Buying land in Lagos without examining the relevant documents is a serious legal and financial risk. A seller can present a Certificate of Occupancy, survey plan, receipt or Deed of Assignment and still fail to establish a valid and transferable interest in the land. The important question is not simply whether the seller has documents, but whether the documents establish the seller’s interest, correspond with the actual land and show that the seller has the legal authority to transfer it. Lagos State operates a land registration system under which land-related documents and transactions are registered through the Lands Registry. The Lagos State Land Administration Portal also provides online property-search and Certified True Copy services. Before paying for land in Lagos, a prospective buyer should therefore obtain and investigate the relevant documents. What Documents Should You Check Before Buying Land in Lagos? The documents required will depend on the history and nature of the property. There is no single document that proves everything about every property. Depending on the transaction, the documents you should investigate include: Certificate of Occupancy Deed of Assignment Governor’s Consent Survey Plan Gazette Deed of Lease or Sublease Allocation Letter Previous title documents Purchase receipt Probate or Letters of Administration Power of Attorney Court judgments or orders Property search report Evidence relating to government acquisition or excision The significance of each document is different. 1. Certificate of Occupancy A Certificate of Occupancy (C of O) is one of the documents most commonly presented by sellers of land and buildings in Lagos. However, a buyer should not simply see a C of O and conclude that the transaction is automatically safe. The document should be examined to determine: the name of the holder; description of the property; size and location; term of the interest; date of issuance; purpose for which the land is granted; conditions attached to the grant; and whether the information corresponds with the property being sold. The C of O should also be independently investigated where appropriate. Why You Should Not Rely on a C of O Alone A C of O is evidence relevant to the interest stated in it, but it does not eliminate the need to investigate the circumstances of the transaction. You should still investigate: the identity and authority of the seller; subsequent dealings with the property; registered encumbrances; survey information; physical possession; acquisition issues; and other matters affecting the proposed purchase. A seller’s possession of a C of O should therefore be treated as the beginning of the investigation, not the end. 2. Deed of Assignment A Deed of Assignment is an important document where the seller acquired the property from a previous owner through an assignment. It generally records the transfer of the assignor’s interest to the assignee. When reviewing a Deed of Assignment, check: the identity of the assignor; the identity of the assignee; description of the property; consideration; the nature of the interest transferred; execution by the relevant parties; whether the necessary consent was obtained where required; whether the transaction was registered; and whether subsequent transactions affect the interest. The buyer should also investigate the document from which the seller derived title. For example, if the seller acquired the property from Mr A, it is not enough to examine only the deed between Mr A and the seller. The circumstances of Mr A’s own title should also be investigated where necessary. A Deed of Assignment Does Not Automatically Prove Good Title A Deed of Assignment transfers an interest; it does not automatically cure a defective root of title. If the person who purported to assign the property had no transferable interest, the buyer cannot safely assume that a subsequent assignment has resolved the underlying defect. This is why the chain of title must be investigated. 3. Governor’s Consent Governor’s Consent is an important consideration in many land transactions involving alienation of a statutory right of occupancy. Section 22 of the Land Use Act generally requires the consent of the Governor before a holder of a statutory right of occupancy can alienate the right by assignment, mortgage, transfer of possession or sublease, subject to the provisions of the Act. Consequently, where the seller acquired the property through an assignment requiring consent, the buyer should investigate whether the necessary consent was obtained. What Should You Check? Examine: the Governor’s Consent; the transaction to which the consent relates; the parties; property description; date; title reference; registration details; and whether the document corresponds with the transaction being presented to you. Do not assume that the mere presence of a document titled “Governor’s Consent” establishes that the transaction has been properly perfected. 4. Survey Plan A survey plan is particularly important when buying land. It identifies the parcel of land by reference to its location, boundaries, dimensions and other survey information. A survey plan should be examined alongside the title documents and the physical property. What Should You Check on the Survey? Check: survey plan number; name of the surveyor; survey date; coordinates; dimensions; plot number; block number; location; boundaries; and other identifying information. The survey information should also be investigated against the relevant government survey records where appropriate. The Lagos State Office of the Surveyor General provides a certificate-validation facility through which a deposited survey record can be checked using the plan number. A Survey Plan Is Not the Same as Proof of Ownership This distinction is important. A survey describes and identifies land. It does not, by itself, establish that the person named on it has a valid title to the land. The survey should therefore be considered together with the underlying title documents and the history of the property. 5. Gazette A Gazette can be an important document in transactions involving land that has been excised from government acquisition or where the relevant land status is established through a government publication. However, buyers should not simply accept a seller’s statement that land is “gazetted.” The relevant Gazette should be obtained and examined to determine: the land covered; the
How to Conduct Property Due Diligence Before Buying Property in Lagos
Buying property in Lagos is a major financial decision. Whether you are purchasing land, a house, an apartment, or commercial property, the fact that a seller possesses documents relating to the property does not, by itself, mean that the seller has a valid and transferable title. A property may be subject to government acquisition, an existing mortgage, litigation, family claims, competing interests, restrictions on transfer, or other legal issues that may not be apparent from the property itself. This is why property due diligence in Nigeria should be undertaken before paying the purchase price or committing substantial funds to a transaction. Proper due diligence helps a prospective buyer establish who owns the property, the nature of the seller’s interest, whether the title is genuine and transferable, whether the property is affected by government acquisition or other encumbrances, and whether there are legal or practical obstacles to completing the transaction. What Is Property Due Diligence? Property due diligence is the process of investigating the ownership, title, history, legal status and other relevant circumstances surrounding a property before purchasing it. The purpose is not merely to determine whether the seller has a document. It is to establish whether the seller has good and marketable title and whether the buyer can safely acquire the interest being offered. Depending on the property, due diligence may involve: examining title documents; conducting searches at relevant government registries; investigating previous transfers of the property; confirming the identity and capacity of the seller; checking for mortgages, charges and other encumbrances; investigating pending or threatened litigation; determining whether the property is affected by government acquisition; inspecting the physical property; confirming that the property being sold corresponds with the documents; and reviewing the proposed contract and transaction documents. Why Is Property Due Diligence Important in Lagos? Lagos has a highly active property market, but property transactions can involve complicated chains of title and competing interests. A buyer may encounter situations where: the person presenting the property is not the true owner; a property has been sold to more than one person; a family member purports to sell family property without the necessary authority; a property is subject to a mortgage or other encumbrance; the property is affected by government acquisition; the seller’s title is defective; the property is already the subject of litigation; the dimensions or location of the property do not correspond with the documents; the seller lacks authority to sell; or the transaction documents contain terms that expose the buyer to unnecessary risk. These problems can be extremely expensive to resolve after completion. The safest time to discover a title problem is before you buy the property. 1. Identify the Seller and Confirm Their Capacity to Sell The first question should be: Who exactly is selling this property, and what gives that person the authority to sell it? If the property belongs to an individual, the buyer should verify the seller’s identity and examine the documents establishing the seller’s interest. If the property is owned by a company, the company’s ownership and authority to dispose of the property should be investigated. If the property belongs to a deceased person’s estate, the buyer should determine who has the legal authority to deal with the property. Family property requires particular caution. A person who claims to be the family head or a family representative may not necessarily have unlimited authority to dispose of family land. The buyer should therefore investigate the ownership structure rather than relying solely on the seller’s representation. 2. Examine the Root of Title A critical part of property due diligence is identifying the root of title. The root of title is the document or transaction from which the seller’s interest can be traced. Depending on the circumstances, relevant documents may include: a Deed of Assignment; Certificate of Occupancy; Governor’s Consent; Deed of Conveyance; grant or allocation documents; court judgment; vesting assent; probate or letters of administration; customary documents; or other documents establishing the history of the property. A buyer should not simply look at the latest document. The history of the title may reveal defects or competing interests. For example, if A transferred the property to B and B is now selling to C, it may be necessary to investigate how A acquired the property in the first place. A defective root of title can affect subsequent transactions. 3. Conduct an Official Search One of the most important stages of property due diligence is conducting an appropriate search at the relevant land registry. For property in Lagos, a legal practitioner can conduct the necessary searches and examine the records available from the relevant authorities. The purpose of the search is to establish matters such as: whether the title exists in the relevant records; the registered owner or holder of the interest; the nature of the interest; whether the property has been transferred; whether there are registered encumbrances; whether there is a mortgage or charge; whether there are restrictions affecting the property; and other matters disclosed by the registry records. A search should be carried out before substantial payment is made, rather than after the transaction has already been completed. 4. Investigate Government Acquisition A property may appear perfectly normal on physical inspection and still be affected by government acquisition. This is particularly important in Lagos, where land may be affected by various government schemes, infrastructure projects, committed acquisitions or other planning considerations. A buyer should therefore investigate whether the property falls within an area affected by government acquisition or other restrictions. This is one reason why merely asking the seller for a Certificate of Occupancy is insufficient. The legal status of the particular property must be independently investigated. 5. Compare the Documents With the Physical Property Legal due diligence should not be conducted entirely from a desk. The property should also be physically inspected. The buyer should compare the description contained in the title documents with the actual property. Among other things, the investigation should consider: location; boundaries; dimensions; access; adjoining properties; existing structures; occupation;