Real estate investment continues to be a profitable financial venture in Nigeria. Acquiring real estate offers the potential for capital appreciation. However, like all investments, real estate carries risks if not acquired properly. In this article, we will be considering the various stages of a real estate transaction and what every buyer needs to know before buying property in Nigeria.
WHAT ARE THE STAGES OF LAND TRANSACTION IN NIGERIA
For a successful property transaction, it is recommended that every real estate investor goes through the following stages:
a. 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. 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 a 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 not a subject of litigation etc
b. Contract Stage:
If you decide to proceed with the purchase of the property after completing your due diligence, the next step is the property transaction stage. During this stage, the terms of the property transaction are negotiated and agreed upon. This includes discussions about the purchase price, mode of payment, and the date when the buyer will assume full possession of the property.
The buyer at this stage ensures that relevant agreements are prepared by the lawyer on behalf of the client. The type of agreement prepared will depend largely on what is agreed upon. For instance, if the buyer is to make payment for the property in installments, 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.
c. 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 signing 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. It’s important to note that this is also the stage at which the seller will relinquish all rights to the property.
d. 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, the payment of stamp duty is required, and the amount is calculated based on the value of the property. 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 in 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.
CONCLUSION
Real estate investment can be highly profitable for buyers if managed correctly. That’s why it’s essential to seek the services of an experienced legal professional to avoid incurring significant financial losses. If you need legal advice or assistance with a real estate transaction, please contact us HERE or through the WhatsApp icon on this page, and we will be happy to assist you.
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