Abdul Muhammed Law Practice
Abdulateef Muhammed makes a different case for the re-evaluating the new land transaction remuneration regulation (2023).
Introduction
The new remuneration regulation or rule for Nigerian lawyers which has prescribed a 10 percent fee charge for lawyers engaged in land transactions enjoys popularity with Nigerian lawyers but the regulation, in our respectful submission, fails to consider the true nature of modern real estate business in a realistic manner.
While the prevailing practice in Nigeria is to charge a flat 10 percent fee for legal services rendered in land transactions, this paper argues that such a one-size-fits-all approach is not realistic.
Instead, Nigerian lawyers must recognize that a land transaction encompasses three distinct aspects: title investigation, title documentation or conveyancing, and title perfection.
In line with international best practices and the realities of a commercial society, it is proposed that fees be appropriately divided, with 3 percent for title investigation, 3 percent for title documentation or conveyancing, and 4 percent for title perfection.
Three dimensions of land transactions
Title investigation
Title investigation involves the process of ascertaining the legal standing of a property. It requires in-depth research into land records, encumbrances, ownership history, and potential legal issues that may affect the property’s marketability. Lawyers play a critical role in this stage, often unearthing hidden risks that could save their clients from costly mistakes.
Title documentation or conveyancing
The second dimension of land transactions is title documentation or conveyancing, which encompasses the drafting and negotiation of legal documents necessary for transferring ownership.
This stage involves the preparation of contracts, agreements, and deeds, ensuring that all legal requirements are met and protecting the interests of both parties involved in the transaction. Lawyers’ expertise is crucial in navigating the complexities of this process.
Title perfection
Title perfection is the final but by no means the least important aspect of a land transaction. It involves the completion of all necessary formalities to legally transfer the property’s ownership. This often includes registering the transfer with relevant government authorities, obtaining necessary permits, and ensuring that the buyer acquires unencumbered ownership. This stage is essential to secure the transaction’s integrity.
International perspectives: USA and United Kingdom
In progressive commercial societies such as the United States and the United Kingdom, the legal profession has adapted to modern real estate practices. Real estate solicitors or lawyers in these countries do not adhere to a fixed, one-size-fits-all fee structure. Instead, they charge fees that reflect the complexity of each aspect of a land transaction.
For instance, in the USA, it is common for lawyers to charge based on the hours worked, the complexity of the transaction, and the level of expertise required. This approach ensures that clients pay a fair and transparent fee that aligns with the services provided.
In the United Kingdom, a similar model prevails. Legal fees are often structured based on a combination of hourly rates and a percentage of the transaction value. This allows for flexibility, acknowledging that different aspects of the transaction may require varying levels of legal input.
A Case for a more realistic fee
The 10 percent remuneration rule in Nigeria is an outdated and inadequate approach that fails to reflect the intricacies of modern land transactions. It overlooks the significant variations in the level of effort and expertise required at each stage. Furthermore, it can discourage potential investors and impede economic growth.
By adopting a more flexible and transparent fee structure, as seen in the USA and the United Kingdom, Nigeria can attract more real estate investments and promote fair competition within the legal profession. The proposed division of fees into 3 percent for title investigation, 3 percent for title documentation or conveyancing, and 4 percent for title perfection aligns with the international best practices and ensures that lawyers are appropriately compensated for their specialized services.
Conclusion
In conclusion, the 2023 remuneration regulation for Nigerian lawyers in land transactions must evolve to better serve the interests of clients, investors, and the legal profession itself.
Recognizing the three distinct aspects of title investigation, title documentation or conveyancing, and title perfection is a progressive step toward a fair and realistic fee structure.
A realistic and practical fee structure for will bring Nigeria in line with commercial societies like the USA and the United Kingdom, promoting transparency, efficiency, and economic growth in the real estate sector.
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