Supporting topic – Key Compliance issues in Real Estate Development in Nigeria.
Real estate development in Nigeria is one of the most lucrative ventures for investors and developers seeking long-term wealth creation. Yet, it remains one of the most complex sectors due to the interplay of federal, state, regulations governing land ownership, development approvals, and property transactions. For developers engaged in build-to-sell projects, where properties are constructed with the intent to sell upon completion, understanding and adhering to the legal framework is very important.
There are three phases in the build to sell projects
Pre Development Phase
Every successful development starts with land acquisition, and under Nigerian law, land ownership is governed primarily by the Land Use Act of 1978. The Act vests all land in each state in the hands of the Governor, who holds it in trust for the people. This means no individual can own land outright without obtaining proper title.
This is why it is important that before acquisition, it is essential to conduct thorough due diligence at the State Land Registry to verify ownership, confirm that the land is free of encumbrances, and ensure it is not under government acquisition. Once it is confirmed that the land is free from encumbrances, the next will be to securing the Governor’s Consent under Section 22 of the Land Use Act, which formalizes the transaction. A registered survey plan should also be prepared, with the boundaries properly fenced to avoid encroachment or future disputes.
Financing and Development Phase
In build to sell projects, developers often develop In build-to-sell projects, developers often establish a Special Purpose Vehicle (SPV), a separate legal entity created solely to own, finance, and manage a specific development, allowing them to reduce financial risks and streamline project accounting. At this point really, it is important to actually create SPVS that aligns with the Companies and Allied Matters Act (CAMA), drafts the shareholders’ and joint venture agreements, detailing voting rights, profit distribution, and exit mechanisms, in order to avoid internal conflicts or fiduciary breaches. In this process too, it is important that all contracts with architects, contractors, and financiers align with statutory requirements and industry standards. Off-plan sales contracts, Deeds of Assignment, and escrow arrangements, will also be prepared to safeguard the interests of both the SPV and buyers while preventing misrepresentation and reducing legal risks.
It is also important to note that before construction, developers must secure the necessary planning approvals and building permits from the relevant state authorities, such as the Lagos State Physical Planning Permit Authority (LASPPPA). Documents required to obtain building plan permits in Nigeria include title documents such as certificate of occupancy, registered deeds or governor’s consent on lease, detailed survey plan, tax clearance documents, environmental impact assessment reports, development levy receipts and certificate of incorporation, (where the applicant is a company).
Starting construction without approval is a frequent and costly error, as unauthorized structures can be sealed, demolished, or attract heavy fines.
Environmental compliance is another critical aspect of legal due diligence. Developers must adhere to the National Environmental Standards and Regulations Enforcement Agency (NESREA) Act and the Environmental Impact Assessment Act, ensuring that their projects do not pose environmental or infrastructural hazards.
Post- Sale Phase
The final stage begins upon completion of construction and continues until all sales and transfers are legally concluded. In most cases, a landlord tenant relationship is formed here, through tenancy contracts stating the rent amount, duration, renewal rights, maintenance obligations, and termination procedures.
Corporate developers must also comply with all statutory obligations under the Federal Inland Revenue Service (FIRS) and relevant State Internal Revenue Services. They must account for stamp duties, capital gains tax on property disposals, development levies, infrastructure charges and taxes on sales of commercial property.
Compliance in build-to-sell projects is more than a legal requirement, it is a strategic differentiator. Developers who embrace compliance into every stage of their project lifecycle, from acquisition to post-sale, safeguard their investments, enhance buyer confidence, and position their businesses for sustainable growth.
Ololade Oloniyo is a lawyer with vast experience in real estate law, and property management. She is the lead partner at Starfield advisory, a firm focused on providing tailored consulting and investment advisory services to real estate investors.
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