Real Estate Terms Every Buyer Should Know

Just like every industry, real estate in Nigeria has a language of its own. As a first-time buyer or investor, the terms used in communication during the process can get overwhelming. Understanding the different terms of real estate in Nigeria will enable you to make smart financial decisions and avoid falling victim to fraudulent agents.

Common Real Estate Terms in Nigeria and their meanings

Real estate in Nigeria has a list of basic and legal real estate terms that can be confusing, especially to newbies. This article breaks down some of the most common real estate terms every buyer and investor will encounter during the process. Whether you intend to buy, sell, rent or invest, this real estate glossary will navigate the real estate market with confidence.

1.       Property Title

A Property Title is a legal document that serves as proof of ownership of a property. In Nigeria, common examples include the Certificate of Occupancy (C of O), Deed of Assignment, and Governor’s Consent. It contains the property’s description, ownership history, and legal status. Having a valid property title is necessary for securing your property investments and resolving any ownership disputes.

2.       Certificate of Occupancy (C of O)

The Certificate of Occupancy is an official document issued by the state government that legally confirms a person’s ownership and right to occupy and use the specific parcel of land. It is important to note that the Certificate of Occupancy is usually granted only to the first individual who purchases and registers the land. In Nigeria, a C of O has a validity period of 99 years, after which the holder can apply for renewal.

3.       Deed of Assignment

A Deed of Assignment is a legal document that officially transfers ownership of a property from one party (the assignor) to another (the assignee). It serves as evidence that the property rights have been successfully transferred to the new owner. Once prepared and duly executed, the document is registered with the appropriate land registry to make the transaction legally binding.]

4.       Tenancy Agreement

A Tenancy Agreement is a legally binding contract between a landlord and a tenant that outlines the terms and conditions of renting a property. It specifies the rent amount, payment schedule, duration of the tenancy, maintenance responsibilities, and procedures for eviction. This document protects the rights of both parties and helps prevent future disputes.

5.       Property Tax

Property Tax is the levy that property owners are required to pay to the government, typically on an annual basis. In Nigeria, the amount of tax varies across states and local governments and is determined by factors such as the property’s value, location, and purpose of use. Property tax serves as a key source of revenue for the government and contributes to the development and maintenance of public infrastructure.

6.       Survey Plan

A Survey Plan is an official document that details the exact location, boundaries, dimensions, and size of a parcel of land. A licensed surveyor prepares it and includes essential information such as the surveyor’s name, license number, and the date of the survey. The Survey Plan also indicates whether the land has been officially released back to the community/individuals or if it still falls under government acquisition.

7.       Governor’s Consent

The Governor’s Consent is an official document that signifies the state governor’s approval of a land transaction. It is a requirement for validating any transfer of ownership in a given state. Since a Certificate of Occupancy (C of O) can only be issued to the original owner of the land, subsequent buyers must obtain the Governor’s Consent to legally recognise and register their ownership rights.

8.       Land Use Act

The Land Use Act of 1978 is a Nigerian law that grants the state governor full control of the lands in the state, except those under federal jurisdiction. The Act empowers the governor to oversee land allocation, regulate land use, and approve land transactions. While it grants individuals and communities the right to occupy and use land, it does not give absolute ownership. Full control remains with the government.

9.       Building Approval

Building Approval is an official authorisation granted by the local government or relevant authorities to construct, modify, or renovate a building. It ensures that the proposed structure complies with safety regulations and standards before construction begins.

10.    Site Inspection

In real estate, site Inspection is the process of physically visiting a property to check its condition and surroundings. Prospective buyers or investors do this to verify the accuracy of the information provided by the seller or agent.

11.    Real Estate Agent

A Real Estate Agent is a licensed professional who helps clients buy, sell, or lease properties. In Nigeria, agents act as middlemen between property owners and buyers or tenants, guiding negotiations and ensuring smooth transactions. They earn a commission for their services, which is agreed upon before the deal is finalised.

12.    Real Estate Developer

A Real Estate Developer is an individual or company responsible for financing, designing, constructing, and selling real estate projects. They are responsible for residential and commercial developments across Nigeria. Real estate developers manage the entire process, from acquiring land to completing and marketing the finished property.

13.    Landlord and Tenant

A Landlord is the legal owner of a property who rents it out to another person, while a Tenant is the individual who occupies and pays rent for that property. Their relationship is governed by a Tenancy Agreement, which outlines the rights, responsibilities, and obligations of both parties throughout the rental period.

14.    Excision

This is when the government releases a portion of land it had previously acquired back to the original owners, individuals, or communities. Land that has been excised is considered legally safer to buy, as it is officially recognised that it is no longer under government acquisition.

15.    Gazette

A Gazette is an official government publication that records all lands that have been excised and released for private ownership. If a property is listed in a Gazette, it means that the land is safe and legal for private ownership.

16.    Property Valuation

Property Valuation is the process of determining the current market value of a property. It is determined based on factors such as location, size, condition, and recent sales of comparable properties. Accurate valuation helps property owners, buyers, and investors make informed decisions on pricing, investment, and loan applications.

17.    Omo Onile

Omo Onile is a Yoruba term for indigenous landowners or families who claim ancestral ownership of land, especially in southwestern Nigeria, such as Lagos, Osun, and Ogun States. Having a proper legal stance when dealing with the Omo Onile can help resolve disputes and sort out land verification quickly.

18.    Encumbrance

An Encumbrance is a legal claim or restriction placed on a property that may limit its transfer or use. Common examples include liens, mortgages, and easements. Before completing a property purchase, ensure that the property is free from any encumbrances to avoid future complications.

19.    Down Payment

This is the initial amount paid when purchasing a property. It is usually a percentage of the total price. In Nigeria, it serves as proof of financial commitment and helps secure the property before full payment.

20.    Mortgage

A mortgage is a type of loan used to finance the purchase of real estate, with the property itself serving as collateral. In Nigeria, banks and other financial institutions provide mortgage loans that enable individuals to acquire homes and repay the borrowed amount in instalments over an agreed period, usually several years.

21.    Freehold

This term refers to a property ownership type, where the buyer has complete and indefinite rights over the land and any structures on it, without time limits or government restrictions.

22.    Real Estate Investment Trust (REIT)

This is an investment vehicle that allows individuals to pool funds together to invest in income-generating real estate without directly owning physical properties. It functions much like buying shares in a real estate company. Investors can purchase units or shares and earn dividends from the profits generated by the company’s property portfolio.

23.    Land Banking

Land Banking is the practice of purchasing and holding on to land for an extended period with the goal of selling it later at a higher value. Additionally, the land can serve as a financial asset and be used as collateral for securing bank loans.

24.    Capital/Property Appreciation

This is the increase in a property’s value over time, due to factors such as location growth and development, improved infrastructure, and high market demand. When capital appreciation occurs, the property owner can sell the property at a higher price than its original purchase cost.

25.    Power of Attorney

This legal document authorizes one person to act on another person’s behalf in real estate transactions. It is common when the property owner is not physically present. In Nigeria, this document must be duly signed by both parties concerned for it to be considered valid.

You don’t have to be a real estate agent to know these terms. If you plan to buy, rent, sell or invest in real estate, understanding the terms to know in real estate will ease the process. At Realvista properties, we ensure our clients are fully armed with knowledge that can help them avoid costly mistakes and legal issues. Learning real estate terms is easier when you have a guide like this. Bookmark this article and revisit it when you come across a confusing real estate term.