PROPERTY LAW PRACTICE: PRACTICAL GUIDELINES IN DRAFTING A DEED

Throwback to week 3 we identified various Property Transactions in Nigeria, the Parties involve and the Final document to be drafted and whose responsibility to draft the documents. (Kindly Refer to our Post on ‘’Salient Points from Property Law Practice week 3’’)

REFRESHING MEMORY

REMEMBER, that there are certain transactions that require to be by Deed which includes;

a)      Gift of land

b)      Transfer of legal interest in land

c)      Power of attorney vesting power in an attorney to execute a deed ABINA V. FAHART

d)      Lease for a term exceeding three years. SECTION79 (1) and (2) PCL

e)      Vesting declaration where new trustees are appointed.

f)       Voluntary surrender (A surrender where a lesser estate is given up to merge with the greater estate in land.)

g)      rectification of deed e.g- deed supplemental

h)      creation of legal mortgage in CA and PCL

i)        Discharge of mortgage in CA(SUB DEMISE/ASSIGNMENT

THE DRAFT

To be able to draft the draft you need to understand the draft and for you to understand the draft you need to know the parts of the drafts.

The DEED is divided into 4 PARTS

PART 1: INTRODUCTORY PART: It contains certain clauses that make up the Part which are;

a)      Commencement

b)      Date

c)      Parties

d)      Recital

POINTS TO NOTE ON INTRODUCTORY PART

1.      Commencement helps to identify the transaction and describe the nature of the transaction.

N.B: If you don’t identify the right transaction your will have a wrong draft. I believe this is the major part of your draft.

2.      You must not date it please

REASON: A deed takes effect from the date of its delivery and not on the date on which it is therein stated to have been made or executed. Section 157 EA, 2011; ANUKU v STANDARD BANK.(kindly read our post on ‘’Undated v Dated Deed’’)

3.     

 We will be tested with the parties;

a)      An Individual; Just write his address and assignor or assignee as the case may be of the one part

b)      A Company; You write the name of the company with additional details that it incorporated under Part A of  Companies and Allied Matters Act Cap C20 LFN 2004 and it registered address

c)      Business Name; For instance you have Derin who owns Blackstone Ventures; if she enters  a transaction with her Firm’s name while drafting you write; Derin (trading under the name and style of Blackstone Ventures)Assignee or Assignor as the case may be of the one part or the other part

d)      Incorporated Trustee, associations incorporated under Part C, Example National Association of Nigerian Students, So in your draft, you have Incorporated Trustees of National Association of Nigerian Students (do not abbreviate) incorporated under Part C of Companies and Allied Matters Act Cap C20 LFN 2004 and it registered address at…… assignee or assignor of the one part or the other part as the case may be.

e)      If you have a wife and Husband or Family Members. never lump their name together, you write it like this;

i.                    (i)Mr Fola Musa and (ii) Mrs Bisi Musa (AssigneeS or AssignorS of the one part or the other part as the case may be  OR

ii.                  (i)Mr.Kufre Ono (Principal Member) (ii)Mrs Kofo Ono(Principal Member) (iii)Mrs Boye Oga(Nee Ono)(Principal Member) and (iv) Mr.Ade Ono(Principal Member) AssigneeS or AsssignorS

REASON:

a)      Only persons that are known to Law can validly be involved in property Transaction. In other words, the party to a deed must be legal person’s i.e Natural persons and entities with corporate personality.

b)      The names and address of all the parties must be included to identify them because a stranger cannot sue on the terms of a deed, only parties to a deed or persons deriving benefit under it can sue to enforce the terms of the deed – Adebanjo v. Olowosoga (1988) 2 NSCC 203; Nnubia v. A. G (Ricers State) (1999) 3 NWLR (Pt. 593) 82

4.      On Recital, these are statements of the material facts that constitute the background to the transaction. To include it in your draft, you must include the word; IS in your commencement. We have two types of Recital in the order of drafting;

a)      Narrative: Stating the  history and background of how the vendor came to own the property

b)      Introductory: Stating the vendor’s intention to transfer the property to the purchaser and the purchaser’s intention to acquire the property from the vendor.

So while drafting, you start with the word; WHEREAS and itemize your points

POSER: WHY SHOULD I ADD A RECITAL CLAUSE?

1.      It clears ambiguity in the Operative part of the deed

2.      Statements of facts in a recital may give rise to estoppel against the person making them. See section 169 EA

3.      Useful means of knowing the history and background of how the vendor came to be vested with the property in question.

4.      Evidence of fact contained in a Recital in a document which is 20 years old is deemed to be correct (Ancient document Rule)SECTION 126

SAMPLE DRAFT: THE FIRST PART OR INTRODUCTORY PART

THIS DEED OF (LEASE, ASSIGNMENT, and MORTGAGE) is made this ____ day of _____ 20_____ BETWEEN Mr Fola Musa of No 1 Law School street, Victoria Island. Lagos (ASSIGNOR) of the one part AND First Bank a company incorporated under Part A of Companies and Allied Matters Act Cap C20 LFN 2004 with registered address at No 2 Ikoyi Road, Lagos State (ASSIGNEE) of the other Part  

WHEREAS;

1.      …

2.      ...

PART 2: OPERATIVE PART: This is like the main body of the draft, the clauses in it includes;

1.      Testatum

2.      Consideration clause

3.      Receipt Clause

4.      Capacity

5.      Word of Grant

6.      Parcel Clause

7.      Habendum

POINTS TO NOTE ON OPERATIVE PART

1.      On TESTATUM: This merely signifies the beginning of the covenant entered into by the Parties.

Draft: NOW THIS DEED WITNESS AS FOLLOWS:

2.     

 CONSIDERATION CLAUSE: This shows that the transaction is not a gift and it also serve as the basis of assessment of stamp duty ad valorem

Draft: IN CONSIDERATION OF THE SUM OF____ ONLY PAID BY THE ASSIGNEE TO THE ASSIGNOR

3.     

 RECEIPT CLAUSE: This discloses the fact that the vendor has collected the money for the property. You draft this along with the consideration clause

Draft: THE RECEIPT OF WHICH THE ASSIGNOR ACKNOWLEDGES

Function:

a)      It serves as evidence of payment of consideration

b)      The inclusion of a receipt clause in a deed dispenses with the need to issue a formal receipt of payment. See SECTION  54 CA and section 92 PCL

4.      CAPACITY: This is very important, so you go back to the Scenario, to identify which capacity the vendor is conveying. The capacity of the vendor/assignor is stated immediately after the receipt clause and it can either be;

a)      Beneficial Owner

b)      Trustees

c)      Settler

d)      Mortgagee

e)      Personal Representative.

POSER: WHAT IS THE IMPLICATION OF CONVEYING AS BENEFICIAL OWNER IN AN ASSIGNMENT?

Where the vendor/assignor is expressed to have conveyed in his capacity as beneficial owner, there will be certain implied covenants to the title which are;

a)      Right to Convey

b)      Freedom from Encumbrances

c)      Quiet Enjoyment

d)      Further Assurance

If the transaction is a Lease Transaction then you will add 2 others to the above;

e)      There is a valid and subsisting Lease

f)       That the rent has been paid and all the covenants contained in the lease to be observed and performed have been observed and performed up till date.

Section 7(a) & (b) of CA and section 100(1)(a) & (b) of PCL

5.      WORDS OF GRANTS: This depends on the Nature of the Transaction.

a)      Assignment: Assigns

b)      Mortgage: Mortgage

c)      Lease: Lease

6.      PARCEL CLAUSE: The rule is that the property involved must be sufficiently described, so this clause is used to give detailed description of the property which is the subject matter of the deed.

Draft: “ALL THAT parcel of land(or the building involve) at ___________ covered by Certificate of Occupancy numbered _______ dated _______ and registered  as ______ in the Lands Registry office, Lagos State

7.     

 Habendum: This describes the describes the estate which the grantee or purchaser takes; it defines the extent of ownership in the thing granted to be held and enjoyed by the grantee – Stephen Idugboe v. Anenih (2003) FWLR (Pt. 149) 1418.

Draft: “TO HOLD the same UNTO the assignee/purchaser as holder of a Statutory right of Occupancy for the term unexpired on the Certificate of Occupancy and subject to the provisions of the Land Use Act Cap L1, LFN, 2004.”

SAMPLE DRAFT OF AN OPERATIVE PART

NOW THIS DEED WITNESS AS FOLOWS:

In Consideration of the sum of #2,000,000(two Million Naira) only now paid by the Assignee to the Assignor (Receipt of which the Assignor hereby acknowledges), the Assignor as a BENEFICIAL OWNER  ASSIGNS ALL THAT with four blocks of flat situate at No. 2, Law School road, Victoria Island Lagos State covered by a Certificate of Occupancy No. 59/59/2010A in the Land Registry Office and more rightly described in the Survey plan to be prepared by a licensed Surveyor attached to the Schedule with all rights easements and appurtenances TO HOLD unto the Assignee as holder of a Statutory right of Occupancy for the term unexpired on the Certificate of Occupancy and subject to the Provision of the Land Use Act Cap L1 LFN, 2004

PART 3: Miscellaneous Part: The clauses will include;

a)      Safe Custody and Acknowledgement Clause

b)      Indemnity

c)      Insurance and

d)      Other Covenants

PART 4: The Final Part which is also called the CONCLUDING PART, the clauses are;

1.      Testimonium

2.      Schedule

3.      Execution

4.      Attestation

5.      Franking

POINTS TO NOTE ON THE CONCLUDING PART

1.      On Testimonium: It commences the concluding part of the deed.

Draft: IN WITNESS OF WHICH the parties have executed the deed in the manner below the day and year first above written.

2.     

      Remember that in our introductory part while discussing parties we said that when it relates to Husband and wife or Family members you do not lump them together. Also at the point of execution you will list them in the order of the listing in the introductory part.

3.      Special Execution and Attestation  that we need to cast our mind to is when it involves;

a)      Blind person

b)      Illiterate

c)      Company or an Association

DRAFT: Assuming the Assignor is a blind person or illiterate and the Assignee is a company. So we will have;

SIGNED, SEALED AND DELIVERED

By the Assignor

____________

(NAME)

            The content of this deed having being first read and Interpreted (Aloud if blind) from English Language to Yoruba Language by Me (Name and Address of the Interpreter) when she appeared to have perfectly understood the content she affixed her thumb print/ Signature

                                               

Before me

__________________

Magistrate OR Judge OR Notary Public

THE COMMON SEAL OF ZENITH BANK (Assignee) IS HEREBY AFFIXED TO THIS DEED, ON THIS_ DAY OF __ 20___ AND WAS DULY DELIVERED IN THE PRESENCE OF

______                                                                                                                                    _______

DIRECTOR                                                                                                                 SECRETARY

4.       

    On Franking; this is merely stating the name and address of the solicitor that prepared the deed. The absence of franking does not invalidate the deed

FUNCTION;

a)      A duly franked document is not invalidated by the absence of Illiterate Jurat

b)       The preparation of instruments is the exclusive right of legal practitioners. See section 22(1)(d) & (2) LPA and sections 4 & 5 of Land Instrument Preparation Law.

ON A FINAL NOTE WE WILL HAVE ENDORSEMENT OF THE GOVERNOR’S CONSENT

“I CONSENT TO THE ABOVE TRANSACTION

THIS …… DAY OF ……………….… 20 ….”

________________________________

EXECUTIVE GOVERNOR, LAGOS STATE

N.B: Our Focus was more on Deed of Assignment, TAKE NOTE, that while drafting Lease or Mortgage we may have a slight change in the content of the draft.

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