Buying a property in Nigeria can be very challenging: one should consider many factors and conduct due diligence steps before proceeding with any form of property purchase. However, there are about two major forms of due diligence steps that we would recommend any investor that would like to buy properties in Nigeria to take. These major steps are;
1. Physical Inspection
2. Legal Procedures
The Physical Inspection step involves you visiting the property, most especially if itâ€™s a landed property; there are various important parameters you need to pay attention to and look out for during your visitation to the land site. Real estate physical condition check includes the following:
a. Pipeline or Power Line: If the property is right below a power line or above pipelines, this is a red flag, which means you should not even go further to purchase this property as itâ€™s very dangerous and you may end up losing it in the nearest future.
b. Road Alignment: The entire property or half of it may be falling right on the road alignment. This is a bad deal because if you go ahead with the purchase, in the nearest future the entire property or part of it may be useless at the end of the day as it may be confiscated or be of public interest on the long run.
c. Flooding in the Environment: It has commonly been said that the best time to inspect a property you want to buy is during the raining season. You really need to watch out for flood or water locked areas when trying to secure a landed property in Nigeria. There are some places that the residents may have to use Canoe as a means of transportation to get to their house during raining seasons and some houses would have drainage issues, these are the things you need to look out for.
d. Signage: Another important parameter you need to pay attention to are signs such as caveat emptor, Buyer Beware - This property is not for sale, etc. these signs are indication that you should ask more questions, when you see these signs on a property, that means you really need to make thorough researches before you decide to make payment for such property.
e. Check for Occupancy: This is very essential, you need to check if there are people occupying the property you want to buy; it may be via lease or rental, for instance, you can see various landed properties where there are Mechanic Workshops, Mini Block Industries, etc. Usually the owner have a form of agreement with these people and in most cases it may be that the owner doesnâ€™t have the use of the land at the moment and doesnâ€™t want to keep it vacant pending the time they find a buyer for the land and they put in some people just to occupy the land, when you see this you need to ask for more questions about the people that put them there and the people theyâ€™ve been paying rent to, with that you can trace the real owner of the property .
f. Vacancy: If you intend to purchase a house or an apartment, it is very essential that you check its vacancy status. If thereâ€™s a sitting tenant in the house, you may want to confirm the time of their tenancy and their willingness to vacate the premises or point of purchase.
g. Quality of Finishing: When trying to buy a house in Nigeria, itâ€™s very essential that youâ€™re sure of the quality of the finishing of the house. Although if you donâ€™t like the finishing but you like the house, you can always scrape out the finishing but it would go a long way in your negotiation. Also check out for Cracks on the Wall, these cracks may be fundamental and at times it may be minor, but that doesnâ€™t mean they should be overlooked. However, if you find cracks in some very sensitive part of the building, ask questions about why those cracks are there to be sure whether they are fundamental or they are minor.
h. Quality of Water: This is another essential parameter you need to pay attention to. Ensure that you check out the tap for water, open the tap and see the type of water that is coming out of it. Especially if youâ€™re buying a property in Lekki, VI and Oniru Axis, you may want to confirm whether the developer had done a proper borehole and functional water treatment, itâ€™d be very bad if youâ€™re living in a house and the water running from your tap is colorful or has a weird odor, so these are the things you need to cross check when buying a landed property in Nigeria.
i. History: This is very important; you need to ask around from people living nearby the property for the history of the property. You donâ€™t believe in fairy tale, but then you need to be very careful and not ignore even the tiniest bit of information on the history of any house you want to buy. You can ask around from people staying nearby, ask them what they know about the property, there may be a wicked Agent going around duping people with the property or maybe he has sold the same property for different people and if you donâ€™t reach out to them, they may not want to reach out to you to warn you. So you can ask simple questions like; â€œwhat do you know about this propertyâ€, â€œsince when has it been vacantâ€, â€œdo you know the ownerâ€, just to be very careful so that you donâ€™t fall into the wrong hands, besides, you can never be too careful you know.
However, after making the physical inspection and youâ€™re now sure and satisfy with the environment and most of the things that relate with the property, you should then take a step further by taking Legal Procedures, some of which are listed below:
a. Engaging a Legal Practitioner: You need to engage a legal practitioner that is very good in property practice to conduct due diligence for you on the property you intend to buy and prepare all the necessary documents before you make payment. The property title could be a Governorâ€™s Consent via a deed of assignment or lease; it could also be a C of O. You need to take note that a survey plan is not a recognized title document, itâ€™s just a document that picture out the location of the property and indicating a name on it, if this is presented to you as a document of title, we would encourage you not to accept it.
b. Visiting the Land Registry: Your lawyer would go ahead to search at the land registry of the state, or the federal land registry, if the land is a state land with governorâ€™s consent, your lawyer would visit the state land registry to conduct the search of the property, and if itâ€™s a federal land then your lawyer would need to visit the federal land registry to conduct the search. By conducting the search, you would be able to find out the history of the property, who owns the property, the exact size of the property, transactions on the property whether it has been used as a mortgage or encumbered in any way or whether it has been sold or lease to some people in the past and every other thing related to the property. After the search your lawyer would advice you on the true status of the property.
c. Existing Charges: You need to ensure you check if there are existing charges on the property by back logs, land due charge, or electricity bill. It may be possible that since the owner wants to sell he has neglected paying the land due charges on the property, in some state itâ€™s called tenement rent and ground rent in some other states. Whatever it is called in your state, these are statutory fee on every property and itâ€™s the obligation of the owner to pay on a yearly basis. You need to check if there are any back logs that are yet to be remitted by the owner, this does not mean the property is not good for purchase but it will also influence your negotiation if the sellers knows youâ€™re going to be clearing all these bills, it can be used in a form of negotiation.
d. Building Approval Document: You may want to request for the building approval document, if itâ€™s a property such as a duplex, house or a flat itâ€™s not out of place for you to ask whether thereâ€™s a building approval document, this is to ensure that after buying the property, youâ€™re not faced with losing the property to the government when they come to demolish it for lack of building approval.
e. Technical Matters: Itâ€™s important you visit the property with a technical person such as engineer, builder, architect or anybody that is good in structural or technical matters relating to properties, most especially to check the structure to be sure that the property is well built before you go ahead to make purchase. These people can also help to check out the correction and renovation that would be needed to be done to make the property suitable for you.
f. Check out for Litigation: You may want to check the property listing at the high court registry of your state, thereâ€™s a list where you have description of properties that are under litigation, so it may be that thereâ€™s a contention on the property between parties and it is registered at the high court, your lawyer can go the extra mile of visiting the high court of registry to find out if the property you want to buy falls among the properties that is under litigation, it would be wrong and not advisable for you to buy a property that is under litigation because judgment of the court may end up not favoring the seller.
However, If itâ€™s a land, you may also want to visit with a land surveyor to confirm that the location of the land matches with the document of title presented to you by the seller, the surveyor would visit the site with their GPS to take the beacons and the coordinates to be able to confirm to you that the land which you have been brought to purchase is the same as the one described in the survey plan attached to the land documents of title.
Having done all these and youâ€™re satisfied and advised by your lawyer to go ahead and make payment, your lawyer can then go ahead to draft a document of purchase and it is better if it is your lawyer that prepared this document of purchase, because youâ€™re the one who is parting with money then your interest should be protected. In addition, upon payment and signing for the property, itâ€™s advisable that you take immediate possession of the property, one of the best ways to assert ownership of the property is through active possession.
Immediately you buy the land, commence with the erection of your fence, activities on the land, that way if thereâ€™s a third party interest or anybody that feels youâ€™re wrong to have possessed the property, such people can show up and challenge you, and then things can be resolved as soon as possible. Possession is very important, itâ€™s not always good to leave your land fallow, as it may attract land hijackers, although you may eventually get back your property but the stress is not worth it.
After taking possession of your property, itâ€™s also important that you go ahead to register your title. Some people just buy properties and just leave it for a long time before taking possession because they believe they know the person that sold it. The seller may be a family, friend or someone very close, and in some cases where the person eventually dies, thereâ€™d be nobody to validate your story that you had actually bought the property. So documentation is very essential, and itâ€™s very important that you register your title with the state land registry so that the government would be ware that youâ€™re now in ownership of the property and it serves as a notice to anybody that wants to buy or take ownership of the property because your name would already be documented as the owner of the property so when a new buyer conduct their search, theyâ€™d find out that the property belongs to you and they must deal with you and you alone to purchase the property.
Lastly, if the sellerâ€™s document covers the entire property youâ€™re buying itâ€™s advisable that you will ensure you retrieve all the original copies of the documents to the property from the seller, after all he doesnâ€™t need them anymore since he has sold the property. In conclusion, these are the important due diligence steps we would encourage you to take when youâ€™re purchasing a property in Nigeria, whether itâ€™s a land or a house.
Author: Gbemisola Ojerinde Esq.