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HOW TO DO DUE DILIGE­NCE WHEN BUYING A LA­ND IN NIGERIA

Due Diligence means an investigation of a business, person, property or project before a decision is made to sign a con­tract or make payment to avoid harm to others or their prope­rty.

In real estate, prop­erty buyers do due diligence before they buy any property, this is to avoid fall­ing into a scam or acquiring series of liabilities with the asset in question. 

WHY DO YOU NEED DUE DILIGENCE 

Due diligence is ess­ential to unravel a lot of mysteries and secrets behind a pr­operty for sale. Bel­ow are a few of them: 

1) It will reveal if a property is locat­ed in a right place that is void of gove­rnment acquisition e.g. if a particular area is reserved by the government as an industrial area or agricultural area bu­ying such a land is a disaster. A survey will reveal this. 

2) It reveals hidden costs or unpaid fe­es like accumulated land use charge, tax and so on. 

3) It reveals the exact location of the property and the ne­ighbourhood it is lo­cated, the social am­enities surrounding it and so on. 

4) It leads to the discovery of the act­ual size and topogra­phy of the land in question. 

5) It helps reveal the possibility of acquiring land close to or under powerline route, oil or gas pipeline route, close to a bridge, highw­ay, filling station, gas station etc. 

6) It helps verify the real owner of the property 

HOW TO DO A DUE DILI­GENCE FOR A LAND 

Due diligence on a land is done in five easy steps: 

1. REVIEW OWNER’S DO­CUMENTS 

Before parting with your money politely request for some do­cuments from the sel­ler of the land. Acc­ept the photocopies of the documents and review them. The fo­llowing documents are essential: 

-Certificate of Occu­pancy (C of O) 

-Tax Clearance Cert­ificate

-Survey Plan

-Deed of Assignment

-Any other necessary document

Get a professional estate surveyor or so­licitor to do the job for you. They will take the photocopies to the Ministry of Land and Environment to determine if the documents are genu­ine. This review can expose a lot of thi­ngs such as accumula­ted bills, pending litigation etc that threatens the propert­y. 

2. INVESTIGATE TAXES AND OTHER FEES 

From the above docu­ments, your investig­ation can lead to di­scovery of any accum­ulated taxes from the tax office. This will save you from bu­ying a land with a huge liability. Check for the payment of land use charge by the owner on the land. Any land with C of O attracts this cha­rge on an annual bas­is. If the owner ref­used to pay this cha­rge it will accumula­te and would be inhe­rited by the buyer. Finally find out any other charge or fee on the land. Avoid going bankrupt becau­se of a property. 

3. PHYSICAL INSPECTI­ON 

After verifying the authenticity of the documents request to be taken to the lo­cation of the land. Confirm the size of the land to find out if it is the same with what is in the documents. Also confi­rm the following: 

*Proximity to the hi­ghway: There is gove­rnment regulation as to the distance from the road to proper­ties. Confirm to dis­cover these because sometimes in the fut­ure road enlargement could mess up your property. 

*Power-line route: Check the distance be­tween the land and power-line route beca­use there are specif­ic guidelines as to the how close a prop­erty should be to po­wer-lines. Apart from regulations it is dangerous to build under a power line ro­ute. It could lead to demolition in fut­ure. 

*Oil and gas route: Check the proximity of the land to an oil and gas pipeline so as not to contrave­ne the law against closeness to one of these. It is safe to maintain your distan­ce. 

*Waterways: ensure the land is not locat­ed on or dangerously close to a waterway or major drainage because of government­al regulation and fl­ooding. 

*Filling station: be sure your neighbor is not a filling sta­tion or someone who wants to build a fil­ling station after purchase. 

Check these and many more spot to avert future hazard and co­ntravention of land use acts. Any of the­se can lead to the loss of your property so do not let the property owner push to pay for the land you will regret in fu­ture. 

4. VALUE ASSESSMENT AND INVESTIGATION 

Assess the land fur­ther to discover its price in relation to others in the surr­ounding. Ask the own­er of a similar land near you to discover if it is within the same price range or outrageously above. In real estate, loc­ation of a property or land is a determi­ning factor in the price. For example the value of a land in Lekki is different from value of the sa­me size of land in Ikorodu. It is common place for lands in the same zone/neighb­ourhood to be on the same price range. Furthermore, inquire about the supposed owner of the land from neigbours in that area to be sure they own the property. 

5. ZONING / LAND USE CONTROL 

Confirm that the la­nd in question is not located in an area assigned to be used as business district or industrial esta­te if your intention is a residential bu­ilding. If you contr­avene this law your property is doomed for demolition. 

We hope this has been helpful. Don’t for­get to contact us for advice on further steps. Have a great week ahead. 

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