Opportunities, Role & Ethical Responsibilities of Solicitors In Real Estate Investment In Nigeria

By: Oyetola Muyiwa Atoyebi SAN, FCIArb (UK).

INTRODUCTION

Some years ago, a young couple saved diligently to buy their first home in Banana Island, Lagos State. They met a seller who produced a Certificate of Occupancy, receipts, and even photographs of happy tenants. Trusting the documents and on the assurance of their lawyer, they paid 500 million naira to acquire the property. After some months, another man approached the couple, claiming ownership of the same property with his own set of documents. The case ended up in court, and upon years of litigation, the couple discovered that the property had been sold twice, and that the lawyer who handled their transaction failed to conduct the necessary due diligence at the land registry, claiming he was only a new wig and there was no way he could have known that the documents presented by the seller were fake.

This scenario underscores, in the clearest possible terms, how bad a real estate investment can go when due diligence is not conducted. A lawyer is not merely a passive observer who appends signatures to documents; he is the guardian of legality, the custodian of trust, and the professional whose diligence or negligence can determine whether investments are secured or lost. Real estate transactions, by their very nature, involve high-value assets and regulatory requirements. It is therefore incumbent on a lawyer to approach every brief with utmost care, competence, and ethical responsibility. Where a lawyer fails in this duty, as in the unfortunate case of the couple, the consequences are not borne by the client alone but also affect the integrity of the lawyer and could lead to grave penalties.

This was clearly explained in the celebrated case of Savannah Bank Ltd v Ajilo (1989) 1 NWLR (Pt.97) 305. In that case, the respondent, Mr Ajilo, mortgaged his property to Savannah Bank to secure a loan. However, the mortgage was executed without first obtaining the Governor’s Consent as required by Section 22 of the Land Use Act, 1978. When the bank sought to enforce its security, the validity of the mortgage was challenged. The Supreme Court, in a unanimous decision, held that the transaction was null and void for want of the requisite Governor’s Consent. Delivering the lead judgment, Obaseki, JSC, observed that: “The requirement of the Governor’s consent under Section 22 of the Land Use Act is a mandatory statutory provision, and a mortgage or transfer of title effected without such consent is unenforceable in law.” The Court further warned that lawyers have a duty to ensure compliance with statutory provisions before consummating any transaction, as no amount of goodwill, documentation, or intention can cure the fundamental defect of non-compliance with the law”.

TYPES OF REAL ESTATE INVESTMENT

To appreciate the importance of lawyers in real estate transactions, it is necessary to first understand the nature and scope of real estate investment in Nigeria. Real Estate investment is not only about buying and selling land; it spans diverse categories, each with its own peculiar legal issues and risks.

Broadly, these may be classified as follows:

1. Residential Real Estate: This includes the acquisition, development, leasing, or sale of land, homes, flats, and apartments. It is often the entry point for most individuals, such as the couple in the opening scenario. The lawyers’ work here involves title verification, drafting tenancy agreements, and advising on the perfection of title.
2. Commercial Real Estate: This covers office buildings, shopping malls, hotels, warehouses, and business complexes. Transactions in this category are often more complex, involving joint venture agreements, corporate structures, long-term leases, and financing arrangements with banks and investors.
3. Industrial Real Estate: These are properties used for manufacturing, logistics, and heavy industry. Lawyers in this space deal with regulatory compliance, such as environmental impact assessments, licensing, and land-use approvals from relevant authorities.
4. Agricultural Real Estate: Nigeria’s vast arable land provides opportunities for investment in farms, plantations, and ranches. Here, legal issues often revolve around government allocations, community land rights, and disputes arising from compulsory acquisition for public purposes.
5. Real Estate Investment Trusts (RELTs) and Capital Market-Based Investments: These are collective investment schemes regulated by the Securities and Exchange Commission (SEC), allowing investors to pool resources for large-scale property development. The lawyer’s role here expands into securities law, regulatory compliance, and drafting of trust deeds and offering documents.

Understanding these categories is crucial because each type of investment opens a different door of opportunity for the lawyer. The lawyer who understands the dynamics of these sectors is better positioned to offer tailored advice, anticipate risks, and add real value to clients. It is against this background that we now turn to examine the opportunities available to lawyers in real estate investment.

OPPORTUNITIES FOR LAWYERS IN REAL ESTATE INVESTMENTS

Real Estate is one of the fastest-growing sectors of the Nigerian economy, with billions of naira exchanged daily in land acquisition, development projects, and housing schemes. This provides lawyers with vast opportunities to build expertise and a career in the following:

1. Legal Advisory & Regulatory Compliance: Lawyers are indispensable in advising individuals, corporations, and foreign investors on the legal framework governing land acquisition and property ownership. For instance:
2. Urban and Regional Planning Laws for development approvals.
3. Environmental Impact Assessment Compliance for industrial and commercial projects.
4. Companies and Allied Matters Act Compliance for corporate structures in the real estate sector.
5. Securities and Exchange Commission Rules Compliance for real estate investment trusts and property funds.

A lawyer’s knowledge of these framework positions him as a trusted advisor for both local and foreign investors.

1. Title Investigation and Perfection: At the heart of every real estate investment is the question of title. A lawyer’s duty here includes:
2. Conducting searches at the Lands Registry, Surveyor-General’s Office, CAC, Probate and Court Registry.
3. Ensuring compliance with Section 22 of the Land Use Act, requiring Governor’s Consent for alienation of statutory rights of occupancy.
4. Advising on stamping and registration under the Stamp Duties Act and state-specific registration laws
5. Drafting and Negotiating Agreements: Lawyers are responsible for capturing the intentions of parties in enforceable terms. Poor drafting can undermine millions of naira in investment. Lawyers also play a key role in negotiating terms that balance the interests of developers, investors, and financiers.
6. Dispute Prevention and Resolution: Given the high value of real estate, disputes are common. Lawyers add value by embedding arbitration and mediation clauses in contracts, thereby reducing the risk of protracted litigation. In appropriate cases, lawyers may also represent clients in arbitral proceedings, settlement negotiations and the Court.

ROLES OF LAWYERS IN REAL ESTATE INVESTMENTS

Beyond identifying opportunities available in the real estate sector, a lawyer must also understand the specific roles required of him at each stage of a real estate transaction. These roles can be better appreciated when divided into stages of a real estate transaction.

1. Pre-Transaction Stage: At this stage, the lawyer serves as a gatekeeper and risk assessor. A lawyer’s duties at this stage include:
2. Due Diligence and Title Investigation: This involves conducting searches at the Lands Registry, Corporate Affairs Commission, Probate Registry, and Surveyor-General’s Office to verify ownership and encumbrances.
3. Verification of Authenticity: Detecting forged Certificates of Occupancy, counterfeit surveys, or double allocations.
4. Advisory Functions: Guiding the client on necessary statutory consents, taxes, and potential risks.
5. Transaction Stage: Here, the lawyer moves from investigation to structuring and documentation:
6. Drafting Contracts: Sale agreements, leases, mortgages, joint venture agreements, and development contracts.
7. Negotiation: Ensuring terms reflect the client’s interest while balancing fairness between parties.
8. Structuring Investments: Advising on corporate vehicles such as partnerships to hold real estate assets.
9. Financing: Facilitating mortgage transactions, project financing, and compliance with banking regulations.
10. Post-Transaction Stage: After execution, the lawyer’s role extends to perfection and enforcement:
11. Perfection of Title: Securing Governor’s Consent, payment of stamp duties, and registration at the Lands Registry.
12. Regulatory Filings: Ensuring compliance with SEC, CAMA, and state property tax requirements.
13. Issuance of Legal Opinions: Providing investment comfort to banks, investors, or foreign partners.
14. Dispute Management: Where disputes arise, lawyers initiate or defend actions, or steer parties towards arbitration and mediation.

ETHICAL RESPONSIBILITIES OF LAWYERS IN REAL ESTATE INVESTMENTS

Real estate practice is not only technical but profoundly ethical, as lawyers are entrusted with the security of assets that often represent life savings or corporate capital. The Rules of Professional Conduct 2023 impose duties that safeguard both client trust and public confidence in the legal system. A lapse in ethical responsibility injures not only the client but also undermines the profession itself. It is within this context that the ethical responsibilities of lawyers in real estate transactions are considered below.

1. Duty of Competence and Diligence: A lawyer is at all times expected to devote his attention, energy, and expertise to the affairs of his client; this is in line with Rule 14 of the RPC 2023. In real estate practice, this means conducting thorough due diligence. The excuse of being a “new wig,” as in the case scenario, is no defence. Negligence in this duty exposes the lawyer to liability and disciplinary sanctions. In NBA v. Ohioma (2010) 14 N.W.L.R (Pt. 1231) 641 at 680 the Supreme Court noted that the profession should be undertaken with seriousness and lawyers have the duty to maintain the very high standard required in the practice of the profession.
2. Duty of Honesty and Integrity: A lawyer must not mislead clients, falsify documents, or aid fraudulent transactions. Rule 1 of the RPC imposes a duty to uphold the rule of law, while Rule 15 specifically warns against dishonest dealings. A lawyer who engages in conduct contrary to Rules 1 and 15 is not just guilty of negligence but of professional misconduct.
3. Duty to Avoid Conflict of Interest: It is unethical to represent both the buyer and seller in the same transaction without full disclosure and informed consent. Even where consent is obtained, the lawyer must tread with caution. The safer course, in most cases, is to decline acting for both parties to preserve impartiality and trust. See Rule 17 RPC.
4. Duty of Confidentiality: Real estate transactions often involve sensitive financial and personal information. Rule 19 of the RPC imposes strict confidentiality obligations, except where disclosure is required by law. A lawyer who mishandles client information compromises both ethics and trust.
5. Duty to the Society and the Profession: Lawyers are not only accountable to clients but to society at large. Fraudulent land transactions destabilise communities, erode investor confidence, and tarnish the reputation of the legal profession. A lawyer, therefore, bears a higher duty to act in ways that preserve public confidence.

CONCLUSION

Real estate investment remains one of the most lucrative and impactful sectors of the Nigerian economy. Yet, without the guiding hand of diligent and ethical lawyers, it can also be one of the riskiest. Lawyers are indispensable for their role in the real estate sector.

To you, as future practitioners, it must be emphasised that every instrument you draft, every title you investigate, and every opinion you issue carries with it a professional seal that extends beyond your client’s immediate interests. It speaks to your standing as a minister in the temple of justice, to the credibility of the profession you represent, and to the trust which society imposes upon the Bar. Your practice, therefore, must be marked by diligence, courage, and unimpeachable honour.

KEY TAKEAWAYS FROM THE LECTURE

1. The Lawyer’s Role is Indispensable: Real estate transactions are high-value and complex. A lawyer is the gatekeeper whose diligence or negligence determines the validity and security of investments.
2. Due Diligence is Non-Negotiable: Proper searches at the Lands Registry, CAC, Probate Registry, and Surveyor-General’s Office are essential safeguards against fraud and defective titles.
3. Compliance with Law is Mandatory: Statutory provisions, such as Section 22 of the Land Use Act requiring Governor’s Consent, cannot be waived or overlooked. (Savannah Bank v. Ajilo).
4. Massive Opportunities for Lawyers: Lawyers can build rewarding careers through advisory, documentation, regulatory compliance and dispute resolution.
5. Defined Roles at Each Stage: From pre-transaction due diligence to negotiation and drafting to post-transaction perfection and enforcement, the lawyer’s input is central.
6. Ethics as a Cornerstone: The Rules of Professional Conduct demand honesty, integrity, diligence, avoidance of conflicts of interest, and confidentiality. Without ethics, opportunities and roles become liabilities.