Investing in a luxurious real estate is one big feat but can you imagine how devastating it would be to later discover that it was a bad deal and that you just lost millions of naira? It almost happened to Mr. A in Lagos, but luckily, he was able to avoid it through our law firm’s comprehensive due diligence service.
In his words;
“This firm just saved me 30 million naira after a detailed due diligence report. I was advised not to move forward with the purchase of a land that has no title and deed of assignment is not even registered just to name a few. I recommend this service”
In this article, I’ll share with you the amazing story of how we saved Mr. A from a ₦30 Million Lagos real estate scam and lessons you can learn from it.
Specifically, we will discuss the following:
- What comprehensive due diligence is
- Case study on Mr. A’s story and how we conducted the comprehensive due diligence
- Lessons Learned from Mr. A’s story
In Nigeria, there is a very high risk of falling victim to real estate investment scams. The only way to avoid it is through comprehensive due diligence.
So what exactly is Comprehensive Due Diligence?
Comprehensive due diligence is a thorough investigation and verification of your property’s legal, financial, and physical aspects before you start the transaction or make any payments.
It is like doing your homework before making a big decision. It means you, thoroughly checking and verifying all the facts and information about the property, before committing to it.
For instance, if you’re buying a car,
– You wouldn’t just hand over the money without checking the car’s history, condition, and papers, right?
– You’d want to make sure it’s in good condition, has no hidden problems, and is worth the price.
Comprehensive due diligence in real estate is just like that. It means you are:
– Verifying the seller’s identity and ownership
– Checking for any legal issues or debts attached to the property
– Inspecting the property
– Assessing the likely risks and pitfalls
Comprehensive due diligence also involves conducting all the necessary searches, verifying all the necessary information and not just taking all the information given on face value.
In Lagos, comprehensive due diligence is a very important step to be carried out. More often than not, it benefits the buyer and investors mostly. It helps investors:
- Identify potential land risks and disputes
- Identify hidden liabilities and avoid falling victim to scams
- Ensure compliance with regulations for developed properties. For example, building approval. Building approval is like a permit granted by the state government to start building on the property after meeting with all legal and government requirements.
- Enjoy secure investment and peace of mind
In any real estate purchase without comprehensive due diligence, anything can happen. As a real estate investor,
- You could be buying from a wrong person.
- You could be buying a property in the wrong location.
- You could be buying a property that is in a bad location
- You could be buying a property that has already been sold
- You could be buying a property that the dispute is still actively going on in court.
In fact, the list goes on and on and I know you wouldn’t want to buy any of such properties. No one would.
Also Read: Master Real Estate Due Diligence: Why A Simple Registry Search Won’t Protect Your Investment
Mr. A’s Case Study
So when Mr. A approached us, he informed us of his interest in a property worth 30 million naira in Lagos and requested our services to help verify the authenticity of the property.
We then asked him to provide us with all the necessary documents and information he had gathered about the property. Our team then conducted a comprehensive due diligence investigation on the property.
What We Did:
- Review of Documents:
We read and reviewed the deeds of assignment provided to us by Mr. A to enable us begin the comprehensive due diligence.
This included all the deeds of assignment drafted for the property, the survey plan attached to the deeds of assignment.
A deed of assignment is a document that transfers legal ownership of a property from one person to another.
A survey plan is a detailed map that shows the boundaries and measurements of a property.
2. Tracing of root of title:
We traced the root of title of the seller who wanted to sell to Mr. A from all the documents provided. Root of title means the starting point of ownership.
This means we checked how the seller came to become the owner of the property back to the very starting point of ownership so as to have an idea of all the past owners of the property.
3. Verifying the title of past owners:
From the past owners stated in the deeds of assignment, we verified the details of their ownership from the lands registry so as to be sure of their legal rights to be able to sell the property.
The Lands Registry is a government database that stores information about land and property ownership.
4. Search on CAC portal:
From our tracing, we discovered that one of the past sellers/owners was a company.
We then conducted a search at the Corporate Affairs Commission to check the authenticity of the company.
The Corporate Affairs Commission is the government agency saddled with the responsibility of managing all companies in Nigeria.
5. Confirm location of property:
We also engaged the services of a surveyor to confirm location of the property so as to be sure that the location provided in the survey plan of the seller was the same with the location that the surveyor will discover.
What We Discovered
- Lack of Legal Title:
From our review of the documents provided, we discovered that a company; one of the past owners sold the property to someone who then sold to the seller.
Unfortunately, when we checked the lands registry, we discovered that the company didn’t have a good title, that is, sufficient proof of ownership despite claiming to have a registered title with the lands registry.
What’s more? The document we discovered was not even in their name.
As a result of this, buying from the company was trouble. The person who bought from the company practically bought nothing and therefore had no legal right to sell the property to the seller.
By virtue of this, the seller had no legal right to lay claim to the property even though he had a deed of assignment in his name.
2. Broken Chain of Title:
The fact that we did not find any sufficient proof of ownership at the lands registry to prove that the company was once the owner of the properties broke the chain of title.
We could not find any information about how the company became the owner of the property before it sold to the person who then, sold to the seller.
The document we discovered did not have the capacity to transfer ownership to the company.
There was nothing showing in the document at the lands registry that the company had been given ownership of any property.
The chain of title apparently ended with the original land-owner.
3. Faulty/Bad Root of title
As a result of the broken chain of title, the seller’s root of title automatically became faulty despite having a deed of assignment.
4 Wrong Location:
From the survey report of our surveyor, we discovered that the physical location of the property was different from the survey plan of the property that the seller had.
We also discovered that the location where the property is falls within a government allocated land; meaning the property at the location the surveyor discovered is already acquired by the government.
Mr. A was interested in purchasing the property but the seller despite having a deed of assignment didn’t have a legal right to own and sell the property because of a faulty root of title that originated from the company.
The Due Diligence Search Report
From all what we discovered, we prepared a comprehensive due diligence report stating all the steps we took and our observations, and went on to advise Mr. A not to go ahead with the purchase.
A due diligence search report is a document that summarises the results of a comprehensive due diligence and states the status of the property whether it is safe to go ahead with the purchase or not.
Following our advice, Mr. A was saved from losing his money. You can imagine the roller coaster of emotions he must have felt.
Consequences of Not Conducting Comprehensive Due Diligence
Now, if Mr. A had not engaged our services to conduct comprehensive due diligence on the property, you know what could have happened to him? He would have suffered the following:
1. Financial losses: He would have lost a whooping sum of 30 million naira!
2. Emotional stress from legal disputes: He would have experienced emotional trauma from a failed investment considering the amount he would have invested.
3. Investment regrets: He would have regretted real estate investment all together.
Meanwhile, real estate is one of the easiest investment to make if all necessary legal steps are taken.
Lessons Learned
Mr. A’s investment journey teaches us valuable lessons:
1. Verify Ownership
Before investing in any property, make sure the seller has legal title to the property. This means ensuring they have the right to sell the property and that there will not be any funny surprises later in the future after the property has been purchased.
A seller claiming to have a registered title at the lands registry is not enough to assume the seller has a good title and then buy from the seller.
Registration at the lands registry does not and will not cure defect in title because the lands registry will accept just about any legal document for registration and it wouldn’t mean that all is well with the document regarding a particular transaction.
This is the same with having a deed of assignment. It doesn’t guarantee ownership if the root of title is faulty.
2. Check Documentation
Don’t just assume any legal document the seller gives you is authentic. Just like in Mr. A’s story, they might use different addresses, some important dates and registration numbers or parties details might be wrong.
These documents include deeds of assignment, survey plans, offer letters, contract of sale, etc.
3. Research Property History:
Understand the property’s ownership chain.
Do a thorough research on the property’s past owners, their relationships, and their identities.
This will help you discover any hidden legal issues like Mr. A story where we could not find any information about the person who sold to the company.
4. Inspect the Property
It is not enough to rely on the survey plan given to you by the seller.
Always double check on whatever is stated in the survey plan.
Confirm that the location and coordinates tallies with what is in the survey plan and that the land is free from government acquisition.
5. Get legal expertise:
You should engage the services of a reputable law firm specialized in real estate law to conduct comprehensive due diligence.
Also, engage other important professionals needed for a comprehensive due diligence of any property such as a surveyor.
Also Read: 5 Common Legal Mistakes to Avoid When Buying a Property in Lagos
Conclusion
Seeking legal help is crucial to buying a scam-free property in Lagos. At Charis Legal Practice, we offer our services to sophisticated investors who want to invest a minimum of 30 million naira in real estate investment and want to avoid getting scammed in Lagos real estate.
If you need our team to work with you conduct comprehensive due diligence for your property, you can click HERE to get started.
Comprehensive Due Diligence Service starts from N700,000
This Is How Charis Legal Practice Can Help You!
– Discovering Legal Issues
Benefit from a thorough title (ownership) investigation to identify ownership clashes, rightful property claim, or illegal property claims
– Verifying Property Details
Maximize the expertise of a surveyor confirming the property’s location with the description on documents
– Review Legal Documents
Benefit from meticulously examined seller’s documents permits when it is a building, and other critical paperwork.
– Minimizing risks
Reduce the possibility of costly surprises by identifying any potential challenges upfront.
– Provide Legal Expert Guidance
Get clear explanations on whether the property is safe to purchase or not backed up with our findings.
WHY CHOOSE CHARIS LEGAL PRACTICE?
We are your top Real Estate Law Firm in Lagos Nigeria.
As an investor, it can be disheartening to invest in a bad real estate investment. You can engage our services from anywhere in the world regarding properties in Lagos, Ogun, Oyo, and Osun states. Our virtual legal consultations make it easy for you to get expert advice and guidance in the comfort of your own space.
We have successfully conducted numerous comprehensive due diligence services worth billions of Naira for Mr. As. Let us handle all of your legal needs with our comprehensive due diligence services package specifically designed for you.
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