STRATEGIES TO ADOPT TO AVOID FRAUDULENT PRACTICES IN REAL ESTATE INDUSTRY.

It has become a common practice for many property owners in Lagos state to mark their properties or lands with “This House/Land Is Not For Sale. Beware of 419” signs and display same in conspicuous positions for the view of the public. This practice is a local method adopted by the perceived owners of the properties to prevent the illegal and fraudulent disposition of their properties without their knowledge or consent.

In these present days, it is not uncommon for properties to be sold to unsuspecting third parties by persons who have no legal titles to the properties under the fraudulent misrepresentation that the said properties belonged to them. A lot of Fraudulent Practices in real estate industry. In spite of the extant rules and government policies put in place to stem out these unwholesome acts, the evil persists.

The most common forms of fraudulent practices in real estate industry can be seen in the following instances:

1. Where a person who does not hold any legal or equitable interest in a land sells/mortgages the land to unsuspecting buyer or mortgagee.
2. Where a person who actually holds a legal/equitable interest in a land sells/mortgages same to more than one buyer or mortgagee.
3. Where a land/property is in joint ownership of two or more persons, and one of the owners sells/mortgages the land without the knowledge or consent of the other person or co-owners.
4. Where it is a family land, the land is sold/mortgaged by any member(s) of the family without the joint consent of all family members.

The increasing rate of fraudulent practices in real estate industry has generated a lot of public outcries and innumerable petitions to various agencies necessitating many states in Nigeria, like Lagos state, for instance, to enact Properties Protection Law, 2016 (“the law”) to prohibit fraudulent conducts in relation to lands, unauthorized sales of lands, forceful and illegal occupation of landed properties, amongst others; the State also went further to set up a special agency known as Special Task Force on Land Grabbers to tackle the menace of land grabbing and incidental matters.

Against this backdrop, we are going to examine the measures that can be put in place to drastically reduce if not completely eradicate fraudulent practices in real estate industry.

1. Regulation of Real Estate Practitioners: The Lawyers, Surveyors, and Estate Managers are major actors in the real estate industry and they have a role to play to avoid fraudulent practices in real estate industry. There is no gainsaying the fact that some of these categories of persons do not have the requisite license to practice their profession. These quacks bring the real estate industry into disrepute as they often collude with Omo-oniles to dispose of lands and proceed to draft illegal Deeds of transfer to the purported benefit of the buyer. Upon the presentation of such deeds for the obtainment of Governor’s consent, the buyer will then discover that he/she has been scammed.                                                                                                        Thus, there is a need to regulate this field of practice by ensuring that only accredited legal professionals and real estate practitioners that have the license to deal in real estate businesses. By doing so, any land transaction done by the said registered practitioners can be traceable to them. This will prevent fraudulent practices in real estate industry. As a matter of fact, Section 9 of the law prohibits professionals from engaging in conducts that constitute an offense under the law.

2. Adoption of a centralized property statistics network: A visit to the Land Registry, Corporate Affairs Commission (“CAC”), and Courts, amongst others, will reveal that these institutions still deal with the analog system of filing documents. The implication of this is that a document filed at the Ikeja branch of the CAC or the High Court in respect of a property at Allen Avenue, may not come to the knowledge of the Lagos branch of the CAC or Court. Hence, there is every possibility that simultaneous applications in respect of a property can be made by different persons at the different branches of these institutions.                                                            Thus, there is need to adopt a digitalized computer network system such that at the click of a button, all the various agencies granting various licenses or permits will have all relevant information in respect of any property displayed before them.

3. Conduct due diligence: It is necessary when buying a land for the prospective buyer to engage legal professionals to verify all documents in order to ascertain the real owner of the property and to ensure that the property/land in question is free from encumbrance. The reason for the latter is very important because there are times where an owner of a property may mortgage the property and thereafter, proceed to sell the same property to an unsuspecting buyer when he knows that there is a likelihood of default in his mortgage contract. Thus, the employment of a legal practitioner to conduct due diligence on a property/land will go a long way in curbing fraudulent practices in real estate dealings.
4. Enforcement of extant legislation: The government has a vital role to play in the eradication of fraud in the real estate industry. Laws prohibiting illegal activities such as land grabbing, illegal sales of land, forgery of land documents, forceful takeover of a land etc should be enforced strictly. Special laws dealing with fraudulent acquisition and disposal of properties and land have been promulgated by various States to complement the extant Land Use Charge Act. Lagos state government, in particular, has enacted a law prohibiting illegal and fraudulent practices in land transaction, and also prescribed punishments in the event of a breach. The State also set up a Taskforce against land grabbing incidences in Lagos state and this agency is empowered to work with security agencies to arrest, detain and prosecute the so-called “Omo-oniles” or any person (s) involved in fraudulent dealings in land. Despite this giant stride, the government has to come up with more stringent mechanisms to practically enforce these laws.
5. Do not be in a hurry to buy a land: Our experience in the real estate business has revealed that majority of people who fall victims to fraudulent land transactions are those who were in a hurry to acquire lands. For instance, we have seen cases where Nigerians resident abroad who feel the need to build a house in their home country before ‘Christmas’, or ‘the next time they arrive the country’ (or for other reasons) are quick to send money to fake land agents or Omo-oniles who fail to deliver the said lands to them.                                          Thus, it is very important that one takes his time before buying a land in order to prevent many years of protracted court case. It is, therefore, necessary for a prospective property owner to engage the services of a legal professional to carry out due to inspection and make appropriate recommendation to the client.

In conclusion, it is importatnt to state that the duty to eradicate fraudulent practices in real estate industry is a joint effort by all and sundry. The government, community, seller, and buyer of a land have concerted roles to play in ensuring that this protracted menace is totally eradicated. It is even more surprising to note that professionals in the real estate business often fall victims of these fraudulent practices, let alone a novice; hence, a great deal of expertise and dedication is required when handling real estate transactions.

Due to the numerous emails and letters we have received from the public alleging that they had been duped in the course of buying lands/properties, we have decided to write this short article to further sensitize the public on the need to be more vigilant when it comes to buying of properties in Lagos state. Perhaps, you reading this article have also been caught in the scheme of these nefarious activities, it is not too late to get a legal advice as to what next steps to take in redeeming the situation. Feel free to call us on +234 8034869295,+2348020550410 or send us an email to [email protected]

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