As much as people crave owning properties, they dread the complexities and challenges associated with closing deals, especially in developing economies like Ghana, where the Real Estate Industry is still finding its feet.
The sector only recently had a Real Estate law; Real Estate Agency Act 2020 (Act 1047) which is aimed at regulating Real Estate Agency practice, commercial transactions in Real Estate including the sale, purchase, rental and leasing of real estate and related fixed assets.
Under the law, only persons licensed as brokers can provide services in the sector, particularly relating to transactions. The persons who are eligible to be issued with the license are
- individuals who have passed an examination conducted by the board or an independent testing service designated by the board;
- a valuation and estate surveyor registered by the Ghana Institute of Surveyors;
- a lawyer licensed by the General Legal Counsel;
- a non-resident of Ghana who is a licensed real estate broker in the country of residence.
Apart from these persons, any person who performs real estate services without a license commits an offence. This is to ensure persons conform to the laws of the sector in a professional manner. A license once issued is neither transferable nor renewable.
We have talked about the role of Real Estate Agents and Brokers and Role of Licensed Surveyors in Previous articles. To this end, this article will focus on the role of Lawyers in a Real Estate transaction.
It is important to note that land in general and Real Estate in particular have been shaped by the law since the beginning of man. Land is what the law defines it to be and not what a lay man’s understanding is. Land is also more than just the hard surface; it also includes the space under it, above it and all fixtures on it, be it building, forest, water, farm etc.
Before a property will be established to be legitimate and also transferred from one owner to the other, it requires many legal processes and documentations which fall under the ambit of the Lawyer. The lack of knowledge of these things and more can cost one a lot if they do not have a Lawyer involved in their property related Transactions. These and many other reasons are why we will focus on understanding the significant role of Lawyers in acquiring a property.
Establishing the Right Owners of a Property
Per the laws of Ghana there are no ownerless lands in the country. Thus, every land has an owner one way or the other. Unlike other jurisdictions where the head; Queen (UK), Sheikh (UAE) own all the land, In Ghana we have Stool lands, Clan Lands, Family Lands, Individuals and then the State lands. Apart from the state who can acquire lands anywhere; the kind of land ownership system differs from place to place in Ghana.
For instance, in the Volta Region, families own most of the lands and not the stool or even the clans. In Accra, Families, Clans and Stools own lands. In parts of the North, the Tindana (Original Settlers and Spiritual Leaders) own most of the lands. It is these land owners that the law refers to as Allodial owners. Thus, they have the highest interest in land and their ownership interest if free and perpetual. It is from their interest that other interests in land emanate. Thus freehold interest, usufructuary interest, leasehold, customary tenancy and rent.
A lack of understanding of these intricacies and hierarchy in ownership by property purchasers is what sometimes leads to misunderstanding, land disputes and losses (property and even lives). The lawyers, by virtue of their training and dealings have good understanding of these nuances and hence are able to conduct thorough investigations and analysis to establish the rightful owners of a property that a potential client may be interested in.
In the situation where a particular property has passed through several ownership levels, determining who the rightful owner is at the material moment of the transaction can be difficult, but this is why a lawyer will be the right person to go to.
Some ruling of cases in relation to some properties can be a very good source of information that every person may never have access to, but the lawyers usually do and that also helps to establish who the right owner of a property is at any given time.
Negotiation is largely about information. The quality of information one has about a property will have a huge impact on the negotiation scale when acquiring a property. Every property has history. Every property may have merits and demerits.
For example if an inspection of the property shows some structural issues, Your lawyer can request for reduction on the selling price or the work to be completed before the sale completes.All these go to add to the value of a property that is up for sale, lease, rent or acquisition.
The role of the real estate brother or agent and the surveyor in a negotiation together with the other details the lawyer gathers, goes a long way to define the negotiation of a property.
Here we are not just talking about the value and how much a property must be bought. We are also referring to the mode of payment, favourable payment plan, screening of difficult clauses and meeting of deadlines (evacuation, documentation, handing overs, renovations etc).
The Lawyer’s role in negotiation is also critical because of the need to satisfy statutory requirements by parties and also protect the client from any after effect of the transaction which may be detrimental to a party or both parties.
Documentation and Purchase/Lease Agreement
The moment one expresses an interest in a property. The work of the lawyer must begin. After the necessary background check to establish the legal owner of a property, the lawyer begins to put together a draft contract; terms of engagement.
The idea is to come up with a favourable terms of offer which include state of the property, what you want done, what fixtures should stay or go (in terms of a building).
The Lawyer will then confer with the Lawyer of the selling party to peruse their draft contract and any supporting documents. This is to ensure a mutually beneficial contract is arrived at before the final sale. During this process, the lawyers can raise queries where necessary for resolution.
The lawyer will also have to vet all documentations including legal property searches to ensure you are safe from statutory infractions. Some of these documents to be vetted and approved include both national and local authority searches like land registry searches, water company, Environmental Protection, Electricity Company, Town and Country Planning and even location specific search documents.
When the lawyer is satisfied and the client is satisfied and parties are sure that there are no outstanding issues, the Lawyer then fanciless the purchase or lease agreement. The purchase or lease agreement is what will guide what will be offered and accepted as the final price and other terms deemed necessary by the parties.
It will also spell out the payment plan, whether it will be outright or installment, rent or partnership or even barter. The purchase agreement can be in many forms and shapes. But know that the lawyer is meant to protect your interest irrespective of the kind of agreement you settle on. In these days of town homes and commercial spaces, the seller of a land can offer the land in exchange of a percentage of townhomes or office spaces instead of receiving a one time monetary payment.
Preparation of Deed of Conveyance
This is where the seller transfers an interest (ownership) in a property to a buyer. This document is the responsibility of the Lawyer as it will convey the history of the property, the value, the owner and the buyer and the price or exchange being subscribed to.
It will usually have a site plan (cadastral plan) of the property as signed by a licensed surveyor, a letter of administration and a vesting assent where necessary.
It is the deed of conveyance that the buyer will then go and file at the lands commission for registration to seal the deal of the transfer of interest in the property. The registered document is what now protects the interests of the new owner or owners, tenants or parties with interest in the said property.
Without the deed of conveyance, the land cannot be registered in the new owner’s name. It gives legal effect to the transaction. The registration is to lodge the transaction in the records of the state, so that the state can defend the interest of the buyer when it becomes necessary.
Contract Finalization and Transfer
At this point the two parties are legally bound to the sale and neither party can pull out, as a contract is said to have been entered by the two parties. The lawyer must then ensure the responsibilities of the parties are adhered to.
These include the making of final payments and handing over of all necessary documents, keys, maps, plans among others.
The lawyer will also have to assist with ensuring property insurance is in place, ensuring mortgage conditions are met (if the property is a mortgage). He or she is also to ensure that the buyer’s payments and agreed terms are met.
It is the responsibility of the lawyer to ensure all illegal occupants of the property are evacuated legally and peacefully, so that you can enjoy your property.
Until all loose ends are tied the Lawyer’s work is not done.
I may not be competent enough to talk about fees, but what I will advise is that always look at the cost the services of the lawyer saves you, and do the needful.
Some fees are pegged on a percentage of the value of the transaction, while others are just based on specific negotiated fees. Some charge per hour in other jurisdictions, while others charge per month.
Like I said, do not let the mention of a lawyer scare you, instead count the cost of all the responsibilities the lawyer must undertake on your behalf and make a fair bargain. CBC properties can also recommend for you some of the lawyers we work with, should you need any assistance in that regard.
The writer is the CEO of CBC Properties Limited, a member of Ghana Association of Real Estate Brokers (GAR) and Ghana Real Estate Developers Association (GREDA); Email: [email protected] Cell: +233-20-422-5002