Tackling Illegal Property Sales, Prevalence of Fake Developers, Unlicensed Agents And Money Laundering In The Nigerian Real Estate Sector

CONTRIBUTOR: Jesutofunmi O Idowu

Nigeria’s economic development is intricately linked to the growth of its real estate sector. This vital industry contributes significantly to the nation’s GDP, generates employment opportunities, and drives the expansion of critical infrastructure.^[1] Real estate projects often incorporate essential public utilities, such as roads, electricity, and water systems, which not only enhance the functionality of cities but also improve the overall quality of life for residents.^[2] As urbanization accelerates and the population continues to grow, the demand for both residential and commercial properties is expected to rise sharply.^[3] This presents attractive opportunities for both local and international investors seeking profitable ventures. Ultimately, the sustained development of Nigeria’s real estate sector plays a pivotal role in fostering inclusive economic growth and advancing national prosperity.

While Nigeria’s real estate sector offers immense potential, its growth is hindered by a range of systemic challenges, including widespread fraud, weak regulatory oversight, inadequate documentation processes, and institutional inefficiencies. These issues not only undermine investor confidence but also limit the sector’s ability to contribute fully to national development.

Every day, Nigerian home seekers, investors, and even diaspora returnees fall victim to sophisticated property fraud schemes. These range from double sales of land, impersonation of owners, fraudulent developers selling off-plan properties that never materialize, to unlicensed agents collecting deposits for properties they neither own nor manage. Despite these obstacles, the Nigerian real estate market remains dynamic, offering a unique blend of opportunities for growth.

Real estate fraud and legal remedies

Real estate fraud is a prevalent issue in Nigeria. In fact, a report by the Nigerian Economic and Financial Crimes Commission (EFCC) noted that real estate scams contribute significantly to financial crimes in the country. Understanding how to navigate property transactions legally can save you time, money, and potential heartbreak.^[4] Real estate fraud is not only a breach of contract, it is often a well-orchestrated criminal enterprise. Victims are robbed not just of money but of their dreams, savings, and often their psychological peace.

Our legal system does provide remedies, civil and criminal. Under criminal remedies, the Advance Fee Fraud and other Fraud Related Offences Act criminalizes the offence of obtaining property by false pretence. The Act is to the effect that:^[5]

1. any person who by any false pretence, and with intent to defraud;
2. obtains, from any other person, in Nigeria or in any other country, for himself or any other person; or
3. induces any other person, in Nigeria or in any other country, to deliver to any person,

Any property, whether or not the property is obtained or its delivery is induced through the medium of a contract induced by the false pretence, commits an offence under this Act.

(3) A person who commits an offence under subsection (1) or (2) of this section is liable on conviction to imprisonment for a term of not more than 20 years and not less than 7 years without the option of a fine.^[6]

Flowing from the above, it simply means that the Law frowns at Real estate fraud. Real estate frauds are not only prosecutable under our criminal system,^[7] but there are also remedies under our civil system. These remedies include: rescission of contract, recovery of monies paid, specific performance, and damages.

How to Avoid Real Estate Fraud in Nigeria

The following are actionable steps to avoid real estate fraud in Nigeria:

1. Verify the Property Title: Before making any payment or commitment to buy land or property, title verification is crucial because many fraudulent schemes involve selling land that does not belong to the seller.^[8] Conduct a search at the Land Registry in the state where the property is located to confirm the legitimacy of the title. Ensure that the property has either a Certificate of Occupancy (C of O) or a legally recognized equivalent.

Note: If the property lacks a C of O, you may be exposed to risks under Nigeria’s Land Use Act, which gives the state government control over all land. Always ensure the seller has the legal right to transfer ownership.

1. Inspect the Property Physically: One of the most ignored aspects of real estate transactions in Nigeria is physical inspection.^[9] Fraudsters often use fake photos and documents to lure potential buyers. Always inspect the land or property in person and ask neighbours or local authorities about the ownership status of the land.^[10] Physical inspection helps you cross-check claims made by the seller or agent.
2. Check for Encumbrances and Liabilities: Sometimes properties are sold with existing encumbrances such as court cases, unpaid mortgages, or unpaid taxes. You need to ensure that there are no liens or legal disputes over the property. A comprehensive legal search at the relevant registry will reveal if the property is tied to any ongoing litigation.
3. Insist on a Well-Drafted Contract: Do not rely on verbal agreements or informal contracts. Insist on having a well-drafted contract that clearly states the terms of the transaction, including payment schedules, timelines, and penalties for breach of agreement. A lawyer should review and endorse the contract to ensure it complies with Nigerian property law.
4. Obtain the Governor’s Consent: Under Nigerian law, for any transaction involving the transfer of property ownership (especially land), you are required to obtain the Governor’s Consent. This legal requirement is often overlooked by buyers, making the transaction incomplete. Without Governor’s Consent, you may not have full legal ownership of the property.^[11]
5. Conduct Due Diligence on the Seller: Not every seller is trustworthy, even if they present convincing documents. Confirm that the seller is the true owner of the property by requesting the Deed of Assignment, Survey Plan, and their identification documents. If the property is jointly owned, ensure all owners give consent to the sale. In some cases, unscrupulous sellers may impersonate legitimate owners.

Addressing the weak institutional and organizational regulatory oversight in the real estate ecosystem.

The problem in the real estate sector is not just about criminal actors, but also about regulatory failure. There is a glaring absence of effective coordination among land registries, town planning authorities, development control agencies, and professional bodies.^[12] Licensing requirements for real estate agents and developers are either non-existent or unenforced.^[13] There is a need for the establishment or revitalization of a Real Estate Regulatory Authority in every state, modelled after global best practices, with powers to:

• Accredit developers and agents,
• Publish verified listings,
• Sanction errant players,
• And maintain a public registry of licensed professionals.

Effective oversight demands synergy; this means lawyers, land surveyors, town planners, estate agents, developers, financial institutions, and the judiciary must share intelligence, verify documentation collaboratively, and act swiftly to flag anomalies.^[14] Technology can play a pivotal role here. States like Lagos are already experimenting with digitized land records. This should be replicated nationwide.^[15] A centralized, tamper-proof digital system will reduce forgery, impersonation, and duplication.

Titling, documentation and Land registration processes.

At the root of most fraudulent sales is poor titling and opaque documentation.^[16] Many Nigerians still hold on to ‘deeds of agreement’ or ‘receipts’ as proof of ownership, documents that have no force of law unless properly registered.^[17] The process of obtaining Governor’s Consent or Certificate of Occupancy (C of O) is often slow, expensive, and ridden with red tape.

There is a need to demystify land titling and advocate for:

• Simplification of land registration procedures,

• Reduction of costs and time involved,

• And increased public awareness about the importance of proper title.

We must also demand accountability from land registries. A registered title should be sacrosanct. Title searches should be accurate and accessible, and any errors traceable and correctable without bureaucratic trauma.

INVESTMENT COMPLIANCE AND ANTI-MONEY LAUNDERING

Investment compliance simply means adhering to laws, regulations and internal policies and procedures that govern the investment sector. It ensures that all investment is carried out in accordance with the rules and regulations set by regulatory authorities.^[18] Anti-money laundering (AML), on the other hand, refers to the legal and regulatory framework designed to prevent criminals from disguising illegally obtained funds as legitimate income. It encompasses a range of measures and procedures aimed at detecting and deterring money laundering activities, ultimately safeguarding the integrity of the financial system. AML efforts are crucial in disrupting the flow of illicit funds and holding individuals accountable for financial crimes.^[19]

The real estate sector has, over the years, been an attractive target for money launderers due to the large sums of money involved in property transactions, as well as the perceived anonymity that the sector can offer. As a result, the real estate industry has become increasingly susceptible to money laundering, with criminals using the sector to launder illicit funds, finance terrorist activities, and evade taxes.^[20] In recent years, regulators and governments around the world have recognized the growing anti-money laundering (AML) risks in the real estate sector and have implemented new regulations and guidelines to combat the issue.^[21] As Nigeria positions itself as a destination for investment and infrastructure development, it becomes critical to ensure that the real estate sector does not become a conduit for financial crime.^[22]

Real estate as a channel for illicit financial flows

Illicit financial flows are illegal cross-border movements of money obtained through corruption, fraud, tax evasion or organized crime.^[23] Real estate is particularly vulnerable to illicit financial flows because of the high value of transactions and the complex ownership structures. Real estate globally and particularly in developing economies like Nigeria has emerged as a preferred avenue for laundering illicit funds.^[24] Criminals exploit the opaque nature of property transactions, using shell companies, third-party proxies, or cash-based purchases to conceal the origins of unlawfully acquired wealth.

In Nigeria, the prevalence of informal property markets, lack of centralized land registries, and weak enforcement mechanisms have created a fertile ground for money laundering activities. Properties are often acquired in fictitious names, with no clear trail of ownership or funding sources. High-end real estate developments in major cities such as Abuja, Lagos, and Port Harcourt are increasingly under scrutiny for suspected connections to corruption and unexplained wealth. Unchecked, these illicit financial flows distort market values, inflate housing costs, reduce tax revenue, and compromise national security. There is, therefore, a pressing need to tighten controls and improve transparency in property ownership and investment.

Strengthening KYC and Compliance systems across the sector

Combating financial crimes in the real estate sector begins with robust Know Your Customer (KYC) and Anti-Money Laundering (AML) frameworks.^[25] Currently, KYC compliance is largely limited to formal financial institutions, leaving a significant compliance gap among estate developers, agents, lawyers, and other real estate professionals.^[26]

To close this gap, the sector must institutionalize sector-wide compliance protocols, including:

• Mandatory registration and licensing of real estate professionals,
• Customer due diligence for all property transactions,
• Mandatory disclosure of beneficial ownership,
• Reporting obligations for suspicious transactions, and
• Collaboration with the Nigerian Financial Intelligence Unit (NFIU) and other anti-corruption agencies.

Digital technology can be a key enabler. Platforms that integrate land registries, bank transaction data, and national identification systems will help trace the flow of funds and verify the identities of property buyers and sellers in real time.^[27]Furthermore, regulatory bodies such as the Special Control Unit against Money Laundering (SCUML), Corporate Affairs Commission (CAC), and the Economic and Financial Crimes Commission (EFCC) must enforce compliance rules for Designated Non-Financial Businesses and Professions (DNFBPs), especially lawyers, real estate brokers, and developers.

Conclusion

Real estate must no longer be a blind spot in Nigeria’s fight against corruption and illicit financial flows. Nigeria must embed transparency, compliance, and accountability into the fabric of the sector. By strengthening KYC systems, enforcing anti-money laundering regulations, and fostering inter-agency collaboration, we can safeguard the integrity of Nigeria’s investment environment and ensure that real estate becomes a beacon of development not a tool for exploitation. By prioritizing consumer protection and creating practical avenues for redress, we can restore confidence, encourage investment, and promote justice in Nigeria’s Real estate sector.

REFERENCE

1. NIGERIA HOUSING MARKET, ‘2025 Real Estate Prediction – Nigeria Housing Market’ (2025) https://www.nigeriahousingmarket.com/2025-prediction/nigeria accessed 25th July, 2025 ↑
2. Chisom Udora, ‘The Economic Impact of Infrastructure Investment’ (2025) https://www.verivafrica.com/insights/the-economic-impact-of-infrastructure-investment-2#:~:text=Another%20reason%20is%20that%20high,financial%20mechanisms%20for%20infrastructure%20development.&text=To%20actualise%20effective%20infrastructure%20development,the%20shortcomings%20hindering%20its%20actualisation.&text=In%20addition%2C%20there%20is%20a,and%20improve%20societal%20living%20standards accessed 25th July, 2025. ↑
3. DAMILOLA AINA, ‘Tackling menace of fake estate developers, fraudsters’ (2023) https://punchng.com/tackling-menace-of-fake-estate-developers-fraudsters accessed 25th July, 2025 ↑
4. Tope Adebayo LP, ‘How To Avoid Real Estate Fraud In Nigeria: Legal Guide’ (2024) https://www.mondaq.com/nigeria/real-estate/1523212/how-to-avoid-real-estate-fraud-in-nigeria-legal-guide#:~:text=Before%20making%20any%20payment%20or,or%20a%20legally%20recognized%20equivalent accessed 25^th July, 2025. ↑
5. Section (1)(a) (b) & (3) of Advance Fee Fraud and other Fraud Related Offences Act ↑
6. Ibid. ↑
7. Section 1 of the Advance Fee Fraud and Other Fraud Related Offences Act ↑
8. Ibid. ↑
9. Charles, ‘Top Real Estate Scams in Nigeria and How to Avoid Them’ (2025) https://www.thinkmint.ng/buyrealestate/top-real-estate-scams-in-nigeria accessed 26 July, 2025. ↑
10. Ibid. ↑
11. Tosin omotosho, ‘Avoid Property Scams in Nigeria: Why Real Estate Due Diligence is a Must Before You Buy’(2025)https://charislegalpractice.com.ng/avoidpropertyscamsinnigeriawhyrealestateduediligenceisamustbeforeyoubuy/#:~:text=1.Ownership%20&%20Title%20Verification,in%20negotiations%20and%20legal%20transactions accessed 26 July, 2025. ↑
12. Linus Ele, ‘The Impacts of Infrastructure Financing on Economic Growth in Nigeria (1991-2021): An Expository Approach’ (2024) Vol.10, No.1, Journal of Accounting and Financial Management. ↑
13. Alemanno A, Stakeholder Engagement in Regulatory Policy (OECD Publishing, Paris: 2015) ↑
14. Allen S et al ‘An appeal for the integrity of science and public policy’ (2016) Vol. 371, pp.1–11 ↑
15. Ibid. ↑
16. Oludayo Ayeni & Nnamdi Ezekwem, ‘PROCEDURE FOR THE REGISTRATION OF TITLE TO LAND IN NIGERIA’ (2023) https://www.legal500.com/developments/thought-leadership/procedure-for-the-registration-of-title-to-land-in-nigeria accessed 26 July, 2025. ↑
17. Ibid. ↑
18. Chetna Verma and Vagdevi Maddipati, ‘The importance of investment compliance in asset management’ (2024) https://www.acuitykp.com/blog/investment-compliance-asset-management accessed 26 July, 2025. ↑
19. Sanction Scanner, ‘What is Anti-Money Laundering (AML)? (2025) https://www.sanctionscanner.com accessed 26 July, 2025. ↑
20. Sanction Scanner, ‘Anti Money-Laundering

    Increased AML Risks In The Real Estate Sector’ (2024) https://www.sanctionscanner.com/blog/increased-aml-risks-in-the-real-estate-sector-392 accessed 26 July 2025. ↑

21. Ibid. ↑
22. Ibid. ↑
23. Steven Matz, ‘Business integrity in real estate: tackling illicit financial flows’ (2024) https://www.rics.org/news-insights/wbef/business-integrity-real-estate-tackling-illicit-financial-flows accessed 26 July, 2025. ↑
24. Segun Adewole, ‘Real estate used for money laundering, illicit financial flows —ICPC Chairman’ (2021) https://punchng.com/real-estate-used-for-money-laundering-illicit-financial-flows-icpc-chairman accessed 26 July, 2025. ↑
25. Lucinity, ‘6 Best Practices for Streamlining Your KYC Compliance Process’ (2024) https://lucinity.com/blog/6-best-practices-for-streamlining-your-kyc-compliance-process accessed 26 July, 2025. ↑
26. Ibid. ↑
27. Ibid. ↑