Property (Real Estate) Transactions With Their Attendant Risks
By Benita Ayo
Mrs Lewis is a Nigerian in Diaspora who decided to invest her money in Nigeria. In order to do this, she sought the view of her long-time friend named Kunle, a Nigerian-based hotelier, who advised her to invest in the real estate sector of the Nigerian economy.
He convinced her to invest in properties located at the New Lagos (Lekki, Ajah and environs). This, according to Kunle, will appreciate with time and bring back huge returns on Mrs Lewis’ investments.
The idea sounded so good to Mrs Lewis that she wired $200,000 to Kunle for the purchase of some plots of land in the area, also telling him to purchase duplexes in her name.
Kunle, upon the receipt of the money through Western Union, met with LIA Estate Company in Lekki for the purchase of 10 plots of land and two duplexes.
Unknown to Kunle, the land sold to him on behalf of Mrs Lewis is subject of an ongoing litigation (lis pendis), a family property without approaching the principal family members and not to mention that the property is very close to the highway and has been earmarked for government’s future project.
The foregoing reflects the realities of the real estate sector in Nigeria today particularly, Lagos State. There are so many risks involved that it is even riskier to approach it without a legal counsel.
Majority of property transactions in Lagos are conducted by the clients themselves and they only involve the services of lawyers afterwards and this happens when they encounter one problem or another associated with the purchased property.
I have always believed that if a lawyer is meant to solve a problem, then a lawyer is also meant to avoid a problem.
I have also always emphasized the need as well as the importance of consulting a legal practitioner before any step may be taken to invest one’s hard earned money in any property.
No matter how good and mouth-watering a prospect may seem, it is always wise to find oneself a really good and experienced property lawyer, who will represent the client’s interest in such transaction.
After being briefed, a lawyer’s duties and responsibilities in a property transaction include;
- To investigate the estate company (where you choose to buy from them)
- Where you choose to buy from an individual, you must investigate the title of the person, etc
- Where there is sound and good title, the lawyer approaches the seller (vendor) with an offer
- Where there’s no counter-offer, the terms of the offer will be conveyed as an acceptance by the seller.
Where these steps are done (note that there are preliminary steps lawyers need to take prior to the consummation of a property transaction), the lawyer drafts the necessary documents.
- A Sale Agreement: this is necessary where the actual sale will take place at a later date until a condition precedent is fulfilled. It is an executor sale
- Contract of Sale: this becomes necessary where all conditions of sale have been met. It is an executed or completed sale
- Deed of Assignment
- Deed of Indemnity: this document becomes necessary in a land transaction where it is necessary for the buyer to absolve himself of any liabilities or loss or extra cost incidental to the purchase. The clause is often slotted in to the agreement but it is sometimes helpful to have a deed of indemnity executed on its own.
Having discussed the importance of legal consultation before embarking on a property investment mission, I have also discussed what a lawyer representing his client is expected to do. It is my hope and expectation that anyone looking to invest in property, particularly in Lagos, should do so through a lawyer with first-hand experience in property practice, bearing in mind the financial responsibilities involved as well as the attendant risks in such transactions.
In the scenario stated above, if Kunle had gone through a lawyer, a really good property lawyer, who knows his/her onion, he would have been advised against the purchase of property which is so close to the highway as a closer investigation would have revealed that it was within government acquisition.
The government might have decided to expand the highway and earmark such a property for its expansion projects. In this case, the buyer will suffer a huge loss.
Benita Ayo is an Associate at Ayodele, Olugbenga & Co, 9th floor, UBA House, Marina Lagos, Nigeria. She may be contacted on WhatsApp: 08063775768 and email: [email protected].