Land is one of the few assets that generate income for owners without the owners having to do the actual works. Landed property appreciates by itself and as a result, it has always been subject of conveyances, assignments, leases and mortgages.
Conveyance in landed property is very significant. It is far beyond paying for the land and taking possession that is why every buyer must take conscious steps of protecting their investments with documentary and legal backups. Upon buying a land, every buyer wants to get the right title documents and be sure that the title of the seller is adequately transferred to him. Often times, legal practitioners have always have cause to draft contract of sale agreement for parties and it sometimes remains a mystery to parties why they have to sign contract of sale agreement and not deed of assignment. This article has therefore attempted to answer some questions in your mind on the difference between contract of sale and deed of assignment, does the contract of sale agreement makes you the owner of the land or is there a special kind of transaction that fits properly with contract of sale.
WHAT IS CONTRACT OF SALE.
Supreme Court in International Textile Industries Limited V. Aderemi (1999) 8 NWLR part 614, 268 held that, transfer of interest in land can be divided into two parts namely;
i. The contract stage ii. The conveyance stage.
Contract of sale agreement is the documentary that the parties execute at the contract stage. At this stage, parties have agreed to transfer interest on the property but are yet to agree to certain terms. It may happen that the parties are still investigating the root of titles, the buyer is still paying installmentally, parties are yet to agree on fixings and facilities to be on the property, reversionary interest, etc. The validity of the contract of sale agreement hangs on simple rules of contract like offer, acceptance, considerations, etc. Once those simple rules are on ground, it can be said that the parties have reached contract stage and should proceed to execute contract of sale agreement.
In every contract of sale agreement, there are three basic things that must be present; the details of the parties, the description of the land and the purchase price the parties have agreed to. When parties sign contract of sale agreement, the buyer might have paid deposit, part payment or the full sum but the buyer will still not be regarded as the legal owner of the property. The legal rights on the property still vest in the buyer. However, that does not give the seller right to convey the property to a third party. The buyer will have equitable right over the property, can take the possession of the land and have right to perfect the title documents. The buyer will have right to lien and defend the land against the interest of subsequent buyers.
In Ogunbambi v Abowab, (1951) 13 WACA 222 Per Acting president, the West Africa Court of Appeal observed at page 224 described any document that contains the essential characteristics of Contract of Sale stated earlier as “an agreement for sale coupled with a receipt for purchase money and a covenant to execute a conveyance on demand: Equity is said to look as done that which ought to be done.
So, when your solicitor drafts contract of sale agreement for you and you are in possession of the land, the land is not yours yet, but you’re 90% close to being the legal owner. Contract of sale agreement is always desirable for a buyer who wishes to pay the purchase price in installments or that does not want to lose the property during the process of negotiation. Lien will be created in favor of the purchaser and the seller will not be able to rescind. The seller on the other side will retain the legal ownership and will be able to bring action for specific performance should the buyer default. The seller also retains the right to bring action for recovery of possession from the seller.
The followings are the advantages of Contract of sale agreement.
- It allows parties to negotiate and investigates the seller’s root of tittle without fear of losing the property.
- The death of any of the parties does not affect the completion of property.
- None of the parties can withdraw from the transaction without being liable for damages.
- Enforcement of contract is easier.
For more inquiries on how to transfer your interest in land either via Deed of Gift or other means, feel free to call Ibejulekkilawyer on 08034869295 or send us an email at email@example.com.
Disclaimer: The above is for information purposes only and should not be construed as a legal advice. Ibejulekkilawyer.com (bloc) shall not be liable to any person(s) for any damage or liability arising whatsoever following the reliance of the information contained herein. Consult us or your legal practitioner for legal advice.