Abdul Muhammed Law Practice
Abdul Muhammed Law Practice explains the land and house purchase agreements prevalent in Nigerian real estate development projects.
Introduction
In Nigeria, real estate development projects often involve the subdivision of larger plots of land into smaller parcels, the construction of houses on these parcels, and the subsequent sale of both the land and the house to individual buyers.
These developments create self-contained communities, each governed by a unique set of agreements that define the rights, responsibilities, and obligations of both developers and buyers.
In this article, we will explore the nature and contents of the typical land agreement signed between buyers and real estate developers in such situations.
Name of the agreement
Deed of sublease or Deed of assignment
The primary legal instrument governing the relationship between a buyer and a real estate developer in such real estate developments is typically known as the “Deed of Sublease” or “Deed of Assignment.” These agreements set out the terms and conditions under which the buyer acquires both the land and the house within a larger community of similar properties.
Nature of the agreement
The Deed of Sublease or Deed of Assignment in these real estate developments serves multiple purposes:
Transfer of ownership
It acts as a conveyance document, transferring ownership of the land and the house from the developer to the buyer.
Creation of leasehold
It creates a leasehold interest in the land, allowing the buyer to occupy and use the land and house for a specified period, often long-term or even in perpetuity.
Establishment of covenants
The agreement establishes restrictive covenants, also known as estate covenants, which govern how the property can be used and the rules and regulations of the community.
Allocation of responsibilities
It outlines the responsibilities of both the developer and the buyer, including maintenance, infrastructure development, and community management.
Contents of the land agreement
Parties to the agreement
The agreement starts by identifying the parties involved, which include the developer and the buyer.
cThe agreement provides a detailed description of the land and the house, including the plot number, dimensions, and any structures built on it.
Terms and Conditions of transfer
It specifies the terms and conditions under which the developer is transferring ownership to the buyer. This includes the purchase price, payment schedule, and any applicable taxes or fees.
Leasehold provisions
The agreement outlines the leasehold interest granted to the buyer, including the duration of the lease, renewal options, and any rent or ground rent obligations.
Restrictive covenants
It sets out the estate covenants that apply to the property and the larger community. These may include restrictions on property alterations, land use, noise levels, and architectural guidelines.
Maintenance and infrastructure
The agreement details the responsibilities of both parties concerning the maintenance of common areas, utilities, and infrastructure within the community. It may establish a homeowners’ association or management company to oversee these functions.
Dispute resolution
In case of disputes between the parties, the agreement typically outlines the dispute resolution mechanism, which may include mediation, arbitration, or litigation.
Default and remedies
It defines the consequences of a breach of the agreement, including default and remedies available to both parties.
Indemnity and liability
The agreement may include indemnity clauses to protect both parties from certain liabilities and risks.
Exit strategy
In some cases, the agreement may outline the procedures for the buyer to exit the arrangement, including the sale of the property to a third party.
Signatures and execution
Finally, the agreement is executed by both parties, often in the presence of witnesses and a notary public, to make it legally binding.
Conclusion
In Nigerian real estate developments where a developer cuts out smaller pieces of land from a larger parcel, constructs houses, and sells them to buyers as part of a larger community, the Deed of Sublease or Deed of Assignment which also incorporates the management agreement plays a pivotal role.
These agreements serve to transfer ownership, establish leasehold interests, create restrictive covenants, allocate responsibilities, and outline dispute resolution mechanisms.
They are essential documents that protect the rights and interests of both the developer and the buyer, ensuring the orderly development and management of these self-contained communities.
Buyers should carefully review and understand the contents of these agreements before entering into such real estate transactions, and consulting with legal professionals is highly advisable to ensure a clear understanding of their rights and obligations.
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