Owner Of A Property vs Bonafide Purchaser Of Value Without Notice Vol 1

Real estate transaction is very interesting but very complicated when one is operating without proper knowledge of the laws governing the area. The need to consult a legal practitioner of your choice when venturing into real estate business can not be over emphasized. It is very unfortunate that so many people in Nigeria and other African countries do not really appreciate the need to approach a lawyer when ever they want to buy a piece of land .Many do not even see the need because there is this erroneous impression that you look for a lawyer only when there is problem .

This article seeks to clear the pulse between the owner/s of a property as against the innocent purchaser of same property without notice if the existence of the owner. This is because many people find who do not have the legal mind in this area find it difficult to believe that circumstances could exist which will make someone else to content title with the owner of the land. This is what we in Property Advisory Network want to bring to the knowledge of property practitioners.

Ownership of a property is defined In the celebrated case of Abraham V. Olorunfemi  (1999 1 NWLR PT 163) where Nicki Tobi JCA referring to the concept of ownership said as follows: “Ownership connotes the totality or bundles of rights of the owner over and above every other person. The owner of the property is not subject to the right of another person because he is the owner, he has full and final right of alienation or disposition of the property and he exercises this rights without seeking the consent of another party because as a matter of law and fact, there is no other party’s right over the property that is higher than that of the owner. He has an alienation right to sell the property at any price even at a give-away price. He can give it out gratis i.e. for no consideration.

 

The Supreme Court has held in IDUNDUN V. OKUMAGBA (1976) 910 SC 229 that in order to prove ownership of a piece of land in Nigeria, there are five ways this can be done, to wit:

  • By traditional evidence
  • By production of documents duly authenticated and executed
  • By acts of ownership extending over a period of time
  • Proof of ownership of adjacent land
  • By acts of long possession.

The Supreme Court held in the case of DABO V. ABDULLAHI (2005) 2 SC (PT 1) pg 91 that one does not need to prove more than one of the five methods. Meaning that prove of ownership by any one of the above means suffices.

 

However, Things are changing and changing very fast . The most prevalent means employed to prove ownership of land since the enactment of the Land Use Act 1978 is the production of duly authenticated and executed documents of title. This is because the Land Use Act provides that all lands in a state shall vest in the governor of that state who shall hold same in trust for the citizens. Section 1 of the Land Use Act 1978 provides that;  “ Subject to the provisions of this Act, all land comprised in the territory of each State in the Federation are hereby vested in the Governor of that State and such land shall be held in trust and administered for the use and common benefit of all Nigerians in accordance with the provisions of this Act. “ The act empowered the governor to grant a right of occupancy {deemed grants and express grants as provided for in Sections 4, 5, 34 AND 36}  of the Act and to revoke the grant of a right of occupancy in Sections 27 and 28.

Upon grant by the governor, what the applicant has is a lesser interest often termed ‘right of occupancy’ which may be likened to a lease. It is trite law that a lessor has a reversionary interest in the property which he lets to the lessee. This situation also applies to a right of occupancy because the owner of a right of occupancy only holds the property for a term of 99 years. By sub-leasing the property in question, or ‘assigning’ as is used in ordinarily, he is only transferring the unexpired residue of the 99 years in question. This accounts to the contentious section 22 of the Act which provides for Governor’s consent in the case of transfer of this right to another party.

 

What the above expressions means is that for you to claim to be the owner of a piece of land in Nigeria ,you must be ready to prove your ownership by at least one of the five means stated by the supreme court but in are in a better position when you have duly authenticated documents.

 

Now the next question is what constitute a good title for you to claim ownership of land in Nigeria. Examples of good roots of title include deed of assignment duly perfected, deed of legal mortgage duly perfected, assent, court vesting order/ declaration, registered titles, deed of gift well perfected, Government allocation duly granted by the government and duly gazzetted, Governor’s consent duly obtained, Certificate of ownership duly obtained etc. We use the language DULY  because so many people obtain these documents fraudulently by circumventing the due process.

They do this by submitting fake /forged documents and some times fraudulently collaborating with officials of these government agencies to bypass due process and secure these documents . It is important to note that the process of obtaining a good title is as important as the title itself if not more important. For example, when you see a copy of Certificate of Occupancy, ask for the documents showing that due process was followed to obtain it because it could be set aside in court if due process was not followed. Same is applicable with other documents of title. If the holders of these documents are unable to provide these other documents showing the due process of obtaining the Certificate of Occupancy. We advise you to investigate further.

 

Now let us look at who is this Bonafide (innocent) purchaser of value without notice who could in some circumstance contend the ownership of the land with the owner.

 

Bonafide purchase : This means that the purchaser must have acted in good faith in entering the transaction. He/she must not have known of any existing interest in the land.

 

Innocent :’Innocent is defined as having no knowledge of something, also as bearing no responsibility for a wrongful act.

 

Purchaser for Value ‘Purchaser’ does not necessarily mean purchaser for value but in this context, ‘For value’ is included to show that value must be given to give protection from equitable claimants. Value means any consideration in money or money’s worth. This excludes gifts and conveyances for a nominal consideration. The consideration need not be market value.

 

Without Notice : He/ She must have no notice of the existence of any equitable interest. Such a person must have neither actual notice nor constructive notice nor imputed notice. A person has actual notice of all facts of which he has actual knowledge no matter how that knowledge was acquired

 

Actual notice : Actual notice is where the purchaser was consciously aware of the existence of the equitable interest. The purchaser does not have to obtain this information from any particular source and may even discover the truth from an outsider. An inspection not properly carried out may also result in being fixed with constructive notice. For instance; a pre-planned visit that gives room for the legal owner to hide evidence of continuous occupation of the property.

 

Constructive Notice : Constructive notice is mainly concerned with what the purchaser would have discovered by making reasonable inquiries. Constructive notice provides that a purchaser will be fixed with notice if it is within his own knowledge or would have come to his knowledge if such inquiries and inspections had been made as ought reasonably to have been made by him. By reasonable inquiries it includes visiting the property and asking the  occupants if they have an interest or if they are tenants; to whom their rent is paid. Purchasers are therefore deemed to know of interests that they would have discovered if they had asked the usual questions about the property, and are bound by them.

The purchaser is required to make inquiries as to all occupants even if their occupation is consistent with the title offered and failure to make any inspection of the property at all will result in the purchaser being fixed with constructive notice. Ignorance of the purchaser in this regard is fatal to his/her case. A purchaser should inquire about equitable interests with no less diligence than he would about legal interest which they could ignore only at their own peril. The risk of encumbrances is on the purchaser who must satisfy himself by a full investigation of title before completing his purchase. A purchaser would be able to plead absence of notice only if he had made all proper inquires, and still found nothing to indicate any equitable interest.

 

Imputed Notice

If a purchaser employs an agent, such as a solicitor, any actual or constructive notice which the agent receives is imputed to the purchaser. A purchaser is deemed to know all that his agent knows or has constructive notice of, so a purchaser is deemed to have notice of an equitable interest if his agent has either actual or constructive notice of it. This rule is essential, since most purchasers do not conduct their own conveyance.

The doctrine of notice applies in unregistered land to determine priority of equitable interests. The doctrine of notice provides that, a bona fide purchaser of a legal estate for value takes priority over any pre-existing equitable interest, provided they did not have actual, constructive or imputed notice of their existence.

 

Worthy of mention is the principle of Nemo dat quod Non Habet which connotes that a person cannot give what he does not have, hence, a person who is not a rightful owner or allottee of land, cannot transfer the title. The exception to this is that when a person conveys title that does not belong to him/her to an innocent purchaser who did not know that the person who sold to him does not own the title, the purchaser has a right. He is called an innocent/bonafide purchaser for value without notice

 

Bonafide purchaser for value without notice is any person who buys a property in good faith, without the knowledge of any prior claims or liens on it. Innocent purchaser for value without notice can also be defined as an innocent party or bonafide purchaser who purchases a property without notice of any other party’s claim to the title of that property.

An Innocent purchaser for value without notice must purchase for value, meaning that he or she must have paid for the property and not the beneficiary of a gift. Even when a party fraudulently conveys property to an Innocent purchaser for value without notice, by selling to the Innocent purchaser for value without notice a property that has already been conveyed to someone else, such Innocent purchaser for value without notice will, depending on the circumstances and  the laws of the relevant jurisdiction have the title of the land.

 

Having stated who the innocent purchaser for value without notice is ,lets look at the doctrine of notice and what it means in land transactions :

See Vol 11

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