HOW TO BUY A PROPERTY IN NIGERIA AS A FOREIGNER

INTRODUCTION

Every foreigner is entitled to purchase property in Nigeria, whether as an individual or an entity. However, such an acquisition is subject to certain restrictions under the Land Use Act. The Act confers ownership of land on the governors of each state. As a result, foreigners are not permitted to acquire a freehold interest in land but may obtain a leasehold interest for a term of up to 99 years. In addition, non-Nigerian citizens or entities are required to secure the prior approval of the Governor of the state where the property is situated, commonly referred to as “Governor’s Consent’’. [1]

This article seeks to explore how to buy a property in Nigeria as a foreigner, the legal steps for acquiring a property as a foreigner, whether a foreigner is entitled to acquire a property and live in Nigeria and the importance of engaging a legal professional in your property transactions.

WAYS IN WHICH A FOREIGNER CAN ACQUIRE A PROPERTY IN NIGERIA

Basically, there are two ways, namely;

1. Through a Registered Company in Nigeria: One of the ways through which a foreigner can buy land in Nigeria is through a registered company in Nigeria, which is fully owned by such a foreigner. However, this does not mean that a foreign-owned company can be set up in Nigeria instantly. This is because by virtue of Section 78 of the Companies and Allied Matters Act 2020, a foreign company is required to register such a company locally as a Nigerian company before it can be allowed to do business, except in some exceptional cases, especially when they want to operate for a short period or on specialized projects.[2]
2. Through the foreigner/alien’s individual name

HOW TO BUY A PROPERTY IN NIGERIA AS A FOREIGNER

WATCH HOW TO BUY LAND IN NIGERIA HERE

The law provides that a Non-Nigerian Citizen can buy a property in Nigeria either through a registered company in Nigeria or personally, but cannot have absolute control over such land permanently and indefinitely rather, they can hold a Statutory Right of Occupancy, which enables them to use and occupy the land for a long term of up to 99 years.

Buying a property in Nigeria as a foreigner, such as land, requires complying with the legal, administrative and regulatory requirements. While Nigeria does not completely forbid foreigners/aliens from acquiring or owning landed properties, there are limitations and steps to be followed to regulate such transactions.

In practice, acquiring land in Nigeria, whether as a foreigner or Nigerian, requires you to go through the following stages:

1. Pre-Contract Stage: At this stage, preliminary investigations on the property have to be made by the buyer. This is important to avoid the risks associated with acquiring a defective property during the transaction or in the future. A due diligence search or investigation can be carried out by the buyer through his lawyer. In fact, having professional legal assistance involved in your property transaction at this stage is a necessity, as the latter is in a better position to spot defects in title or ownership rights which may not be obvious to the buyer at this stage.

Questions such as:

1. Does the seller have the right to sell the property?
2. Is the physical nature of the property suitable
3. Are there pre-existing debts or liabilities owed by the seller?
4. Whether or not the property is a subject of litigation, etc

2. Contract Stage: Where you are willing to proceed with the purchase of the property after carrying out your due diligence, the next stage of the transaction is the property stage. During this stage, the terms of the property transaction are negotiated and agreed upon.  Concerns about the purchase price, mode of payment, when the buyer assumes full possession of the property e.t.c will be addressed. The buyer at this stage ensures that relevant agreements be prepared by the lawyer on behalf of the client. The type of agreement prepared will depend largely on what is agreed on. For instance, where the buyer is to make payment for the property in instalments, a Contract of Sale will be prepared. However, the terms are negotiated; it is advisable to use the services of a lawyer to ensure your interests are protected.

3. Completion Stage: The completion stage is the final step in the property transaction process before the perfection stage. At this point, all preceding processes must have been completed, and the purchaser’s solicitor will draft the title document. During this stage, several activities take place, including delivery of possession to the purchaser, payment of the balance of the purchase price, preparation and execution of conveyance agreements by the parties, transfer of all original documents from the seller to the buyer, and transfer of legal interest to the buyer, subject to perfecting it. This means that the final document will be executed, and any additional requirements, such as traditional rites, will be completed by the buyer. It’s important to note that this is also the stage at which the seller will relinquish all rights to the property.

4. Post-Completion Stage: There are three essential steps to be completed in the following order. First, obtain the governor’s consent, which is crucial and must be done promptly to avoid penalties for delays. Next, stamp duty must be paid, and the amount is calculated based on the property’s value. Finally, the property must be registered at the Land Registry. This step cannot be completed unless the first two have been fulfilled. Registration is necessary for several reasons, some of which are: in the event of a dispute on the property, priority is given to the party who first registers interests on the property. Secondly, in the event of a subsequent sale as a buyer, your ownership right on the property can be verified by a subsequent buyer when conducting due diligence on the property.

 The Importance of Having a Lawyer in Property Transactions

The importance of having a lawyer while conducting property transactions cannot be overemphasized. A lawyer is essential for successful property transactions for the following reasons;

1. To conduct due diligence and investigations: A lawyer carries out a thorough investigation to give proper legal advice suitable for the transaction and to check if such property is subject to government control or any pending disputes.
2. Documentation and Evaluation: A lawyer ensures proper documentation of the property transaction to ensure that the interests of the client are well secured.
3. Regulatory Compliance and Registration: It is a duty of the lawyer to ensure that the document is registered with the appropriate authority and that the process of registration complies with the legal and regulatory provisions.
4. Mitigation of Risks: A lawyer ensures that there is no form of fraudulent transaction, as well as resolves any form of legal disputes that may hinder the smooth process of the transaction.
5. Completion of the Transaction: Lawyers handle the entire closing process, from executing documents to transferring ownership and funds securely

Conclusion:

Buying a property in Nigeria as a foreigner involves certain legal restrictions, but the process can be easier with proper planning and compliance with the law. By seeking guidance from legal professionals and conducting adequate due diligence, foreigners can successfully invest in Nigeria’s growing real estate market and benefit from property ownership or long-term leasehold in the country.

For enquiries on how to buy a property in Nigeria as a foreigner or professional assistance with buying a property, use the live chat/WhatsApp icon on the lower right part of this page, or leave a message using this form here, and we’ll respond to you.

[1] Land Use Act 1978, s 22.

[2] Companies and Allied Matters Act 2020, s 78.