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Buying property in Ghana: scams and pitfalls

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Everything you need to know is included in our Ghana Property Pack

Ghana's stable economy and growth prospects are drawing more foreign investors into its real estate market.

But it's worth noting that navigating the property market here can be a bit of a complex journey, especially for those who aren't local residents. There are plenty of potential hurdles and hidden pitfalls along the way that could easily catch you off guard if you're not careful.

Both our property-owning customers and our local associates have brought a range of concerns to our attention. We've listed them all in our Ghana Property Pack.

This article will give you a quick overview of some of the potential pitfalls you could face.

Is it safe or risky to invest in real estate in Ghana?

Ghana presents viable opportunities for real estate investment, the market is rife with risks that can severely disadvantage an unwary buyer.

There have been well-documented instances where investors have been defrauded through complex schemes, such as the sale of government lands by unscrupulous individuals posing as legitimate agents. A notable example is the Ramada Resort Accra Coco Beach scam, where investors bought into a resort project on land that was not legitimately available for development.

Foreigners face particular hurdles stemming from Ghana's intricate land ownership system.

A significant portion of land in Ghana is either stool land, vested land, or family land, and each category comes with its own set of challenges. Stool lands are owned by traditional leaders and are often subject to disputes that may not be evident at the time of purchase.

There are cases where foreign investors have acquired land, only to find themselves embroiled in a conflict between the stool and local community members claiming ancestral rights.

On paper, Ghana's legal framework is comprehensive, but in practice, it lacks the enforcement and transparency needed to protect investors fully. Property registration processes are often mired in bureaucracy.

A poignant example is the Land Administration Project (LAP), initiated by the government to streamline property registration and reduce conflicts. Despite its good intentions, the LAP has been criticized for its slow implementation, which has not significantly eased the burden on property buyers.

In my view, the legal system in Ghana, while fair in principle, can be a quagmire of inefficiency in practice. Dispute resolution mechanisms are often slow and legal processes can be unpredictable. Foreign investors have been left hanging for years waiting for resolution on property disputes.

The case of the Achimota Forest land dispute serves as a cautionary tale, where multiple parties have been locked in legal battles over rightful ownership and use of the land.

Due diligence in Ghana goes beyond the conventional. It is not enough to check the property title; one must also understand the history of the land, which can involve extensive research into family or tribal lineage and historical land usage. This is because a piece of land could have multiple individuals or entities who, by local customs, have some claim to it.

A comprehensive land survey is also crucial, as there are instances where land is sold without proper demarcation, leading to encroachments and disputes.

While the government has made efforts to regulate and support the real estate market through initiatives such as the Ghana Real Estate Developers Association (GREDA), the impact of these regulations on the ground can be inconsistent. Policies are often not effectively communicated or enforced, leaving room for misinterpretation and malpractice.

Specific challenges faced by foreigners include navigating the complexities of the Ghana Investment Promotion Centre (GIPC) regulations.

The GIPC stipulates that foreign investors must meet a minimum capital requirement, which can be quite substantial, depending on the nature of the investment.

Additionally, there have been instances where foreigners have faced sudden revocations of their land leases or have been victims of xenophobic sentiments, which can affect local community interactions and pose indirect risks to property investments.

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Avoid these pitfalls when purchasing property in Ghana

The issue of "Land Guards"

One specific pitfall you should be aware of when buying residential property in Ghana is the issue of "Land Guards."

In Ghana, especially in areas around Accra, land guards are a unique and significant problem. These individuals or groups claim to be protecting land on behalf of its rightful owners, but they often engage in intimidation and can be involved in land disputes.

When you are looking to buy property, you might encounter these land guards.

They can create significant challenges, including threatening legal property owners or potential buyers, and sometimes resort to violence.

This situation is more common in rapidly developing areas around cities like Accra and Kumasi.

To avoid this, you should thoroughly verify the ownership of the land and ensure that the seller has undisputed rights. It's advisable to engage with a reputable local lawyer who understands the intricacies of Ghana's land ownership and dispute resolution systems.

Additionally, checking with the Lands Commission in Ghana to confirm the legitimacy of the land title is crucial.

"Multiple Sales" risk

Another unique pitfall in purchasing residential property in Ghana that you should be aware of is the challenge of "Multiple Sales" of the same property.

This issue is particularly prevalent in Ghana, where a single piece of property is sold to several different buyers without their knowledge. This often happens due to inadequate record-keeping and the lack of a centralized, reliable property registry system.

In this context, a seller might take advantage of the system's inefficiencies to sell a property to multiple buyers.

This can lead to lengthy and costly legal battles, with the risk that you might not recover your investment.

To safeguard yourself against this pitfall, you should conduct a thorough search at the Lands Commission to ensure the property has not been previously sold or is not under any dispute.

Also, its advisable to verify the identity and the legitimacy of the seller.

It’s important to engage the services of a credible and experienced solicitor or real estate professional in Ghana who can guide you through the process and conduct the necessary due diligence.

Insist on seeing and verifying original property documents and cross-checking them with official records.

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"Customary Land Tenure" issues

A further unique challenge you might encounter when buying residential property in Ghana is the issue of "Customary Land Tenure."

This is a land ownership system deeply rooted in Ghana's local customs and traditions, especially prevalent in rural and some peri-urban areas.

In this system, land is owned by customary authorities such as chiefs or clans and is not formally registered. The sale or lease of such lands follows traditional practices and is often not documented in the formal legal system.

As a potential buyer, you could face difficulties if you are not familiar with these customary laws and practices.

There is a risk of buying land that the customary landowner may later contest, or you may face challenges when trying to register the land formally.

To navigate this challenge, you should understand the local customs and practices related to land ownership in the area where you are buying the property.

Moreover, you can ensure that all agreements are clearly documented, even if they are initially made verbally, as per customary practices.

It’s advisable to involve local chiefs or community leaders in the transaction process, as their approval is often crucial in validating the sale.

Consulting with a local lawyer who has expertise in customary land laws can help you understand and navigate the complexities of these transactions.

The issue of "Unregistered Lands"

In Ghana, another unique and significant pitfall when buying residential property is the challenge posed by "Unregistered Lands."

A considerable amount of land in Ghana, especially in rural and some urban fringe areas, may not be officially registered with the government. This lack of registration can lead to a lack of clear title, making it difficult to ascertain the true ownership of the property.

When you're considering buying property, it’s crucial to be cautious of unregistered lands.

The issue here is that without formal registration, there may be no official record to confirm who owns the land or to prove that the seller has the legal right to sell it.

Transactions involving unregistered land often rely on traditional ownership systems, which can be nebulous and difficult for outsiders, particularly foreigners, to navigate.

The solution lies in thorough due diligence.

Engage with a local lawyer who understands Ghana's land ownership systems, and make sure to verify the property's status through local government offices or the Lands Commission.

It's also advisable to seek confirmation of the land's history and previous ownership to ensure there are no disputes or contesting claims.

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The concept of "Indeterminate Land Boundaries"

Another specific and less commonly known pitfall in Ghana's real estate market is the issue of "Indeterminate Land Boundaries."

In many parts of Ghana, especially in rural and newly developing urban areas, land boundaries are not always clearly demarcated or recorded. This can lead to disputes over where one property ends and another begins.

When you're looking to purchase property in Ghana, particularly in less developed areas, it's essential to be aware that the physical boundaries of the land might not be as clear-cut as they appear.

In some cases, what is shown to you on the ground may not match the descriptions in the legal documents, or there might be discrepancies in the size and dimensions of the land.

To navigate this challenge, you should insist on a proper land survey conducted by a certified surveyor. The surveyor can help clarify the exact boundaries and ensure they align with any existing documentation.

It's also wise to talk to neighboring property owners to understand any existing boundary issues or disputes.

Moreover, having a local lawyer or real estate expert involved in the process can provide additional assurance.

They can help in verifying the land's history, previous boundary agreements, and any potential disputes that might not be immediately apparent.

This issue is particularly relevant in areas where development is recent or ongoing and where traditional or customary land ownership practices have been predominant.

The risks related to "Zoning and Land Use Regulations"

In Ghana, a unique and often overlooked pitfall when buying residential property is the challenge of "Zoning and Land Use Regulations."

Unlike in many Western countries, where zoning laws are strictly enforced and well-documented, in Ghana, these regulations can be less clear and are not always rigorously applied. This can lead to situations where the land you purchase may not be zoned for the type of residential development you intend.

For instance, you might buy a piece of land with the intention to build a home, only to discover later that the land is zoned for agricultural or commercial use only.

Similarly, some lands may have restrictions due to environmental protection laws or heritage preservation, which could significantly limit your ability to develop the property as you wish.

To safeguard against this, it's crucial to verify the zoning status and land use regulations of any property you are considering.

This involves consulting with the local planning or municipal authorities and possibly reviewing any master plans for the area. A local lawyer or real estate agent with expertise in Ghanaian property law can also be invaluable in helping you navigate these complexities.

This issue is particularly pertinent in rapidly urbanizing areas or regions close to major cities like Accra and Kumasi, where land use is changing quickly, and regulations may be in flux.

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The awareness of the "Fraudulent Documentation" risk

In Ghana, a less commonly known but significant pitfall when purchasing residential property is the problem of "Fraudulent Documentation."

In some cases, sellers present fake or altered land documents, making it appear as though they have legitimate ownership or the right to sell the property, when in fact they do not. This issue is compounded by the fact that the systems for verifying land documents are not always robust or easily accessible, especially to foreigners or those not familiar with the local processes.

This kind of fraud can lead to serious legal and financial consequences.

You might end up paying for a property that you cannot legally own, or find yourself embroiled in legal disputes with the rightful landowners or other deceived buyers.

To protect yourself against this, you need to be diligent in verifying all documents related to the land purchase.

This includes checking the authenticity of the title documents, ensuring they match with official records at the Lands Commission, and confirming that the person selling the land is indeed the rightful owner or has the authority to sell it.

It is highly recommended to work with a reputable local attorney who specializes in property law and understands the intricacies of the Ghanaian land registration system.

They can help verify documents and provide guidance throughout the buying process.

"Incomplete Infrastructure" and its problems

A unique and often underestimated pitfall in the residential property market in Ghana is the issue of "Incomplete Infrastructure."

In many new development areas, especially on the outskirts of cities like Accra and Kumasi, developers often sell plots or homes in areas where infrastructure development is promised but not yet completed. This can include essential services such as roads, electricity, water supply, and sewage systems.

The risk here is that you might purchase a property expecting the infrastructure to be developed soon, only to find significant delays or, in some cases, the infrastructure never being completed as promised.

This can greatly affect the livability of the property and its future value.

To mitigate this risk, it's important to research the track record of the developer and the development project.

Visit the site to assess the current state of infrastructure and obtain clear, written commitments from the developer regarding the timeline and scope of infrastructure development.

Additionally, it can be beneficial to speak with other property owners in the area or local authorities to gauge the likelihood of the promised infrastructure being delivered.

A local real estate agent or lawyer who is familiar with the area and its development history can also provide valuable insights.

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The issue of "Chieftaincy Disputes"

In Ghana, a specific and complex pitfall when buying residential property is the issue of "Chieftaincy Disputes."

Land ownership in some parts of Ghana is intricately tied to traditional chieftaincy structures. In these areas, land is often under the custodianship of chiefs or traditional leaders.

However, disputes among different factions within a chieftaincy can arise, particularly in regions where there is ambiguity about the rightful heir or leader.

For you as a potential buyer, this can pose a significant risk. You might find yourself inadvertently purchasing land from a faction of a chieftaincy that does not have the widely recognized or legitimate authority to sell.

This can lead to future disputes or challenges to your ownership of the property, especially if another faction is later deemed to be the rightful custodian of the land.

Navigating this requires a deep understanding of the local context.

Engaging with the broader community and local authorities to understand the current status of any chieftaincy disputes is important.

You should also verify the legitimacy of the party selling the land through extensive background checks and by consulting with local legal experts who are familiar with chieftaincy laws and land rights.

The issue of "Ghost Properties"

In Ghana, a specific and somewhat unique pitfall when buying residential property is encountering what's known as "Ghost Properties."

This challenge involves fraudulent sellers marketing properties that they don't actually own or, in some cases, properties that don't even exist. These sellers often create very convincing forged documents and may even conduct elaborate schemes to show you the property, sometimes involving a property that's unoccupied or in a remote location.

As a buyer, especially if you're a foreigner or not deeply familiar with the local real estate market, you need to be particularly cautious.

These scammers target individuals who might not have the local knowledge or resources to thoroughly verify the property's legitimacy.

To navigate this situation, it's crucial to perform extensive background checks.

This includes verifying the property's existence and legal status through the Lands Commission and local municipal offices. Additionally, visiting the property multiple times and engaging with neighbors or local community leaders can provide valuable insights into the property's history and current status.

Working with well-established and reputable real estate agents or legal professionals in Ghana is also a wise step. They can help in verifying the authenticity of the property and the sellers.

This type of fraud is more prevalent in areas with high real estate demand and rapid development, such as the outskirts of major cities like Accra or Kumasi.

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