Diclaimer: This is not a legal advice. It is for education
Real estate in Nigeria is one of the most profitable and secure ways to build wealth in Nigeria. With a population of over 200 million, rapid urbanization, and rising demand for housing, Nigeria offers returns you won’t find in many mature markets around the world. Diaspora buyers are Nigerians living and working abroad, and foreign investors who see the opportunity in Nigeria’s real estate growth. They are the group most affected by the gaps in our land administration system.
This article breaks down the problems diaspora buyers face and exactly how to solve them so you can invest with confidence.
THE LEGAL FOUNDATION:
It all starts with the LAND USE ACT 1978: Every land transaction in Nigeria is governed by this Act. Under it, all land in Nigeria is vested in the Governor of each state and in the Minister of the FCT for Abuja. Meaning that every legitimate title must trace back to the Governor or Minister of FCT.
Common titles you will hear in Nigeria include: Certificate of Occupancy, Governor’s Consent, Deed of Assignment, Survey Plan, Excision gazetted, Allocation Letter, Ratification and more depending on the state in Nigeria. The names may differ, but the principle is the same. Titles can also be derived from Local Governments, Federal Agencies, and Court Judgments but they must all be traceable to the Land Use Act 1978 through a proper search at the Lands Registry and other appropriate agencies because most of the problems the diaspora buyers face come from gaps in this verification chain.
Let’s look at the two main types of Diaspora buyers.
1.NIGERIANS LIVING ABROAD, USING RELATIVES AND UNREGISTERED AGENTS AT HOME AS PROXIES.
African culture is family oriented as family plays a vital role in the up bring of children and their growth in Nigeria. The first instinct of every Nigerian who lives abroad and wants to buy a property at home is to send money to parents, brothers, cousins, pastors or imams to buy land for them. It feels safe but in reality, it is where most Diaspora losses happen. This is because most of these persons are not professionals and know little about real estate transactions and in other cases, they deliberately defraud their brothers and sisters living abroad. The latter is more common. If your proxy is not a registered professional or real estate lawyer, here are the 7 problems you will face:
1.Fund Mismanagement: Money sent for purchase gets diverted to school fees, weddings, or businesses. Demanding accountability becomes a family war. In many cases, elders, pastors, or chiefs are invited for settlement. By the time that is over, your money is gone and the land is not bought.
2.Death of Diaspora buyers: There are many unverified stories out there where family members plan the death of diaspora property owners because of the properties of the diaspora in their hands. These stories are everywhere. Though not verified and confirmed but the likelihood that this can happen or that it happens is not farfetched because Nigeria is not in any shortage of very greedy men and women who can and have actually killed their brothers and sisters because of their properties. The solution to this problem is to use professionals who can buy your properties, send you documents for safe deposit in official places even abroad. In this way what you have in Nigeria is out of the knowledge of your relations to avoid envy and dangerous plans against you.
- Wrong Names on the Title: Family members use their names to register the title to the property and if the relationship sours, or when the person dies, you have to fight to prove ownership. In many cases, you lose. If your proxy dies, relocates, or has a falling out with the family relationship, your documents and knowledge of the deal vanishes.
- Incomplete Documentation: Relatives often skip professional steps to save money for themselves. They end up buying land with no title, land under government acquisition, land under power lines, or land with no drainage setback. You only find out after you’ve paid and your money is gone.
- Conflict of Interest and Price Inflation: Family members and agents can collude with the seller for a kickback and inflation of the price of the land. You find out that they would make the diaspora brother or sister to pay double the amount of the property yet there is no guarantee that you will not lose the property at the end
- Poor Site Selection: Without technical knowledge, relatives buy swampy land, flood-prone areas, or land in communal conflict zones. Even when they happen to buy genuine land, they may not choose a good location that will be suitable for you. Personal choices matter when it comes to location of personal residences but professionals will make technical choices with the personal information that you will provide like age, family size, health conditions, life style and more.
- Communal and Family Land Disputes: In Southern Nigeria more than the North, most land is family land. A sale is only valid if all principal family members’ consent. A proxy who is not a professional may not be able to conduct all the necessary verifications that are required and at the end of the day you will fall victim of the fraudulent practices of some land-owning families in Nigeria. This is one of the biggest problems of Diaspora land buyers.
FOREIGNERS INVESTING IN NIGERIAN REAL ESTATE
Foreigners face many of the same issues above but the major ones which affect foreigners specifically include:
1.Tenure Restrictions: Under the Land Use Act 1978, foreign ownership of land is more restricted for foreigners than for citizens. In practice, a foreigner can only be granted a statutory right of occupancy in Nigeria for only 25 years subject to terms in Lagos State for instance and its more confusing in different states of Nigeria while a citizen gets 99 years. The process is more complex and requires Federal Government consent. This is different from countries like Ghana where foreigners can get 50 years leaseholds more directly and citizens get 99 years. This short term of leasehold discourages investment. Professionals can advise you on other ways of doing this in Nigeria.
2.No Physical Presence: You cannot visit the site. You cannot feel the neighborhood. All due diligence depends on photos, videos, and third-party reports. That makes you vulnerable to misrepresentation but when you deal with real estate lawyers and other professionals, you will be properly guided.
3.Unlicensed Agents: Unlike Lagos State which has LASRERA, Nigeria does not yet have a strong mandatory national licensing regime for estate agents. It is hard to vet credentials or hold anyone accountable when things go wrong. This is a major problem for foreigners who want to be part of real estate transactions in Nigeria. Getting property professionals by going through the professional bodies like the Nigeria Bar Association (NBA) or Nigeria Institute of Architects (NIA) is your best choice.
4.Pricing and Double Sales: Without being on ground, it is easy for agents and even lawyers to collaborate with sellers to inflate the price of the property. Multiple sales of the same plot to different buyers are still common in areas without a digitized registry and it is a problem for foreigners.
- Title Confusion: Foreigners often don’t understand the complexities in our title regimes and a lot of other issues that only a professional can deal with.
- Currency and Repatriation Rules: The Central Bank of Nigeria has regulations on capital importation and profit repatriation. If you don’t follow the proper processes, moving your investment returns abroad later becomes difficult.
7.Legal Enforcement Delays: Land cases in Nigerian courts can take years. It is a big problem for everyone both Nigerians and diaspora but it is more concerning for foreigners as it may contrast with what is obtainable in their countries. For instance, it takes some times 10 to 15 years to dispose of a land matter in Nigeria while in Ghana, courts dispose of Land matters in a year or two or even few months. This is a problem for real estate business in Nigeria.
Buying property in Nigeria as a Diaspora Nigerian or foreigner is still one of the best wealth decisions you can make. Land appreciates, rent yields are strong, and demand is growing. But you must change your approach. Engage Registered Professionals only. Use a registered real estate lawyer and a registered estate agent or firm. Buying land in Nigeria is safe, secure, and profitable when you follow the law and work with the right people. That is how you build generational wealth without the land traps and exposing yourself to enemies at home.
Follow Propertygroom on our social media handles for verified lists of registered professionals you can engage when buying property in Nigeria and other updates