Legal Tips For Land Investment That Guarantees Peaceful Ownership.

One of the many things that bother people about investing in land is the security of that land and its peaceful enjoyment. Because of the bad experiences some persons have had personally or those around them, they find it difficult to invest and benefit from one of the most lucrative businesses in our time. This of course has led to loss of great opportunities to earn that long awaited financial freedom from dependence on relations and friends for financial support which come at a cost: insults and what have you.

One may want to ask, what are those fears people have that have kept them in the dark? We will highlight them briefly before going into the main discourse of the day. They include:

1. Fear of land grabbers: These set of people have no other business than to resell people’s lands which to their knowledge have already been duly acquired. The cost of recovering such lands sold by these land grabbers is often costly which has led many people to either abandon their lands to them or rebuy the same land from them. This is a major challenge across Nigeria. We recently brokered a property transaction for a client. The vendor told the story of how he purchased land in another State away from his residence and how, three years later, the “omo-oniles” told him to bring additional money if he wanted to continue to own the land. Eventually, he had to forfeit the land! Many people have had similar experiences dealing with land grabbers.
2. Purchasing a property from the wrong person(s): This usually occurs where persons falsely portray themselves as the owners of a land thereby selling it to unsuspecting buyers. After the purchase price has been paid, the true owner shows up. The sellers abscond with the money while the purchaser is left unaided. We know of the story of someon e that was lured to pay for a property (having inspected the land). The fraudster used the exact name with the owners of the land and absconded the moment he got paid.
3. Wrong choice of property or location: When you purchase property which does not fit the purpose for which it is required, it becomes useless as its purpose has been defeated. An example is the situation where someone buys land in a location marked for residential activities when the intention is to buy and build for purely commercial activities. Similarly, when you purchase a property in the wrong location, you may have to spend far more than you would have expended if such property were purchased in a better location.

The big question now is: what should be done to remedy this situation; what have others done differently that helped them to enjoy peaceful possession?

We shall be highlighting some points and touching bit by bit

Due diligence: The common mistake people make in the purchase of property is that they want to undermine the importance of a Lawyer in the transaction. Sometimes, they believe the lawyer’s duty is just to write papers which they can easily do on their own. However, due diligence is one key aspect of property transactions. Failure to do due diligence on a property most of the time leads to loss of investment. Due diligence refers to the lawyers’ investigation into the ownership of the property. It is upon clearance from your lawyers that you safely proceed to purchase a property. Because of the fact that land appreciates in value everyday, only proper due diligence will reveal the true owners of the property. When you acquire property from the true owners; those who have the capacity and authority to sell, you can then enjoy peaceful ownership.

The kind of due diligence to be done will usually depend on the title, owners and location of the land. It takes a combination of legal knowledge and ability to manage relationships to do a thorough due diligence.??

1. Location of the property/choice property:? The location of the property also matters a lot. When purchasing a property, you must ensure that the location of the property permits the use for which you are purchasing the property. This has to do with town planning laws and the development plan of the site of the land. For example, an area designated as a business area cannot be a good choice to purchase a property for residential use and vice versa. We know of someone who made a purchase in a seemingly lovely location and wanted to apply for some approvals from the Town Planning department, his application was rejected because the location was designated for residential while his intention was to do business on commercial scale in the vicinity.
2. Perfection of title: One way to secure peaceful enjoyment of one’s property is to ensure that the title documents to the land are duly registered: payment of stamp duties, obtaining the Governor's Consent and possession of Certificate of Occupancy which is usually issued upon successful registration of the title deeds. It is not enough to have your deed of assignment, though it sufficiently shows your purchase of such property. However, when you fail to register the property you have purchased and someone else does purchase and registers it, the law will grant ownership to the new buyer because you do not have a registered title to such property. So, do not go to sleep the moment you get your lawyer to prepare a deed, you must ensure to process the registration of your ownership with the government
3. Getting Insurance for Your Property: Insuring your property against any loss is one of the covenants often added to lease agreements on high profiled properties. Insuring your property against any loss ensures that at all times your property is safe. If for any reason there is a loss, the insurance policy which you have taken out covers such losses. That way, you continue to have that peace of mind while enjoying your property knowing that it is safe at all times.
4. Using a Company Name as Investment Owner: For those who intend to build and sell, it is safer to have a registered company. This is to guard against any personal liabilities which sometimes occur in the course of delivering on the building project. Some site accidents do happen which might not be envisaged. Operating as an individual developer will be a dangerous trend at that point in time. The company bears the liabilities while you only contribute to the extent of your shareholding in the company. We must however mention that the cost of processing government papers is sometimes inflated when a company owns the property. The entire factors must be looked at in deciding the best approach for the ownership.
5. Prepare Contracts That Guard Your Investment: One of the things other successful investors have done is to prepare a contract that regulates their transactions. It is not enough to have an oral understanding because you have known each other for ages. Those understanding should be reduced into writing. Those coming to purchase from you likewise must have a signed agreement. This is also used to guard agreements on civil liabilities. It also defines the responsibilities of partners in the business in the case of a partnership. Years ago, a man helped his friend to pay off company debts and they made a verbal pledge that the man may take over the company property if the friend did not refund the money within a stipulated period. Unfortunately, the man and his friend passed on just before the agreed period and it became a dispute among the heirs. Things may have been different if the man refused to be blinded by the relationship and instead insisted on preparing an agreement to protect his interest.
6. Hire a Professional Accountant: Many people believe that they can readily calculate what they are spending because they think they can manage their own affairs. However, the place of a professional accountant can not be overemphasised. For someone who intends to develop property and make profits out of it, it is very crucial to have an accountant who helps in calculating your profits and losses. This is important most especially in cases of tax payment. When you don’t carry out a proper account audit, you are bound to pay taxes even on the invested sum. A professional Accountant will help avoid such incidents.
7. know Short-Term Rental Legalities: Another way to exact ownership of land is to run a Short-term rental. This enables you to give out your property for a very short time while making profit from the property. As long as you continue to rent out the property as the lawful owner, in the case of dispute as to the ownership of the property, you always bring receipts issued to persons who occupied the property during the period to show ownership of the property. Another benefit of this is where you are not physically present to monitor the land, getting tenants on a short lease helps to ensure that the land is not desolate and thereby a target of land grabbers.
8. Possession: It is not enough to own a property. It is important to enter into possession of the property immediately after it is purchased. You need to exact some level of ownership by either being in the property yourself or giving it out on lease. Possession is 9/10 of ownership. One of the things we usually recommend to those buying land from native owners is for them to do acts that will show they are in physical possession (like clearing the land, mounting a signage, doing a mini-get together on the land, etc). This is because you may never be sure of who owns a land until you physically possess it. Where a property, especially land is abandoned by the owners, the principle of laches and acquiescence? will apply. In Nigeria, where a property is abandoned for a period of 12 years, whoever has possessed the property undisturbed during that period is deemed the owner. Moreso, in Lagos state, while tracing the root of title, 20 years is a sufficient time to show ownership. Thus, it is important to take possession of your property upon purchase.?
9. Special Assessment Liens: This refers to taxes imposed by the local government asides all other taxes from the government. Payment of taxes is another way you can legally secure property. Upon payment of those taxes to Local Governments or any issuing bodies, the receipts always carry the name of the payer of such taxes. It will be out of place to presume that the tenant pays taxes on the property that does not belong to him. Even though you are? not on the property physically, continued payment of those levied taxes is a sufficient proof of ownership.?

SUMMARY:

In summary, to guarantee peaceful ownership of your property, you must endeavour to protect your property by applying the highlighted points and pay regular visits to the site of your property. This will help know if there is any encroachment into the property. You can also check out our article on Guidelines for Foreigners when Buying Property in Nigeria.