First-time Property Buyer

14 Important Real Estate Documentations / Terms you should know as a First-time Property Buyer

Buying a property can be frustrating sometimes, especially in this Nigeria. There are tons of real estate terms and documentation that real estate agents use interchangeably.

Forgetting that many property buyers in Nigeria do not understand these ambiguous terms/documentation, the few real estate consultants that understand these terms hardly explain them to the first-time property Buyer.

As a first-time property buyer, never be surprised that many real estate agents do not understand some of the important real estate title documents and terms. They are only interested in selling and receiving their commissions. They leave you to your problem once the commission has flown from your hand into their pockets.

In an attempt to pay for the desired property in Nigeria, Some scrupulous agents will tell you that Excision and Gazette are real estates Title documents, thereby leading you to acquire government-owned lands.

Inadequate explanation and understanding of some real estate terms and documentation could land you in poor real estate decision making, a legal battle and financial trouble.

Prelude

As an intending/first-time property buyer in Nigeria, you need to understand the real meaning and interpretation of vital real estate terms/ and documentations cutting across;

  • Excision
  • What is a Gazette
  • Certificate of Occupancy – C of O
  • Deed of Assignment
  • Governors Consent
  • Property/Land Purchase Receipt
  • Survey Plan
  • Approved Building Plan
  • Approved Layout Plan
  • Power of Attorney
  • Letter of Engagement
  • Contract of Sales
  • Letter of Administration
  • Off Plan Property

The proper understanding of real estate documentations could save you a lot of stress, and it can prevent you from the risk of real estate related legal and financial troubles.

In this write-up, I am pleased to explain the following real estate terms/documents;

What is Excision?

In the Nigerian real estate industry, excision means a portion of land that the government released to the Indigenous settlers or the original inhabitants of the community.

When they say the land is an excised land, it means that the land is legally free from government acquisition.

Lagos State of Nigeria Official Gazette
Example of Lagos State of Nigeria Official Gazette.

Please note: excision is not a Title document, and never let anyone mislead you that excision is a Title document.

First-time property buyers should always ask proper questions from his / her agent when buying excised land in Nigeria.

What is a Gazette?

A gazette is an official publication/document revealing that certain land at a community or location has been excised.

In other words, GAZETTE is an Official record book where all special government details are spelt out and recorded.

It is within officially excised acres or hectares that the original landowners are entitled to sell the lands to the public and not anything outside those hectares of land given or excised to them.

If they decide to sell anything outside the excised land, then that land is under government acquisition, and such land can be dangerous to purchase or acquire as an individual or corporate organization.

Please note: land can be excised but not gazetted, for a land to be officially excised, it needs to be gazetted by the government.

What is a Certificate of Occupancy – CofO ?

A Certificate of Occupancy is a legal document issued by the State Government / or Federal Government in the case of FCT, Abuja or Federal Lands, it is usually issued to an individual, groups of individuals or a company.

A CofO confers the right of occupancy of a particular property to an individual, group or company. A CofO will clearly define the location, size and ownership term of 99 years.

It is always important to note that a CofO is one of the most critical Real Estate Documentations in Nigeria.

What is a Deed of Assignment?

A Deed of Assignment is a legal land agreement document that records a sale of land. It captures detailed information about the buyer, the seller, the time and date of sales, price consideration for the sales, the witness in the sales and other important considerations on the transaction.

A Deed of Assignment transfers interest and title in real property from one party to another. You must demand this document after a real estate sales transaction.

A deed of assignment is an essential document for transferring property ownership between the buyer and the seller.

As a property buyer, it is always important to note the following information in a deed of assignment document;

  • Personal Information details of the parties to the transaction; names, workplace/job, address, status, sex.
  • The date of the transaction, especially the date the property is transferred to the buyer.
  • The type and class of property title document that is being considered.
  • Detailed description/ specifications, including any fittings and fixtures of the property.
  • A track record or history of the property being considered, including all preceding documentation.
  • The amount of money paid in a property transaction (buy price).
  • Buyer and Seller party agreement and joint consideration.
  • The parties’ signatures, as well as the signatures of the witnesses to the transaction.
  • Survey Plan for the Property.
  • Information about the legal practitioner who lawyer who prepared the deed.

Please Note:

The Deed of Assignment must be logged to the land registry, and the State Governor must sign and validate the Deed of Assignment. That’s when a Deed of Assignment is considered registered.

What is Governors Consent?

At times you ask people for the title document covering land and you hear responses like ‘the property has a ‘Governor’s Consent’ as if ‘Governor’s Consent is a document like a C of O.

Governor's Consent
Example of a Governor’s Consent

Governor’s Consent is an action by the governor or his appointee consenting to a land transaction on a deed of assignment executed between a buyer and a seller through appending of a signature on the executed document.

Governor’s Consent is appended on a page in a deed of assignment that is submitted by the buyer to the government informing the government that a transaction has taken place and they require the consent of the Governor for the transaction to be valid as required by the Land Use Act of 1978.

Governor’s Consent should be taken note of.

What is a Property/Land Purchase Receipt?

A property purchase receipt is the evidence of financial consideration in a real estate transaction, and whether a buyer makes a full payment or a part payment, there must be a document that acknowledges the amount paid, and that the seller has received the payment from the buyer.

Whether a buyer makes a part or full payment to the seller (owner) of a property, there must be a document that acknowledges that a person has received payment for such land or building. The document is known as Receipt of Purchase of Property or Land Purchase Receipt.

First-time Property Buyer
Example of Land Purchase Receipt

In a real estate transaction, a property purchase receipt can be used to serve as proof of the transfer of property from the seller to the buyer.

Please Note: the receipt of purchase is not enough as a complete claim over ownership of land, other important documents should also be requested at the point of purchase.

What is a Survey Plan?

In the Nigerian real estate industry, survey plans are usually in two categories. We have the Record Copy (Red Copy) Survey Plan and the Normal Survey Plan.

The Record Copy (also referred to as Red Copy) is a copy of the original survey carried out by a Registered Surveyor which is lodged to the Office of the Surveyor-General of the State/Jurisdiction under consideration in Nigeria.

A record copy survey plan is the best, as a copy of the same is always lodged to the Surveyor General’s office. It is a mandatory document that the government always require when processing land titles.

Real Estate Documentation
Example of a Survey Plan

Professional survey service is not complete until a record copy is lodged to the Surveyor General’s office.

Evidence of lodgment is usually given to the surveyor after successful lodgment of the record copy.

Clients must demand evidence from the surveyor.

The Normal Survey Plan is a survey plan that does not require lodging to the office of the Surveyor-General, the survey is just prepared to determine the length, breadth, perimeter and topography of the property under consideration.

What is an Approved Building Plan?

For you to build on any land in Nigeria, you need a building plan approval document, it is a mandatory document from the government. Having buildings erected on a large expanse of land without building plan approval is like running a government without regulations guiding it.

 

First-time Property Buyer
Example of an Approved Building Plan

You need a permit from the government authority before you can legally build on any land in Nigeria. A building plan approval ensures that the building complies with the Urban and Regional Planning standards of Nigeria, and also ensure that the building structure and arrangement will not cause any harm to the society.

What is an Approved Layout Plan?

When constructing new housing estates or homes on a large expanse of land, it is expected that parcels of land would have to be broken into plots as sites for building individual housing units. In Nigeria, the government expect that you first carry out a land survey on such a project, then you subdivide the lands into plots, by giving provision for essential infrastructure and facilities on the land.

 

Real Estate Documentations in Nigeria
Example of Approved Layout Plan

Before proceeding with construction work, it is expected that the developer must have the land surveyed and prepare a layout plan for the land, and on the layout plans, the following must be visible;

  • The exact size of the land.
  • The streets on the land
  • Utility Easement
  • Community Parks / Playfields
  • Etc.

A detailed layout plan that is submitted and approved by the government showing the above information is called Approved Layout Plan.

Before building development can commence in a community or estate or land area that is more than 1 acre, it is fundamental that the project owner is issued an approved layout development plan for his project and must in no way contravene with the standards approved in his layout plan.

Residential developments of ten acres or more that incorporate areas for public, commercial, or industrial use are often defined as planned unit developments – PUD.

The objective of the PUD is to allow for commercial, recreational, and educational facilities located convenient to the housing. The plan may provide for a variety of residential uses, such as a block of flats, detached housing units, terraces, neighbourhood shops, community playfield etc.

A Planned Unit Development – PUD requires extensive planning and a large initial investment. It is important to work out arrangements with the appropriate Urban and Regional Planning Authority to obtain approval before commencing any physical development activity on the land.

What is a Power of Attorney?

This is a legal document that gives a person the authority to act as an agent or representative for another person or a corporate entity. A Power of Attorney is a vital instrument in ensuring that the affairs of a person can be managed by a delegated associate. In this case, all actions carried out on behalf of the person has been properly authorized.

A Power of Attorney is usually used in a situation where the original owner of the power is physically away from his property/asset. It may also be used in a situation of Ill-health or a physical impairment that prevents the property/asset owner from personally handling his/her affairs.

By the virtue of a Power of Attorney, a real estate consultant can in his professional capacity assist the original property owner in disposing of his/her property and at the same time also carrying out acts that are the responsibility of the property owner.

Power of Attorney is one of the most important Real Estate Documentations in Nigeria, especially for absentee property owners and investors.

What is a Letter of Engagement?

This is a letter in the form of a contract that simply states that you are appointing a firm/agent to represent you in your real estate transactions. This allows the firm/agent you are appointing to carry out the professional project task on your behalf.

A letter of engagement could be to sell off the property on behalf of a client, it could be a lease renewal or it could be to get some new tenants into a particular property.

A standard letter of engagement must state the following;

  • Appointment of Firm/Agent – who is going to help you in your real estate endeavours?
  • Scope of Work – what exactly are they going to do for you?
  • Payment Terms – how are they going to get paid?

Please note; a Letter of Engagement is one of the important Real Estate Documentations in Nigeria, should always consider it when appointing any real estate agent to help you sell/rent/lease out your real estate investment.

What is Contract of Sales?

This is a written agreement between buyer and seller to transact real estate. The buyer agrees to pay an agreed-upon amount for the property. The seller agrees to convey the Deed of Agreement upon meeting certain conditions.

Please note: The Deed of Assignment is a legal instrument. It denotes ownership and description of the property owned.

A property executed Contract of Sales must contain the following information;

  • Price
  • Sales/closing target date
  • Deadline by which the offer expires
  • Earnest money deposit amount
  • Details about who pays for inspections, surveys, title documents, etc.
  • Details about adjusting utilities, property taxes and other fees

As a first-time property buyer, please take note of the details in any contract of sales given to you. Never forget to do your due diligence.

What is a Letter of Administration?

A Letter of Administration – LOA is the legal authority granted to a person (usually next of kin) to administer the estate(s) or property of a person who died without a will (intestate death).

With a letter of administration, an administrator derives his or her authority to act from the terms of the letter of administration.

Without a letter of administration, a next of kin or associate of a deceased person does not have the legal authority to act as the custodian of his or her property.

As a first-time property buyer, please take note if you are buying the property of a deceased person.

What is an Off-Plan Property?

Off-plan property simply means property that is available for purchase before it has been constructed. This is where “buying off-plan Off-plan property may be desirable in a place like Lagos and Abuja where real estates are in high demand, and buyers want to secure a future property.

There are some risks involved with buying an off-plan property, mostly related to the inherent uncertainty of buying something that isn’t built at the time of purchase. For instance, the property might not increase in value to the extent that is expected, or at all.

Another risk in buying an Off-plan Property might be a change in market conditions, or due to the location being in an area with low or falling levels of investor demand. Change in Political and policy in the project region may have an impact. For example, a planned infrastructure development project that would increase connectivity to an area might be delayed due to certain circumstances.

As a first-time property buyer, you must clearly understand the terms and conditions surrounding the Off-plan property deals.

Recap on Real Estate Documentations in Nigeria

It will be important to recall that buying real estate as a first timer in Nigeria can be frustrating sometimes, but for you to make your real estate investment a worthwhile one, a first-time property buyer must understand these documents and terms;

  1. Excision
  2. What is a Gazette
  3. Certificate of Occupancy – C of O
  4. Deed of Assignment
  5. Governors Consent
  6. Property/Land Purchase Receipt
  7. Survey Plan
  8. Approved Building Plan
  9. Approved Layout Plan
  10. Power of Attorney
  11. Letter of Engagement?
  12. Contract of Sales
  13. Letter of Administration
  14. Off-Plan Property
Never joke with any of the above terms and Real Estate Documentations.
I hope this article helped answer all your questions. If you liked this article, or you would like to ask a question, please feel free, I will appreciate your comment.

Disclaimer:

The contents of this article are for informational purposes only. Always do your research before you take any real estate advice as a First-time Property Buyer in Nigeria.

ABOUT THE WRITER:

I am Bolaji Afolabi. I created bolajiafolabi.com to teach you about real estate and tech-based business opportunities. I work as a full-time partner at Globalclique, a Real Estate + Technology Consulting Company. I am also a CIO at Ibugbe and Partners, a Real Estate Marketing and Development Consulting Firm in Lagos, Nigeria.

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