Real Estate Law In Nigeria: A Seso Global Interview with Lawyer Olawunmi Alade

In the ever-evolving landscape of Nigerian real estate, legal expertise is paramount for navigating the intricacies of property acquisition, development, and disputes. 

One such legal luminary who has provided strategic guidance for diverse clients in this industry is Mrs. Olawunmi Alade, an Associate Partner with Detail Solicitors in Nigeria. Mrs. Olawunmi Alade is a renowned Commercial and Real Estate Lawyer with a distinguished career in crafting multi-million-dollar legal strategies for high-profile corporations across the globe. Her expertise extends to leading cross-functional teams in innovative change management initiatives that not only ensure business continuity but also drive revenue growth, minimize risk, and manage diverse portfolios efficiently. 

Q&A with Lawyer Olawunmi Alade

Seso Global had the privilege of interviewing Mrs. Olawunmi Alade where she shed light on complex legal aspects of Nigerian real estate. She offered invaluable insights for investors, developers, and anyone seeking to navigate this dynamic and rapidly growing market on how they can purchase real estate in Nigeria with the required level of trust.

1. Can you share your journey into real estate law and what drew you to this field?

My real estate journey started after my first year of national service. I started managing a shopping mall called Mega Plaza. Mega Plaza was a shopping mall with different shops and we were managing it on behalf of the landlord in terms of taking rent, getting permits and other things he needed to run a shopping mall in the heart of Victoria Island in Lagos. That was my first major exposure into real estate. It was quite interesting, we were renting shops out to shop owners and those were my first real estate transactions I solely managed. I was drafting tenancy agreements and other agreements like facility management agreements and that was what piqued my interest into real estate law and so far I haven’t looked back. I added other practice areas so I don’t just do real estate but I thoroughly enjoy real estate law. 

Real Estate is part of our everyday lives. As long as we’re here someone will be buying and selling real estate. Real estate involves many different aspects and legal is just a part of it and as a lawyer you are involved in the entire ecosystem. If a developer wants to develop property and wants you to represent them, there are different aspects of your legal expertise required and it keeps it interesting.  

2. What are the common legal issues buyers should be aware of when purchasing property in Nigeria?

One of the most common issues is related to land titles. Land titles can be tricky especially in Lagos. Because the real estate sector is ever evolving, we have to be careful to follow regulations appropriately regardless of the situation. For instance a common situation has emerged where developers enter into a joint venture with land owners. The developers could be developing the property while the land belongs to another person who is a land owner. Then a third party will want to buy the property from the developer who does not have the title to pass on. There has to be an agreement whereby the land owner agrees to pass on the title to the third party buyer who wants to buy off the developer. We also have some arrangements where the property developer buys the land title from the land owner but the person selling the land has not yet registered their title. We must always make sure we do our due diligence when it comes to land titles. We have to confirm every agreement that ensures the title is properly transferred to the new buyer. You also have to ensure you get the requisite licenses and permits when buying land. You must ensure that the land is allocated for its intended purpose, whether commercial residential or government use.

3. Can you walk us through the process of conducting due diligence on property in Nigeria?
   1. You should do research on the land title of that property
   2. Research the title of person selling the property to you 
   3. Identify the terms of years left on that title. Under the Nigerian Land Use Act, land is held by the governor of each state for the benefit of the citizens. So when you acquire land it is like a leasehold for a specific period of time (99 years) after which ownership returns to the government.  So after you acquire land and want to sell it, what you are passing on to a new buyer is whatever is remaining from the terms of years from the 99 years. So if you are buying land with only 10 years left on the terms of years, you have to determine if it will be worth the intended use. You also have to look at the approved use of the property. If you are trying to build a commercial property on a particular land you must ensure that the C of O of the land (or the root of title) matches your intended use. 
   4. If either party is a company you have to do due diligence of the corporate information of the company in question so that when the title is being passed on everything checks out 
   5. You also have to do a search on whether there are any encumbrances on that property, whether it’s been used as collateral for a loan or it has been pledged to anyone else in furtherance to any obligations. The property you buy must be free from any encumbrances and you can do this search either at the Land Registry and at the Corporate Affairs Commission (CAC). 
   6. You can do due diligence on the license and permits of the property seller. 

4. What are the red flags or potential deal-breakers when evaluating a property’s legality?

Apart from the above mentioned, red flags will be identified on a case by case basis. For instance if you are buying from a real estate company, you have to look at the track record of the company, how they have delivered in the past. What have been the experiences of their customers? A company who hasn’t delivered or kept to their promises regarding time and delivery would present a red flag. Have they been able to deliver to their customers in a straightforward manner without any legal implications or complications? These  are all important questions to answer

5. How do you ensure a property’s title is clear and transferable?

You do a search at the land registry where the property is located. Lagos State for example has started an online platform where you can put in the details of the property to do a search and it tells you everything you need to know about that property till the date you are searching. Other states may not have such advanced platforms but every state has a land registry where you can check the information of property. Every property has a registration number and that is what you take to the land registry to do the search. Most people would use a lawyer to go through this process. Some states have taken more steps to make purchasing land easier but the process is the same across all states. Perhaps the only difference will be in the speed.

6. Can you elaborate on the importance of getting the right legal support when purchasing property as a Nigerian and as a Diasporan?

When it comes to purchasing property, the importance is the same for people in the diaspora and people in Nigeria. You cannot overemphasize the need to get a lawyer. Whether you live in the diaspora or in Nigeria my advice would be to get a lawyer from the beginning, from the commencement of your real estate transaction so that they can carry you along the entire process. Even from the moment of shopping around for the property you want to buy, please get a lawyer involved. This makes the process easier and it guides you. It will allow your lawyer to take advantage of the legal framework to ensure that you’re not buying a property that will give you problems or has any legal encumbrances in any shape or form. 

7. What are the laws for non Nigerians owning property?

The laws for non nigerians owning a property in Nigeria are not clear. Acquiring a property is subject to the consent of the Governor of each state, whether a Nigerian citizen or non Nigerian citizen is buying it. The general rule is that individual foreign investors are not allowed to own property in Nigeria. There are ways around it where a non-Nigerian can go through a company to do so. This is because the law allows for a Nigerian company to be controlled by foreigners and as such the Nigerian company can buy the property. They can also partner with Nigerians to buy land. But the common practice is for non-Nigerians to buy property through a company (a special purpose vehicle) as opposed to buying it on an individual basis. 

8. How has the real estate market in Nigeria evolved during your career?

The real estate market has really evolved over the years. Initially few people were taking on many different aspects of the property purchasing process. Perhaps one person will buy a property, try to develop it and sell it. However, now we have a whole ecosystem. Now there are many different people who specialize in particular parts of this process. We have many more property developers now. The industry has also evolved in terms of space. Initially we would have someone buy land and build a small property on it. But now buyers and developers are more space conscious and build complexes that have multiple apartments to accommodate more people. This is understandable with the considerable population and the consequent need. I see that our industry has evolved to meet the needs of the masses and it has led to more types of properties like mixed use buildings, flats, terraces, studio apartments etc. We didn’t have these as much as we do now. There’s also advancement in the use of technology where people are using proptech to search for properties, and ensure that the purchasing process is secure and seamless. There is also more attention to how the development affects the environment leading to developers using more environmentally safe and sustainable building materials and processes.

9. Can you share a particularly memorable transaction you’ve been involved with? 

I’ve had a couple but one in particular stands out because it was my first time doing that type of transaction. I had a client who was a developer, developing a property under a joint venture agreement with a landowner. They were half way into the project when a new investor who wanted to get into real estate approached them to buy the transaction off the property developer. However, my client, the property developer, was not the original owner of the land, it wasn’t theirs to sell under the joint venture agreement with the actual land owner. We had to navigate the complex process to ensure that they could properly pass on the title. The new developer did not want to be bound with the existing joint venture agreement, especially because he wanted to tweak the development plan. So we had to approach the land owner and inform them of the intended changes. Draft a new joint venture agreement, ease out the existing developer for the new investor to come in and also talk about payments for each party.  The new investor also wanted my client (the property developer) to supervise the new transaction. There were different moving parts that made the process complex. But my take away from the transaction was that as long as people are genuine, as long as there is nothing hidden there are creative ways to solve any transaction within the law. So we were able to pay off the developers and secure payment for their supervision. We were also able to secure an agreement between the developer and the land owner to void the existing joint venture agreement (including payment for inconveniences). We are also able to secure an agreement between the land owner, the developer and the new investor to confirm the new arrangement between the three parties.

10. For someone in the diaspora, what steps should they take to ensure they’re making a sound property investment in Nigeria?
    1. Research current trends and based on that you will know the type of properties that will suit your goals and be most profitable. 
    2. Consider the location. The location is one of the most important factors in determining the value of a property and the return on investment you can generate. 
    3. If you are not building yourself check the track record of the developer. Make sure they are using the right materials so that you can be sure that your investment is secured.

11. What are the tax implications for property buyers in Nigeria, especially those living abroad?

If a non-nigerian citizen buys a property through a company or a special purpose vehicle they will pay company tax, personal income tax and other normal taxes. But there are no special taxes that a non nigerian citizen or nigerian citizen will pay on their land. The only time you will have to pay a special tax is if your property is giving you income. If you are in the diaspora and your property in Nigeria is giving you income you are expected to pay taxes on the income you get from that property. If you are buying property the person selling to you will have to pay a capital gains tax. If you are in the diaspora and are selling your property in Nigeria, you will also be obligated to pay a capital gain tax. However when it’s time to perfect your title at the land registry, there is something called the personal income tax, if you do not reside or work in nigeria, you will have to pay the equivalent income tax for your country of residence

12. How do you see the role of technology impacting real estate transactions and legal practices in Nigeria?

I’m grateful for the role of technology in Nigerian real estate and I believe it has come to stay. Thanks to technology people are more comfortable with dealing with real estate. They have a clearer idea of what they have to do and how to go about it. Technology also helps people to connect with the real estate professionals they have to. It helps with securing financial transactions, for instance with escrow technology. This allows all parties in the property purchasing process to feel safe. Because of this, there are more real estate transactions. Seso Global is doing so much in the proptech and real estate space. They allow people to conduct business without meeting physically but still provide the security and speed that is necessary for success. They have a good track record in facilitating real estate transactions without any challenges. 

13. Finally, any tips for diaspora Nigerians looking to invest in real estate back home?

Please engage professionals in your property investment/purchasing journey. Involve professional parties to handle things on your behalf rather than family and friends as you are making important and expensive investments in real estate.

14.  Final Thoughts

Real estate is doable, Real estate is meeting a need, real estate is one of the biggest contributors to the GDP of the country. I would say that we should continue to encourage our developers and everyone in the real estate ecosystem so we can move this sector to greater heights and develop the industry to match or surpass other real estate industries around the globe.