A good legal restriction on sale
of land in Nigeria is the Land Use Act of 1978. It has the following
restrictions –
1. Before
a party can sell land to another which is subject to statutory right of
occupancy, the consent of the Governor of such State is required – sections 22 and 26 of the Land Use Act.
2. A
person under the age of 21 (twenty-one) cannot be granted a statutory right of
occupancy or subletting of a statutory right of occupancy by the Governor of a
State – section 7 of the Land Use Act.
3. Without
the approval of the National Council of States, a non-Nigerian cannot be
granted a statutory or customary right of occupancy – section 46(1) of the Land Use Act.
4. Where
it is a land belonging to a community (communal land) or family land, the
consent of the principal members and heads of the communal land or family must
be obtained before there can be a valid sale – Adeleke v. Iyanda (2001) 6 SCNJ
101; Odekilekun v. Hassan (1997) 12 SCNJ 114.
5. Covenant
in a lease may also restrict the sale and transfer of land.
6. The
Nigerian Coal Authority Act, Cap. 95, LFN 2004, also provides that the
corporation shall not alienate... or charge any land vested in the land ...
without the prior approval of the Minister – section 12(4) of the Act. In Rockonoh Property Co. Ltd. V. NITEL Plc
(2001) FWLR (Pt. 67) 885 at 910, the court observed that “it must be
accepted that the absence of the necessary ministerial approval or consent is a
serious defect which affects the title sought to be conferred by the relevant
instrument”.
7. Town
planning laws and regulations may also restrict the alienation of certain lands
where the purposes for which they are intended to be used are contrary to the
purposes of town and planning laws. For example, an industrial place designated
for such purpose should strictly be abided to rather than using it for
something else.
8. The
Land Development (Provision for Roads) Law, Cap. L57, Laws of Lagos State, 2003
states that the sale of any land which is the prescribed authority has directed
to be reserved for roads development, shall be null and void.
9. Doctrine
of ‘Lis Pendis’ meaning ‘pending law suit’ which is to signify
the power and control of a court of law while legal proceeding is pending; the
effect of which is to restrict the sale of any interest in land – Ezomo
v. N. N. B. Plc. (2007) All FWLR (Pt. 368) 1032.
This doctrine would apply in cases where it can be shown by
a party that at the time of such sale or purchase of the property, there is a –
i.
Pending suit in respect of the
property;
ii.
The action or the lis was in respect of real property;
iii.
The object of the action was to recover
or assert title to a specific real property; and
iv.
The party concerned was aware or ought
to be aware of the pending suit – Bua v. Dauda (2003) FWLR (Pt. 172) 1892.
STEPS OR STAGES IN THE SALE OF LAND
In International Textile Industries
Nigeria Limited v. Aderemi (1999) 8 NWLR (Pt. 614) 268, where the
court held that it is only after a binding contract for sale is arrived at that
the need to pursue the procedure for acquiring title will arise. That is when
obtaining of the necessary consent to alienate the property becomes an issue in
order to make alienation valid.
It was also in the above case
that stages of transfer of interest in land where divided into two distinct
stages viz:
1. The
contract stage (ending with the formation of binding contract for sale); and
2. The
conveyance stage (culminating in the legal title vesting in the purchaser by
means of the appropriate instrument under seal).
THE NEED FOR PRE-CONTRACT ENQUIRIES
These are enquiries which we
will raise with the seller’s solicitors upon receipt of contract documentation.
The main aim of pre-contract enquiries is to obtain the fullest information to
enable the purchaser to decide whether or not to sign the contract.
Thus, it is expected that a
purchaser should investigate certain matters concerning a property before
buying them in order to enable him decided if he should enter the contract or
not before binding himself by any contract. The reason is that the vendor is
not bound by any duty to disclose to the prospective purchaser such facts that
the purchaser could merely discover by inspection of the property (This is the
rule of ‘caveat emptor’ meaning ‘buyer beware’).
In practice, the purchaser or
his solicitor, on his behalf, physically inspects the property in order to
discover if there is any defect in the property. However, this should not be
extended to investigation of title, which is done at the stage where searches
are conducted.
Pre-contract enquiries are
usually contained in a standard printed form prepared by a solicitor. Though it
varies from one firm to another, but it should contain the following –
1. Boundaries
of the property;
2. Disputes
over the property;
3. Notices
in respect of the property;
4. Guarantees
in respect of the property;
5. Services
supplied on the property;
6. Facilities
of the property;
7. Any adverse
rights and restrictions on the property;
8. Outgoings
charged on the property;
9. Method
of sale of the property;
10. Details
of lease, lessor, headlessor, and licenses;
11. Covenants
and their breaches;
12. Service
charges;
13. Insurance
provisions;
14. Reversionary
title or interest;
15. Any
other additional inquiries in which the special circumstances of each
transaction requires.
The vendor should try as much as
possible to answer questions correctly raised by the purchaser in the
pre-contract enquiries form, though, he is not under any obligation to reply.
When acting for the vendor, he could answer the questions by qualifying his
answer with the phrase “so far as the vendor is aware” – Gilchester Properties v. Gomm
(1948) 1 All ER 493.
The vendor should not
misrepresent facts else he will be liable to damages for misrepresentation
after the contracts have been exchanged. In Sharneyford Supplies Ltd. v. Edge
(1987) All ER 588, the vendor was held liable for a false reply granted
to an inquiry on whether there was vacant possession of the property. Also, in Walker
v. Boyle (1982) WLR 495, the vendor was held liable for
misrepresentation of facts because he gave a lie that there was no boundary
dispute on the land when in fact there was a long-standing dispute.
From the foregoing, the
following could be said to be the need for pre-contract enquiries –
- The main reason why enquires are necessary before contract is based on the principle of Caveat Emptor. (The purchaser cannot rescind the contract because of non disclosure of patent defects which he could have discovered on a reasonable inspection of the land).
- Search will reveal encumbrances on land.
- A physical inspection will eliminate constructive notice.
4. It
will reveal easement and restrictive covenants which he ought to have found out
at contract stage if he had done a diligent search.
TYPES OF CONTRACT OF SALE OF LAND
There are basically 3 (three)
types of contract of sale of land. They are –
1. Oral
contracts;
2. Open
contracts; and
3. Formal
contracts.
ORAL CONTRACTS
This is a common method of acquiring
land under native law. However, it is inconsistent with section 4 of the Statute of Frauds 1677, and other laws of similar
effect which requires that there must be a memorandum or some note in writing
in respect of contracts for the sale of land, otherwise such contract shall be
unenforceable.
Though such contracts are
unenforceable, it is not void. But where there is sufficient evidence of part
performance, equity will decree specific performance. Though, it is risky for a
purchaser to rely on the doctrine of part performance for the enforcement of a
contract of sale of land because specific performance is a discretionary
remedy.
The reason for the intervention of
equity in granting specific performance is to help the plaintiff where he was
assisted by the defendant to partly perform the contract, and to prevent the
defendant from pleading that the contract was not in writing.
In International Textile Industries Nigeria
Ltd. v. Aderemi (supra), the court stated thus:
“The ground on which the courts
hold that part performance takes a contract out of the Statute of Frauds is
that when one of the two contracting parties has been induced or allowed by the
other to alter his position on the faith of the contract, as for instance by
taking possession of land and expending money in the building or other like
acts, there would be fraud in the other party to set up the legal invalidity of
the contract on the faith of which he induced or allowed the person contracting
with him to act and expend his money.”
Thus, the following are
instances where the courts can specifically enforce a contract base on part
performance –
1. There
is proper oral evidence to prove or establish the terms of the oral contract.
2. The
contract must be specifically enforceable, in the sense that it is not a
contract for personal service.
3. The
act constituting part performance must be unequivocal and consistent with, or
referable to the contract alleged to be breached.
4. The
plaintiff has wholly or in part of the oral agreement with the confidence that
the defendant would do the same.
In Mohammed v. Klargester Nigeria
Ltd. (2002) FWLR (Pt. 127) 1087 at 1095, it was stated that a claim for
specific performance cannot be granted where the vendor sold a property that is
family property and is jointly inherited and owned with other persons, since a
court cannot compel a person to do that which is impossible for him to do.
However, where the sale of land
is conducted under native law and custom of a particular community, such sale
may be undertaken orally and a written document may not be required.
The minimum requirements for
oral contracts are –
1. Payment
of the purchase price;
2. Possession
by the purchaser; and
3. The
presence of witnesses during the transaction – Adedeji v. Oloso (2007) All FWLR
(Pt. 356) 610 at 640; Ogunmuyiwa v. Odukoya (2009) All FWLR (Pt. 454) 1526.
OPEN CONTRACT
An open contract is one that
provides for only the minimum requirements of the Statute of Frauds. It –
- Describes
the property clearly.
- States
the parties clearly.
- States
the price. In Jodi v. Salami (2009) All FWLR (Pt. 458) 385, the court
held that there can never be a sale of land on credit; that even where a
person is in possession, there is no sale except the purchase price is
paid.
An open contract is not oral, it
is contained in note or memorandum in writing with the basic requirements of a
contract of sale of land. It is called an open contract because all the other
relevant terms and conditions which will give business efficacy to a contract
for sale of land are implied by statutes, common law, equity and by
conveyancing practice and custom, that is, it is implied that the vendor must
show a good title within reasonable time and execute a conveyance to the
purchaser on payment of purchase price.
In an open contract, it
is implied by law that the vendor shall prove his title to 30 (thrity) years by
virtue of section 70 of the PCL; and 40 (forty) years by virtue of section
1 of the Vendor and Purchaser Act.
A vendor can convey as:
Trustee, Family head, and Administrator/Personal Representative of an Estate,
Mortgagee, Beneficial owner etc.
In instances where a
vendor conveys as a beneficial owner for valuable consideration, 6 (six)
covenants are implied by law. These are
–
1.
Right to convey.
2.
Quiet enjoyment.
3.
Freedom from encumbrances.
4.
Further Assurances (that is, the seller ensures the
buyer that he will do everything to obtain the Legal title of land in question).
5.
That the lease is valid and subsisting.
6.
That the rent has been paid and the covenants of
the lease performed.
FORMAL CONTRACT
Formal contracts are a
detailed contract of sale of land which provides for other agreed terms in
details in addition to the parties, property and price. Thus, it sets out the
rights and duties of the parties.
It is divided into 2
(two) namely –
1.
The particulars of sale dealing with matters
affecting the property – This has to do with its nature, area (size), defects,
benefits charges and liabilities to which it is subject.
2.
The conditions of the sale dealing with
contractual terns which set out the terms by which the parties are to be bound
– Terrance
v. Bolton (1872) LR EQ 124.
The contract needs not
be made in any particular way provided the parties intend to enter into a
legally enforceable contract and there is agreement upon the essential terms
for valuable consideration. The contract
needs not be in writing, a written evidence of it is sufficient – Re
Holland (1902) 2 Ch. 360, the note or memorandum must be signed by the
party to be bound. This is to prevent
fraud and perjury and to make it impossible for a contract for sale of land to
be alleged on only oral testimony of witnesses who may just be perjuring. The
statute aims to prevent any action unless the defendant had signed some paper
containing the terms of the contract. The equitable doctrine of part
performance was an intervention of equity to create and exception to the
statutory requirement.
ADVANTAGES
OF FORMAL CONTRACT
1. The
purchaser protects himself by having more time to investigate the title being
transferred before the execution of the deed of conveyance.
2. The
death of either party to the transaction does not terminate the contract as
their personal representatives can proceed with the transaction and complete
the sale – Yusuf v. Dada (1990) 4 NWLR (Pt. 146) 657.
3. None
of the parties can withdraw from the contract in the last minute without being
liable for breach of the terms of the contract.
4. The
terms of the contract having been expressly agreed to, the position and rights
of the parties are express and not implied, which may otherwise make their
positions uncertain.
5. Fixtures
and fittings may be transferred under a formal contract and need not be
reflected in the deed of conveyance of the land.
6. The
vendor cannot unilaterally and subsequently increase the purchase price since
this has already been fixed in the contract.
7. Parties
may take special advantages under the contract by providing for specific
matters they may not otherwise be able to do.
8. It is
easier to enforce the terms of the contract.
EXCHANGE OF CONTRACT
This is the procedure for making
a contract binding. However, while a deed takes effect upon delivery, a
contract takes effect when it is exchanged – Awojugbagbe Light Industries Ltd
v. Chinukwe (1995) 4 SCNJ 162; (1995) 4 NWLR (Pt. 390) 379. Exchange of
contract is the vital factor which brings the contract into existence – Eccles
v. Bryant (1948) Ch. 93.
Exchange of contract is defined
in the English case of Domb v. Isoz (1980) Ch. 548 at 557 thus
–
“… each party shall have such a
document signed by the party in his possession or control so that, at his own
need, he can have the document available for his own case. Exchange of a
written contract for sale is… effected so soon as each part of the contract,
signed by the vendor or purchaser… is in the actual or constructive possession
of the other party or his solicitor”.
There is said to be a exchange
of contract where –
1. The
parties have signed the contract.
2. The
signed contract is in the actual possession or constructive control of the
parties.
Where there is physical
exchange, that is, hand to hand there will not be any problem as to if there is
an exchange of contract. However, constructive exchange is required for
exchanges which are made by post, telephone or email.
WHERE THE PARTIES INSTRUCT THE SAME
SOLICITOR
To avoid conflict of interest,
solicitors should not act for both parties in a transaction for sale of land.
However same solicitors are advisable in the following circumstances –
1. Where
the terms of the contract have been fully negotiated and the parties agree to
such an arrangement.
2. Where
the transaction involves a small amount of money.
3. Where
the title to the land is sound and there is no likelihood of conflict of
interest.
4. Where
the parties are established associated companies.
5. Where
there are no other solicitor within the vicinity which the client can
reasonably be expected to consult.
Where both parties act by the
same solicitor (one-copy contract), there is no need for exchange of contract.
In such instance, there is said to be an exchange in contract where both
parties to the transaction have signed the contract document. The ‘exchange’ in
this situation has been said to be ‘artificial nonsense – Smith v. Mansi (1962) 3 All ER
857. This is due to the fact that there is no physical exchange.
PROCEDURE FOR EXCHANGE OF CONTRACT
1. Vendor’s
solicitor prepares the draft.
2. The
vendor’s solicitor sends draft to purchaser for comment and approval by
purchaser or his solicitor.
3. If the
purchaser agrees, he returns the draft back to the vendor’s solicitor.
4. The
vendor’s solicitor prepares copies and sends to the purchaser’s solicitor who
signs it.
5. The
purchaser or his solicitor returns the signed copies with deposit of purchase
price.
6. The
vendor accepts deposit and signs.
7. The
vendor hands over signed document to the purchaser signifying exchange
EFFECT OF EXCHANGE OF CONTRACT
These are –
1. An
equitable interest is vested in favour of the purchaser and a subsequent
purchaser of the estate acquires it subject to the equity of the original
purchaser.
2. So
long as the purchaser is not in default of the terms of the contract, he can
prevent the transfer of his estate to a subsequent purchaser by way of action
in court.
3. He can
also sue the vendor specifically to perform or complete the transfer.
4. He can
sue against voluntary waste, which depreciates the property.
5. The
purchaser can transfer his equity to another person.
6. The
vendor by implication is made a trustee of the purchaser in respect of the
equity of the purchaser.
7. Until
completion, the vendor is entitled to the rents and profits on the land, though
he must account to the purchaser.
8. A lien
is created in favour of the vendor over the property for payment of the balance
by the purchaser.
9. The
death of one of the parties does not affect the contract.
KACHALLA
v. BANKI & Ors. (2006) All FWLR (Pt. 309) 1420
FACTS OF THE CASE
The appellant claimed against
the respondents before the High Court of Borno State, a declaration that he is
the bona fide owner of the disputed
property; a declaration that the sale of property is null and void and should
be set aside and that the property be restored to him; a declaration that the
judgment debtor before the trial court has no interest or right in the appellant’s
property; an order of perpetual injunction restraining all the respondents from
interfering with the appellant’s property including their agents, servants, and
privies; an award of N5,000.00 (five thousand naira) as damages against the
respondents for trespass as well as costs in the suit.
Pleadings were filed and
exchanged between parties and the suit proceeded to trial. At the hearing, the
parties testified and called witnesses to testify in favour of their respective
cases. Documentary evidence was also relied upon. At the close of the addresses
of counsel, judgment was delivered. The trial judge dismissed the claims of the
appellant having found them devoid of substance.
Aggrieved, the appellant
appealed to the Court of Appeal, which dismissed his appeal. Aggrieved still,
the appellant lodged a further appeal at the Supreme Court.
HELD
On
rule as to priority where there are competing interests on land –
It was stated that in property
law, many different questions of priority may arise, these may concern rival
conveyances of property or as in the instant case, competing interests in the
holding of the right of occupancy. The fundamental rule is that competing
interests will generally rank according to the order of their creation. Thus,
where a person pays for land and obtains receipt for the payment followed by
his going into possession and remaining in possession, equitable interest is
created for him in the land such as which can defeat the title of a subsequent
legal estate purchaser with knowledge of the equitable estate in the land.
Per Kalgo, JSC stated thus:
“This action concerned the sale
to or purchase of one landed property by two different people. That is, the
appellant and the 2nd respondent. According to the evidence at the
trial, the appellant bought the property from the sales agent (PW1) at
N1,200,000.00 (One million, two hundred thousand naira) on 16th March,
1994. He paid the purchase price and was given a receipt, a deed of assignment
and the certificate of occupancy on the land. He was then put in possession of
the property. He could not register his interest in the property with the lands
authority due to some intervening circumstances.
On the
18th April, 1995 the 2nd respondent bought the same
property at an auction sale for the sum of N520,000.00 (five hundred and twenty
thousand naira). From the above, it is very clear that the appellant bought the
property on 16th March, 1994 and the 2nd respondent bout
the same on 18th April 1995 over one year later. There is no doubt
therefore that the sale to the appellant was first in time and ordinarily he
should have priority over that of the 2nd respondent… The fact that
the 2nd respondent bought by auction on the purported execution of a
judgment of a court, does not give him any priority over that of the appellant.
On
interest protected by the Land Use Act, 1978 –
It was stated that there is no
doubt that a distinction exists between a legal estate or fee simple as opposed
to an equitable interest in land, but that distinction cannot apply in a
situation such as in the instant case, where the disputed land is governed by
the provisions of the Land Use Act in which the maximum interest any person can
hold is a right of occupation, the legal estate or legal interest is vested in
the Governor of the State. The tenor of the Land Use Act was to nationalize all
lands in the country by vesting its ownership in the State. The maximum interest
preserved in private individual hands is a right of occupancy. Thus, in the
instant case, the interest the appellant acquired cannot be inferior to the
interest acquired by the 2nd respondent.
The Supreme Court allowed the
appeal and held that the plaintiff (appellant) is the bona fide owner of the property which is the subject matter of the
suit.
ODUSOGA
v. RICKETTS (1997) 7 NWLR 1
FACTS OF THE CASE
The appellants were defendants
in an action instituted by L. L. Rickets now deceased, as plaintiff, now
respondent. The respondent claimed as follows:
(i)
A declaration that the plaintiff is the
beneficial owner of the property situate, lying and being at Thomas Drive and
forming part of a larger area of land covered by a deed of conveyance
registered as No. 9 at page 9 in volume 1547 of the Lands Registry, Lagos and
that the plaintiff is entitled to a certificate of occupancy of the same
property (hereinafter called ‘the land in dispute’);
(ii)
N1,000.00 (one thousand naira) damages
for trespass committed by the defendants, servants and agents on the said piece
or parcel of land on or about the 29th day of April, 1980.
(iii)
Perpetual injunction restraining the
defendants, servants and/or agents from further acts of trespass on the land in
dispute.
The land in dispute is a portion
of the land (4 plots) sold by the administrators of the estate of Babatunde
Jemi-Alade deceased in 1965 to the respondent. Mr. Ricketts paid part of the
purchase-price to the vendors but failed to pay the balance. He went into
possession and surveyed the land, (the entire 4 plots). He however, developed
only a part of it leaving the part now in dispute undeveloped. He built on the
portion of the land developed by him but left the undeveloped part vacant. He
bought the 4 plots of land for E950.00
(nine hundred and fifty pounds) but made a part payment of E700.00 (seven hundred pounds) for which he was given a
receipt. This was in 1965. He did not pay the balance of the purchase price
despite repeated demands from the vendors.
In 1971, one Mr. S. O Adenuga
went on the land in dispute. He was challenged by the respondent, Mr. Ricketts.
Mr. Adenuga, disclosed to Mr. Ricketts that he was supervising the building on
the land on behalf of Madam Asimowu Odusoga the 1st appellant. The
respondent sued Mr. Adenuga and Mrs. Ebun Bucknor the sole surviving
administratrix of Jemi-Alade in suit No. LD/414/72 for damages for trespass. It
was disclosed in the course of the proceedings that Mrs. Ebun Bucknor had sold
the land in dispute to the 1st appellant in the present proceedings
following the failure of the respondent to pay the balance of the purchase
price of the 4 plots of land sold to him in 1965. The respondent was non-suited
in the action. Thereafter, he instituted the proceedings leading to this appeal
against the appellants claiming as herein-before mentioned.
Pleadings having been ordered,
filed and exchanged the action proceeded to trail. At the conclusion of trail
and after addresses by learned counsel for the parties, the learned trial Judge
in a reserved judgment, found that the respondent was in possession of the land
in dispute at the time that the appellants came on it to build. He also found
that although the respondent paid a part of the purchase price in 1965, he did
not pay the balance of the purchase price of the land sold to him, until 1976.
He found also that the land in dispute was conveyed to the 1st
appellant in April 1972 by Mrs. Ebun Bucknor the sole administratrix of the
estate of Jemi-Alade the original owner of the land and two members of
Jemi-Alade family. The learned trial judge also found that the deed of
conveyance executed in favour of the respondent in 1976 by Mrs. Ebun Bucknor
after the respondent paid the balance of the purchase price was ineffective to
pass the title to the land in dispute to the respondent in that by the earlier
conveyance in 1972 in favour of the 1st
appellant, the estate of Jemi-Alade had divested itself of any title to the
land in dispute that could be passed to the respondent. He finally found that the
1st appellant had better title to the land in dispute and
consequently dismissed the respondent’s claim in toto.
The respondent was dissatisfied
with the decision of the learned trial judge and appealed to the Court of
Appeal. The Court of Appeal allowed the appeal, reversed the decision of the
trail court and granted the respondent’s claim. The appellants were
dissatisfied with the judgment of the Court of Appeal and appealed to the
Supreme Court.
HELD
On
ingredients of valid sale of land under customary law –
It was stated that to constitute
a valid sale of land under customary law, three essential ingredients are
required, namely:
a) Payment
of the purchase price;
b) Purchaser
is let into possession by the vendor; and
c) In the
presence of witnesses.
On
effect of failure to pay the full purchase price of land under customary law –
It was stated that where the
purchase price of land under customary law is not fully paid there can be no
valid sale, notwithstanding that the purchaser is in possession. That
possession cannot defeat the title of the vendor.
On
whether vendor can resile from contract of sale after part-payment made under
customary law –
It was stated that where
part-payment of the purchase price was made and the balance is tendered within
the stipulated time or, in the absence of a stipulated time, within a
reasonable time, the vendor cannot resile from the contract of sale and the
purchaser in possession will be entitled to a decree of specific performance.
On
effect of payment of purchase price and possession of land –
It was stated that at common
law, payment of purchase price coupled with possession gives the purchaser an
equitable title and he is entitled to seek an order of specific performance to
compel the vendor to convey legal title to him. But where the purchase price is
not fully paid, the purchaser will have no right to enforce specific
performance.
On
right of vendor where purchaser fails to pay balance of purchase price of land
–
It was stated that where the
purchaser has made a part-payment of the purchase price is in default of
payment of the balance, there is right in the vendor to rescind the contract of
sale and re-sell the property.
On
priority of deeds of conveyance coming from the same source –
It was stated that where the
deeds of conveyance are validly executed and come from the same source to
transfer the interest in a property, the first in time takes priority.
The Supreme Court allowed the
appeal, and set-aside that of the Court of Appeal.
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