UNDERTAKING PROPERTY DUE DILIGENCE IN GHANA: WHAT FACTS TO CONFIRM

Ownership of a land (both developed and undeveloped) is invariably a notable standard of measure of one's worth and status in the Ghanaian community. This phenomena is one of the main factors propelling the increase in the demand for land, country-wide. Due to the high capital outlay required in most instances to purchase land parcels and the apparent cumbersome nature in securing title (legal right) to a given parcel; it is very important and incumbent on a prospective purchaser to undertake some due diligence or investigations to confirm all facts the vendor has presented on the land. Below are some general facts that should appear on a purchaser's due diligence checklist;

 

1. Whether the vendor is the actual owner of the property: In recent times, there have been a number of sale transactions where the individual posing as the vendor has no legal right to the property; let alone initiate a sale. To avoid the incidence where money is paid to fraudsters, it is important to conduct an official search at the Lands Commission to back up proof of ownership.

 

2. Identify any encumbrances on the property: Although the property might be sold to you by the original owner, it is important to verify the absence of any adverse legal claim which would affect the owner's ability to transfer his ownership of the property to you. For example the property could have been used as a collateral for a loan or could be the subject of a family dispute.

 

3. The unexpired term on the property: In most cases, the property is owned for a particular period of time. In Ghana, this could be for a period of 99 years or less depending on the type of property. Hence if a property purchased in 1975 with a lease period of 99 years is being sold in 2020, the buyer would only own the property for the remaining 45 year period.

 

Thus, when the initial purchaser of the property intends to dispose-off his interest in a land parcel, he can only sell to you the remaining term from what has been used. Some purchasers without knowledge of this fact have purchased prime properties left with an unexpired term of three years at exorbitant prices only to find out they only have three years interest (to own) in the subject property.

 

In such a situation, insist that the purchaser renews the lease term before the sale transaction is concluded. Alternatively, engage a property professional to value and negotiate the price of the property and undertake a surrender and renewal process on your behalf.

 

With the above said, it is worth noting that in order to obtain more information on a property you intend to purchase, it is important to talk to persons other than the owner. An investigation or discussion with community dwellers or neighbours could reveal risk factors such as environmental and social vices in the community. Risk factors could include perennial flooding, earthquakes zones, crime incidences, availability of public infrastructure, and litigation over the land etc. This would help a purchaser achieve value for money in his/her acquisition and the peace of mind to fully enjoy the property.