Despite the fact that legal concerns are a reality that real estate investors routinely deal with, we admit that knowledge of the rules regulating real estate investments requires a comprehension of these problems. By doing so, many people will be able to build their financial portfolio without worry while avoiding legal complications.
So, let’s get started with the important factors that property investors need to be aware of both while buying a property and once they already own it.
Misrepresentation is so widespread in the real estate industry, from salespeople giving wrong information about the investment properties, the construction quality, legal issues involving the land, infrastructure problems, and so on.
In fact, it is one of the most typical reasons for suing real estate developers. For example, sales executives and realtors exaggerate the condition of a property’s structure. Many property developers and realtors are so concerned about meeting their targets or not selling their houses that they may share false or misleading statements or omit certain facts about the property or asset that would unavoidably cause other misleading assertions. This is when due diligence comes into play.
The best way for a first-time home buyer to avoid misrepresentation is to engage an expert, in most legal transactions a lawyer will most likely save you from any complexities because when it comes to landed properties there are a lot of controversies and likelihood to be defrauded. A lawyer comes in to carry out due diligence on your behalf.
And, no, we are not advocating that only first-time home purchasers should seek the advice of experienced specialists; Even the most experienced property investor needs the service of a lawyer. So, make sure to consult with a professional.
You must also conduct your research. Findings can be made in a land registry if you don’t want to hire a lawyer, but keep in mind that your findings may have restrictions. You can also go for a physical inspection. If there is a flaw in the titles, any other pending litigations or controversy about the land in question, through the help of a legal expert.
2. Title of a Property
A title refers to a property owner’s right to own, use or sell a piece of land. If a seller doesn’t have a good title to a property, they will need to “cure or perfect” title defects such as liens, mistakes in recording the deed, and others. Now, how can you spot a title defect? What are the key things to do to know if you have a good title?
There are different titles one can have over a property, and these titles take precedence over the other. For example, someone with a Certificate of Occupancy (Commonly known as C of O) has a better title than someone with a survey document.
For every land that was already in possession before the enactment of the 1978 land use act, the families can hold on to it, they are customary owners of the land. Every other landed property that was not owned or possessed before the enactment of the 1978 land use act, is under the control of the state government. Therefore, you either have customary ownership, or you have government ownership, meaning the government has allocated that land to you one way or the other.
3. Contract Infringement
Legal settlements may be pursued if a customer believes that their owner has violated the terms of their contract. One of the most common causes of contract breaches is failure to meet a deadline. Contract violation claims frequently include the following elements:
- Breach of duty
A real estate lawyer should review each section of the contract to ensure that all information are correct. Real estate investors and their clients should look for any ambiguous phrases, sentences, or clauses to reduce the probability of legal action.
A contract disagreement also occurs when one of the parties involved disputes the negotiated price of a real estate property. Disputes over purchase price, closing date, property condition, type of deed, and other issues might occur after the initial contract is signed but the sale is not finalized. This can also occur over closing fees if one party believes the contract provisions have been misrepresented, or over which local laws apply to the purchase contract. The resolution of such disputes requires a skilled attorney and thorough scrutiny of the purchase contract.
4. Money laundering in Real Estate
Real estate money laundering incorporates illicit monies into the legal financial system while simultaneously presenting the criminal with a relatively “safe” property investment.
This topic is one that has been here for a long time. The question is, how can real estate developers avoid this? By conducting due diligence with your customers, by ensuring proper KYC processes are in place to know who you are dealing with in order to avoid legal issues. Customer verification is debatably one of the most important anti-money launderings (AML) regulatory requirements.
5. Other Major Legal Matters
There are some other more major legal matters that you should know about;
- Customarily Owned Land: In Nigeria, these are referred to as Omo Onile. It is critical to be careful when trying to obtain customarily owned land. Ensure you are dealing with the rightful owner and always engage the counsel of a legal expert.
- Lands owned by the deceased: In this case, you will need to request a letter of administration, which means you have been granted the authority to sell or execute any transaction involving that land on behalf of the owner, or a will indicating that the land has been transferred to you, or a power of attorney, which is an instrument that transfers the power to execute for the original owner. You must be certain of your authority to execute for that land, or you will face legal complications later.
- We’ve talked a lot about what a real estate developer can do wrong and how to avoid it, but what about the buyer? One of the first mistakes you may make as a buyer is failing to conduct due diligence and follow through on your consideration. Insist on getting all of the necessary documents for that land; for as many people have bought and sold it, make sure you get all of those documents, so you can trace the history of the property. If the documents cannot be provided or they are hiding something, take that as a red flag and a sign to cancel the contract.
For legal advice and services in the real estate industry, contact us via firstname.lastname@example.org
Check out Strongmas Futuristic Properies, to book an inspection click here
Contributor: Jumoke Akinola