Overview of Nigerian Real Estate Laws
Nigerian real estate laws govern different aspects of real estate, including land ownership, land use, property rights, and more.
- The Nigerian Constitution provides for the right of people to own and acquire real estate in any part of the country. Section 43 of the Constitution provides that “subject to the provisions of this Constitution, every citizen of Nigeria shall have the right to acquire and own immovable property anywhere in Nigeria”.
- Customary Laws of the People
- Property and Conveyancing Law (PCL) 1959
- Illiterate Protection Act
- Registration of Titles Law 2004 of Lagos State
- Land Instrument Registration Laws of various States
- The Stamp Duties Act LFN 2004
- Administration of Estate Laws of States
- Companies and Allied Matters Act Cap 2020
- Wills Laws of States
Key legislations impacting real estate development.
- The Land Use Act of 1978: It vests all urban land within a state in the state governor and all non-urban land in the local governments where they are found.
- The Nigerian Urban and Regional Planning Act: provides a framework for planning, development, and management of urban and regional areas.
- The Investment and Securities Act: The Investment and Securities Act governs the operation of the capital market and provides the procedure for acquiring and disposing of assets, including real estate.
- Environmental Laws and Regulations: These include the Environmental Impact Assessment Act, the National Environmental Standards and Regulations Enforcement Agency Act, and others. These laws require property developers to consider the potential environmental impact of their projects and to take steps to minimize negative effects.
Mitigating risks in real estate transactions
Due Diligence: Importance and Best Practices
As real estate transactions in Nigeria are fraught with numerous risks, it is of great import to conduct due diligence to prevent fraud and mistakes. Due diligence involves a comprehensive investigation into a property before acquisition to confirm its value and uncover any potential issues. It includes investigating the property’s legal status, physical condition, potential environmental issues, and any other relevant factors.
Title Verification and Land Documentation
Title verification is another crucial aspect of due diligence in real estate transactions in Nigeria which involves confirming the authenticity of the seller’s title to the property and ensuring that the property is free from any encumbrances or disputes. This includes scrutinizing the land documentation, the certification of occupancy, deed of assignment, survey plan, and other necessary documentations crucial in securing a valid title to the property.
Resolution of Disputes and Litigation Management
- Alternative Dispute Resolution Mechanisms: land disputes are time-consuming and costly through litigation. This is why alternative dispute resolution (ADR) mechanisms such as mediation, arbitration, and conciliation are increasingly being used to resolve real estate disputes in Nigeria. These mechanisms provide parties with a time -saving, costs -saving, flexible and efficient way to resolve conflicts outside the court system.
- Judicial Processes and Precedents: In cases where disputes escalate to litigation, understanding the Nigerian judicial processes is also utmost importance. Real estate developers need to be aware of the court system, procedural rules, and the importance of legal precedents. Precedents set by higher courts serve as a guide for future cases and can significantly impact the outcome of disputes.
Regulatory compliance and permitting
Understanding the Regulatory Bodies and Authorities
To navigate the regulatory landscape in Nigeria, real estate developers must familiarize themselves with the relevant regulatory bodies and authorities. These include:
- Federal Ministry of Works and Housing: The Federal Ministry of Works and Housing is responsible for formulating and implementing policies and programs related to housing and infrastructure development at the federal level.
- Federal Housing Authority (FHA): The FHA is a parastatal under the Federal Ministry of Works and Housing. It is responsible for the development and management of federal government-owned housing estates and provides mortgage finance and other related services.
- State Planning and Development Authorities: Each state in Nigeria has its own planning and development authorities responsible for regulating and approving real estate projects within their jurisdictions.
- Lagos State Real Estate Regulatory Authority (LASRERA)
- Real Estate Developers Association of Nigeria (REDAN)
Compliance with building codes and standards
Compliance with building codes and standards is essential to ensure the safety, structural integrity, and functionality of real estate projects. In Nigeria, building codes and standards are regulated by various bodies at the federal and state levels. Real estate developers must adhere to these regulations and obtain necessary permits and approvals before commencing construction. Failure to adhere to these codes results in legal issues for infringing real estate firms.
Conclusion
To achieve success in the Nigerian real estate industry, it is imperative to establish a solid legal foundation. And to do this, one has to understand the Nigerian legal landscape, conduct thorough due diligence, ensure regulatory compliance, and adapt to emerging trends are critical for building a solid foundation.
Developers can effectively mitigate risks and avoid legal pitfalls by acquainting themselves with substantial legal knowledge on relevant Nigerian laws or engaging the services of a competent Legal Practitioner.
The Nigerian real estate industry is one that presents opportunities for growth and prosperity. By embracing knowledge, collaboration, and innovation, stakeholders can navigate legal landmines, establish solid foundations, and contribute to the growth and success of the Nigerian real estate sector.