A Complete Guide To Conducting Due Diligence Before Buying Land In Nigeria

Introduction

Like any other investment, buying a landed property in Nigeria comes with risks. Yet, it remains one of the most rewarding investments if done right and with the right professionals. Every year, countless buyers lose money to fraudulent sales, fake documents, double allocations, and government-acquired lands sold by unauthorized persons. This often stems from failing to conduct due diligence before buying the property.

Due diligence is the single most important step in a land transaction that reduces these risks and protects your interest and investment in the property in the long run.

What is Due Diligence in Land Transactions?

Due diligence in land transactions is a thorough investigation of the legitimacy of that land and identifying any potential issues or encumbrances with the land before committing to buy it. This usually involves inspecting the physical land, inspecting the title document, verifying the ownership history of the land at the land registry, and sometimes, even a background check on the seller's agents. It involves legal, financial, or physical due diligence.

Why is Due Diligence in Land Transactions Important?

Due diligence in land transactions is important for the following reasons:

1. It greatly minimizes or eliminates the likelihood of future disputes as to the title of the property.
2. It saves you extra time and money spent on land disputes in court.
3. It helps uncover hidden issues in land transactions, keeping you from making bad real estate investments.
4. It also keeps you from losing money to fraudulent sellers.
5. It helps uncover the property's true value and allows you to negotiate a fair price.

Steps in Conducting Due Diligence When Buying Land in Nigeria?

Engage Professionals for all Land transactions

While most prefer to do due diligence themselves due to the cost of hiring lawyers or real estate professionals, it's always better to use the expertise of lawyers and surveyors before buying land or even negotiating a good purchase price in Nigeria. This is crucial because these professionals know how to spot fake documents, detect irregularities, and know where to look to verify the seller's title. Engaging professionals early can prevent costly mistakes later.

Conduct a background check on the Seller or Agents

Land transactions could involve agents, developers, or representatives. Some agents operate without licenses, as required in some States like Lagos State, and are not connected to the actual owners. If a corporate entity is involved, confirm that the sellers are bona fide officers of the company. If the land is a communal or family land, be sure that the agents have the authority to sell the land and that the communal or family head signs the formal contract.

Carry Out Physical Inspection of the Land site

Before buying any land in Nigeria, visit the location of the land with a lawyer and a surveyor. Physical inspection helps you confirm that the land exists and matches the survey plan in the title document. It also helps confirm that the land is accessible and not waterlogged, and that there are no signs of encroachment, boundary disputes, or ongoing construction by others.

During the physical inspection, it is important to ask every possible question about the land, as the seller has a legal obligation to disclose only latent defects of the land to the buyer.

Also, when carrying out a physical inspection of the property, it is helpful to speak with neighbors or community members, as some people may be aware of any disputes involving the land. If the land is a family property, community members may be familiar with the actual head of the family, who is the single most important person in a sale of family land transaction.

Obtain the Seller's Registered Survey Plan for the Land

Part of due diligence in a land transaction involves getting a surveyor to verify that the survey plan, usually in the seller's title document, was registered.

The surveyor checks whether the survey is genuine by taking coordinates of the land at the Office of the Surveyor-General, and conducts a charting to confirm that the coordinates do not fall under government acquisition, and the boundaries correspond with what is physically on site.

Inspect the Seller's Land Title Documents

Before any money exchanges hands, you should confirm that the person or entity selling the land truly owns it or has legal authority to sell the land on behalf of the owner by inspecting the owner's original title document.

A title to a land document is a document that proves a person's ownership of land. A title document could be a Certificate of Occupancy issued by the Government, a Deed of Assignment, a Deed of Gift, etc. If the land is sold by the owner's legal representative, ask for the power of attorney given to the legal representative to sell the land on behalf of the owner.

The seller is to present his "root of title", usually contained in the actual title document.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.