HOW TO BUY LAND IN LAGOS AND PAY “INSTALMENTALLY”
To buy land in Lagos and pay instalmentally, the buyer must ensure that the seller has the legal right to transfer ownership in that property. Such a property transaction goes beyond merely inspecting the property or confirming the seller has a legal title on such a property.
It is pertinent for any purchaser who intends to buy a land or house on installments to execute a formal contract of sale because of its numerous advantages over an open or oral contract.
A contract for sale of land is an agreement between a purchaser and a land vendor where parties agree to the sale of land, stating the considerations, obligations, and other terms for the transfer of land ownership from the vendor to the purchaser. A contract for sale of land can contain a mutual agreement between parties that the buyer can pay the purchase price through a series of installments, either directly or through a financing agency or bank. In a land purchase agreement based on installments, the buyer usually takes immediate possession of the house as the equitable interest passes to him, while the seller retains legal title as security until the buyer pays the full purchase price. It is only upon satisfaction of the contractual agreement that the seller will then proceed to transfer the legal interest and ownership of the land to the purchaser by issuing him a deed of assignment or a deed of transfer. However, the parties may also agree the seller will remain in possession until the satisfaction of the entire contract.
Importance of a contract of sale of land when buying a property in installments
A contract of sale is very important, especially when buying land or a house on installments because of the benefits that shall be discussed below.
- The certainty of terms,
- The binding nature of the contract,
- The time is given to the purchaser to investigate vendors title,
- It can be used to circumvent implied covenants by making express provisions,
- The death of either party will not terminate the contract as their personal representatives will proceed with the contract,
- It prevents unnecessary last-minute withdrawal as parties are bound by the terms and as such withdrawal will amount to a breach of contract,
- It also prevents gazumping (the vendor cannot just wake up and increase the purchase price as the price has already been fixed in the contract) and gazundering (the purchaser, on the other hand, cannot compel the vendor to reduce the price because he has seen another offer with a lower price),
- The vendor can tender it as evidence of the expectation of money.
In conclusion, although when buying land on installment, it may serve as a flexible alternative to a mortgage loan, however, parties to a contract of sale of land should seek professional advice and assistance from their respective solicitors to structure a contract that will adequately protect the interest of the buyer as well as the seller.
By Real Estate Law Team at Resolution Law Firm