Do you know there are so many hidden Charges and taxes that you must pay when buying a land that could bankrupt you easily if your not careful?
These taxes hide in plain sight and it is until you want to perfect your papers it will rear its ugly head. I have compiled a list of 4 Problematic fees that your not aware of and the earlier you start taking cognizance of it, the better:
4 Problematic fees that your not aware of
1. Everybody wants to buy a land with a C of O but do you know that every owner of a C of O must pay a yearly fee per annum to the government for occupying that land. This fee is know as a GROUND RENT and it has a certain fee that holder must pay.
For every year the person defaults in paying that GROUND RENT, the person incurs a penalty. But because of our very lax tax system, the holders of that C of O rarely pay that amount and in most situation, they are totally ignorant of the fees they are to pay.
The problem now arises when a new buyer is interested in buying that Land with a C of O. If you don't do a comprehensive check on that C of O, you will never know that your about to INHERIT SOMEONE ELSE'S DEBTS at once.
The Land registry Tax department will compute the Ground rent from inception that the C of O was obtained, compute the penalties , value it at today's inflationary rates and give it to you before you can process your Governors Consent.
That is why the cost of Governor's consent is so high in some people's case because they don't know that they are carrying the load and problems of other people's taxes as their own burden.
The best way to avoid this scenario is to make sure the Lawyer doing the search for you carries out a comprehensive check at the tax registry to know exactly how much the holder of the C of O is owing the Government.
Once you have an idea of the costs owed, you can now use that as a veritable bargaining tool to deduct money from the asking price of the property. I have used this method so many times for my clients to obtain a reduced fee for the Land transaction.
Whenever i hit the owner of the C of O with his Ground Rent Charges, he is always eager to sell the land quickly at a reduced price so as not to continue holding on to a burden that could ruin him at any given time. Sometimes Sellers are willing to share the Ground Rent so as to make it equitable and both parties suffer the penalty.
Make sure you know the Ground Rent of any property that has a C of O before hand , lest you suffer the consequences of it.
2. If your buying a Land with a Governor's Consent or you just bought a land and want to perfect the Governor's consent, make sure you ask the person selling the land to you; be it a private seller or Omonile to produce their Tax clearance and give it to you unless be ready to Fork out N200,000 as the Tax clearance for that person to be paid on his behalf.
The rules in Lagos state and Ogun state that before you process your Governor's consent you must produce the Tax clearance of the Seller and you the buyer. Failure to do so will attract a one off Fee which would serve as the Tax clearance for that person.
3 years back it used to be 60,000 Naira that was the tax clearance for a seller who did not have a Tax clearance. Now its N200,000 and its rising astronomically yearly.
So before you buy that land and you know you want to perfect your papers soonest, make sure you disturb that person or Family for their Tax clearance unless be ready to pay their tax clearance and pay your own tax clearance of N200,000 too.
If there are more family members, you will pay for their own tax clearance too (Note that). Minimum of 2 family members per community. So shine your eyes well and be ready to hold their shokoto to produce that tax clearance for you unless na die you de so for Government hand.
3. Another sneaky land tax that doesn't go into the Government coffers is the Omonile Signing Fee. This money reeks of fraud, corruption, wickedness etc but it must be paid no matter how loathsome and repugnant the who thing seems.
A lot of people just rush into buying a land without knowing the attendant costs involved in buying a land from Omoniles. This signing fees can range between N50,000 to N1Million Depending on how developed and posh the area is.
Apart from paying the Omonile signing fees, You would pay for Foundation fees, Community development fees and Youth Fees etc. These are compulsory fees you must pay before they will agree to sign your documents.
The best way to approach this Evil is to start negotiating the cost of these fees before you buy the land. It gives you a stronger leverage power over these Omoniles because they are looking for your money here and now and would do anything to reduce the fees.
The mistake is not knowing the cost or negotiating it in advance and when they have received money for the cost of the land, they know they have you by the balls and would drive up the price of the Signing fee because they smell your desperation to sign that document.
4. Another silent but deadly Land tax is the SERVICE CHARGE that private real estate developers levy on their prospective subscribers who buy into their Estates. Because of the scourge of Omoniles, alot of people are running to private real estate developers estates to escape that mad world of Omonile fees and their attendant wahala.
These estates offer them the serenity and peace of mind that is non existent when buying a family or Omonile land but there is a catch.
In exchange for the Amenities that you are to enjoy in that estate, you are being levied either a monthly or yearly service charge. These Private real estate companies load all sorts of silent charges such as water charges, Light charges, security charges, refuse charges, maintenance charges etc and it could range between N50,000 to N1Million per annum depending on how posh the estate is.
Some go as far as charging in thousands of dollars per annum and its all there in the tiny fine print of your contract of Sale given to you.
Have you ever wondered why a Contract of Sale is so bulky and filled with Legal rubbish Grammar so as to deflect you from seeing these charges and percentages that would accure yearly?
Its because if it is the first thing you see when you open the contract of sale, you will be discouraged and won't subscribe to be a member of that estate. I know so many people living in these estates groaning under the extremely high service charges that are being levied on them and they are not getting the service worth.
A way out of this is by making sure you give a lawyer your contract of sale to vet and read through before you sign anything. Ask questions about the service charges and let them know how you feel.
You could be given a reduced fee so as to accommodate you in the estate but if you don't talk and choose to be ignorant, be ready to pay your children's school fees yearly as Service charge till you no longer have the strength to keep up with the Jones and pack out to Mowe/ofada.