Regulatory Framework for Real Estate in Lagos: A Complete Guide

Lagos is one of the biggest real estate markets in the world, attracting both local and foreign investors. There are variety of properties including luxury apartments, town houses, duplexes, and commercial properties. The continued growth in population has given rise to an increased demand for properties in the state.

In addition, Lagos is a coastal city, housing the two major seaports in the country as well as home to the busiest airport in Nigeria being the Murtala Mohammed International Airport. These factors have contributed to making Lagos a viable real estate investment destination.

As a key real estate investment location, the sector was infiltrated by some quacks masquerading as real estate agents to deceive the public and defraud them of their hard-earned money.

In a bid to curtail this menace and sanitize the system, the Lagos State Government through the Lagos State House of Assembly passed into law the Lagos State Real Estate Regulatory Authority Law, 2021 (“LSRERA”).

The key objective of this LSRERA 2021 is to regulate real estate transactions, provide for the registration of real estate professionals and provide a robust dispute resolution mechanism in the sector laying emphasis on mediation.

Provisions of the LSRERA 2021

Some of the salient provision of Lagos State Real Estate Regulatory Authority Law, 2021 (“LSRERA”) Includes:

A clear definition of what Real Estate Transaction Entails

The Lagos State Real Estate Regulatory Authority Law, 2021 (“LSRERA”) clearly defines what is meant by real estate transactions in Lagos, to minimize chances of misinterpretation. Real estate is defined under the law to include any service such as mortgage or financial exchange between an individual or an organization with respect to transactions involving real estate in the state.

As one of the key real estate laws in Lagos, the LSRERE 2021 includes any agent whose services are retained by any party to the transaction. This definition broadens’ the scope of the definition of real estate transaction.

Establishment of the Regulatory Authority

LSRERA established the Lagos State Real Estate Regulatory Authority to regulate real estate transactions in Lagos State.

The functions of the Authority include formulation of policies in line with global best practices for the regulation of real estate transactions in the State, maintenance of a comprehensive register of permits of real estate service professionals, monitoring compliance with the Lagos State Tenancy Law and other applicable real estate laws in the state.

The Lagos State Real Estate Regulatory Authority Law, 2021 (“LSRERA”) also provides for investigating complaints and petitions from the public against agents or real estate professionals in the state, collate and maintain a database of real estate transactions in the state, register and issue permits for individuals or organizations carrying out real estate business in the state etc.

The new regulatory authority majorly acts as an ombudsman in the real estate sector.

Requirement for Registration as a Real Estate Agent in Lagos under the LSRERA:

The Lagos State Real Estate Regulatory Authority Law, 2021 (“LSRERA”) makes it mandatory for any individual or organization desirous of operating as a real estate agent to be registered with the Authority and issued a license to operate.

Requirement for Individual Real Estate Agents in Lagos

To be qualified for registration as a real estate agent in Lagos, either as an individual or a corporate entity, certain conditions must be met. For individual registration, LSRERA mandates that the following conditions must be met:

The applicant must be a citizen of Nigeria.
If a non-Nigerian, the applicant must have a valid work permit.
The applicant must be 18 years and above.
The applicant must have the Lagos State Residents Registration Agency (LASSRA) number.
The applicant must have an office space in Lagos State
The applicant must possess a minimum educational qualification of WASSCE, GCE or NECO.
Keep updated record of real estate transactions.
Maintain a client’s account.
Show proof of three (3) years tax clearance certificate preceding the date of application.
Be registered as a business name with the Corporate Affairs Commission (CAC).

Requirements for Registration by Corporate Entities:

For corporate entities, the Lagos State Real Estate Regulatory Authority Law, 2021 (“LSRERA”) mandates that the following conditions must be met:

Proof of certificate of registration with CAC.
Maintain proper records of real estate transactions.
The directors who are non-Nigerians operating in Nigeria must have valid work permits and other licenses.
Proof of three (3) years tax clearance certificate prior to registration.

The requirement for registration extends to other stakeholders in the industry such as property developers, facility manager or property management company.

Failure to Register as an Agent under the LSRERA

Failure to register with the regulatory authority is an offense which is punishable with a fine of not less than N250,000 where an individual is involved and not less than N1,000,000.00 in the case of a company.

Duration of the Validity of the Permits

The permits issued by regulatory authority upon payment of the prescribed fees is valid for an initial period of one (1) year which is renewable upon fulfillment of the required conditions.

Foreigners as Real Estate Agent in Lagos

The Position of the Lagos State Real Estate Regulatory Authority Law, 2021 (“LSRERA”) for foreigners seeking to carry out Real Estate Business in Lagos provides that:

Any foreigner or foreign company that seeks to carry out real estate business in Lagos must seek and obtain the prior written consent of the Governor of Lagos State through the regulatory authority for such business. A foreigner’s investment in land must not exceed a period of twenty-five (25) years including the option to renew.

Dispute Resolution Mechanism under the LSRERA

The regulatory authority is vested with the power to receive and investigate petitions/complaints filed against any licensed real estate agent or company.

The regulatory authority carries out this function through the Committee of Inquiry. If found liable or culpable, the licensed real estate agent could be suspended or have the license revoked. Where criminal allegations are made and found to be true, the Committee could refer such cases to the Nigeria Police for further investigation and prosecution.

The overall objective of the Committee is to mediate in disputes and secure an amicable resolution.

Conclusion

The Lagos State Real Estate Regulatory Authority Law is a welcome piece of legislation towards the creation of a smooth process in the sector. LSRERA, although still relatively new, would help harmonize the sector and minimize the level fraud usually perpetrated on investors in the sector.

Berkeley Legal is a leading business law firm in Nigeria. We provide comprehensive and sophisticated range of specialized and personalized legal services that are designed to meet the various needs of highly diversified local and international businesses.

If you would like to know more about the Real Estate industry in Lagos, please contact info@berkeleylp.com

The information provided in this article is for general informational purposes only and does not constitute legal advice.