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: The parties to the contract; The property being sold; The consideration or purchase price; and 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