SALE OF LAND UNDER PROPERTY Flashcards
What are the Documents that may be prepared in a Sale of Land Transaction?
- Contract of Sale-Vendor’s Solicitor
- Deed of Assignment-Assignee’s solicitor
- Epitome/abstract of title-Vendor’s
solicitor - Pre Contract Enquires-Purchaser’s
solicitor - Completion statement-Prepared by both parties
- Requisition of title-Purchaser’s
solicitor - Search Report-Purchaser’s solicitor
- Answers to requisitions-Assignor’s
solicitor - Receipt -Vendor/Assignor’s solicitor
List ten laws affecting Sale of Land in Nigeria?
- The Constitution
- Evidence Act 2011
- Rules of Professional conduct 2023
- Legal Practitioners Act
- Land Use Act
- Statute of Frauds Act 1881
- Property and Conveyancing Law 1959
- Conveyancing Act 1881/1882
- Stamp Duties Act
- Companies and Allied Matters Act 2020
Is Certificate of Occupancy conclusive evidence to title?
A certificate of occupancy issued cannot be said to be conclusive evidence of any interest or valid title to land in favour of grantee; it is onlyprima facieevidence of such right, interest or title and may in appropriate cases be effectively challenged and rendered invalid, null and void
Ways of acquiring interest in land?
- Gift intervivos
- Sale of land
- Partition of Family Land
- Adverse possession–20 years adverse possession
- By Purchase
- Allocation of State Land by Government. Section 5 & 6 LUA
- Court Order
- Devolution in A Will
- By settlement
Difference between Allotment and Partition?
PARTITION-Partition is a recognized form of determining family property. The family property is divided amongst individual members. Each individual has absolute ownership over his portion. Partition which does not make provision for all as the constituent branches of the family is void.
ALLOTMENT-allotment does not determine the family ownership of the land so as to make the allotee an absolute owner. It can be affected by the head of family alone.
What is Gift Intervivos?
Under Customary Law, it is an oral pronouncement by grantor in the presence of witnesses but the grantee is expected to take the interest during the lifetime of the grantor.
What are the limitations of sale of land?
- Statutory limitation
- Customary limitation
- Judicial limitation
- Contractual limitation
- Town planning limitations
What the position of the LUA on fee simple?
Before, land could be held under freehold ownership in Nigeria. However, the Act now vests control and administration of all land within the territory of a State in the Governor of the State. By this, freehold ownership has been abolished and converted to leasehold ownership. The Act also empowers the Governor of a State to grant rights of occupancy over lands within the State for a maximum term of 99 years
S 1, 34(2), 34(3) LUA
What is the position of the LUA on governor’s consent?
The consent of the Governor is required before a person can alienate a land (which is subject to statutory right of occupancy) to another. And so, any purported sale of land without the consent of the Governor first had and obtained is null and void. SS. 22 AND 26 LUA; SAVANNAH BANK V AJILOH
What is the position of LUA on minors?
A person younger than 21 cannot legally be granted ownership or control of land.
EXCEPTIONS
-Where a guardian/trustee has been appointed to manage the affairs of a person under 21.
- inherits a statutory right of occupancy (meaning it passes to them after the death of the original holder), they are treated as if they were an adult in terms of the responsibilities and obligations tied to that right.
What is the position of LUA on foreigners?
A non-Nigerian cannot be granted right of occupancy nor can a right of occupancy be granted to him except with the consent of the National Council of State.
SEC 46(1) LUA
Conditions that must be shown under judicial restriction of SOL?
- That there is a pending suit
- That it is regarding a real property
- Object of the action was to recover or assert title to a specific real property
- The party ought to have known that there is a pending suit
Stages in SOL
- Pre contract stage-preliminary enquires and negotiation
- Contract stage-Deposit, transfer of equitable interest. Exchange of contract
- Post contract-Investigation, deducing title, Search report
- Completion stage-Deed of Assignment
- Pre completion stage-GSR
What is physical inspection in SOL?
YANDLE V SUTTON
The vendor is not bound to disclose patent defects, because patent defects are physical and visible and the principle of caveat emptor applies.
He is bound to disclose latent defects, because latent defects are restrictive and not visible on inspection.
What are likely questions to ask preliminary enquiries?
-What are the boundaries of the property?
-Are there disputes over the property?
-What are the Facilities in the property?
-Are there Outgoing charges on the property?
-Which Insurance policy covers the property?
Advantages of Preliminary Enquiries?
- It helps to disclose certain defects on the property
- It ascertains the suitability or otherwise of the proposed property
- It helps to determine whether to negotiate or not
Negotiation Of Purchase Price in SOL?
• The discovery made during preliminary enquiries would affect the purchase price. For instance, if there are still tenants with subsisting lease on the property, that would affect negotiation.
WHAT IS CONTRACT STAGE IN SOL?
A. Agreement on terms
B. Preparation of formal contract of sale of land and
C. Exchange of contract
TYPES OF CONTRACTS OF SALE?
- Oral
- Open
- Formal
WHAT IS ORAL CONTRACT?
An oral contract for the sale of land is generally unenforceable because it does not satisfy the requirements.
S4 STATUTE OF FRAUDS
Exceptions to the general rule that oral contract is not admissible?
- Under Native law and customs
- Where Sufficient Acts of Part
performance is made - Written evidence of oral agreement
- Sale by the court
Conditions that must be followed before oral contract can be enforceable under native law and customs?
- Payment of full purchase price-ODUSOGA V RICKETTS
- Taken possession
- Presence of witnesses
Conditions that must be fulfilled for sufficient acts of part performance?
a. There is proper oral evidence to prove or establish terms of the oral contract
b. The act constituting part-performance must unequivocally refer to the oral contract;
c. The party complaining must have wholly or in part executed his own part of the oral
contract.
d. The oral contract must be a contract of sale of land, and not for personal servic
What are the features of an Oral Contract of sale?
- Parties
- Ascertainable properties
- Sufficient consideration
- Valid but not usually enforceable
- Two credible witnesses
What are open contracts?
It reflects the price, purchase, parties & signatures.
it is not explicit, expressed in writing without strict formalities. It contains the minimum requirement of the Statute of Frauds
Can a receipt can sufficient as an open contract?
YES! KACHALLA v BANKI
How is a contract exchanged under formal contract?
-It is prepared by the vendor’s solicitor and duplicate copies are sent to the purchaser’s solicitor for amendment(if any
-The purchaser solicitor sends the amended copy, the vendor approves the amendment and sends an engrossed (final copy) to the purchaser solicitor
-The purchaser signs both duplicates and pays fixed stamp duty on the agreement, and sends it together with a cheque for deposit.
- The vendor signs his part, and sends back a copy of the signed agreement with a receipt for the deposit.
What is the position of the parties after exchange of contract?
-Equitable interest passes to the purchaser
-BINDING-Death of either party will not affect the transaction as the PR may be compelled to complete.
-Risk and liability passes to the purchaser
-Vendor becomes a trustee
-Vendor has a lien on the property incase the party fails in paying his money
ADVANTAGES OF FORMAL CONTRACT OVER OPEN AND ORAL CONTRACT?
- It crystallizes the position of the parties as parties are bound by the terms of the agreement
at an early stage in the transaction. - Discloses patent defects on the property
- Death does not affect its validity.
- The terms of the contract are certain
- The purchaser is given adequate time to investigate vendor’s title.
- prevents last minute withdrawal as parties are bound by the terms
- It is used to circumvent implied covenants
- Prevents gazumping and gazundering
CONTENTS OF A FORMAL CONTRACT?
- Deposit
- Balance and interest on the unpaid purchase price
- Capacity of vendor
- Completion date
- Possession before Completion
- Provision for Fixtures and Fittings
- Acknowledgement for Production and Undertaken for Safe Custody
- Risk & Liability Pending Completion
- Insurance
- Qualification of Terms of the Contract / Subject To Mortgage Clause
- Reservations and Exceptions
Difference between deposit and part payment?
The deposit is different from part payment in that, deposit is made before the conclusion of the contract to show commitment on part of the purchaser, upon a breach by the purchaser, the deposit sum will be forfeited.
Part payment is part of the purchase price made after the conclusion of the contract. Part payment is not forfeitable ODUSOGA V. RICKETT
Advantages of deposit clause?
- Shows commitment
- guarantee against breach of contract by the purchaser
What happens in the absence of an express agreement from both parties on how a solicitor should act regarding deposit?
He receives the deposit as an agent of the vendor-RYAN V PICKINGTON
What is the effect of a solicitor receiving the deposit as a stakeholder?
- He acts as an agent to both parties.
- He represents the interests of both parties
- He is only liable to pay the money to the party that eventually becomes entitled to it.
- He has a personal responsibility to keep the money safe
- Where the money goes missing, he is personally liable
- INTEREST is NOT paid to the party entitled to the deposit.
- The money collected can be kept in client or trust acc
What is the effect of receiving deposit as an agent?
a. You are responsible wholly to the vendor
b. Any gain made or interest must be given, and accounted to the vendor
c. If the money gets missing, or misappropriated, agent will not be personally liable to the purchaser, the vendor will be liable
d. He is to return the money at any time required by the Vendor.
What is Balance and interest on unpaid purchase price?
This is a clause stating when balance should be paid and the interest accruable. It is usually paid during completion & there is a 4% on the UNPAID BALANCE (where parties intend otherwise, it should be explicitly stated.
What happens when one party breaches the terms of the completion date?
The innocent party must serve a NOTICE TO COMPLETE on the defaulting party before terminating the contract or suing for damages.
Is possession before completion allowed in a COS?
NO. The law is of the opinion that the purchaser possess only equitable interest in the property at this stage & cannot take possession.
EXCEPTIONS
-Licensee-To evict him, give him 7 days of owner’s notice to recover property(LAGOS)
-Tenant at will-1 week notice + 7 days’ notice of owner’s intention to recover premises(LAGOS)
inserting this clause makes it easy to evict him if the contract fails due to the purchaser’s fault.
What are fixtures and fittings?
Fixtures (permanent) and fittings (detachable) are things attached to the property.
If fixtures and fittings are to be included in the contract, it should be provided for as the law implies that a purchaser is not meant to pay for fixtures.
Why should the price of fixtures be excluded from the purchase price?
This is because a deed is payable ad valorem and including it in the purchase price will increase the stamp duties payable.
There should be a separate clause for fixtures and fittings.
What are risks and liability pending completion?
The law implies that the risk in the property moves to the purchaser immediately after contract.
The purchaser must pay the balance even if the property is destroyed before completion.
Doctrine of frustration is not applicable in COS
What does the case of Castellian V Preston state in COS?
it states that even when the vendor insured the property in his name & receives the insurance, he is still entitled to the remaining balance from the purchaser.
NOTE
S 66 &67 of insurance act.
How do you protect the purchaser in a COS?
Therefore, to protect the purchaser, it is advisable to provide in the contract of sale that risk and liability should remain with the vendor until completion
What is contained in an insurance clause?
- Who is to insure?
- Risk to be insured?
- Amount to be insured?
- Application of insurance money
- Insurance company
What is subject to mortgage clause used for?
It is used where a buyer intends to purchase a property by securing a loan from a lender to complete the purchase.
This clause sets the condition that the completion of the sale depends on the buyer obtaining the necessary mortgage.
CIRCUMSTANCES WHERE A SINGLE SOLICITOR CAN REPRESENT BOTH PARTIES?
- Where the title of the property is sound
- Where there is a close relationship.
- Where there is no likelihood of conflict
- Where the consideration is small
- Where the terms have been agreed upon by the parties
- Where there is consent to use one solicitor
SMITH V MANSI
Stamping of the COS and DOA is done within how many days?
30 days for COS
40 days for DOA
Remedies for a breach of COS?
- Recession
- Damages
- Injunction
- Interest on balance of purchase money
- Specific performance
- Lien
- Forfeiture of Deposit
What are the stages in post contract stage?
- Deducing title
- Root of title
- Investigation of title
- Search Report
A good root of title dates back to how many years in the CA and PCL states?
CA-40 years
PCL & ADE-30 years
Is a vendor under any obligation to deduce root of title in Lagos?
Vendor has no obligation
• the Purchaser would discover the vendor’s right to sell.
• The State issues a Land Certificate which constitutes prima facie evidence.
-Mere inspection of the register to discover the vendor’s power and right to sell and the presence or otherwise of any encumbrance.
What is abstract of title?
• An abstract of title is a written chronological summary of the history or account of how the property under consideration has moved from one person to another beginning with the root of title up to the present vendor who now wants to sell
What is epitome of title?
• An epitome of title is a schedule of documents and events which constitutes the title of the vendor and which is accompanied by photocopies of the documents.
contents of epitome of title?
- Date
- Nature of transaction
- Names of parties
- CTC or photocopy
- No of docs
- Whether the original document to be handed over on completion
Advantages of abstract/epitome of title?
- it helps the purchaser know the requisitions to make
- reveals any defect in the vendor’s title
- helps the purchaser’s solicitor in writing the report
WAYS OF PROVING OF TITLE TO LAND?
- Traditional history
- Acts of long possession(Adverse possession) 12 yrs for private, 20 years for gov
- Acts of ownership extending over a period of time
4.Proof of possession of adjacent land - Production of documents duly authenticated and executed
what are the qualities of a good root of title?
- It must sufficiently describe the property being conveyed.
- It must clearly state/describe the owner.
- It must establish that the legal and equitable interests is vested in the vendor and that it
is not subjected to a higher interest. - The document must not contain anything that creates doubt about the vendor’s title.
- The document should not contain breaks in the title devolve
Examples of good root of title?
- Deed of gift
- Deed of assignment
- Legal mortgage
- Will by way of assent
- Conveyance
- Court vesting order
- An Equitable Mortgage by Deed and contains the remedial devices
Examples of bad root of title?
- Power of attorney
- Certificate of occupancy
- Leases
- Equitable mortgage
- Will except it has been admitted to probate
WHAT HAPPENS WHERE A DEFECT IS VISIBLE?
The vendor has no obligation to disclose patent defects, the principle of caveat emptor applies.
YANDLE V SUTTON
Ways to conduct investigation of title/search?
- Search at the lands registry, probate, court registry & CAC
- Physical inspection of the property
- Examination of abstracted documents, or original documents
- Enquiries about family history, or traditional tile
- Enquiries from neighbours on adjoining land with the property.
- Requisitions and observations
How are lands registered in Lagos and Abuja?
In Lagos-LAND INFORMATION MANAGEMENT SYSTEM
In Abuja-ABUJA GEOGRAPHIC INFORMATION SYSTEM
HOW IS THE SEARCH PROCEDURE IN ABUJA AT AGIS?
- Make an application together with the consent letter from the owner of the land
- Pay the required fee
- Submit items at AGIS
- Official of the AGIS conduct search & report is issued & delivered to the solicitor
HOW IS SEARCH CARRIED OUT IN LIMS(LAGOS)?
- Apply through FORM 3 together with the payment of the required fee-Submit the form and the instruments in duplicate to the Registrar of Titles.
- The registrar will review the application.
- If the registrar is satisfied, he will issue a FORM 4(the official search report)
What are the advantages of investigation of title?
- To know whether the boundaries correspond with the description given by the vendor.
- To ascertain if there is any indication of dispute relating to occupation.
- To determine whether there are other persons in possession.
- To see if property is developed whether it complied with town planning regulations
- To ascertain the vendor’s title
- To know if there is any patent defect
Contents of search report?
- Date of search
- Place of search
- Name of beneficial owner
- Name of borrower
- Description of property
- Nature of property
- Encumbrances
- Comments/observations
What are the stages in completion stage?
1.Drafting of deed of assignment
2. Drafting completion statement
3. Payment of balance
4. Handing over of documents of original title documents, and receipt of payments
5. Delivery of Deed of Assignment
What is a completion/financial statement?
It contains the history of financial transactions between the vendor and purchaser.
It helps determine the capital gains tax payable & accountability between the solicitor and client.
ITEMS TO BE COLLECTED BY THE PURCHASER AT COMPLETION?
- original title documents
- A properly executed deed of assignment
- The receipt of payment of purchase price ground rents, other rates and taxes.
- The key, if the property is developed
5 Where the property is sold subject to tenancies, the vendor should hand over a letter to be delivered to the tenants notifying them that the property has been sold to the purchaser.
Stages in perfection of title?
- Obtaining governor’s consent-The Assignor
- Stamping-The Assignee
- Registration-The Assignee
what are the documents required to obtain governor’s consent?
- An Application letter
- Six copies of survey plan
- Purchase receipt
- Tax clearance certificate of the vendor
- Relevant copies of the executed conveyance
- CTC of original documents
- Passport size photographs
- Receipt of payment of taxes
- Approved building plan
What is the effect of failure to obtain governor’s consent?
- The transaction remains inchoate
- Legal interest does not pass, only equitable interest.
**AWOJUGBAGE LIGHT INDUSTRIES V CHINUKWE
What is the effect of failure to obtain governor’s consent?
- The transaction remains inchoate
- Legal interest does not pass, only equitable interest.
AWOJUGBAGE LIGHT INDUSTRIES V CHINUKWE
effect of failure to pay stamp duties?
- The doc is inadmissible in court except in criminal proceedings
- It will not be registered
- It is a criminal offence
- It attracts penalty
What’s the procedure for stamping?
.Presentation of the original and copy of the instrument for assessment at the stamp duty office for assessment of the duty payable. Which is usual based on the value of the transaction.
• Solicitor pays the assessed duty and present evidence of payment to the Stamp Duty Commissioner
• The instrument is accordingly impressed with the stamp.
• After this, it has been duly stamped
When should a deed be registered?
within 60 days of execution of the doc.
What’s the effect of registration?
- NOTICE
- ADMISSIBILITY
- PRIORITY
- PUBLIC DOC
