KEY POINTS

• Lack of proper documentation can lead to legal disputes and investment loss.​
• Purchasing undocumented land increases vulnerability to fraud and scams.​
• Proper documentation is essential for obtaining development permits and facilitating resale.

Purchasing land in Nigeria without proper documentation can lead to significant legal and financial challenges.

A thorough understanding of these risks should be necessary for investors to protect their assets from possible problems in the future.​

Legal disputes and loss of investment

The documentation status of ownership of properties plays an essential role in validating legal claims, which makes disputes more likely to occur.

Such legal disputes extend the duration of court proceedings and incur significant expenses while sometimes resulting in total investment loss.

For instance, buyers who purchase land without verifying its legal status may discover that the land is under government acquisition, leading to potential demolition of any structures erected and loss of investment. ​

Government acquisition and demolition risks

Purchasing land without verifying its status may result in buying property within government acquisition zones.

Land with development potential is subject to government reclamation, which entails possible tearing down of newly constructed buildings while investors lose their funds.

For example, in Lagos State, lands designated as “committed” are reserved for government projects, and any development on such lands is subject to demolition without compensation. ​

Financial fraud and scams

The Nigerian real estate market is susceptible to fraudulent activities, including the sale of land by unauthorized individuals or the presentation of counterfeit documents.

Investors who fail to conduct proper documentation expose themselves to fraudulent schemes.

To achieve due diligence, prospective buyers must recognize the threat of scams. This is because scammers take advantage of weak industry supervision and lack of regulations. ​

Inability to obtain development permits

A proper documentation system for land ownership enables developers to obtain the required permits for their projects.

The absence of valid documents creates obstacles to obtaining approval for construction and other development projects. This impedes land utilization and results in possible legal consequences.

The property becomes less saleable and generates fewer returns because of this restriction. ​

Difficulty in property resale

Prospective buyers will not purchase land with improper documentation since they must confirm clear ownership and legal compliance.

The absence of proper documentation imposes a limit that hampers marketability and affects return on investment potential.

Buyers need to perform comprehensive research before purchasing land as they must prove the authenticity of title documents and confirm the property has no legal restrictions.