Prospective property buyers, tenants
N250,000 per person as yearly rent to one selfacclaimed landlord.
Many of the people who dreamt of owning homes have had their dreams shattered at both the lower and middle cadre of society due to the high cost of building materials, infrastructure, labour cost, lack of access to home finance, affordable mortgages, and an expanding population estimated at over 228 million.
But despite these numerous challenges, Nigerians are increasingly desperate to have a roof over their heads. It is this desperation that pushes many into nets cast by fraudsters who parade as estate agents and developers.
It is generally believed that the consequences of not using the right professionals for any property transaction are sky- high. However, it is also common knowledge that multi- billionnaira transactions involving known professionals or estate agents can also go the wrong way as reflected in some known cases. A common narrative by most victims of property fraud is that at the initial stage of the transaction, they trusted the developers, or estate agents perhaps due to their professional reputation, appearance, or credentials.
Industry experts are of the view that most times property buyers and investors fail to carry out adequate research on developers, property of interest, and the real estate market before making payments for such property.
To them, most perpetrators of fraud make unrealistic promises about returns, and appreciation, to lure victims, and in many cases, they fall for the unrealistic promises.
Victims are generally swayed by the promise of quick profits or high returns, while neglecting the warning signs, as well as the refusal to seek legal advice and indulge in due diligence before signing contracts or making payments.
Oftentimes also, real estate sales canvassers and developers deploy high- pressure sales tactics to convince buyers to make decisions on their feet and commit to buying property without fully understanding the terms.
An estate surveyor and valuer, Mr Abidemi Ojo, who cautioned against branding all developers as dubious, however, warned that there are red signals that prospective property investors or subscribers must watch out for.
He said by nature some people in the business have dubious intentions, while some others who end up floundering often bite more than they can chew, adding that the menace can be reduced through stringent application of regulations, but might be difficult to do away with stop because it has become a part of the society.
Ojo said: “Some developers are new in the business, so, they lack funds to develop, and have to wait for subscribers’ funds, as off- takers. It is the off- takers fund that they use to continue their development. But some of them are not sincere. Once they collect the funds from subscribers, instead of using it to develop the projects that they promised, they divert it to buy dollars.”
He emphasised that professional bodies need to take the bull by the horns, adding that what is needed is strict regulation as the practice has become an all- comers affair.
“An investor must be able to look at the financial strength of the company that he is investing his money. It is just for the company to supply the proof of funds that it has the money to do a project either by loan, or others. This could entail a letter from the bank. They should ask if the project is insured for unforeseen circumstances. As an investor, you must see the insurance that covers the project, and ensure that there are no encumbrances whatsoever,” he said.
Furthermore: “A subscriber can search for the firm that he wants to buy a property from, through the Corporate Affairs Commission ( CAC) to know who the directors and members of the board of directors; whether they have integrity, are trustworthy, and the length of timethattheyhavespentinrealestatebusiness. It is also important to find out whether they are still listed in CAC, their pedigree, as well as whether they make yearly returns to the government.
“This might look too strict, but that is where we have found ourselves in the country. If a developer is new in the business, there must be an assurance that investors’ money is secure through indemnity insurance to refund in case something goes wrong,” Ojo said.
An Assistant Chief Building Officer with the Lagos State government, Mr Akingbade Israel, argued that lack of knowledge and experience about contracts, and legal procedures is making more property investors and subscribers vulnerable to fraudulent real estate agents and developers.
He also affirmed that clients may feel pressured tomakequickdecisions, especiallyinrealestate transactions, which can lead to overlooking red flags or failing to conduct due diligence.
“Regulatory bodies may not be effective in monitoring and enforcing real estate laws and regulations, thereby allowing fraudulent activities to go undetected. Subscribers need to adequately verify agents’ credentials and reputation before remitting funds for any property,” he said.
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the Chief Executive Officer of Trustcrow Limited, Mr Joe Orji, regulators and professional associations should play a proactive role in establishing and enforcing policies that safeguard the interests of all stakeholders in real estate transactions.
A call to action for regulators, professionals O
These policies, he said, should prioritise transparency, accountability, and risk mitigation. “By implementing robust verification processes such as leveraging technology for title searches and authentication, we can reduce the likelihood of fraudulent transactions and provide assurance to buyers, sellers, and other parties involved,” Orji said.
He argued that the establishment of intermediaries to handle payments until title transfers are done can greatly reduce payment risk.
“These intermediaries can ensure that funds are securely held in escrow until all conditions of the transaction are met, giving both parties peace of mind and minimizing the potential for disputes or financial loss. Additionally, regulators and professional associations should focusonpromotingeducationandawareness among stakeholders about their rights and responsibilities in real estate transactions. This can help empower individuals to make informed decisions and protect themselves from potential risks or scams,” he said.
Orji said that by working collaboratively with regulators, professional associations, and industry stakeholders, a more resilient and trustworthy ecosystem that fosters confidence and prosperity for all can be built.
The immediate past President of the Real Estate Developers Association of Nigeria ( REDAN), Dr Aliyu Wamakko, said that the association has zero tolerance for shoddy and unprofessional dealings from registered and non- registered members.
“As for our members, they are under our radar as they have signed our Code of Conduct to transact business with due diligence and to adhere to structured guidelines. We can categorically state that most of them are compliant and not involved in under- the- table deals,” he said. According to him, for this category of unregistered members, REDAN cannot vouch for their behaviour, allegingthattheseare those who are mainly involved in nefarious dealings.
He disclosed that the association has helped members of the public to recover their monies or houses noting: “Any member of the public that has any problem with our members or non- membersthatrelatestohousingbusiness ownership, our doors are open, and we will do the needful to help by recovering them. We also have zero tolerance for quackery. That is why our code of conduct has clauses for compliance. We are determined to clean the housing development and real estate ecosystem from fraudulent operators,” he assured.
Wamakko said REDAN has a robust relationship with the Nigerian Financial Intelligence Unit ( NFIU). Thus, members are obliged to report any suspicious transactions relating to housingandrealestatetransactions, whileour members also report sales transactions above the approved threshold of SCUML for AntiMoney Laundering and CounterTerrorism Transactions.
He added that the association also has a relationship with the ICPC and the EFCC.
The Vice Chairman of the Nigerian Institute of Architects ( NIA) Lagos chapter, Mr Biodun Fatunyi, blamed the rate of fraudulent practices in the industry on the level of corruption in the country.
While acknowledging the existence of laws that guide against such illicit activities, he regretted that the government seems not to have been enforcing its laws diligently.
According to him, in professions across the world, including Nigeria, there are governing laws that stipulate how a professional should act; how they should be paid, and how the client should engage them.
“We also have these laws in Nigeria but what is lacking is stringent implementation or enforcement of these laws. It is only in Nigeria that a client is willing to buy 10 trucks of cement, but not willing to pay the person that will make the structure, or the building habitable. The issue of fraud is centred on the clients as there is a standard of practice required from the professionals.
Fatunyi advised prospective homeowners to relate with professionals noting: “A professional that takes money from the client and does not deliver the property should go to jail, or have his/ her practice license withdrawn. A client that doesn’t pay must also not expect a property.”
On his part, Ojo, an estate surveyor and valuer, added:“Allprofessionalsinthebuildingindustry need to come up with a blueprint on ways to stop fraudulent practices in real estate transactions.”
must“An investor be able to look at the financial strength of the company that he is investing his money. It is just for the company to supply the proof of funds that it has the money to do a project either by loan, or others. This could entail a letter from the bank. They should ask if the project is insured for unforeseen circumstances.