CAVEAT EMPTOR: BUYER BEWARE!!
If you have been involved in property transactions for a while, there is a high chance that you have come across this phrase. However, what does it really mean? We will be answering that question today.
If you are purchasing land or any type of real estate, you are required by law to carry out due diligence to ensure the authenticity of the transaction before proceeding to buy.
Cases of land disputes in Nigeria are becoming alarming in their numbers, which is why it is necessary for the buyer to take precautionary measures to ensure that he or she is not buying a law suit in transaction involving land sale.
For this reason, the buyer must exercise utmost caution and due his or her due diligence before entering a contract of sale cannot be overemphasized. This is known as the principle of caveat emptor.
The principle of Caveat Emptor (meaning buyer beware) is to the effect that the buyer of a piece of land or real property is duty bound to first carryout proper investigation before the contract of sale of land is executed.
It holds that a seller is under no duty to communicate to the buyer the existence of defects, even hidden ones. Hence, the buyer must carry out his own investigation to know whether there are any defects attached to the land.
To be able to carry out such investigation, the buyer must first and foremost engage the services of a solicitor whose professional responsibility it is to do searches on the property the buyer intends to purchase.
It is trite that the purchaser’s solicitor must ensure that his client gets a good title by developing a comprehensive check-list of terms to be negotiated and agreed upon.
He is to ensure that all contractual restrictions are complied with. Failure to carryout proper searches on the property may result in grave cost to the purchaser, as the principle of caveat emptor suggests that the buyer will not be able to recover damages from the seller for defects which rendered the property unfit for purpose. This also applies in a case where there is serious dispute over the property.
In 1976, a vendor sold plot 27 and 28 of a landed property to a man. The man obtained a covenyance title for plot 28 but not plot 27. He however moved into both plots of land.
Two years later, the vendor proceeded to sell the yet to be conveyed plot 27 to a woman and she immediately obtained the conveyance title to the land. However, upon attempting to possess her newly acquired plot of land, she realized the man who had purchased it earlier but didn’t obtain a conveyance title on the plot of land; had taken possession of it. She instituted an action against him in court.
The Supreme Court in this famous case of Animashaun v. Olojo relied on the caveat emptor rule (let the buyer beware) which was solely founded on principles of equity.
The woman was held to have failed to prove bonafide ownership of the property . As a responsible purchaser, she ought to have inspected the land before purchase, if she had done so, she would have recognized the equitable right of the respondent; who did not only have possession of the property but had also purchased the property from the vendor.
This example highlights the importance of performing a thorough check on every land before acquiring it. However, a buyer can plead absence of notice, if he had made all inquiries but still did not detect an existing interest.
So whenever you see the words Caveat Emptor on a parcel of land, it is vital you RUN. Nevertheless, a purchaser must approach every land sale with vicious suspicion. The vendor will not bring charges and encumbrances on the property to your notice, it is your duty to dig them out. Always get a real estate lawyer before proceeding.