One single bad property deal can swallow millions and rob you of your peace of mind overnight. As a discerning investor, your first thought is often, “Should I build from scratch or buy an existing house?”
Building from the ground up offers complete control over aesthetics, but it comes with a mountain of stress, from securing permits to managing contractors and supervising construction.
For a savvy investor with a busy real estate business or an international portfolio, this is often not a plausible real estate investing strategy.
This is why buying an already developed property or investing off-plan in high-demand areas like real estate in Lagos or real estate in Abuja is a more efficient option.
But how do you ensure you’re not just buying a building, but buying true peace of mind? Because buying a property you didn’t personally supervise comes with unique, hidden risks that can jeopardize your entire real estate investment trust.
This article will show you how to navigate these risks, revealing the critical legal clauses that act as your ultimate safeguard.
The Foundation of Peace of Mind: Beyond Just a Green Light
Your due diligence—confirming the property is legitimate and free from encumbrances—is an essential first step.
But even after receiving a green light from your initial checks, you’re not fully protected.
A successful transaction hinges on one crucial element: having the right legal documents with the right clauses to protect your interests.
At my law firm, we advise our clients that a mere standard-issue legal document is not enough.
Depending on your payment stage, you’ll need either a Contract of Sale or a Deed of Assignment.
While a Contract of Sale is an agreement setting out responsibilities and is used for off-plan or installment payments, it doesn’t transfer ownership.
The Deed of Assignment, however, is the final, pivotal document that legally transfers the property into your name. It is your ultimate proof of ownership.
However, a document that is not properly drafted, or is merely a generic template, is a worthless piece of paper.
A Contract of Sale designed only for undeveloped land will not adequately protect you when buying a house. It’s the specific clauses within these documents that provide real security.
Your Essential Safeguards: Clauses That Protect Your Investment
To fully protect yourself against unseen risks, these five crucial clauses must be included in your Contract of Sale and Deed of Assignment.
They are your secret weapon against hidden liabilities that can turn your real estate investment into a financial nightmare.
1.Due Diligence Clause: This clause is your shield, giving you the legal right to fully investigate the property—its title, physical condition, zoning, and any encumbrances—even after you’ve made an initial financial commitment.
If you later discover a legal issue before the final closing and receiving your Deed of Assignment, this clause allows you to request a full refund. This is your last line of defense against real estate scams in Nigeria.
2. Indemnity for Building Regulatory Breach Clause: This clause is your protection against a developer’s non-compliance.
What happens if the seller failed to obtain a proper building permit or other necessary regulatory approvals, as required under real estate law?
This indemnity clause ensures the seller takes full responsibility for any fines, delays, or even demolition orders that arise from their lack of compliance.
It also keeps them on their toes, forcing them to ensure they have all approvals, including the correct planning permits and an official Letter of Authorization to Build.
3. Indemnity for Structural Defects Clause: While due diligence can catch some issues, what about hidden, or “latent,” structural defects that are not visible to the naked eye?
This clause protects you from the consequences of poor infrastructure or negligent workmanship.
While a seller may claim you’re buying “as is,” this clause legally shifts the responsibility to them, ensuring they are accountable for any issues that manifest after you’ve taken possession.
4. Structural Warranty Clause: This is a crucial promise from the seller. It guarantees that the property is structurally sound for a defined period after you take possession.
If any structural faults arise during this warranty period, the seller is legally obligated to repair or replace the defect, saving you from a significant financial burden.
5. Fixtures and Fittings Clause: This clause prevents a common and frustrating form of real estate scam.
A detailed schedule attached to the legal documents lists all the fixtures and fittings, guaranteeing that the exact models or types agreed upon are what will be delivered or used in the construction.
This clause prevents the seller from removing high-quality fixtures or replacing them with inferior versions, avoiding any disputes later on and protecting the value of your real estate investment.
Conclusion: Trusting the Process and Your Property Lawyer
These clauses are more than just ink on paper; they are your personal safeguards for a secure real estate investment.
This list is not exhaustive, as other clauses may be necessary depending on the specific circumstances of your transaction.
This is why, according to real estate law in Nigeria, only a qualified property lawyer is legally permitted to draft agreements for you.
Even if a developer or real estate agent hands you a document, you still need a real estate lawyer to review it, ensuring your interests are truly protected and your investment is secure.
At Charis Legal Practice, we specialize in securing peace of mind for high-value real estate transactions worth a minimum of ₦20 million and above in Lagos, Ogun, Oyo, and Abuja. Our services are a vital part of a comprehensive real estate business plan for any serious investor.
Don’t let one missing clause stand between you and your dream property. Our team of real estate lawyers in Lagos and across Nigeria is ready to guide you through every step, ensuring a secure and seamless transfer of ownership.
Choose us to protect you from potential real estate scams in Nigeria and set you up for success in your real estate investing strategies.
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