Deduction of Vendor's Title in Land Sale Contracts
In the post-contract stage of a land sale, it is crucial for the vendor to demonstrate the ability to transfer the contracted property. The purchaser must inspect the title for a specified period to ensure its validity, with rules varying across different regions. Noteworthy guidelines include ancient document rules and requirements for purchasers based on statutory provisions. Methods for deducing a vendor's title, such as Abstract of Title and Epitome of Title, assist in evaluating the history and authenticity of property ownership. Solicitors play a key role in scrutinizing documents to confirm a clear title devoid of encumbrances.
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SALE OF LAND & CONVEYANCY 2 DEDUCING OF TITLE (POST-CONTRACT STAGE) The aim is for the Vendor to show that he is in a position to transfer what he has contracted to convey. This obligation arises after the exchange of contract. STA 30 September 2024 1
Need to deduce title if it is by way of registered deed (as title deeds are registered with all their defects) Purchaser to search back at a certain period to satisfy himself that the title is good: In C.A. States 40 yrs (Abia State is 30 yrs S. 70(1) Abia State Law of Property) In PCL States 30 yrs -- S. 70 (1) PCL. 30 September 2024 2
NOTE (ancient document rule): == Facts recited in a document which is 20 yrs old or more raises a presumption of regularity of the document/event. = OWOADE VS. OMITOLA - S.162 E.A. See also ADOLE VS. GWAR (2008) 11 NWLR (Pt.1099) 562; S. 3(1) PCL. 30 September 2024 3
NOTE PLS: = Purchaser will not require any information or requisition prior to the stipulated number of years. See S. 71 (1) (a) PCL & S. 71 (1) (a) Abia State Law of Property. 30 September 2024 4
MEANS OF DEDUCING VENDORS TITLE Abstract of title: a summary of evidence of the history/types of the title of the vendor (in chronological order). Epitome of title: schedule of documents and events which constitutes the title and accompanied by photocopies of the documents. 30 September 2024 5
Matters to NOTE by Solicitors in Abstract/Epitome of title: It commences with a good root of the title Particular documents are in law capable of having their supposed effect; whether the parties had the power to buy, convey, or otherwise deal with the property It evinces that there are no subsisting encumbrances except those that are disclosed in the contract That all abstracted mortgages and charges have been duly discharged That all the documents are in order in respect of execution, consent requirement, stamping and registration. See S. 12 (1) (2) PCL. 30 September 2024 6
CONTENTS OF AN ABSTRACT OF TITLE Date of the document Nature of event Parties to the transaction in the stated event Whether CTC or photocopy of the document Number of documents involved Whether original document to be handed over on completion STA 30 September 2024 7
MERITS OF ABSTRACT/EPITOME OF TITLE Helps Solicitor to make requisition as to title It provides a prima facie (though not conclusive) evidence of any defect in the title of vendor Assist the purchaser s Solicitor where he is preparing a search report on title Provides at first glance the nature of the vendor s title, rather than a detailed analysis of the history of title. 30 September 2024 8
NOTE: Categories of documents that should be abstracted: = Deeds = Dealings on the grant of C. of O. = Deeds of releases = Leases = Mortgages and charges = Court judgments = Probate = Letters of Administration and Assents 30 September 2024 9
Investigating of Title by Purchaser It is a basic assumption (at the contract stage) that the vendor shall convey good title to the purchaser, subject to instances of patent defects in title earlier mentioned. = YANDLE VS. SUTTON. 30 September 2024 10
NOTE: Need for the purchaser/his solicitor to carry out searches and investigation of the vendor s title: == Land registry; probate registry; CAC registry; physical inspection/ investigation of family background of the vendor etc. NOTE: the solicitor to act professionally to avoid being liable in negligence for any loss suffered by his client for taking a defective title. 30 September 2024 11
WHAT IS REQUISITIONS (As to Title) = It is a right of demand exercisable by the purchaser to clarify certain queries raised as to defects in the title of the vendor as observed by the Solicitor to the Purchaser. = Requisitions should deal with relevant and important matter that may not be disclosed where an inspection of the property is conducted. STA 30 September 2024 12
FEATURES OF A GOOD ROOT OF TITLE The vendor had the authority and capacity to make the conveyance The document must have been duly executed, stamped and registered as the case may be The document must be genuine and valid The vendor had what he purported to convey & the document has the effect claimed by the holder The document should deal with transfer of both the legal and equitable interest in the property The documents should not contain broken chains in the title devolved. = LAWSON VS. AJIBULU. 30 September 2024 13
DOCUMENTS THAT CONVEY GOOD ROOT OF TITLE Title acquired by a subsequent purchaser of registered estate pursuant to the RTL (repealed) Deed of gift of land Deed of legal mortgage by which the legal interest is transferred Deed of assignment which transfers the unexpired term in the leasehold Assent Vesting order by court. 30 September 2024 14
DCMTS THAT CONVEY BAD ROOT OF TITLE An equitable mortgage Certificate of occupancy (except it is a state grant) - S.9(1) L.U.A.; OGUNLEYE VS. ONI A Will (except it is admitted to probate) A Lease A power of attorney (the donee is only an agent)- EXCEPT: where it is coupled with interest/consideration; made by deed to transfer title of the donor (LABADEDI VS. ODULANA & ORS.) = S. 143 PCL; S. 8 CA 30 September 2024 15
COMPLETION The vendor s solicitor prepares a schedule of documents to be handed over at completion and get the original title documents ready NOTE= where the conveyance (deed) contains an undertaking of production of original title documents (when required by the purchaser). Purchaser s solicitor prepares a draft deed of assignment, send same to the vendor s solicitor for amendments (if any) Both parties to agree on the terms of the conveyance as reflected in the deed Often, Deed of assignment is executed in the vendor s solicitor s office where completion takes place (parties may agree otherwise), but not the house or office of the parties. = R. 22 RPC. 30 September 2024 16
POST-COMPLETION (PERFECTION OF TITLE) CONSENT = any instrument for transfer of legal interest in land without the consent of the Governor/approval of the Local Govt. Council is null and void. - SS. 21, 22 & 26 LUA SAVANNAH BANK LTD Vs. AJILO; AWOJUGBAGBE LIGHT IND. LTD Vs. CHINUKWE. NOTE: vendor s duty to seek the consent but in practice purchaser s solicitor facilitate the process. Some states have prescribed forms that is completed by applicants (e.g. Form 1c in Lagos). NOTE: The Governor has a discretion whether or not to grant consent to assign, so, he cannot be compelled to give his consent. QUDUS Vs. MILITARY GOVERNOR OF LAGOS STATE. 30 September 2024 17
NOTE: when consent is granted, the Governor would endorse on the deed thus: I CONSENT TO THE ABOVE TRANSACTION Dated day of ..2017 (sign) EXECUTIVE GOVERNOR OF .. STATE/MINISTER OF THE FCT. See SS.22(2) and 45(1) L.U.A 30 September 2024 18
STAMPING = Deed of Conveyance/Assignment requires stamping ad valorem. NOTE: An instrument on which proper stamp duty is not paid will not be admitted in evidence for non-compliance with the provisions of the Stamp Duties Act/Law. - SS.23 & 28 SDA; DA ROCHA Vs. HUSSAIN; OKUWOBI Vs. JIMOH; ADENUGA Vs. AJAO STA 30 September 2024 19
EFFECTS OF FAILURE TO STAMP A LEGAL INSTRUMENT 1. The deed of assignment will not be accepted for registration 2. It cannot be tendered in evidence to prove title 3. Attracts penalty if the instrument is not stamped within 30 days after completion/execution. = S.23 (3) (a) S.D.A. 30 September 2024 20
REGISTRATION == By virtue of S.2 of the Land Instruments Registration Law (Ogun State) which is similar to that of other states and the Federation, Deed of Conveyance/Assignment is a registrable instrument. NOTE: A Deed must be registered within 60 days of the date of execution of the instrument. 30 September 2024 21
The registration implies that the registrar of deeds shall cause a certified true copy of the instrument to be pasted on the register and he shall append his signature accordingly thus: This instrument is registered as No: .at page ..in volume of the Lands registry in the office at Ibadan . 30 September 2024 22
NOTE: Registration is to prevent fraud and challenges arising from the suppression or omission of instruments when title is deduced. See S.25 of the L.I.R.L.; OMIYALE Vs. MACAULAY. 30 September 2024 23
EFFECTS OF NON-REGISTRATION. 1. Inadmissibility the instrument is inadmissible in evidence and cannot be pleaded in any court to prove title, S. 15 L.I.R.L. NOTE PLS: an unregistered instrument may be admissible for purposes other than title (For example, it can be relied upon as evidence of contract of sale, and that payment was made by the purchaser OGUNBAMBI Vs. ABOWABA) 30 September 2024 24
2. Priority instruments take priority according to date of registration, more so, where subsequent purchaser is a bonafide purchaser for value without notice S. 16 L.I.R.L.; OKOYE Vs. DUMEZ; NSIEGBE Vs. MGBEMENA. 30 September 2024 25
LIST OF DOCUMENTS FOR PROCESSING GOVERNORS CONSENT. 1. Covering letter 2. Application in the appropriate application form (Form 1C in Lagos) 3. Tax clearance certificate (3 years) of the parties 4. Original copy of the deed of conveyance duly executed by the parties 5. Evidence of payment of ground rent (if not developed) 6. Evidence of payment of tenement rate (if developed) 7. Evidence of development levy (in states where it is required) 8. Receipt for payment of consent fee 30 September 2024 26
9. Receipts for payment of charting and endorsement fees 10. If any of the parties is a Company, it may require: a. C.T.C. of certificate of incorporation b. C.T.C. of Memorandum and Articles of association c. C.T.C. of Form CAC 7 d. Tax clearance certificates of at least 2 directors of the Company. 30 September 2024 27
PROCEDURE AT THE STAMP DUTIES OFFICE 1. The purchaser s solicitor deliver two or more copies of the Deed of Assignment to the stamp duties office for assessment for payment of stamp duty 2. After the assessment, based on the value of the property, payment of stamp duty is made through designated banks 3. After the payment, the stamp duties office will accept the documents 4. Within two or three days, the document is stamped with the inscription DUTY STAMPED impressed on the Deed 30 September 2024 28
5. The Commissioner for Stamp Duties will append his signature to it and the documents are ready for collection 6. The stamp duties office retains one copy of the deed of assignment. PLS NOTE: Ministries and government institutions are exempted from the payment of commercial rate duties. See S.9 of the Diplomatic Immunities & Privileges Act (it exempts the diplomatic corps from payment of duty). 30 September 2024 29
PROCEDURE AT THE LANDS REGISTRY. The procedure at the lands registry varies from state to state but the outcomes are the same: 1. The solicitor sends his application to the Registrar of Deeds or any other designated officer to conduct a search 2. In some states, the application to conduct searches is by completion of the relevant form 3. The applicant makes payment of the search fees at the designated bank 30 September 2024 30
4. The payment receipt is attached to the application before submission and the registry staff will bring the file from the filing room 5. The file is then handed over to the solicitor for the search. NOTE: (a) the solicitor must be meticulous and study the file page after page to discover any defect in them (b) a search should never be done when you are in a hurry 30 September 2024 31
(c) it is not advisable that senior lawyers leave task of searches at the registry to younger lawyers, unless the young solicitor is properly trained, because there is serious risk inherent in using an inexperienced hand to perform such a sensitive assignment. 30 September 2024 32
THE PROCEDURE IN ABUJA 1. The solicitor submits the application containing particulars of the land especially the file number and the receipt of payment of search fees to AGIS (Abuja Geographic Information System). 30 September 2024 33
2. The solicitor returns after a day or two to collect the search report 3. Searches at AGIS is computerized, it is faster and more convenient. 30 September 2024 34
NOTE: (a) sometimes the information generated from the computer is incorrect or incomplete. 30 September 2024 35
For example, the computer is unable to capture cases of lands that are subject of litigation; it is the responsibility of lawyers handling cases involving title to land to file a CAUTION at AGIS. 30 September 2024 36
(b) until the caution is removed AGIS will not register any transfer of interest in respect of the land 30 September 2024 37
(c) Conveyancers should keep a check list on things to watch out for when conducting searches at the registry. STA 30 September 2024 38
The success or otherwise of a search carried out on a property depends on the instant judgment of the solicitor while the file is before him. 30 September 2024 39
ETHICAL ISSUES ARISING FROM INVESTIGATION & PERFECTION OF TITLE TO LAND. Conveyancer to act professionally and diligently, otherwise he could be liable in negligence for any loss suffered by his client for taking a defective title See R.14 (1) (2) & (5), R.15 (1) (2) (a),(3) (a) (e) (i) & (j), R.16 & R.23 RPC. STA 30 September 2024 40
