INTRODUCTIONThe Nigeria real estate market presents significant opportunities for investors, homeowners, and sellers alike. Navigating the real estate market can be both exciting and nerve wracking, whether you're buying your first home, selling inherited property, or diving into real estate as an investment, understanding the legal side is non-negotiable. After all, you don’t want your dream deal to turn into a nightmare.UNDERSTANDING THE CONCEPT OF REAL ESTATE OWNERSHIPBy virtue of the Land Use Act, 1978, all land in each state is vested in the hands of the Governor of each state, invariably, you could technically state that no one truly “own” a land. This means that individuals or entities can only hold land through leases or allocations, not outright ownership. For this to make sense, you must understand that there are two main concepts you must bear in mind in property transactions, which are Leasehold and Freehold.LEASEHOLD: This is the prevailing ownership concept of property in Nigeria, the Land Use Act of 1978 basically introduced the concept of Leasehold, upon vesting every land in the state to the Governor of that state, invariably, the state government has the exclusive right to permit a lease and revoke a license to individuals or businesses for a specified period, granted by a Certificate of Occupancy (C of O), which gives you the right to possess, acquire and utilize the land for a designated period of “99 years”, following which, ownership reverts to the state governor. Just imagine renting a house, but instead of paying monthly rent, you “own” the property for a set number of years. After that, you’ll need to apply for a renewal to keep your claim to the land.Bear in mind that in between the Leasehold, the property can be sold to another interested buyer, however, the new owner must obtain a Governor’s Consent, which is required to ensure compliance with the law on any transaction involving a C of O and make it legally valid.What Happens After 99 Years?When a Leasehold nears its 99-year expiration, you might wonder, “Do I lose my property?” The answer is no, if you act in time. Here’s how to apply for renewal:1. Start Early: It is important you apply for a leasehold renewal between 1-5years prior to its expiration.2. Submit a Renewal Application: Visit the state’s land registry or ministry of lands to submit your application. This usually includes:a. A formal letter requesting renewal.b. A copy of the existing Certificate of Occupancy.3. Evidence of payment for applicable fees or land use charges.3. Assessment and Fees: The government will assess your property to determine renewal fees, which vary depending on the location and use of the land.4. Receive a New Lease: Once the renewal is approved, you’ll receive a new Certificate of Occupancy for another 99 years.Note: If your lease expires without renewal, the government has the right to revoke the land, but this can be prevented if you’re proactive and comply with the process.FREEHOLD: Perpetual ownership of land indicates that ownership endures indefinitely with a Freehold title, there is no restriction on how you can possess the land, no strings attached, no expiration date. It’s like buying something and knowing it’s truly yours for life. You have ownership and your rights are not contingent upon any terms or expiration dates. This sets it apart from the other types of land titles where ownership might be limited to duration or subject to renewal. Sounds amazing, right? But here’s the catch: freehold is incredibly rare in Nigeria today. It usually only exists under specific circumstances such asa.&nbsp;&nbsp;&nbsp;&nbsp; Properties inherited or acquired before 1978, which is before the advertence of the Land Use Act.b.&nbsp;&nbsp;&nbsp;&nbsp; Lands governed by customary or traditional systems, often in rural areas.It is worthy to note, that the type of ownership you have affects how secure your rights are and what you need to do to maintain them. Freehold is appealing because it’s simpler, no renewals or approvals required. However, most property buyers in Nigeria will encounter leasehold agreements, so understanding the process of lease renewal is crucial.Purchasing a Property: What You Need to KnowWhether for personal use or investment, buying property requires careful planning. Here are the steps to ensure a smooth transaction:&nbsp;<ul><li>Engage a Lawyer: This can be considered the most important feature, They’ll do the heavy lifting, examine documents, verify claims, and ensure you’re not walking into a legal trap, they will also help you understand the fine print, draft contracts, and ensure compliance with the law with the necessary due diligence on the under listed steps.</li><li>Conduct a Search: Visit the land registry to verify the property's title, ensure there are no encumbrances, and confirm the seller’s ownership. Think of this as running a background check on the property such as; Is the seller the true owner? Are there any legal disputes or loans tied to the land?</li><li>Physical Inspection: Visit the property and make further enquiries from neighbours within the environs.</li><li>Encumbrances: Conduct due diligence to ensure the property is not subject to mortgages, disputes, or court orders.</li><li>Disputes with Traditional Landowners: When dealing with customary land, engage the community leaders to confirm the land's status.</li><li>Verify Land Use: Check if the land is zoned for your intended purpose (residential, commercial, industrial, etc.). Not all land is created equal, some are designated for residential use, others for commercial or agricultural purposes. Make sure the land aligns with your plans.</li><li>Survey: Engage a Surveyor to verify property boundaries and prepare survey plan for the property.</li><li>Execute a Contract and/or Deed of Assignment: A property purchase agreement must detail the terms and conditions of the sale, signed by both parties. Have a lawyer draft a solid purchase agreement detailing everything from the price to the handover date.</li><li>Obtain Governor’s Consent: This is mandatory for any land transaction involving property under a Certificate of Occupancy. It might sound tedious, but this step is non-negotiable. Without it, your transaction isn’t legally valid.</li><li>Payment of Stamp Duty and Registration: Complete the payment of stamp duties and register the transaction at the appropriate land registry, this makes your ownership official in the eyes of the law.</li><li>Taxes: Stamp Duty to be paid on the purchase agreement. Land Use Charge: In states like Lagos, this is an annual tax paid by property owners.</li></ul>&nbsp;Selling/Transfer of Property:Selling property can be as complex as buying it. The following steps can help streamline the process, making it seamless:1. Prepare the Title Documents: Ensure you have all necessary documents, including the Certificate of Occupancy, Deed of Assignment, and receipts of previous transactions. Buyers will want to see proof of ownership.2. Valuation of the Property: Work with an estate agent or valuer to set a fair price that attracts buyers without underselling your asset.3. Engage a Lawyer: A real estate lawyer can help draft a water-tight sales agreement and facilitate negotiations with the buyer, so nothing is left to chance4. Real Estate Agents: They’ll help you find buyers or sellers and negotiate favorable terms and assist in locating properties.5. Payment and Transfer: Secure payment from the buyer before executing the deed of assignment and transferring ownership by proper handover of title documents.6. Tax: Capital Gains Tax Sellers must pay tax on any profit made from the sale.&nbsp;Land Transactions When the Owner Passes Away: Testate and Intestate SituationsDealing with property after the owner passes away can be complex, especially in Nigeria, where laws on inheritance, family, and landownership often intersect. Here’s what you need to know about handling property when the owner dies. Whether the person left a will (testate) or didn’t (intestate), understanding how property is transferred in such situations can save families, intending buyers from confusion and disputes.When the Owner Dies Testate (With a Will)If the deceased left a valid will, the process is typically straightforward:&nbsp;<ol><li>ProbateProcess: The will of the Testator must first go through probate, which is a legal procedure where a probate court confirms the will’s validity. The probate court appoints an executor in accordance to the wishes of the Testator, the person responsible for managing and distributing the deceased’s assets.</li><li>Transferring the Property:</li></ol>&nbsp;a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; If you’re a beneficiary of the will, you’ll need to apply to the land registry to update the property’s title. This often involves providing the probate order, the deceased’s death certificate, and the original title documents. the executor will then assist to transfer ownership.&nbsp;<ol><li>For leasehold property, don’t forget to obtain the Governor’s Consent to validate the transfer under the law.</li><li>Ensure all taxes and fees (e.g., land use charges) are settled before the transfer process begins.</li><li>If the property has tenants, their lease agreements should also be reviewed.</li><li>Ensure the property has no legal encumbrances, such as unpaid taxes or unresolved disputes.</li><li>Obtain the Governor’s Consent if the property needs to be transferred under a leasehold arrangement.</li></ol>&nbsp;When the Owner Dies Intestate (Without a Will)Things get trickier when the deceased didn’t leave a will. In this case, the property is divided according to specific laws or customs. Here is an outline of procedure to consider.Challenges of Intestacy: Family disputes over property can be emotionally draining, particularly when the property is valuable or when multiple heirs stake a claim. If issues arise, try mediation or involve a trusted elder to resolve them amicably.&nbsp;<ol><li>Letters of Administration: Family members must apply for letters of administration from the probate registry of the court. This document gives the appointed administrators the legal authority to manage and distribute the deceased’s assets, including property.</li><li>Distribution of Property: The rules of inheritance are governed by customary law, Islamic law, or the Administration of Estates Law, depending on the deceased’s religion, marriage, ethnic group, or place of residence.</li></ol>&nbsp;Customary law often favors male heirs in some parts of Nigeria, while Islamic law follows specific principles of inheritance (e.g., a wife may inherit one-eighth of her husband’s property).3. Engage a Lawyer: They’ll help you navigate the legal maze of probate or letters of administration, ensuring compliance with the law.4. Verify Ownership Documents: Ensure the deceased’s title is valid and free of encumbrances before any transaction.5. Resolve Disputes Amicably: Family disagreements over inheritance can drag out property transactions. Mediation or family meetings can help.ConclusionBuying or selling property in Nigeria doesn’t have to be overwhelming, it can be rewarding but requires a keen understanding of the legal framework. By conducting proper due diligence and involving legal experts. Remember, due diligence isn’t just a legal requirement, it is your shield against fraud, a safeguard of your investment and avoidance of potential disputes.

A Guide to Real Estate in Nigeria (Legal Compliance)

Share on social media