Before you Purchase that Lagos Property – 3

This is the last part of the series – Before you purchase that Lagos property.

Last week we talked about the Acquisition/Purchase proper when it comes to property acquisition in Nigeria with reference to Lagos. Here is the concluding part:

EFFECT OF NON-REGISTRATION
Where documents created over a land transaction are not registered it renders such documents inadmissible in a court of law as evidence of the transaction, and a party to a land dispute will not be allowed to rely on it in a dispute over title to land thus negatively impacting his/her case.

Loss of Priority: The document registered immediately after its first execution subject to Governor’s consent takes effect as against other instrument affecting the same land from date of its registration. This essentially reflects the “first in time rule” which is to the effect that where there are competing claims over the title to land whoever registers his interest first takes priority over other claimants.

DOCUMENTS REQUIRED FOR PERFECTION
The documents required for perfection of the purchaser’s title at the State Board of Internal Revenue, the Lands Registry, State Ministries of Finance and Justice, Governor’s office, etc. are as follows: –
1. Application for Governor’s consent in Land Form 1C
2. Current Income Tax Clearance Certificate of the parties for three (3) years preceding application.
3 Receipts of payment of all Tenement Rate for three (3) years if a developed land
4 Affidavit in lieu of payment of tenement rate if undeveloped land
5 Survey or Building plans whichever is applicable.
6 Duly executed Deed of Assignment (6 copies)
7 Original or Certified True Copies of Assignors Title documents
8 Receipts of payment of all Ground rent.
9 Receipts of payment of Development Levy
10. Receipts of payment of all land charges.
11. Covering letter addressed to Governor through the Lagos State Ministry of Lands and Survey, Alausa, Ikeja, Lagos applying for consent and attaching all documents listed above.

FINANCIAL REQUIREMENTS
The various processes in perfecting title to land in Lagos State, requires certain percentage of fees payable to the Lagos State Government in a Bank Certified Cheque as may be assessed as the value of property notwithstanding the consideration on the deed. The key factors in the valuation exercise are: –
1. The size of the property usually valued per square meter.
2. The location of the property (example, if land is within the designated areas called the titled areas such as Ikoyi, Lekki, Victoria Garden City (VGC), Lagos Island, Ebute Metta, etc.) or if Land is within the excised areas and covered by an Excision Plan.
3. Security of property.
4. Structural design of building.
5. Building layout (total number of rooms and relative size of rooms).
6. Aesthetics of building and quality of material used.
7. Relative cost of property.

Read also: Before you Purchase that Lagos Property – 2

TIME FRAME FOR PERFECTION PROCEDURES
The processes are burdened with a lot of bureaucracies and averagely take between six to twelve months.

DOCUMENTS TO EXPECT AFTER THE PERFECTION IS COMPLETED
1. Original Letter (for instance No. LU/GC/12345/Assign./12) conveying the Governor’s Consent.
2. Original Certificate of Occupancy with the Governor’s consent endorsed therein.
3. Where the land has never been covered by a certificate of occupancy, then the Original Deeds (Deed of Assignment) with the Governor’s consent endorsed therein.
4. At least one Counterpart of the Deeds (Deed of Assignment) with the Governor’s consent endorsed therein
5. Approved Layout of the XXX Chieftaincy Family Land Excised at XXX Village or layout
6. Original Letter (No. LU/GC/12345/SUB stating the assessed payments due on the property.
7.  LSG Treasury Receipt for Land Charges & Fees
8.  LSG Treasury Receipt for Registration Fees.
9.  LSG Miscellaneous Receipt for Capital Gains Tax.
10. LSG current & previous year Income Tax Clearance Certificate for purchaser/assignee (with the assessment form & bank teller slip). Where there are joint or co-owners, e.g. husband and wife, then they should have separate tax clearance certificates.
11. LSG Treasury Receipts for stamp duties, oath fees, etc

GETTING BY (THE ALTERNATIVES)
Essentially, after perfection, the purchaser becomes the legal title holder of the land/property having been issued with the Certificate of Occupancy by the Lagos State Governor. This entitles him to deal with the land for his benefits, tender the certificate in evidence and could deposit the title document as collateral in application for loan from the Bank.

However, the sheer 33% of “assessed value” has been a problem for most purchasers because of the cost (further cash outlay), the bureaucracies, the laxity by the ministry official, incessant official and unofficial tours, Exorbitant unofficial fees demand, Touting by junior workers etc, administrative problems and complacent attitudes of
consultants engaged by the state government, labour strike action, etc.

In order to get by the problems of Governor’s consent, registration, capital gains tax, bureaucracies, etc, it would be best to acquire a land presently held by a company (preferably a shelf company with no liabilities and whose only asset is the land). Where this is the case it means that you can simply acquire that company by means of share
transfers and changes in the directors of the company.

Getting by here means acquiring a company that owns the land, thus changing only the shareholders but not legally speaking a sale of land requiring perfection of title. The only perfection will be the effective transfers and registration of the transfers and changes in the particulars of Directors and shareholding portfolio of the company at the Corporate Affairs Commission. This practice is fast gaining grounds among Real estate speculators and developers.

An investor is faced with two probable options in real estate in Nigeria. Firstly he may just want to buy landed property in a choice area and want to develop it for his/her private use; Secondly and as is often the case, to buy
property, develop it and either sell it off to make a profit or lease it out.

This is in fact the current trend in Nigeria now, with numerous property developers coming out with all manners
of residential estates. Price range depending on the area involved, is in the range of 30 to 70 Million Naira, one can
comparatively state therefore that there is a boom in property development in Nigeria of today.

The more reason why a prospective purchaser of property should seek proper advice from professionals before embarking on any investment in real estate.