Navigating Land Acquisition

As the value of stock markets across the world, including Nigeria, plummet, everyone is looking for alternative investments, predominantly in real estate. Indeed, real estate is so hot that despite the fact that the US recession has been precipitated or exacerbated by the sub prime mortgage crisis, real estate prices in choice locations like Manhattan keep soaring. It is the same in this neck of the woods, as real estate prices in Lagos keep going up up up. For years we have heard that the high prices are not sustainable and will crash eventually. For those who waited for the crash here is a news flash…land in Lekki Phase I which sold for twenty million naira last year, is now sixty million naira.

For those who have decided to bite the bullet and jump in, there are a number of issues to manage between finding your dream home or investment and holding the keys. It always helps when you know what to expect especially when you are financing the acquisition through a mortgage, another ‘legal’ knot to unravel.

When you finally manoeuvre around the agents trying to sell you duds which other people are trying to get rid off and you find something you like, quite often you have less than 72hours (if you are lucky) to make the payment. That’s when you realise: it takes weeks to secure a mortgage. Okay, you lose that property and head back into the search, this time simultaneously trying to secure a mortgage with a bank. Quick warning – stay away from the banks, e.g., the orange one, that want you to open a ‘mortgage’ account with them first before they let you know if they will lend you money. Because by the time you deposit twenty thousand naira in five banks, you would have spent a good part of your search and consent fees.

The reason why you should talk to more than one bank (not applicable for those who work for banks or whose companies are arranging financing on their behalf) is to make sure you are getting a good deal, not only with interest rates but with equity contributions and other terms. For example, one common term which you should look out for is a penalty clause for redeeming your mortgage early. This means, if by some stroke of fate you win the lottery or get an unexpected but large inheritance from a relative you did not know you had, when you attempt to pay off your mortgage, the bank can charge you extra for doing so. Everything, it seems, is open to negotiation.

Ten pages of forms later, the end is in sight…and then you get to the part where you are asked to describe the property. You know what it looks like from your dreams but you have just haven’t been able to find it. Do not be deterred, press on and submit the forms to the bank, it is usually not a problem because you can complete the paper work later. What is important is starting the application process. The forms give the banks information about your ‘earn and spend’ patterns and that is when they tell you how much they will be able to lend you; suddenly your dream house just got smaller.

That’s the fun part. Once you are sure you have found what you like and you have reached an arrangement with the seller, try to secure this agreement as best as you can, otherwise the buyer might get a ‘better’ offer while you deal with the ‘regulatory’ side of property acquisition. Surprisingly, with the new reforms in place, the process is not so bad in Lagos State.

The first step is to conduct a search on the property at the Lands Registry at Alausa, Ikeja to ensure you know the registered owner of the property and to make sure it has not already been mortgaged or is the subject of a law suit. A search is supposed to costs N3,750 and all you need is the number, page, and volume (N.P.V.) of the property which the agent or seller can provide. However, where a mortgage is involved, the banks will ask you to engage the services of their agents to conduct the search. The banks will also want to get the property valued…but that’s another story.

The search helps you avoid one of the more common problems with property acquisition which is that other parties such as banks sometimes have rights to the property and their rights will take priority over yours.

Presumably you are happy with the results of the search (you better be if you have made a down payment to the buyer to keep him happy) and now the deed of assignment can be prepared transferring the seller’s rights to the property to the buyer. This is where the final payment for the property is made - make sure you get a lawyer to look it over and explain it to you (in English, not ‘legalise’) – if you are paying her, she works for you.

Next comes the Governor’s consent to the ‘transfer’ of the property and this is where it can get complicated. Two things. One, under the Land Use Act (1972), all land belongs to the government and so you are not really getting ‘ownership’ of the property, only a leasehold which is sometimes a 90 or 99 year long permit to ‘hold’ the property. Two, the Governor’s consent is only required if the property is in an urban area, otherwise, what you need is the consent of the local government chairman.

Obtaining the Governor’s consent takes at least four months and the process requires that you pay at least nine different fees i.e., consent, administration, charting, registration, survey and facilitation fees; Form 1C & endorsement fee; the cost of a certified true copy (CTC) of the deed and the stamp duty.

Final note as you plan – pay all the fees at once, it helps the process go quicker, watch out for the pitfalls mentioned above and keep asking questions.


Governor’s Consent Fees (Lagos State)
1. Consent Fee - 8% of the assessment
2. Form 1C & Endorsement - N3,000
3. Administration Fee - N3,000
4. Charting Fee - N 7,500
5. CTC of deed of sublease - N5,550
6. Stamp duty - 2% of the assessment
7. Registration Fee - 3% of the assessment
8. Survey Fee -N65,000
9. Facilitation Fee -N40,000 – N60,000

Published Sept 23 2008