Conveyancing means transfer oflegal interest in real property, if its equitable interest it can’t be referred to as Conveyancing. A document that conveys/ transfers legal interest from one person to another is a conveyance, then the act of transferring legal interest from one person to another is also conveyance. So an assent or deed of lease is a conveyance. Note that the transfer of an equitable lease (leases below 3 years) is not conveyance. So the term conveyance is used to refer to the transactions as well as the documents.

 

Contract of sale of land

This is the first step in the process of transferring interest/title in land for valuable consideration. Existence and validity depends upon ordinary rules of contract – capacity, offer, acceptance, consideration, intention to create legal relations. It is subject to general contractual principles i.e. waiver, estoppel etc.

Gbenro v premier Associates Ltd (2000) 8 P & CR Chancery

 

Relevant laws applicable for sale of land

1. Land use act
2. Property and Conveyancing law 1951
3. Conveyancing act 1881
4. Land registration law 2015 – for Lagos
5. Land Instrument Registration laws of various states
6. Land Instrument Registration Act – for Abuja
7. Illiterate protection laws of the various states; Illiterate protection act for Abuja
8. Stamp duties Act – have 30 days to apply, then 60 days to register
9. Statute of frauds
10. 1999 Constitution
11. Judicial precedents
12. Common law – in the permissible areas
13. Equity
14. RPC – the lawyer that is concluding the transactions must abide by the rules 
15. LPA – same reasons above
16. Lagos state properties protection law (Anti-land grabbing law)

 

What are the problems facing Conveyancers?

Conveyancers are experts involved in the practice of property law transactions.

1. Multiplicity of laws
2. The practice of ‘do it yourself’ –problems arises in a situation where the buyer didn’t engage the services of a legal practitioner in the transaction and there is an unknown defect in the property.
3. Quackery – people in Nigeria involve themselves in things they know nothing about. So people who aren’t experts in the field engaging in property law transaction. See Rule 16 RPC
4. Professional Incompetence and lack of diligence amongst legal practitioners who are involved in Conveyancing.
5. Materialism amongst legal practitioners
6. Poor record keeping – archaic mode of record keeping at land registries
7. Corrupt practices
8. High cost of perfection
9. Bureaucracy and cumbersome procedures.
10. Land tenure system – family land
11. High level of illiteracy
12. No full appreciation of value of contract before conveyance.
13. Uncritical dubbing of precedents
14. Unfavourable government policies
15. Practice of land grabbers

 

Ways of acquiring ownership of land in Nigeria

• Purchase of land
• By gift – there are two types of gift: gift inter vivos, testamentary gift
• By inheritance (testate or intestate)
• First settlement on a virgin land
• By conquest
• By statutory grant or customary grant
• By partitioning or allotment of family property
• Adverse possession – by laches and acquiescence
• Long possession – 20 years
• By operation of law

 

How to prove ownership/ title to land

• Traditional evidence/ history
• Production of title documents duly authenticated & executed
• Proof of Ownership of adjacent land to the one in dispute
• By vesting order of court
• Acts of long possession & enjoyment
• Acts of ownership extending over a sufficient length of time numerous & positive enough to warrant the inference of being the owner

See Elegushi v Oseni (2005) 12 MJSC 13, Idundun v Okumagba

 

Note: A certificate of purchase is the document received when a person buys property from the court.A certificate of purchase duly perfected is a title document just as a deed of assignment. 

 

There are implied covenants - Right to convey, Quiet possession, free from encumbrances, further assurance 

 

Restrictions on the right to convey

• Planning regulations/Laws
• Family property/ community property – one person can’t sell family property, everyone must be carried along

 

Stages/ steps in sale of land

• Pre-contract stage
• Contract stage
• Post-contract stage
• Completion (conveyance)
• Post completion / perfection stage

 

Sale of land in Nigeria includes two major segments (segments differs from stages): Contract stage – equitable interest is transferred and a binding transaction comes into place; completion stage/Conveyancing stage  – here legal interest is transferred from the vendor to the purchaser.

 

PRE – CONTRACT STAGE

Pre – contract stage: two major things occur at this stage - preliminary inquiries and negotiations.

1. Preliminary inquiries - This is usually undertaken by the prospective purchaser or his agent the purpose is i) to ascertain suitability of the property for the intended purpose, ii) to look at the physical condition of the property e.g. age of the building, leaking roof/ broken walls, security condition of the property, location of the property, ease of access. iii) Find out if there are tenants in possession iv) to ascertain if there are obvious encumbrances (this is called patent defects): note the caveat emptor rule – let the buyer beware. The major reason for carrying out preliminary inquires is to find out if there are patent defects – defects or encumbrances which are so obvious that the purchaser can find out themselves. Also easements are examples of patent defects. With respect to patent defects the vendor does not have any duty/ obligation to disclose them.

Need for pre- contract enquiries

• Provisions of planning regulations
• Obvious encumbrances
• To check for patent defects

See Randle v Sutton

1. Negotiation: this involves discussion over price, covenants

 

NBA v Ibebunjo – here the court said that it is a professional misconduct and unprofessional for a LP to engage in sale and buying of land simultaneously with the practice of law. This means the lawyer shouldn’t be the one advertising for sale. Rule 7 RPC says a lawyer shouldn’t engage in business simultaneously with the practice of law. 

After the first stage – the document to be prepared is contract of sale of land.

 

CONTRACT STAGE

There are three different types of contract of sale

• Oral contract
• Open contract
• Formal contract

 

Major features of the contract stage

1. Initial documentation
2. Transfer of equitable interest
3. Transfer of risk
4. A binding contract is born: the transaction becomes binding at the completion of the contract stage, with the effect that not even the death or other legal incapacity of any of the parties will adversely affect the transaction. It is binding on successors in title.
5. At the completion of contract the vendor becomes a qualified trustee – this means that the vendor is bound not to transfer the interest in land to any other party. So here the vendor is now holding the property on trust and cannot do anything that will affect or go contrary to the interest of the purchaser. Pending when he hands over the property to the purchaser the vendor is entitled to continue to enjoy benefits from the property provided that the benefits don’t go contrary to or affect the interest of the purchaser. He’s a qualified trustee because an ordinary trustee cannot receive benefits but here he can.

Possession follows legal interest so it is only transferred at the completion stage.

 

Oral contract

Every transaction for transfer of interest in land must be evidenced in writing in other to be enforceable.

Exceptions

• Sale of land under native law & customs: note the conditions for validity.
• Sufficient acts of part-performance: s 5 (1), Law Reform (contracts) Act & Law reform (contracts) law.

 

As a general rule oral contracts for sale of land are valid but not enforceable - s.4, Statute of frauds; s 5(1), Law Reform (contracts) Act & Law reform (contracts) law.They are valid because contracts can be made orally but they are not enforceable because they fail to comply with the minimum requirement of the law. The minimum requirement of the law is that it must be in writing, containing these four things: the parties, property, price and signature of the person to be bound. SeePaye v Gaji (1996) 5 NWLR (pt 450) 589.  It doesn’t matter if the other details are not in writing provided these four are in writing. 

Parties- The parties must be described in such a manner that will make them easily ascertainable. Property - The particulars of the property must be given, these includes the address, description and the registration particulars. Price – this must be given in figure and in words. Sign – the vendor must sign.

 

Open contract

The literal rule says once the provisions are clear and unambiguous apply it the way it is. The golden rule says when such interpretation will result in absurdity then it should be interpreted in a way to avoid that absurdity.

 

Open contract comes in to correct the ills of oral contract.

Open contract is the type of contract that merely complies with the minimum requirement of the law in respect to documentation and goes no further. So any document that has reduced the transaction into writing and the only thing that it has reduced the writing are the parties, property, price and sign is an open contract.  Examples of an open contract are as follows:

• A receipt of purchase
• Electronic transfer receipt indicating the purpose of transfer
• Rough agreement
• Exchange of letters/ e-mails which clearly identify the parties, property and price.

Because it captures the minimum requirement of the law in respect to documentation open contract is both valid and enforceable. Note however the defects/ demerits of an open contract.

• It doesn’t capture the other terms and conditions of the contract. It still leaves the other terms and conditions open to be implied by the law, it just satisfies the minimum requirements and goes no further. This can lead to serious problems.

E.g. if the balance is to be paid at a later date that isn’t specified, the law implies the date as within a reasonable time. The term reasonable time varies from transaction to transaction and isn’t subject to any specific date.

 

Example of an Open contract

“I confirm that on July 23, 2017, I,Chief Wendell Kolade Cardoso of 15, Oredo Quarters, Benin City, Edo State, received N160 million from Mr. Innocent Bonade and Ms. Mercy Musa (representing League of Nations Solicitors of16, Agu Lane, Wuse, Abuja) as PART-PAYMENT for the purchase of the semi-detached duplex at 33, Dutse Road, Kubuwa, Abuja, registered as 45/45/4545.

 

 

Formal contract of sale

The formal contract of sale came to correct the defects of open contract.

Formal contract of sale of land is the type that not only satisfies the minimum requirement of the law in regard to documentation but goes further to reduce to writing all other terms and conditions of the contract agreed by the parties, thereby leaving nothing open to be implied by the law. Formal contract of sale of land is otherwise known as sale of land agreement or land sale agreement or memorandum of sale of land.

Advantages

1. It crystallises the position of the party thereby leaving no one in doubt as to their respective rights and obligation.
2. It gives the purchaser sufficient time to investigate because the contract binds the vendor pending while you investigate.
3. It creates a binding contract.***not a strong point
4. It prevents gazumping – arbitrary increase in price.
5. It prevents last minute withdrawal except the other party is in breach
6. It enables the parties to confer certain advantages on each other.
7. It confers equitable interest on the purchaser.

 

Exchange of contract

This is a concept. It is a process at the conclusion of which the contract of sale of land becomes binding.

Procedure for exchange of contract 

1. Preparation of the formal contract – note that it is the vendors solicitor that prepares the formal contract of sale
2. Vetting of the draft contract by the purchasers solicitor
3. Engrossment – when the parties have agreed on the various provisions of the contract, they then print as many copies as they wish. Engrossment is simply the production of as many copies as there are parties.
4. A meeting at the vendors solicitors office where the following things will take place:
5. Payment of deposit by the purchaser
6. Execution of the formal contract – all the parties and their witnesses will sign the formal contract

• The vendor or his solicitor will now hand over the following documents to the purchaser or his solicitor:

1. Receipt of payment of deposit received.
2. Copies of the duly executed formal contract of sale
3. Epitome (copies of title document) and abstract of title for purposes of investigation

 

At the conclusion of exchange of contract the following consequences will ensue:

 

Result/ legal effect/ consequences/ legal position of the parties after exchange of contract

1. A binding contract will come into place
2. Equitable interest passes to the purchaser
3. Risk passes to the purchaser
4. The vendor becomes a qualified trustee
5. The vendor has a right of lien in respect of the balance of purchase price.

 

Is exchange of contract necessary all the time? NO

Where the parties are represented by different solicitors, exchange of contract is necessary but where the parties are represented by the same solicitor (e.g. in a land transaction involving a father and son and they agree to use the same solicitor), exchange of contract is not necessary.

 

When can a lawyer accept to act for both parties in a sale of land transaction?/ factors a lawyer must consider before accepting to act for the two parties in a sale of land transaction.

• Conflict of interest: the lawyer must determine whether or not if there is conflict of interest. If there is, he must not act.
• Where the title is sound: this is where there is no dispute as to the title
• The parties have agreed to major terms and conditions of the contract. They are ad idem on the terms
• Where the two parties have consented to the lawyer representing the two of them

 

 

TASK CORRECTIONS

 

QUESTION 1

• Pre-contract stage
• Contract stage
• Post contract stage
• Completion stage
• Perfection stage

 

QUESTION 2

Initial negotiations are the negotiations had at the pre-contract stage.

The document – the formal contract of sale agreement; legal status – it’s a document that transfers equitable interest to the purchaser. Its not a good root of title/ title document because i) it does not convey legal interest and ii) it is subject to a higher interest. It is a registrable instrument because its document of transfer of interest in land and failure to register may make you lose priority. It does not require governors’ consent because it does not convey legal interest, only documents that convey legal interest require governor consent. It requires stamping because without stamping you can’t register. Person responsible for drafting it – vendor or vendor’s solicitor. Particulars of instructions he needs for drafting the sale of land agreement:

• Particulars of the parties – full names, addresses and their legal position (are they vendor or purchaser. Note that at the contract stage the terms used are vendor and purchaser)
• Particulars of the property
• Consideration and mode or manner of payment
• Date of completion / payment of balance
• Quantum of interest being transferred (habendum)– usually its unexpired residue
• Capacity
• Particulars of witnesses

 

Question 4

This is contract stage and the document prepared is a formal contract of sale of land and it conveys only an equitable interest.Its not a good root of title/ title document because i) it does not convey legal interest and ii) it is subject to a higher interest. It is a registrable instrument because it is a document of transfer of interest in land and failure to register may make you lose priority. It does not transfer legal interest and for this reason it does not require governor’s consent. Stamp duty is paid in this stage of sale of land is paid ad valorem.

 

Question 5

1. It crystallises the position of the party thereby leaving no one in doubt as to their respective rights and obligation.
2. It gives the purchaser sufficient time to investigate because the contract binds the vendor pending while you investigate.
3. It creates a binding contract.
4. It prevents gazumping – arbitrary increase in price.
5. It prevents last minute withdrawal except the other party is in breach
6. It enables the parties to confer certain advantages on each other.
7. It confers equitable interest on the purchaser.

Note that even though formal contract of sale does not require governors’ consent it is still admissible in court to prove a transaction has occurred.

 

Question 6

1. a) Exchange of contract is a process at which the conclusion of which by which a contract of sale of land will become binding. It depends on whether the parties are using the same solicitor or not. Where the parties are represented by different solicitors, exchange of contract is necessary but where the parties are represented by the same solicitor exchange of contract is not necessary.

 

1. b) Effects of exchange of contract
2. A binding contract will come into place
3. Equitable interest passes to the purchaser
4. Risk passes to the purchaser
5. The vendor becomes a qualified trustee
6. The vendor has a right of lien in respect of the balance of purchase price.

 

1. Pre-contract enquiry is an aspect of contract stage and takes place during the contract stage of sale of land. They are necessary because of the doctrine of caveat emptor – buyer beware, and they cannot hold the vendor responsible. They are the preliminary investigation carried out by the prospective purchaser before moving ahead with the transaction. They are conducted for the following reasons:

• To determine whether or not there are patent defects in the land
• Planning and other regulations
• To determine whether its suitable for the purpose
• Easements, encumbrances
• Tenants in possession.

This is because all patent defects are binding on the purchaser even if they don’t detect it.

 

Question 7 – of what use are the following clauses

When asked to state the legal implication of something, define it first.

1. Payment of deposit – deposit is a sum form the consideration paid as security on the property. If this clause is inserted in a contract of sale. i) it shows commitment and ii) that the transaction is not gratuitous. Where deposit is paid by the purchaser who fails to pay the balance the purchaser would lose the deposit and the vendor will be entitle to rescind the transaction. Where deposit is paid, the balance must be paid on the agreed date.
2. Balance and interest on unpaid purchase sum – the purchaser will lose the deposit and the vendor can withdraw – this is the default position of the law. The parties may however insert a clause that will provide an alternative remedy for the vendor where the purchaser fails to pay on time, and once such provisions are made, the position of the law will no longer apply.
3. Capacity of the vendor: this is important because the capacity in which the vendor conveys/transfers the title to the property will determine the legal terms to be implied into the transaction. For example – where the vendor transfers title as a beneficial owner, the following legal terms will be implied: right to convey, freedom of encumbrances, quiet possession, further assurances – this is like an indemnity. 

Where the assignor transfers as a lessee, all the above will be applied plus two additional terms – i) the rent is valid and subsisting ii) all necessary consents have been obtained.

1. Provision on risk and insurance: the position of the law is that risk passes at contract stage. Risk passes but it doesn’t automatically mean they bear the burden of insurance. Factors that will determine who will bear the burden of insurance in a contract of sale:

• Existing obligation
• Nature of property or nature of occupation
• Other provisions of the agreements
• Express provision in the agreement
• Nature/Extent of risk

 

Contents of an insurance covenant:

• Who to insure
• Name of the insurance company to be used
• Type or nature of risk to be insured against
• Amount on cover/premium
• How to apply the insurance money should the risk occur

1. Provision on possession before completion - Possession clause is a clause in the sale of land agreement transferring possession at the completing stage. In the absence of it in the land sale agreement it means the purchaser cannot have possession until completion because possession follows legal interest.

When putting a purchaser before full payment in possession it is best to put him as a licensee because it’s easier to move him out.

1. Provision on date of completion - This is important to avoid the law implying reasonable time and it helps remove all possibilities of doubt and unnecessary dispute regarding date of completion. It also provides a time line for the parties so they have the opportunity to prepare in advance of the date.

 

Question 9

There are 2 exceptions to the general rule that an oral contract of sale is not enforceable.

 

Question 10

1. a) It depends. This scenario emphasises the need for formal contract of sale and highlights the defect of an open contract.

 Registration serves as notice to whole world, so if john Paul can show that he is a bonafide purchaser for value without notice then he’ll have the interests and compensation would go to the legal issues.

1. b) League of nations is in breach and chief cardoso can sell.

 

 

Question 3

For purposes of bar part 2 is the Introductory part and the concluding part.

 

In the Introductory part of the formal contract of sale of land you can use (Trading under the name and style of/ carrying on business as ) (purchasers)

 

INTRODUCTORY PART

This agreement is made this ……… day of ………..between Chief Hubert Wendell Kolade Cardoso (Aka Wendy K. Caddy) of 15, Oredo Quarters, Benin City, (vendor) of the first part and Mr Innocent Bonade and Ms Mercy Musa both of 16 Agu lane, Wuse Abuja Nigeria (carrying on business as League of Nations Solicitors) (purchasers) of the second part.

Whereas, (because there is ‘is’, a recital would follow)

 

CONCLUDING PART

In witness of which the parties have executed this agreement in the manner below the day and year first above written.

 

SIGNED AND DELIVERED BY/ SIGNED 

By the within named vendor

………………….

Chief Hubert Wendell Kolade Cardoso (Aka Wendy K. Caddy)

 

IN THE PRESENCE OF:

Name:

Address:

Occupation:

Signature:

 

 

SIGNED AND DELIVERED

By the within named purchasers

1….…………………

Mr Innocent Bonade

(Partner)

 

2..………………..

Ms Mercy Musa

 (Partner)

(Carrying on business as League of Nations Solicitors)

 

In the presence of:

Name:

Address:

Occupation:

Signature: