchase price and payment structure;
9. Review the proposed contract carefully;
10. Establish responsibility for Governor’s Consent and title perfection;
11. Confirm who bears the transaction costs;
12. Ensure the completion and refund provisions are clear.

For a broader checklist, see “Five Legal Checks Before Buying Land in Nigeria” and “How to Conduct Due Diligence Before Buying Property in Lagos.”

Common Mistakes in Land Sale Agreements

Using a Generic Template

A land sale agreement should reflect the actual transaction.

A generic template may omit important protections or contain provisions that do not fit the property.

Paying the Entire Purchase Price Immediately

Where title verification and other conditions remain outstanding, paying the entire purchase price without adequate contractual protection can expose the buyer to unnecessary risk.

Failing to Identify the Exact Property

The property should be sufficiently described and should correspond with the survey and title documents.

Ignoring Existing Occupants

The agreement should clearly state whether the property will be delivered with vacant possession.

Leaving Governor’s Consent Unaddressed

Where consent is required, the parties should expressly address the process and its effect on completion.

Failing to Allocate Costs

The contract should identify who pays the relevant statutory and professional costs.

Relying on Oral Promises

Important terms should be written into the agreement.

A buyer should not rely on a promise that “the seller will sort it out later” where the matter can be addressed in the contract.

Failing to Include Default Provisions

A contract that explains what happens when everything goes well but says nothing about default creates unnecessary uncertainty.

What Happens After Signing the Contract?

The next steps depend on the transaction.

They may include:

1. Satisfaction of conditions precedent;
2. Payment of agreed instalments;
3. Completion;
4. Execution of the Deed of Assignment;
5. Obtaining Governor’s Consent where required;
6. Stamping;
7. Registration;
8. Delivery of possession;
9. Completion of other title-perfection requirements.

The contract should make these steps clear.

The parties should not assume that signing the agreement alone brings every aspect of the transaction to an end.

Conclusion

A Contract of Sale of Land in Nigeria should do much more than state that one person is selling property to another.

It should clearly identify the parties and property, state the purchase price, establish the payment structure, address title and due diligence, define completion, regulate possession, allocate transaction costs, deal with Governor’s Consent and title perfection, and provide appropriate remedies if either party defaults.

The courts recognise that agreement on the parties, property, consideration and nature of the interest is fundamental to a concluded contract for the sale of land. But a carefully drafted agreement should go further by addressing the practical and legal issues that can arise between signing and completion.

Most importantly, the buyer should conduct proper title due diligence before becoming contractually committed to the transaction. A detailed contract protects the bargain; it does not cure a defective title.

If you are buying or selling land or property in Lagos or elsewhere in Nigeria, Lexforte Attorneys can assist with property due diligence, preparation and review of Contracts of Sale, Deeds of Assignment, title verification and the subsequent perfection of the buyer’s interest.