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Everything you need to know before buying real estate is included in our Nigeria Property Pack
Buying off-plan property in Nigeria carries significant risks, with 20-40% of projects in Lagos and Abuja experiencing delays or abandonment in the past five years.
The Nigerian off-plan property market operates within a complex legal framework where enforcement is inconsistent, making careful due diligence essential for buyers. While legitimate opportunities exist, particularly in major cities like Lagos and Abuja, buyers must navigate weak regulatory oversight, verify developer credentials, and structure payments to minimize financial exposure.
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Off-plan property purchases in Nigeria require extensive due diligence due to limited legal protections and high project failure rates.
Buyers should verify developer registration with LASRERA, confirm land ownership through Certificate of Occupancy checks, and structure payments through escrow arrangements to minimize risk.
| Risk Factor | Impact Level | Mitigation Strategy |
|---|---|---|
| Project Delays/Abandonment | High (20-40% of projects) | Verify developer track record, use escrow payments |
| Title/Land Issues | High | Independent title search, C of O verification |
| Regulatory Compliance | Medium | Check LASRERA registration, plan approvals |
| Hidden Costs | Medium | Budget 10-20% extra for infrastructure levies, fees |
| Payment Security | High | Milestone-based payments, bank escrow accounts |
| Legal Enforcement | High | Strong contract clauses, professional legal advice |
| Developer Fraud | Medium-High | Background checks, site visits, reference verification |
What legal protections exist for off-plan property buyers in Nigeria?
The legal framework protecting off-plan property buyers in Nigeria relies primarily on the Land Use Act of 1978, which governs land ownership and titles nationwide.
Each state has its own Sale of Land law that applies to off-plan purchases, supplemented by general contract law and consumer protection statutes. However, enforcement of these laws is inconsistent across different states and jurisdictions.
The Consumer Protection Council (CPC) provides some recourse for buyers, but its effectiveness in real estate disputes is limited. Most legal protections depend on the specific clauses included in your sales agreement rather than statutory protections.
Contract law remains your strongest protection, making it essential to include comprehensive penalty clauses, refund provisions, and clear delivery timelines in any off-plan agreement. The courts can enforce these contracts, but litigation is often lengthy and expensive.
As of September 2025, there is no specific federal legislation protecting off-plan property buyers, unlike some other countries with dedicated off-plan purchase protection laws.
How do I verify that a developer owns the land and has proper government approval?
The Certificate of Occupancy (C of O) is the most important document proving legitimate land ownership and government consent for use.
You must request the original C of O from the developer and verify that their name matches exactly with what appears on the certificate. Any discrepancies should be investigated immediately through a qualified lawyer.
Visit your state's Land Registry to confirm the authenticity of the C of O and conduct an independent title search. In Lagos, this would be the Lagos State Land Registry, while Abuja uses the Federal Capital Territory Administration land records.
Engage a registered lawyer or surveyor to conduct a thorough title search at the relevant ministry of lands. This search will reveal any existing encumbrances, disputes, or irregular transactions affecting the property.
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Which government agencies regulate property developers and how can I verify registration?
The Lagos State Real Estate Regulatory Authority (LASRERA) is the primary regulatory body for developers and agents operating in Lagos State.
| Agency | Jurisdiction | Verification Method |
|---|---|---|
| LASRERA | Lagos State | Check online portal for developer registration |
| ESVARBON | Federal | Verify surveyor/valuer professional registration |
| State Ministry of Physical Planning | State-specific | Confirm building permits and plan approvals |
| Federal Mortgage Bank of Nigeria | Federal | Check involvement in regulated housing projects |
| Corporate Affairs Commission | Federal | Verify company registration and legal status |
| Nigerian Institution of Estate Surveyors | Federal | Confirm professional membership status |
| State Planning Authorities | State-specific | Verify development permits and compliance |
What percentage of off-plan projects in major cities have been delayed or abandoned recently?
Between 20% to 40% of off-plan residential projects in Lagos and Abuja have experienced significant delays or complete abandonment in the past five years.
The abandonment rate is significantly higher for unregistered developers or those without established track records, reaching up to 60% in some cases. Established developers with LASRERA registration show better completion rates of around 70-80%.
Common delay periods range from 12 months to 36 months beyond the original promised delivery date. Projects in satellite towns and developing areas face higher abandonment risks than those in established neighborhoods.
Economic factors including foreign exchange volatility, high construction costs, and limited access to financing have contributed to these high failure rates. The COVID-19 pandemic further exacerbated delays in 2020-2022.
Lagos Island and Victoria Island projects generally show better completion rates compared to mainland developments, due to higher property values and more established developer presence.
How do I verify building plan approval before making any payment?
Request a certified copy of the approved building plan from the developer before making any deposit payment.
Cross-check the plan approval directly with your state's physical planning authority - in Lagos, this is the Lagos State Physical Planning Permit Authority (LASPPPA), while in Abuja, you would verify with the Federal Capital Development Authority (FCDA).
Hire an independent architect or quantity surveyor to visit the relevant planning office and verify that the plans are genuine and properly approved. This typically costs between ₦50,000 to ₦150,000 but can save you from significant losses.
Ensure the approved plan matches the project being marketed to you, including the number of floors, units, and specifications. Developers sometimes market projects that differ from approved plans.
Check that all necessary permits are in place, including environmental impact assessments for larger developments and infrastructure connection approvals from utility companies.
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What essential clauses should I include in an off-plan sales agreement?
Include specific penalty clauses that require the developer to pay compensation for each month of delay beyond the agreed completion date.
1. **Delivery timeline penalties**: Specify compensation of 1-2% of purchase price per month for delays 2. **Termination and refund clauses**: Right to cancel and receive full refund if project is delayed beyond 18-24 months 3. **Construction milestone requirements**: Detailed breakdown of construction phases with inspection rights 4. **Title delivery specifications**: Clear timeline for providing Certificate of Occupancy and deed of assignment 5. **Quality standards**: Detailed specifications for finishes, fixtures, and construction materials 6. **Dispute resolution mechanism**: Specify arbitration or court jurisdiction for resolving conflicts 7. **Escrow payment arrangements**: Requirement for milestone-based payments through bank escrow accountsWhat deposit amounts are typical and what happens if developers fail to deliver?
Off-plan property deposits in Nigeria typically range from 10% to 30% of the total agreed purchase price.
High-end developments in areas like Ikoyi or Victoria Island often require deposits of 20-30%, while middle-income projects may accept 10-15% initial payments. Some developers offer payment plans with initial deposits as low as 5%.
If a developer fails to deliver, your recovery options depend heavily on your contract terms and whether payments were made through escrow accounts. Without proper legal protection, many buyers lose their entire deposit.
Successful refund recovery is possible but often requires lengthy legal proceedings that can take 2-3 years. Courts generally favor buyers with well-documented contracts and clear breach of agreement evidence.
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What are realistic completion timelines and how often do developers meet deadlines?
Realistic completion timelines for off-plan apartments in Lagos and Abuja range from 18 to 36 months from the start of construction.
Only about 40% to 60% of developers meet their originally promised delivery dates. Factors such as financing challenges, regulatory approval delays, and contractor reliability cause frequent timeline extensions.
High-rise developments typically take 24-36 months, while low-rise apartment blocks may be completed in 18-24 months. Luxury developments often face longer timelines due to imported materials and specialized finishes.
Weather patterns affect construction schedules, with the rainy season (April to October) typically slowing progress. Plan for potential delays of 6-12 months beyond the developer's initial timeline.
Established developers with multiple completed projects show better on-time delivery rates of around 60-70%, while new developers often struggle to meet initial timelines.
How can I assess a developer's track record and verify their credibility?
Request a comprehensive list of the developer's completed projects from the past 5-10 years, including addresses and completion dates.
Conduct site visits to at least 3-5 of their completed developments to assess build quality, infrastructure, and maintenance standards. Speak directly with current residents about their experience with the developer.
Ask for verifiable references from previous buyers, banks that have financed their projects, and suppliers who have worked with them. Contact these references independently to verify information.
Search online for reviews, news articles, or complaints about the developer through Google, social media, and real estate forums. Check for any pending legal cases or disputes.
Review their financial capacity by requesting bank statements, audited financial reports, or credit ratings from recognized financial institutions. Strong developers will have established banking relationships and clean credit histories.
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What hidden costs should I budget for beyond the initial purchase price?
Infrastructure levies are common hidden costs that can add 5-15% to your total property cost, covering roads, drainage, and utility connections.
Service charges for security, cleaning, and maintenance typically range from ₦15,000 to ₦50,000 monthly for apartment complexes, depending on the level of amenities provided.
Title perfection and registration fees include survey costs (₦200,000-₦500,000), deed of assignment preparation (₦100,000-₦300,000), and state government registration fees (2-3% of property value).
Legal fees for contract review and due diligence typically cost 1-2% of the property value. VAT at 7.5% may apply to some transactions, and agency commissions can add another 5-10% to your costs.
Utility connection fees for electricity, water, and gas can range from ₦300,000 to ₦1,000,000 depending on the development's infrastructure status and utility company requirements.
How should I structure payments to minimize risk during construction?
Use milestone-based payment schedules tied to verified construction progress rather than calendar dates.
Establish escrow accounts with reputable commercial banks like Zenith Bank, GTBank, or UBA, where funds are only released upon independent verification of construction milestones.
Engage an independent architect or quantity surveyor to certify completion of each construction phase before authorizing payment releases. This typically costs 0.5-1% of the total project value but provides crucial protection.
Limit initial payments to no more than 20-25% of the total price, with subsequent payments tied to foundation completion, roofing, external walls, and final finishing stages.
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What insurance or guarantee options protect my investment if projects fail?
Property completion insurance is available from a limited number of Nigerian insurers, but adoption rates remain low due to high premiums and limited coverage options.
Escrow account arrangements through commercial banks provide the most reliable protection, ensuring funds are only released when construction milestones are independently verified and certified.
Bank guarantees or performance bonds are rare but possible with large, established developers or government-backed housing projects. These typically cover 10-20% of the project value.
Title insurance is becoming more available through companies like Leadway Assurance and AXA Mansard, protecting against title defects and ownership disputes for around 0.5-1% of property value.
Some developers offer completion guarantees backed by their parent companies or financial partners, but these should be carefully evaluated for the guarantor's financial strength and legal enforceability.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Buying off-plan property in Nigeria requires extensive due diligence and risk management strategies to protect your investment.
While legitimate opportunities exist in the Nigerian property market, the high failure rate of off-plan projects makes careful developer selection and proper contract structuring essential for success.
Sources
- Federal Mortgage Bank of Nigeria
- Lagos State Real Estate Regulatory Authority
- Estate Surveyors and Valuers Registration Board of Nigeria
- Corporate Affairs Commission Nigeria
- Nigerian Institution of Estate Surveyors and Valuers
- Lagos State Government Official Portal
- Federal Capital Territory Administration
- Central Bank of Nigeria