A Contract for buying land in Nigeria is usually executed where there is a transfer of interest in land. A distinguishing factor between a sale of land and other forms of conveyancing like lease, mortgage, is that in sale of land once interest of ownership has been transferred between a seller and a buyer, it can never be taken back again. Thus, there is no reversionary interest.
A contract of sale of land is an agreement between a buyer and a seller of land stating the considerations, obligations and other terms for the transfer of land ownership. Where there is a contract to buy land, no party can rescind from the contract without being liable for a breach of contract.
A contract to buy land in Nigeria is a preliminary step in the transfer of title of ownership of the land from the vendor to the buyer who only acquires equitable rights of title to the land, and upon completion of the completion of the contract, legal interest will be passed to the buyer. This means that the vendor still retains the legal interest in the land and becomes a qualified trustee of the land on behalf of the buyer. Thus, the vendor cannot deal with the land contrary to the agreement in the contract.
Process of Buying Land
Before a contract to buy land is entered between a buyer and a seller, the proposed buyer is expected to make inquiry by physical inspection on the land to be purchased, demand and obtain copies of the land documents and conduct search and/or charting of the land. This process would determine whether there is any encumbrance on the land, patent defects, or whether the land is suitable for the purpose which it is purchased for. Also, negotiations are carried out between the buyer and seller before such a contract is entered into. The discovery made during the inquiry and search process may affect negotiations of the purchase price of the land.
Upon the inspection and due search of the land, the next step is to prepare the contract of sale. Usually, the solicitor to the vendor prepares the contract of sale while the lawyer to the vendor reviews it. At times, the solicitor to the buyer may prepare the contract of sale for the seller to review it too.
Upon the conclusion of the contract i.e. when the full purchase price of the land has been paid, the solicitor to the buyer or seller prepares a deed of assignment for the transfer of legal interest in the land. Such a deed is subject to the registration after obtaining Governor's Consent on the transfer in compliance with the provisions of the Land Use Act.
Contents of a Contract to Buy Land in Nigeria
Particulars of the Parties involved- the parties to a contract to buy land in Nigeria must be persons at law, natural persons as individuals and entities with corporate personality. The parties to the contract to buy land must be fully described in detail such as the name, address and status of the vendor and buyer. The description of the parties as to status is dependent on the nature of the transaction.
Description of Land to be sold- a full description of the land must be contained in the contract to buy land. The description should be such that it is in relation with the description contained in the survey plan (where there is a survey plan).
Capacity of the Vendor- it is important to inquire into the nature f the vendors' title to the land being sold. The vendor has to prove that he has a good root of title either from
a Deed of Assignment duly perfected or by a deed of gift, a Court vesting order or by an Assent. Usually, the capacity of vendor is as a beneficial owner of the land is an assurance to the buyer that the vendor has the right to convey the land, and will grant to the buyer the right to quiet enjoyment of the land and assurance that the land is free from any encumbrances.
The purchase price of the Land- a contract to buy land will enable the buyer and the vendor to agree on whether an initial deposit of the purchase price of the land will be made, the manner in which it will be paid and the date it will be made. A deposit clause should be inserted in the contract to buy land to serve as a security by the purchaser to the vendor as evidence of his intention to complete the purchase of the land. The deposit is different form part payment in that deposit is made before the conclusion of the contract to show commitment on part of the purchaser that the sale is not gratuitous while part payment is part of the purchase price to be made by the purchaser after the conclusion of the contract.
Closing date- the contract to buy land must contain the date when the contract will be finalised by the parties to it, that is the date where the final payment of the land will be made, and the title will be transferred to the buyer. Some contracts to buy land include clauses that upon the delay of payment of the purchase price or fulfilment of specific conditions, the buyer may lose the land and get a refund. So, this clause helps to keep parties abreast with the time limitation to avoid delay in concluding the transaction
For a contract to buy land to be valid there must be an offer, acceptance and consideration. It is important to state that a contract to buy land comes first before the transfer of interest in the land. Also, perfection of the sale which includes obtaining Governor's Consent, register of the document and stamping of the document is not necessary for the contract to buy land as it is only the equitable interest that has passed at that stage and not legal interest.
The deed of assignment or conveyance or assent or deed of gift usually follows the contract of sale of land. The deed is the actual document that convene or transfer a legal title in a land from one person to another subject to perfection.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.