BEFORE YOU PURCHASE THAT LAND (1)
- March 21, 2017
Meet John. John has been working at a little known IT company for just over five years. John is the perfect embodiment of one who saves for the proverbial rainy day. He has a neat stash of money boarded up in the bank, and wants to invest some of it wisely. The possibilities are endless.
One day, he comes across an advert, splashed in red and blue and white across a billboard on Sullivan road.
”BECOME A LANDLORD IN LAGOS! BUY LAND AT MOUTH WATERING PRICES!”
John scribbles the contact details in his diary and schedules a meeting the following day.
Mr. Fantastic, the agent, meets with John in the dimly lit lobby of One Chance hotel. He assures John that he has nothing to worry about. John agrees to pay two million naira for two plots of land on Kasuwa road. John is excited because Kasuwa road is close to the proposed Delta International Airport, and the new seaport. He can already see the multi-storey office complex he will put up on his newest acquisition.
Mr. Fantastic persuades John to pay as soon as possible, because the land is ”hot cake.” John ignores his misgivings about Mr. Fantastic’s insistence on full payment in cash.
”Finally, I will become a landlord in Lagos.”, He says to himself. Mr. Fantastic receives the money and gives John a plastic folder containing ” all the documents”.
John later sets up a trip to inspect his newest acquisition at Kasuwa road. On the day of the trip, Mr. Fantastic does not show up. He rushes to One Chance hotel to seek him out, but the concierge informs him that Mr. Fantastic has since checked out. His phones are switched off, and John does not have his office address- their meetings were at the One Chance hotel.
John attempts to locate the property on his own. He is shocked to find that his dream land is the construction site for the New Airport Hotel. The Lands Registry officials console him, as it is discovered that the land documents are fake. John is on the verge on a nervous breakdown.
Making an investment in real estate is a very big step. It is a process that needs to be followed with great care, in order to avoid incurring debilitating financial losses. There are guidelines to follow to avoid a slew of problems for the buyer, as seen in the scenario above. Want to know? Keep reading!
#1. Budget! Budget! Budget!
Need I say more? The first thing to do is to draw up a budget. One must draw up a budget in order to plan effectively. It is wise to have a price range to avoid excessive spending.
#2. Inspect the Seller’s Documents
It is important to inspect the seller’s documents relating to the parcel of land in question. This is to ensure you are buying from the true owner of the land, or a person who has the authority of the owner to sell the land. This is also to certify that the seller possesses the authentic title documents to the land. Look at it this way: you would not purchase a car without verifying that the car documents are in order. This also applies to land transactions, and even more so because of the rate of land scams in the country. Such documents include deeds of assignment, survey plans and receipts.
The buyer must insist on inspecting the title documents, and if the seller cannot produce such same, it is a red flag and the buyer must tread with great caution.
#3. Engage the Services of Professionals
It takes a village to purchase a parcel of land. A buyer cannot really purchase land in isolation. One must engage the services of professionals to complete a sale transaction successfully. The services of a lawyer and a registered surveyor are to be engaged to ensure a hitch free transaction. A lawyer prepares and processes legal documentation for land transactions, while a registered surveyor draws up the survey plans of the land.
Alternatively, you may retain the services of a full service real estate company to complete the sale transaction from start to finish.
#4. Land Verification Search/ Due Diligence
This also commonly known as due diligence. Due diligence simply means an action that is considered reasonable for people to be expected to take in order to keep themselves or others and their property safe.
Before you part with your money, it is important to conduct a comprehensive land verification search. The purpose of the search is to verify the owner, how he got the land previously, and why he wants to sell. Land verification discloses whether the land is subject to a communal or legal dispute. Also, land verification ensures the land is free from government acquisition, and complies with government regulations.
Finally investigating all the owner’s title documents such as a Survey plan, deed of assignment, contract of sale, certificate of occupancy(C of O), Governors Consent, Gazette, Letter of Allocation, Receipts, Deed of Transfer, Power of Attorney ascertains the validity of the documents.
Land verification searches can be carried out at the Land Registry, Probate Registry, the Courts and the Corporate Affairs Commission (if the seller is a corporate body).
The buyer should engage the services of a lawyer or a real estate company to conduct the search to avoid running into problems.
#5. Make a Physical Inspection
Do not let the seller smile all the way to the bank without verifying the location of the land you want to purchase. This is also to inspect the land to make sure you are not purchasing land in problematic locations, such as swampy or flooded areas. In the same vein, it is advisable to inspect the land to check for red flags and make sure it has not be purchased or developed by another person,
TO BE CONTINUED IN THE NEXT POST….