Introduction
Transferring ownership of land translates to conveyance. The word “conveyance” means a deed or other document by which the ownership of property is transferred. Under the Land Instrument Registration Law of each State of the Federation, a deed which transfers ownership of land in a transaction is called a conveyance. Conveyancing on the other hand is wider in meaning than conveyance. The meaning of conveyancing is not limited to the preparation of a deed that transfers ownership in land; it also covers all inquires that are necessary to be made in relation thereto and all relevant documents such as professional letters, written requisitions etc which are drafted in connection with the sale and purchase of the land.
Transferring interest in land, the process of conveyancing
There are three important stages in the process of conveyancing. There are:
- The contract stage
- The completion stage
- The Post completion stage
The contract stage is usually the first stage in the process. Here the parties would enter into a contract by which they bind themselves to complete the transaction. At this stage, the purchaser is required to pay a deposit which is a proportion of the purchase price of the land. The completion stage is where after all terms of the contract have been fully and clearly agreed upon and the necessary consideration has been furnished by the parties, the purchaser’s Solicitor then proceeds to prepare the deed of conveyance. If there is any balance of the purchase price outstanding, it is paid up and the deed if finally executed.
Transferring ownership of land, the contract stage
A contract for the sale of land is remarkably different from the general contract which merely involves offer, acceptance and consideration, and which becomes binding once these three elements are present. A contract for the sale of land is not enforceable against a party unless all the terms of the agreement are evidenced in writing and signed by the parties involved. There must be some memorandum to evidence the agreement.
It is advisable to state in the memorandum the capacity in which the seller is contracting e.g whether as a mortgagor, personal representative or as a beneficial owner. A date of completion of the contract should also be stated in the memorandum. The date of completion in this sense refers to the drafting of the deed of conveyance. E.g “this transaction is to be completed on or before and not later than the 14th of February, 2025”. In a situation where the contract or agreement is in respect of land that has some improvement on it, such as a house, if the subject matter is destroyed, the issue may arise as to who will bear the loss of the subject matter. Therefore, the memorandum should take care of this sort of situation by providing for the party that should insure the subject matter of the contract.
It is clear from the foregoing that a written memorandum is the formal contract but a vendor or purchaser could find himself bound by a much more informal writing if words of negotiations such as “subject to contract” or “subject to formal contract” are not introduced into the correspondences between the parties.
Preliminary Inquiries
It is the duty of the purchaser’s Solicitor before contract to make inquiries about the property from the vendor or from the vendor’s Solicitor. The vendor is by law under a duty to disclose all latent defects of the property. Where the vendor fails to discharge this duty, the purchaser may withdraw from the contract. Latent defects are defects which are not apparent on the surface and if not disclosed to the purchaser at that stage, he is not in a position to know them. Examples are encumbrances such as mortgages, leases or tenancies on the property.
As regards patent defects, the law is that a purchaser takes what he sees. Patent defects are those defects that are apparent on the surface of the subject matter of the transaction. A purchaser is not entitled to have anything better than what he sees or ought to have seen.
A purchaser or his Solicitor should also make inquiries about any general restrictions on the purpose for which the property may be used. The vendor must disclose any such restrictions eg whether the property is to be used for residential or business purposes. Also, at this stage, the purchaser’s Solicitor should discuss with his client all the matters which the client should consider carefully before deciding to enter into a binding contract. An example is the means of financing a contract or transaction. If the purchaser intends to finance the transaction on the basis of a loan, this fact must be stated very clearly.
Exchange of Contract
Where the parties are separately represented, the vendor’s Solicitor engrosses or puts up the contract in two parts i.e the original and the counterpart. He sends both parties to the purchaser’s Solicitor for approval. The latter would check the contract to see if it is a reflection of the agreement between the parties. If he approves of it, he sends one part back to the vendor’s Solicitor for the signature of the vendor while he retains the other part for the purchaser’s signature. On receiving the contract, the vendor will date it and send off his part in exchange for the purchaser’s part. This is the procedure known as exchange of contract. This exchange could be done physically or by post. It has been held that until exchange of contract, there is no binding performance.
It should be borne in mind that where a purchaser withdraws at this stage, he is entitled to his deposit on the basis of quasi contract as money had and received. But if the deposit was paid to an estate agent who absconds with the money, the loss is borne by the purchaser.
The position after exchange of Contract
Until completion, when a formal deed of conveyance has been prepared, and duly executed with the requisite Governor’s consent and registered, the vendor still retains the legal estate in the property. A purchaser’s interest is equitable. But the vendor holds the legal estate as a constructive trustee for the purchaser who is the beneficial owner in equity. If the contract is silent on rent, it is the vendor that keeps the rents pending completion. After completion, any rent collected by the vendor is collected in trust for the purchaser.
It is the vendor’s duty not to commit waste and to keep the property in a state of good repair before completion. It should to be borne in mind that after exchange of contract, a purchaser has a right to devise his interest by sale, mortgage or by will. Where he sells, the documents should have the vendor as party of the first part, the purchaser as party of the second part and the sub-purchaser as party of the third part. This is to ensure adequate protection for the sub-purchaser.
Transferring ownership of land, the Completion Stage
The completion stage in a contract for sale of land generally involves the preparation of a formal deed of conveyance. This is done by the purchaser’s Solicitor who will normally done by the purchaser’s Solicitor. The last procedure involves due execution of the deed of conveyance which is the signing, sealing and delivery, together with attestation by witnesses to the parties.
Transferring ownership of land, the Post Completion Stage
Post completion matters in sale of land transactions are in three fold. They are other legal requirements hat needs to be fulfilled in order for the transaction to be perfected and fully recognized by law. They are;
- Governor’s consent
- Stamping of title deeds.
- Registration of title deeds
Governor’s consent
The requirement of the consent of the Governor to transactions bothering on alienation of land within the state which is a statutory right of occupancy is in compliance with the provisions of Section 22 of the Lands Use Act. That Section provides that it shall be against the law for a holder of a statutory right of occupancy to alienate same by way of assignment, mortgage, transfer of possession etc without the consent of the Governor of the State.
Stamping of title deeds
The parties should ensure that the deed is duly stamped. This is for the purposes of registration. Although stamping of title deeds is not a stringent legal requirement as lack if stamping will not invalidate the transaction. It is however important because an un-stamped deed will not accepted for registration. Stamping is a means of collecting revenue on the property for the State. It is a tax payable on the property parties.
Registration of title deeds
The deed should be registered for it to enjoy the full weight of the law. Registration is a requirement of the Land Instrument Registration Law of the various States where registration of an estate contract is required. Lack of registration does not make the document invalid, but it may render it inadmissible in evidence to establish title.
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