Ruth Obih: Welcome to 3INVEST ON AIR.
Ayuli Jemide: Thank you Ruth.
On laws governing real estate investments?
Ayuli Jemide: Ruth, that’s a very wide question, to start mentioning all the laws governing real estate investment. I think the most important thing you want to know is that there are laws that set up institutions and then there are regulations, and there is the practical side of real estate.
The most important thing is the practical side rather than the laws themselves, because for the laws, you can always ask a lawyer but for the practical side, you need to know so you can take desk-top decisions. And then a lot of our laws are obsolete when you look at things like the conveyance act and all that, but what happens day-to-day at the land’s registry can change every other week. So simple things like what is the urban planning law around where you are going to build? Whether you can do 4-floors, 5-floors, 6-floors. You have to constantly check because it affects your investment decision.
On Land charges, taxes etc
Ayuli Jemide: So the first thing you want to know is that for land use charges and things like that, it is state by state. And then you must realize that what applies in Lagos does not necessarily apply in Imo state or wherever. You have to then locate your enquiry based on where you are purchasing those properties and sometimes people make the mistake without knowing boundaries are not physical. Sometimes you may be buying land in Ogun state thinking it is in Lagos and whatever you are thinking at that point in time may be just your knowledge of what applies in Lagos without realizing Ogun State is a totally different kettle of fish. I always believe that anybody involved in real estate, the best friends to have are not even lawyers, they are the people at the land’s registry and the people who formulate the policies…
So we are talking to ordinary people and trying to give them some basic information and the way to have basic information is not to go and sit in your lawyer’s office, it is to be out there on the street. You need to know what’s going on, on a day-to-day basis, from state to state and what affects you regarding land use charge, tenement rate and so on. So if you go there, you will have a list of the charges because those are the people who collect the money on a day-to-day basis. They will tell you what they collect, how they collect it, why they collect it, and then you can cross check with your lawyer what the law says regarding this.
In my years of practice I have always seen a great divide between what you read in the books and what the people in the land’s registry will decide that they want to do. For example, you can see in the books that you can file a caveat in a particular land registry and you will get there and decide that you want to file a caveat and they can tell you they don’t know it. I have seen some land registry say, “No we don’t file caveat, if you want to go to court, go to court and sell us the court papers but don’t come here and tell us you want to put it in your file”, you try to explain to them that the law allows me to do this, they will say they don’t know it. You always have to find out not just what the law says but what obtains out there.
On fraudulent transactions
Ayuli Jemide: There are actually two things.
- Some transactions are manifestly fraudulent or they look fraudulent. In my view and my years of practice I have always come to the conclusion that any property I cannot check at the land’s registry is on the face of it fraudulent. So this thing about family title and the likes is difficult. You can’t really check it, you can’t go to the land registry and say you have checked the title or you choose to believe what an agent told you, or the member of the family? And he may be telling you the truth that this family owns the property but the other family disputes it so as long as there is a dispute and there is no reference point like the land registry. It’s you and them and your God. Please if you can avoid it, avoid properties that have no reference point where you can do your due diligence in an institutionalized way by going to the land registry to ask who owns the property.
- Sometimes people are fraudulent because they don’t even know they are fraudulent by giving some information they don’t have. I have seen a situation where someone bought property and was subject to government acquisition but didn’t know it was subject to government acquisition at the time they purchased it because they didn’t do that level of due diligence. They got registered somehow, and when you go there, it is at that point in time government decides they want to exercise their right.
So I think you have to dig all the boxes, some people stop their due diligence at the registry, you have to check whether it is subject to government acquisition, you have to go to that piece of land and take the measurement and ensure that what they are selling to you, if it is a thousand square meters, it has to be a thousand square meters and not two thousand.
This is very funny because, I have had a situation where a client bought a land and for years they had built on it, occupied it and it was twenty years later they realised that the person who sold it had fenced into someone else’s land. So taking a surveyor there just to make sure that the size of the land in question, and that on the title document is same in terms of size and configuration. To also make sure you are not buying the property behind, but the one that’s actually been sold to you. So those practical steps are extremely important, else you might be buying yourself a fraud.
To get in touch with Ayuli, you can follow him on LinkedIn or tweet @JemideAyuli and you can send him questions.
Tune in to 3invest on air every Monday at noon on Classic FM 97.3 LAGOS and Wednesday at noon Beat 99.9 FM LAGOS