Over the years, property buyers have often faced legal disputes due to inadequate documentation proving clear ownership. Not properly perfecting title can complicate establishing a solid “root of title,” leading to prolonged court battles and uncertainty about property ownership. This challenge highlights the critical need for perfection of title in real estate transactions to avoid costly disputes and ensure secure ownership.

In Nigeria, acquiring property is not as straightforward as simply purchasing and signing a deed. The process involves a critical step known as the “perfection” or “registration” of the title. This step is essential to secure a solid legal title in the new owner’s name. The perfection process involves several stages:

1. Governor’s Consent:

This is the first stage in the registration of title to Land. This is predicated on the fact that registration at the land registry cannot be effectuated without it. The Nigerian Land Use Act in section 1 requires that the Governor’s consent be obtained for any land transaction. This section provides thus:

“Subject to the provisions of this Act, all land comprised in the territory of each State in the Federation are at this moment vested in the Governor of that State, and such land shall be held in trust and administered for the use and common benefit of all Nigerians by the provisions of this Act.”

This provision underscores the Governor’s control over land within the state. Where the Governor’s consent is not obtained in respect of the alienation of landed property, such transactions are inchoate as held by the Court in the cases of Awojugbagbe Light Industries Ltd. V. Chinukwe (1995) 4 NWLR (Pt. 390) 379; Fruit Tropic Ind. Ltd v. Amodu & Ors (2020) LPELR-51675(CA) and unlawful as provided in Sections 21 & 22 Land Use Act 1978 and held by the Court in the cases of Jauro & Ors V. Hon. Commissioner, Ministry of Land & Survey Adamawa State (2013) LPELR-20849(CA).

Where an application for Governor’s consent was sought but was declined, the transfer of legal interest is invalid, null, and void. However, where it was not sought for at all in the first place, the transaction is inchoate, incomplete, and voidable as held by the Court in the case of Awojugbagbe Light Industries Ltd. V. Chinukwe (Supra).

2. Stamping:

Legal documents must be stamped as evidence of payment of the requisite duties. This is provided in Section 23 (3) a of the Stamp Duty Act 1939. This section provides thus:

“The instrument, unless it is written upon duly stamped material, shall be duly stamped with the proper ad    valorem duty before the expiration of thirty days after it is first executed, or after it has been first received in Nigeria if it was first executed at any place outside Nigeria.”

This must be done within 30 days of execution of the Deed of assignment or any other registrable instrument which seeks to transfer title or ownership of land. Where stamping is done beyond 30 days after the execution of the instrument of transfer, it attracts sanctions as provided in Section 23 (3) b of the Stamp Duty Act 1939. It is important to note that an unstamped document will not be accepted for registration at the land registry.

3. Registration:

The final stage in perfection of title involves registering the transaction with the Land Registry to make it officially recognized and enforceable. Once the procedure for registration of interest or title to land is successful the title can be said to have been perfected or registered.

However, where a person fails to register their interest in land, the instrument of transfer confers on them no legal title but equitable title. The document may not be admissible in evidence to establish legal title to the land but it is admissible to prove such equitable interest and to prove payment of the purchase sum for the land as held in Muhammed V. Farmers Supply Co (Kds) Ltd.

Benefits of registration:

1. It serves as notice to the whole world that the property has been encumbered.
2. It gives priority to the instrument registered first in time.

Effects of non-registration:

1. It may not be pleaded or given in evidence to establish title to land.
2. Where the documents are not registered at the appropriate land registry, it will not constitute notice of encumbrance to the world.
3. The Purchaser is at best conferred with equitable interest in the property which may lose its priority to a bonafide purchaser of legal estate for value without notice. This was held by the Court in the cases of Ankama & Anor V. Nzeoji & Anor (2022) LPELR-57998(CA) and Briggs v. C.L.O.R.S.N. & Ors (2005) LPELR-805(SC).

Challenges in the Perfection Process

Several challenges can arise during title perfection such as:

1. Government Acquisition: The property may be under government acquisition or part of an excision, complicating the process.

2. Payment Delays: Delays in the payment of assessed fees can halt the process.

3. Internal Bureaucracies: Bureaucratic delays within the Land Bureau can also impede progress.

4. Property Location Issues: Difficulties in ascertaining the exact location of the property for inspection can cause delays.

In conclusion, the imperative for perfecting title in real estate transactions cannot be overstated, particularly in Nigeria where clear ownership hinges on meticulous processes like obtaining Governor’s consent, proper stamping, and registration. Failing to complete these steps can lead to prolonged legal battles and uncertainty over property ownership.

Securing a robust legal title through proper perfection measures is essential to safeguarding your investments and ensuring unequivocal property ownership. Investing in Nigerian real estate can be a lucrative venture, but it requires careful navigation of legal and administrative processes. Therefore, consulting with a reputable real estate vetting company is imperative to guarantee the security and compliance of your investments with all the essential legal requirements.

 In Nigeria, as in many jurisdictions worldwide, the concept of a deed holds significant legal weight, particularly in matters concerning property transactions and contractual obligations. A deed is more than just a document; it is a formalized instrument that not only transfers ownership of property but also binds parties to specific legal commitments that are enforceable in court.

Under Nigerian law, the use of deeds is governed by both common law principles and statutory provisions, which prescribe when a deed is required for a transaction to be legally valid and enforceable. The requirements for executing a deed, such as signing, sealing (traditionally or in a modern context), and delivery, reflect its solemnity and intention to create legal rights and responsibilities.

Deeds play a pivotal role in various facets of Nigerian legal practice, ranging from the transfer of land and real estate transactions to the establishment of legal mortgages and the execution of powers of attorney. Understanding the nuances of these instruments is essential for navigating Nigeria’s legal landscape effectively, ensuring compliance with regulatory requirements, and safeguarding the interests of all parties involved.

WHAT IS A DEED?

A deed is a formal legal document that serves several crucial functions in property law and beyond. It is designed to convey, transfer, or bind parties to certain obligations, often relating to real estate but also applicable in other contexts.

According to Black’s Law Dictionary, a deed is defined as a “written instrument signed, sealed and delivered by one person to another to convey lands, tenements or hereditaments.” This definition underscores its formal nature and legal significance. A deed is typically used to transfer ownership of real property, create legal obligations, or establish rights that are enforceable by law.

Key Elements of a Deed:

1. Formal Requirements: A deed must be in writing, signed, sealed (traditionally with a wax seal), and delivered to the recipient.
2. Intent and Conveyance: It signifies the intention of the parties involved to transfer property or create legal rights and obligations.
3. Covenants: Deeds often contain covenants or promises that provide assurances regarding the title or condition of the property being transferred.

Examples of Deeds:

1. Deed of Lease: Transfers a leasehold interest in property.
2. Deed of Gift of Land: Transfers ownership without consideration.
3. Deed of Transfer: Conveys ownership from one party to another.
4. Deed of Release: Releases rights or claims.
5. Deed of Legal Mortgage: Establishes a mortgage against property.
6. Deed of Assignment: Transfers rights or obligations to another party.

Types of Deeds:

1. Deed Indenture: Historically, a deed written on parchment with edges indented for authenticity, though less common today.
2. Deed Poll: A deed made by one party, not requiring the acceptance of another party, often used for unilateral declarations or gifts.
3. Deed Supplemental: Modifies an existing deed, specifying amendments or additions.

When a Deed is Required:

Under various legal principles and statutes, a deed is necessary in several circumstances, including:

1. Conveyances of land or interests therein.
2. Leases lasting three years or more.
3. Gifts of land without consideration.
4. Powers of Attorney for execution of deeds.
5. Legal mortgages and transfers involving companies.
6. Statutory requirements and rectification of deeds.

When a Deed is Not Required:

Certain transactions can be legally valid without a formal deed, such as:

1. Assents by personal representatives of deceased persons.
2. Vesting orders by court decisions.
3. Short-term leases or tenancies.
4. Receipts not legally required to be under seal.
5. Conveyances by operation of law.
6. Disclaimers and surrenders by operation of law.
7. Transactions governed by equitable principles.

In conclusion, a deed is a powerful legal instrument used for conveying property rights, establishing obligations, and ensuring enforceability under the law. Its formal requirements and specific uses make it a cornerstone of property law and other legal transactions, providing clarity and legal certainty to parties involved. Understanding the nuances of when a deed is required versus when other legal instruments suffice is crucial for navigating complex legal landscapes effectively.

In Nigeria, the complexity and formalities surrounding deeds necessitate a thorough understanding of when and how to use them effectively. While this overview provides foundational knowledge, practical applications often require expert guidance. Engaging a reputable real estate vetting company is highly recommended for anyone navigating property transactions or legal agreements involving deeds.

Many real estate transactions in Nigeria can be particularly challenging due to the prevalence of unregistered title documents. Disputes frequently arise from disagreements over various aspects of real estate contracts, such as sale prices, payment schedules, property conditions, and other contractual obligations. To mitigate these issues, it is crucial to draft comprehensive and legally binding contracts.

A well-crafted contract not only clarifies the rights and responsibilities of all parties involved but also serves as a safeguard against potential disputes, ensuring a smoother transaction process and greater peace of mind for buyers and sellers alike in the Nigerian real estate market.

In Nigeria, an agreement for the sale of property must adhere to specific legal requirements. It must be in writing, executed as a deed, and include crucial details such as the transaction date, parties’ identities, accurate property description, root of title, purchase price, and proper execution by authorized persons with witnesses.

The parties are at liberty to agree on the terms of the transaction and the covenant which each undertake to provide to the other party.

Key Features of Sale/Purchase Contract

A typical sale and purchase agreement in Nigeria typically includes several key features:

1. Parties’ Details and Property Description: The agreement starts by clearly identifying all parties involved and providing a detailed description of the property, including its location, boundaries, and area.
2. Purchase Price and Payment Terms: It specifies the agreed-upon purchase price and outlines the mode of payment (e.g., lump sum or installment), along with any conditions related to payment schedules or adjustments.
3. Title and Seller’s Warranties: The seller warrants the ability to transfer clear title, deliver possession without disturbance, and assist in facilitating the registration of the buyer’s interest. The agreement also includes provisions for the delivery of title deeds and other pertinent property documents to the buyer.
4. Indemnity Against Title Defects: There are indemnity clauses to protect the buyer against any defects in the seller’s title that may arise post-transaction.
5. Dispute Resolution: Provisions are made for resolving disputes, typically through arbitration or litigation, to provide clarity on how conflicts will be handled if they arise.

Moreover, sellers are not legally obligated to provide warranties regarding the condition of the property unless specifically agreed upon in the contract. Buyers have the right to terminate the agreement and claim damages if the seller misrepresents any material facts about the property.

In cases of deliberate fraudulent misrepresentation by the seller, beyond civil remedies, criminal prosecution may be pursued by relevant authorities under existing laws.

In conclusion, navigating real estate transactions in Nigeria demands meticulous attention to detail, particularly due to challenges stemming from unclear title documents and potential disputes over contract terms. A well-crafted sale and purchase agreement serves as a crucial tool to clarify the rights and obligations of all parties involved, thereby minimizing uncertainties and fostering smoother transaction processes. This approach not only enhances transparency and legal protection but also instills confidence among buyers and sellers in Nigeria’s dynamic real estate market.

Therefore, it is crucial to enlist the services of a reputable real estate vetting company, as they play a pivotal role in supporting this process. These companies provide comprehensive due diligence that helps mitigate various risks associated with property investments. They ensure that your transactions are conducted with integrity, compliance, and confidence, safeguarding your interests and enhancing the security of your investments in the Nigerian real estate.

Property ownership in Nigeria entails not only enjoying rights and privileges of possession but also carrying significant responsibilities, one of which is the payment of taxes.

These property taxes are governed by a combination of laws, local regulations, and administrative practices. It is crucial for property owners, investors, and all stakeholders involved to have a good understanding of these tax rules.

Types of Taxes in Nigeria

The different types of taxes in Nigerian property law are as follows:

1. Capital Gains Tax:

Capital gains tax is (10%) paid on the following transactions namely:

  a. Sale

  b. Lease

  c. Transfer

  d. Assignment and

  e. Compulsory acquisition – S6(1) Capital Gains Tax Act.

Ideally, because the transferor of the property is the one benefiting, they should be the one paying the capital gains tax. However, due to the tax being a condition precedent for perfection of title, in practice it is the transferee who pays.

Capital gains tax is not applicable in the following transactions (mainly because they do not involve gains):

  a. Mortgage transactions, as there is no gain realized in mortgages.

  b. Gifts of land.

  c. Schools as charitable institutions.

2. Personal Income Tax:

Personal Income Tax is governed by the Personal Income Tax Act. This tax is levied on individuals, partnerships, and unincorporated businesses, but not on limited liability companies. Individuals are typically assessed under the Pay As You Earn (PAYE) scheme, where tax is deducted directly from their income by their employer. Upon payment of taxes, individuals often receive a tax clearance certificate.

The jurisdiction where Personal Income Tax is paid is determined by the individual’s residence rather than their workplace. This means tax obligations are based on where the person resides rather than where they work.

3. Value Added Tax:

Value Added Tax (VAT) is regulated by the Value Added Tax Act and is applicable to goods and services, such as professional services provided by legal practitioners.

To comply with VAT regulations, professionals must establish an account with the relevant tax authority. VAT is typically calculated at a rate of 5% on the fees charged for their services. It’s important to note that VAT collected by professionals is not retained by them but is instead remitted to the Federal Inland Revenue Service (FIRS) or, following the recent legal developments as exemplified by the case of AG Rivers State v FIRS, to the respective state revenue service.

Under VAT regulations, all professionals are considered VATable persons, meaning they are required to charge and remit VAT on their services. The administration of VAT falls under the jurisdiction of the Federal Inland Revenue Service, although recent legal precedents suggest that state revenue services may also be authorized to levy and collect VAT.

This framework ensures that VAT obligations are fulfilled transparently and in accordance with applicable tax laws, promoting fiscal compliance across professional sectors.

4. Company Income Tax:

This is regulated by the Companies Income Tax Act and is paid by companies to the Federal Inland Revenue Service.

5. Consent Fees:

Consent fee is the payment required to obtain the consent of the Governor of a state as provided in Section 22 of the Land Use Act 1978. This consent, known as Governor’s Consent, is necessary for lease, assignment, mortgage, and other forms of alienation of interests in land and properties. The fee is paid directly to the Governor through the Ministry of Land. In Lagos State for example, this fee is calculated at 8% of the assessed value of the property.

6. Estate Duty:

This duty is applicable to both real and personal property of a deceased individual. The amount payable as estate duty is 10% in Lagos state and it is calculated based on the gross value of the estate.

7. Registration Fees:

This is the fee paid to register an instrument for the transfer of interest at the Lands’ Registry of a state. In Lagos, it is calculated at 3% of the assessed value of the property.

8. Tenement Rate/Property Tax/Land Use Charge:

This is charged by virtue of the Tenement Rate Law of the various states. The tenement rate is an annual levy on buildings within a specific area, often referred to as property tax in some regions. In Lagos State, it is integrated into the land use charge governed by the Land Use Charge Law. Factors considered for assessing the land use charge include:

  a. The location of the property;

b. The purpose for which the property will be used; and

c. Nature of the property.

In conclusion, navigating property taxes in Nigeria involves understanding and adhering to a diverse array of tax obligations that apply to property owners, investors, and stakeholders alike. These taxes are governed by a complex interplay of laws, local regulations, and administrative practices. From capital gains tax on transactions like sales and leases to personal income tax assessed under the PAYE scheme, and from VAT obligations for professional services to company income tax and estate duties, each tax serves a specific fiscal purpose.

Furthermore, specific fees such as consent fees for Governor’s Consent on property transactions and registration fees for land transfers are integral to securing legal rights over property. Moreover, the tenement rate, which is akin to property tax, underpins local revenue generation and development initiatives, particularly in urban areas like Lagos State.

To navigate this landscape effectively and ensure compliance with regulatory requirements, property owners and investors are strongly advised to engage the services of a reputable real estate vetting company. Such companies specialize in conducting thorough due diligence, verifying property titles, assessing tax liabilities, and facilitating legal compliance. By leveraging their expertise, stakeholders can mitigate risks, streamline transactions, and safeguard their investments against potential legal or financial complications.

Understanding and complying with these tax obligations not only ensure legal compliance but also contribute to the sustainable development and governance of property ownership in Nigeria. Therefore, stakeholders must stay informed and proactive in managing their tax liabilities to navigate the complexities of property taxation effectively with the assistance of experienced professionals in the field.