Land acquisition in Nigeria is a technically and legally involved enterprise that requires utmost detail if the transaction is to be seamless. At the heart of this process is a land purchase agreement, otherwise called a sale agreement or contract of sale, which, in relation to real property, originates from the sale of land and spells out its terms and conditions. The discussion that follows will examine the Land Purchase Agreement in Nigeria, detailing a clear outline of the legal framework, basic elements, and good practices to protect the respective interests of both buyer and seller.

Legal Framework on Land Transaction in Nigeria

The land tenure and its registration in Nigeria are basically governed by the Land Use Act of 1978. This Act vests all land within a state under the governor, who holds it in trust for the people. It was intended to rationalize land administration and reduce land speculation. Furthermore, some of the other important legislations that have been enacted to regulate land transactions in the entire country include the Property and Conveyancing Law, the Registration of Titles Law, and the Stamp Duties Act.

Fundamental Elements of an Agreement for the Sale of Land

In order for any agreement for the sale of land to be held valid in law and to serve the best interests of the parties, it must comprise a few fundamental elements:

1. Parties to the Agreement: The agreement should clearly mention the seller, vendor, buyer, or purchaser with their full names, addresses, and relevant identification details.
2. Recitals: This part briefly narrates the history of the land’s title from the original owner right down to the present seller.
3. Property Description: A detailed description of the land, location, size, boundaries, and any special features. Most of the time, a plan or map is attached to add a visual dimension.
4. Purchase Price and Payment Terms: The agreement must contain a statement of the purchase price, how it will be paid, the initial deposit, the subsequent payments, and the time frame in which the transaction is likely to be completed. It must specify how the money will be paid, whether by bank transfer or cheque.
5. Conditions Precedent: These are certain requirements that are to be satisfied before the agreement becomes binding, such as obtaining necessary approvals, due diligence, and verification of the title of the property.
6. Representations and Warranties: Normally, the seller gives warranties and representations about the title to the property and its being free from encumbrances, and also about compliance with planning regulations. The buyer may also give warranties about their ability to buy the property.
7. Covenants: These are promises or undertakings by the parties, like the seller’s commitment to transfer a good and marketable title and the buyer’s obligation to pay the purchase price as agreed.
8. Title and Title Documents: It should provide for what type of title will be transferred, e.g., Statutory Right of Occupancy, Customary Right of Occupancy, etc., and state the relevant Title Documents, such as Certificate of Occupancy, Deed of Assignment, and Governor’s Consent.
9. Completion and Possession: This clause should contain the completion date, the date by which the last installment has to be paid, when finally, the property is transferred, and the date on which the buyer takes actual possession.
10. Indemnity and Insurance: Indemnity clauses are those that protect from losses arising from breaches of the agreement, and the buyer may require the seller to maintain insurance cover till such time as the property transfer is complete.
11. Dispute Resolution: The agreement should contain a process of dispute resolution through the mechanism of arbitration or mediation.
12. Governing Law: The Agreement shall be governed by the laws of the Federal Republic of Nigeria.

 

Due Diligence in Land Transactions

Due diligence is an intricate stage in the land transaction process, purposed to prove the title of the property and ascertain the authority of the seller to sell, as well as to establish the existence of any legal encumbrance against the property. Due diligence entails:

Title Search: A search at the land registry to ascertain that the seller is the owner and to know if there are any encumbrances or disputes on the property.

Survey Plan Verification: That the survey plan correctly describes the property and is filed at the Surveyor General’s office.

Governor’s Consent: Obtaining the Governor’s Consent to the transfer of interest in the land, as required by the Land Use Act.

Verification of Planning Regulations or Building Approval: Verification that the property is in line with the planning laws and that there are no restrictions on the manner by which it is to be used.

Best Practice When Drafting and Signing Off on a Land Purchase Agreement

To ensure an efficient and legally sound land purchase, follow these steps:

1. Seek the Advice of Legal and Other Experts: Both parties have to engage competent legal practitioners who are conversant with such cases and surveyors, to enable them to draft, peruse and execute the agreement on their behalf, taking into consideration all relevant laws.
2. Full Disclosure in Negotiation: Any open and clear negotiation will give both parties clear expectations. The terms shall be mutually agreed and clearly expressed on record.
3. Full Documentation: All documents are to be prepared and annexed to this agreement; examples include title documents, survey plans, etc.
4. The buyer shall ensure timely payment of agreed consideration in the manner and at the intervals that are stipulated, while the seller is to raise immediate acknowledgment to forestall disputes.
5. Obtain Required Consents: Upon signing of this agreement, ensure that all necessary consents and/or approvals, as may be required—Governor’s Consent, among others—to be obtained in order to forestall legal proliferation at a later time.

 

The land purchase agreement is such an important document in any real estate transaction process in Nigeria, simply spelling out the roles and duties of parties to the contract and serving as a guide on how best to legally safeguard the smooth transfer of property. With the essential components, due diligence, and best practices, the buyer and seller will be confident to go through the intricacies involved in land transactions, thereby reducing the associated risks. Ensuring a successful and legally sound land purchase agreement involves engaging the services of experienced real Estate Lawyers and maintaining open lines of communication every step of the way.