Property investing requires extreme caution to avoid fraud
Five years ago, Jacob (not real name) had his fingers burnt trying to invest in real estate. He had trusted a friend, Demola (not real name) who owned a parcel of land at Arepo area of Lagos to sell it to him. They agreed at 800,000 naira for the plot.
At the time of the transaction, Demola told him he owned the land and that he needed to sell the land to help pay his sister’s school fees in the UK. Jacob had been friends with Demola for two years.
They had had a series of financial dealings together and so, he didn’t consider it necessary to conduct further background checks. After all, Demola had already erected a one-story building near the parcel of land that he sold to Jacobs. He only wanted them to become neighbours.
The story was that when he bought the land, he bought the two plots but only developed one and reserved one for future purposes.
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The deal was consummated. Jacob made payments to Demola in cash. A receipt was issued. However, two years on, when Jacob wanted to start building on the land, he found to his dismay that he could not.
On the occasion that he took labourers to clear the place, he was accosted by some young men who threatened to arrest him if he didn’t vacate the property immediately.
At the time, Demola claimed he was in Ibadan attending a ceremony where he would be conferred with a chieftaincy title. He bounced all calls from Jacob, promising to return them but never did.
For 2 months, Jacob tried to meet with Demola to no avail. He eventually resorted to petitioning the Economic and Financial Crimes Commission, EFCC. EFCC responded swiftly and had Demola arrested. It was in EFCC custody that he confessed that it was a family land.
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But by then, the family was asking for 2 million naira for the land. To cut the long story short, in order to escape prosecution, Demola eventually promised to pay the family the balance and get all the required documents for Jacob to take possession of the land.
After the incident, Jacob became scared of having a property near Demola’s. he started hunting for buyers. But up until the time of filing this report, he has been unable to find a buyer.
Stories like this abound in Lagos and across Nigeria. Often, fresh investors overlook certain cues and avoid conducting due diligence. The result is losing substantial amount of hard-earned money or get embroiled in a prolonged litigation that end up consuming more resources.
To avoid being in a similar situation like Jacob, here are few tips to pay attention shared by real estate firm, RealtyPoint.
1. NEVER WAVE YOUR DUE DILIGENCE:
“This is rule number one. The people we find most interesting to sell to are those who ask lots of questions. This is because the person will have us take full cognizance and responsibility of those questions asked because we know we will be held accountable for it.
“We really don’t like those who go into a purchase with sentiments. People who say; ‘I don’t need to ask too many questions; after all we are friends. You can’t dupe me,” said the company in its real estate investment tips.
“Yes, no one may be planning to dupe you, but it would go a long way if you go through stuff like “Terms & Conditions” and ask all the questions you can think of. Ignorance carries a huge cost nobody pays with a smiling face, so avoid it like a plague,” it said.
It added: “There is no one who really wants to do a thing without counting the cost. It is in counting the cost that you do due diligence. Don’t do it after you pay, do it before you part with a dime.”
So, in doing your due diligence, make sure of the following:
a) FORGET THE DOCUMENT, DO YOUR DUE DILIGENCE FROM GROUND ZERO:
“By ground zero, we mean, go to the site you are to buy to pick co-ordinates. If you do not know what that is about, you may want to visit
the site with a competent Land Surveyor to pick the coordinates for you.
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“Chart the Coordinates at the State’s Surveyor General Office to know the status of the land. It is only after doing this if the land comes out clean and the coordinates you picked matches with what’s on the documents you are given that you can start relying on the survey document as referring to the same land you were offered to buy. Otherwise, run!” said the firm.
b) MAKE FINDINGS TO AUTHENTICATE THE DOCUMENTS AND OWNER:
“One way you can authenticate the original owner is by going to the site independently on your own without the vendor or agent to ask
questions in the vicinity.
“If you notice anything that puts you on the edge, please get to the bottom of it and satisfy your curiosity, otherwise, don’t pay.”
c) FIND OUT IF THE LAND IS DISPUTED:
- According to the firm, the following are some of the telltale signs of lands in dispute:
- Fake document or no document at all;
- Negative report from Land Registry;
- Negative report on the vendor and/or agent;
- Advice of caution from your environmental/neighbourhood investigation.
- Persistent and abnormally aggressive demand for payment with the excuse that other people are showing interest in the land;
- Strong preference for cash payment;
- Signs of physical development on the land without satisfactory and/or verifiable explanation;
- Signs of structural demolition on the land without satisfactory and/or verifiable explanation and/or any other measure aimed at achieving hasty closing.
d) CONDUCT TITLE SEARCH AT THE APPROPRIATE GOVERNMENT OFFICE:
You must make enquiries about the land’s titles at the appropriate government office. Such may include the Surveyor General’s office, State Land
Bureau or Land Registry. Inquire about the owner and the title.
e) WORK WITH PROFESSIONALS IN ALL YOUR ACQUISTIONS:
It is true that professionals will collect a lot of money from you but would you rather go to a quack doctor for surgery because his fees are lower?
It is the same with your investment. Would you rather trust a brickmaker for advice about jewels?
The bottom line, according to RealtyPoint is, “use professionals who belong to a body of professionals they are accountable to. It is for a number of reasons and the safety of your investment.”
To be continued…