This article is to guide investors on the important steps they need to take when attempting to purchase a raw or parcel of land. Often time investors are faced with problems of land tenure by Inheritance usually refered to as the omo onile in Lagos which makes real property investing very difficult, unattractive, frustrating and sometimes regretable to investors. There has been cases of some dubious individuals selling a piece or parcel of land to four to five different real property investors, collecting money meant for payment of the same land from each of those investors and absconding.
For these reasons we feel obligated to show real estate investors how to go about real property sales transaction processes and practically guide them through some of those complex and complicated but very important steps involved in purchasing real properties.
1. First of all, an investor must decide on the purpose and the type of real estate property he/she would love to purchase. He /She must develop or adopt an investing and exit strategy which must include considerations for all expenses and cost associated with acquiring, management fees, improvement, maintenance fee, registration fee, taxes, processing fee, stamp duty, legal fee, real estate agent or broker fee and contingency for unexpected expenses.
It is also of ultmost importance to know that the real property registration fee, consent fee to be obtained from the governor, stamp duty, legal fee and real estate agent fee could immediately gulp between 22% to 24% of the real property value.
For this reason you need to have a solid and comprehensive investing and exit strategy that will guide you all the way through all your land purchase, you must endeavour to stick to this strategies when searching and hunting for a real property that fits into your plans and budget.
This is an important step to a bewitching success in real estate property investment that would be witless to ignore.
2. Before you get excited and febrile about seeing a pieces of land that fits into your budget and plans ensure you determine if the real property is registered, unregistered, covered by C Of O, or any other registered private sublease.
3.If it is covered by any registered private lease, find out more information about the private sublease by making sure you demand for the Head Lease.
Ascertain by verifying the claims at the relevant land registry .
Research who the appropriate parties are to make sure you are dealing with the right party.
Get wind of the outstanding years left in the sublease to ensure you are not sold or lease what does not exist.
Contract or engage the services of a solicitor knowledgeable in land issues to interpret the terms of the Head Lease to make sure the propose lessor has the power to sell the land.
4. In case of sublease and deed of assignment, find out if it is possible for you to register the land after the private transfer.
5. Also check if the land registration is via direct allocation by government in case of C Of O and sublease.
6. Investors must know or find out if they are purchasing from a private person who purchased from a registered owner and has not registered his/her title.
7. Check if you are purchasing from a private person who purchased from an unregistered owner and has not registered his /her title.
8. It is the duty of the investor to investigate if he/she is purchasing a piece of land not yet allocated to the seller, simply put purchasing land that has not been excised and it is still technically under government acquisition.
9. The investor must find out if he /she is purchasing from a seller who may have title to the land that has been allocated to him/her by government via Gazette or C Of O but has not process the C Of O.
10. Also make sure you are not purchasing a parcel of land under acquisition that has been committed to a project.
11. If the investor is satisfied with all of the above he/she can the request to see and sight the original registered documents and other relevant documents such as contract of sale, purchase receipt, building plan if any etc
12. Then ensure you verify all these claims at the relevant land registry to get wind of any pending litigation or other issues that can hindered smooth transfer of ownership.
13. Conduct a little research on the allotee disposing the land to know why he /she is selling and make sure you also inquire about previous and current owners whose names are on the documents.
14. Inquire about the outstanding number of years in the life cycle of the real property
15. Investors must ensure that there is no encumberances on the real property such as outstanding taxes, long lease, rents or revocation, mortgage or prior sale.
16. At this point an arrangement could be made for valuation of the real property, to know the worth of the land using a professional valuer
17. Take advantage of conducting physical inspection of the real property to ensure that it conforms with the details on the title.
18. Investor at this junction must request for evidence of no tax encumberances on the real property and document of exchange must be presented.
19. Clarify from relevant government agencies that all land charges and other demands has been paid and cleared.
20. Ensure governor’s consent is obtained for the sale
21. The investor must make sure that the building plan approval, land or soil test result must be relinquished at the final exchange.
22. It is time to negotiate the real property purchase price to reach a mutually acceptable or agreed price.
23. If a price is agreed upon and the investor is satisfied, he/she can ask a solicitor to draft the legal documents of exchange of title and payment.
24. After both parties consent and agree to the terms on the contract which may include but not limited to evidence of good title, issues tagged as important and also making sure that other enquiries are satisfactory answered. The investor can make a deposit of 10% of the purchase price and propose a date for completion.
25. Investor would have to pay the remaining 90% on completion date through his/her solicitor and upon confirmation of receipt of payment, the seller must relinquish all original documents and legal right to the real property which includes contract of sale, purchase receipt building plan if any, and original copies of all other relevant documents.
26. Finally, the investor can commence the processing of a Certificate Of Occupancy if the real property does not have any C Of O.
Here Are Transaction Cost And Who Pays
Transaction Cost Percent Who Pays
Registration Fee 3% Buyer
Consent Fee 8% Buyer
Legal Fee 7.5% Buyer
Legal Fee 5% Seller
Real Estate Agent Fee 1%-2.75% (1%-5%VAT) Buyer
Real Estate Agent Fee 1%-2.75% ( 1%-5%VAT) Seller
Stamp Duty 2% Buyer
Cost Paid By Buyer 21.55%-23.388%
Cost Paid By Seller 6.05%-7.888%
Investors must know that round trip transaction cost includes cost of purchasing and then reselling a real property, registration fee, legal fee, real estate agent fee, taxes, notaries etc
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