Due Diligence can be described as investigations conducted on a particular thing prior to carrying out any activity on that thing. In simple terms, due diligence is akin to checking out online reviews for a laptop before buying the laptop.
Some people carry out extensive research before buying the latest smartphones. They check the internet, attend phone exhibitions, visit the manufacturer’s site, do a virtual tour of the phone, get first-hand feedback from other users etc. Therefore, it is surprising how people still buy land in Nigeria without consulting a solicitor knowledgeable in real estate transactions. There are so many advantages of consulting a competent solicitor before embarking on the purchase of a property.
Your solicitor has the necessary knowledge to verify the title documents of the Vendor. This goes beyond being informed at the Lands Bureau that the property you intend to purchase is registered. There are various types of agreements that can be drafted to transfer title in a property. For example, if Mrs. Gold inherited a property from her late father, her evidence of title should be a Deed of Assent and not the Deed of Assignment or Certificate of Occupancy in her late father’s name. You need a solicitor to identify significant issues like this.
Years back, a client paid a significant fee to verify the title to a property he wished to purchase and resell at a higher value in Lagos. He was initially reluctant to pay the verification fee as he was uncertain he will be purchasing the property. However, he erred on the side of caution and requested that the title be verified. Whilst all the documents provided by the Vendor checked out at the Lands Bureau, it was discovered that the coordinates on the survey plan did not match the actual coordinates of the land as the land was under acquisition by the state government. This means if he had not carried out the verification, he would have purchased a property that had partly been acquired by the government for a specific use. To date, he recounts the incident stating he was saved from fraudsters.
Any solicitor dealing with land transactions will tell you each land transaction is different in itself. If you are not dealing with a simultaneous exchange of consideration (e.g. cash) and existing title documents (e.g. Certificate of Occupancy) you will likely need a sale and purchase agreement which is drafted to suit the transaction at hand, as opposed to using a template agreement. Having a real estate agent provide you with a legal agreement is risky and careless. A competent solicitor knows what clauses to add in order to protect your interests in each circumstance.
The ownership of a property was in dispute and so the unregistered deed of assignment was reviewed to identify the terms. It was discovered that the deed was not dated – neither at the beginning of the deed nor at the execution section by the parties, to work out when the property was purchased. In addition, there were no names, just four signatures for both parties. Unfortunately, this was a fundamental fact in the dispute and the deed which was to bear witness to what happened over 20 years ago was mute. When you engage the services of a competent solicitor, you are more confident that you will be executing an effective contract that will stand the test of time.
We can go on and on about the advantages of conducting proper due diligence, sadly not all property buyers consider this a prudent move. However, it pays to be diligent to avoid poor property investments.
For questions and/or legal advice on property due diligence, please send an email to email@example.com