Written by Adigun Oluwapelumi O. and Audi Rahma S.
For: Starlion Legal
Introduction.
When it comes to the transfer of title in property, Nigeria follows a specific legal framework that involves the use of sales agreements and deeds of assignment. These two legal instruments play distinct roles in the process, ensuring the smooth transfer of ownership from one party to another. In this article, we will delve into the place of sales agreements and deeds of assignment in property transactions, focusing on Nigeria as a case study.
Sales Agreements:
A sales agreement, also known as a contract of sale or purchase agreement, is a legal document that establishes the terms and conditions of the sale between a buyer and a seller. In Nigeria, this agreement is crucial in property transactions as it serves as evidence of the intention to transfer ownership. The sales agreement typically includes essential details such as the names and addresses of the parties involved, a description of the property, the purchase price, payment terms, and any other relevant terms and conditions.
In the context of property transfers, the sales agreement in Nigeria acts as a preliminary contract. It sets out the terms under which the buyer agrees to purchase the property and the seller agrees to sell it. Once both parties have signed the agreement and met all the conditions stated within, it becomes binding and enforceable. However, it is important to note that a sales agreement alone does not transfer the legal title or ownership of the property.
Deeds of Assignment:
While a sales agreement sets the groundwork for the property transaction, a deed of assignment is the legal instrument that actually transfers the ownership or title from the seller (assignor) to the buyer (assignee). The deed of assignment in Nigeria acts as the main document that conveys and confirms the transfer of rights, interests, and ownership in the property.
The deed of assignment must be properly executed, signed by the assignor, and attested by witnesses. It should contain essential information, including the names and addresses of the assignor and assignee, a description of the property, the consideration or price paid, and any relevant terms and conditions. Additionally, the deed must be duly stamped as required by law to make it admissible as evidence in court.
It is worth noting that in some cases, a property may have gone through several transfers before the current transaction. Each transfer would involve a new deed of assignment, creating a chain of title documents that trace the history of ownership.
Distinction and Interplay:
In Nigeria, the sales agreement and the deed of assignment serve different purposes in the property transfer process. The sales agreement establishes the contractual obligations and sets the terms for the transaction, while the deed of assignment legally transfers the title and ownership.
To successfully transfer title in a property, both the sales agreement and the deed of assignment are necessary. The sales agreement initiates the process, securing the buyer’s intent to purchase and the seller’s intent to sell. Once the terms of the sales agreement have been fulfilled, the deed of assignment is executed to formally transfer the ownership rights.
Every citizen possesses the right to acquire and own immovable property, anywhere in Nigeria. There are many ways in which citizens acquire interest in land, the most common being – Sale of Land, which could be further categorized into Contract Of Sale, ( otherwise known as a Sale agreement) and a Deed of Assignment.
A Contract Of Sale or Sale Agreement is the initial step to any conveyance.
Under the different types of Sale Agreement, we have the;
Our focus is the Formal Contract of Sale. As the name implies, it is a formal contract by which a person who wishes to sell the land i.e. vendor agrees to sell, and the purchaser agrees to buy a piece of land under specific terms and conditions spelled out in writing in the agreement signed by both parties, as this agreement is not mandated to be under seal.
The Sale agreement is takes effect upon exchange between parties and contains not only the basic requirements but goes further to include detailed terms, consideration, and future obligations of what the parties have agreed in respect of the land transaction. Some of the provisions of a contract of sale are:
- Capacity of the parties.
- Full details of the parties – (name and address).
- Particulars of the property to be transacted (location, survey plan, etc).
- Particulars of witnesses.
- Purchase price of the property.
- Payment of deposit, to whom it is to be paid, and in what capacity.
- Balance and interest on unpaid purchase sum where the payment is to be paid in installments.
- Risk and insurance.
- Possession before completion
- Completion date of the transaction.
- Payment for fixtures and fittings.
- Specific terms, risks, etc.[3]
Following the execution of the contract of sale by the parties (which is when both parties have discharged their duties and obligations) and upon the payment of the full purchase price, the parties shall further execute between themselves a Deed of Assignment or Conveyance.
This Deed of Assignment is the primary document that transfers ownership in the land from the vendor (now assignor) to the buyer (assignee).
The deed of assignment is a registrable instrument, and therefore, it must be perfected and registered with the state government where the property is located.
The deed is required to be evidenced in writing, but unlike the case of the sale agreement, it is to be executed signed, sealed, and delivered by parties to the transaction.
It is evident that before an interest is acquired in land, there must be a Sale Agreement preceding the final transfer of landed property which is the perfection of the Deed of Assignment.
Although both documents are used in property transactions the difference between both can be derived from their distinctive features and the role they each individually play in the acquisition of title to landed properties in Nigeria.
DISTINCTIONS BETWEEN CONTRACT OF SALE AGREEMENT AND DEED OF ASSIGNMENT.
- In a contract of sale, the vendor is committed to the transaction and the purchaser has sufficient time to investigate the title before the final completion of the transaction. However, once the Deed of Assignment has been executed and perfected, no impediments which would have reasonably been discovered during the deduction of title would rescind the contract.
- In a Sale Agreement, the stamp duty is fixed, however a Deed of Assignment attracts a stamp duty in consequence of the value of the landed property.
- In a Sale Agreement, the interest passed and protected is an equitable one. In the case of the Deed of Assignment, the interest passed and protected is a legal one.
- The capacities of the parties differ. In a contract of Sale Agreement, the parties only have the intent to contract and are thus dubbed “vendor” and “purchaser” however, at the Deed of Assignment the parties have discharged their duties and now ready to transfer full legal interest, and are thus dubbed “assignor” and “assignee”.
- A formal Sale Agreement is evidenced in writing, signed by both parties, it is not under seal. A Deed of Assignment, as a registrable instrument is required to be under seal.
- The Deed of Assignment as a registrable instrument requires perfection to be registered in a Land Registry.
The following three stages are necessary for a deed of assignment to be perfected;
- Obtaining Governors Consent.
- Stamping of the Deed of Assignment.
- Registration of the deed of assignment.
In conclusion, in the Nigerian context, a sales agreement and a deed of assignment play integral roles in property transactions. While the sales agreement outlines the terms and conditions of the sale, the deed of assignment legally transfers the ownership rights from the seller to the buyer. Understanding the distinction between these two documents is crucial for ensuring a smooth and legally sound transfer of title in property transactions in Nigeria.
[1]Alake v Awawa.
[2]Odusaga v Rickkets.
[3]DIFFERENCE BETWEEN CONTRACT OF SALE AND DEED OF ASSIGNMENT. Available at: https://www.chamanlawfirm.com/difference-between-contract-of-sale-and-deed-of-assignment. (Accessed 24 June 2023.
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