Getting your Trinity Audio player ready...

Introduction

Like any other investment, buying a landed property in Nigeria comes with risks. Yet, it remains one of the most rewarding investments if done right and with the right professionals. Every year, countless buyers lose money to fraudulent sales, fake documents, double allocations, and government-acquired lands sold by unauthorized persons. This often stems from failing to conduct due diligence before buying the property.

Due diligence is the single most important step in a land transaction that reduces these risks and protects your interest and investment in the property in the long run.

What is Due Diligence in Land Transactions?

Due diligence in land transactions is a thorough investigation of the legitimacy of that land and identifying any potential issues or encumbrances with the land before committing to buy it. This usually involves inspecting the physical land, inspecting the title document, verifying the ownership history of the land at the land registry, and sometimes, even a background check on the seller’s agents. It involves legal, financial, or physical due diligence.

Why is Due Diligence in Land Transactions Important?

Due diligence in land transactions is important for the following reasons:

1. It greatly minimizes or eliminates the likelihood of future disputes as to the title of the property.
2. It saves you extra time and money spent on land disputes in court.
3. It helps uncover hidden issues in land transactions, keeping you from making bad real estate investments.
4. It also keeps you from losing money to fraudulent sellers.
5. It helps uncover the property’s true value and allows you to negotiate a fair price.

Steps in Conducting Due Diligence When Buying Land in Nigeria?

Engage Professionals for all Land transactions

While most prefer to do due diligence themselves due to the cost of hiring lawyers or real estate professionals, it’s always better to use the expertise of lawyers and surveyors before buying land or even negotiating a good purchase price in Nigeria. This is crucial because these professionals know how to spot fake documents, detect irregularities, and know where to look to verify the seller’s title. Engaging professionals early can prevent costly mistakes later.

Conduct a background check on the Seller or Agents

Land transactions could involve agents, developers, or representatives. Some agents operate without licenses, as required in some States like Lagos State, and are not connected to the actual owners. If a corporate entity is involved, confirm that the sellers are bona fide officers of the company. If the land is a communal or family land, be sure that the agents have the authority to sell the land and that the communal or family head signs the formal contract.

Carry Out Physical Inspection of the Land site

Before buying any land in Nigeria, visit the location of the land with a lawyer and a surveyor. Physical inspection helps you confirm that the land exists and matches the survey plan in the title document. It also helps confirm that the land is accessible and not waterlogged, and that there are no signs of encroachment, boundary disputes, or ongoing construction by others.

During the physical inspection, it is important to ask every possible question about the land, as the seller has a legal obligation to disclose only latent defects of the land to the buyer.

Also, when carrying out a physical inspection of the property, it is helpful to speak with neighbors or community members, as some people may be aware of any disputes involving the land. If the land is a family property, community members may be familiar with the actual head of the family, who is the single most important person in a sale of family land transaction.

Obtain the Seller’s Registered Survey Plan for the Land

Part of due diligence in a land transaction involves getting a surveyor to verify that the survey plan, usually in the seller’s title document, was registered.

The surveyor checks whether the survey is genuine by taking coordinates of the land at the Office of the Surveyor-General, and conducts a charting to confirm that the coordinates do not fall under government acquisition, and the boundaries correspond with what is physically on site.

Inspect the Seller’s Land Title Documents

Before any money exchanges hands, you should confirm that the person or entity selling the land truly owns it or has legal authority to sell the land on behalf of the owner by inspecting the owner’s original title document.

A title to a land document is a document that proves a person’s ownership of land. A title document could be a Certificate of Occupancy issued by the Government, a Deed of Assignment, a Deed of Gift, etc. If the land is sold by the owner’s legal representative, ask for the power of attorney given to the legal representative to sell the land on behalf of the owner.

The seller is to present his “root of title”, usually contained in the actual title document.

The root of the title is a document that shows the history of a property’s ownership and proves that the vendor has a valid right to sell it. It is the foundational document from which all subsequent ownership transfers are traced, showing a clear and unbroken chain of title to the current owner.

A root of title could either be a bad or a good root of title. For a document to be considered a good root of title, it must possess the following ingredients:

1. It must pass both legal and equitable title or ownership of the property. This means there must not be a superior interest in the land ownership.
2. It must state clearly the owner of the property
3. Nothing on the face of the title should cast doubt as to the true ownership of the property.
4. It must clearly describe the property and the extent of the property conveyed, whether partial or wholly.

Some examples of a good root of title include:

1. Duly perfected deed of assignment
2. Duly perfected deed of gift
3. Certificate of Occupancy issued by the State with respect to a statutory or customary right of occupancy.
4. A registered final court judgment

A bad root of title, on the other hand, conveys no title or only an equitable title to land. Examples include;

1. A receipt
2. An unregistered deed of assignment, gift, etc.
3. A certificate of occupancy not issued by the government
4. A court judgment on appeal
5. A contract for the sale of land
6. A will
7. A power of attorney

After going through the seller’s root of title, your lawyer would raise requisitions or questions regarding it, and thereafter, proceed to the land registry, the court, or any other place necessary to further investigate the seller’s title document.

Search at the Land Registry

At the land registry, you’ll be required to submit a formal application by completing the prescribed form, attaching all necessary documents, such as the survey plan, the seller’s title document, payment receipt, and paying the required fees.

In some States, the land registry officials would also inspect the physical land. The reason for this is to check if the land has been acquired by the federal government and if there are any issues with the land. This way, you also get a first-hand knowledge of the facts of any issues involving the land.

Searching at the land registry is indispensable not only because it helps the buyer confirm the seller’s title, as well as the titles of past owners, but it also helps confirm that there are no encumbrances or interference with the seller’s title, such as a mortgage or government acquisition.

Following a successful search, a search report is delivered to the applicant. The search report usually contains the name(s) of the current owner(s) of the property, and a history of previous owner(s).

Lastly, registration does not cure any defects in the seller’s root of title. For example, if Mr. A buys a land or property from Mr. B, who did not have a legal and equitable title to sell the property, Mr. A’s registration of the sale does not automatically cure the defects in Mr. B’s title.

Other Places to Investigate When Conducting Due Diligence in Land Transactions

1. Probate Registry, if the title is derived from a will
2. Court Registry, if the title is derived from a court judgment
3. Corporate Affairs Commission
4. Building, Construction, and Physical Planning Authorities: If you are buying a landed property with buildings already on the land, you should also check with the necessary planning authorities
5. Community authorities and family representatives, if you are buying a community or family land

How Much Does It Cost to Conduct Due Diligence in Nigeria?

The cost for due diligence in a land transaction depends on several factors, including the location of the land, the value of the property, varying professional fees, varying government fees, etc.

How Long Does It Take to Conduct Due Diligence in Nigeria?

On average, it takes about 4 weeks to 3 months to conduct due diligence, depending on the turnaround time with the government agencies that are involved.

Conclusion

Due diligence in land transactions cannot be overemphasized. As the saying goes, “prevention is better than cure”; it is far better to thoroughly investigate the legal, financial, and physical details before buying a property or land than to buy one laced with potential issues and risk losing your money.

Engaging qualified professionals early on when buying land or property in Nigeria is cheaper than engaging them if a dispute arises in the future.