BUYING A GENUINE LAND IN GHANA – A USEFUL GUIDE TO POTENTIAL LAND OWNERS

We cannot downplay the importance of land in any human endeavour. Various countries have set up various legal regimes to govern the acquisition and use of land and Ghana is not an exception. It is safe to say that Ghana’s laws on land have evolved over the years through our common experiences. These common experiences have found expression in our representatives who have put together the current principal legislation to govern land in Ghana known as the LAND ACT, 2020 (ACT 1036). For purposes of easy reference, I shall refer to this law as “the Act” or “Act 1036” as we go on.

The Act has put in place several measures to make land acquisition and use easy, safe and legitimate for all. In this article, I will touch on a few sections that I believe will relate to everyday transactions in relation to land purchase and use.

TYPES OF INTERESTS IN LAND

When you buy land, what do you get? Do you get the right to own it forever? Does the right to own land allow you to do anything you wish on the land? What can you do or not do with the land? The rights you acquire in any land you buy are known as the interest you have in the land. Section 1 of Act 1036 recognises six (6) types of interests that a person can own in land in Ghana. These are the Allodial Title, Common Law Freehold, Customary Freehold, Usufructuary interest, Leasehold interest and customary tenancy. 

At an appropriate time, I shall explain the 6 types of interests that can be acquired in land in Ghana. In the meantime, I will only explain leasehold interest since that is what most land buyers get in Ghana. 

Section 6 of the Act says that a lease or a leasehold interest is an interest in land for a duration which is certain or capable of being ascertained. That means a lease gives you a period of time within which you shall own the land and after that period, the land will revert back to the lessor or the one who sold it to you. Basically, anyone who holds any of the 6 interests mentioned above, with the exception of customary tenancy, can grant a leasehold to another person. (person as used in this article refers to both natural persons and artificial persons such as companies or other organisations recognised by law).

For the purpose of this article, if you see Grantor or Lessor it means the person selling the land. Grantee or Lessee means the person buying the land.

If the grantor holds allodial title, common law freehold, customary freehold, and usufructuary interest, the grant of the leasehold interest does not extinguish their interest in the land. In other words, after they have granted you the leasehold interest, they still hold their interest and there will certainly be a time that the land will revert back to them after the expiration of the lease.

If the grantor holds a leasehold interest, then when he/she grants you all of his unexpired interest, it is normally called an assignment. It means, they have given you all of their interest and they lose their right over the land. If on the other hand, they give you a part of their interest in the land, then they will be entitled to the unexpired portion which they have over the land. 

For example, if Mr. Atinga has a lease of 99 years over a piece of land, and he sells 70 years to Mr. Atara, the land will revert back to Mr. Atinga after 70 years for him to enjoy his 29 years before it goes back to the headlessor (the allodial, usufruct, common law freehold or customary freehold). If on the other hand, Mr. Atinga had sold all of his 99 years to Mr. Atongo, that transaction would be called an assignment and it would mean that after 99 years, the land will go back to the head lessor (the one who sold to Mr. Atinga) straight without any recourse to Mr. Atinga.

Again, if Mr. Atinga had lived on the land for 30 years before selling to Mr. Atara, then, Mr. Atara would be acquiring a 69 year lease from Mr. Atinga and after 69 years, that land would revert back to the allodial title holder who sold it to Mr. Atinga.

In practice, most lease agreements provide the lessee the first right of refusal. That means, after your 99 years have expired, you will be given the opportunity to lease again and it is only upon your failure or refusal to lease again that the headlessor would go ahead to give your land to another person.

Article 266 of the 1992 constitution and Section 10 of the Act, places restrictions on the type of interest a non Ghanaian can hold in land. The  principle is that a non-Ghanaian can only get a lease and not any other interest in land and the maximum lease a non-Ghanaian can get at a time is 50 years.

DUE DILIGENCE BEFORE BUYING LAND

Land purchase looks very simple until you begin to find it difficult to build after buying one. Even worse is to finish building and not be able to register your interest in that land. And it is always a nightmare for a court to rule that the land on which you have built is not for you and so hand it over to the correct owner. At that point, you may have to lift your house off the land for the owner to have his land if you so wish. There is this erroneous impression that when you have built to lintel level, a court cannot rule against you in a land litigation. This erroneous impression has led to many people developing cardiac problems after investing heavenly on lands which are not theirs and then later losing that land in court. Remember that whoever owns the land owns everything on it. In order to avoid some of these problems, it is important that you conduct at least a minimal list of checks before buying a land in Ghana. This minimal check is what we call due diligence and I shall provide you with some of these checks. I must add that these checks might not be full proof in all situations and so you are advised to consult a lawyer in any land transaction you intend to undertake.

Physical Inspection

The first thing to do when buying a land is to identify the land. You need to know the size and dimensions of the land which you are interested in buying. The general advice is that you go with your own surveyor. When the Owner (grantor) points the borders of the land to you, you let your surveyor pick the coordinates of the land in order to prepare a site plan for you. It is very dangerous to rely on the grantor's site plan only without getting an independent surveyor to prepare a site plan for you.

During the physical inspection, it is important to look out for certain red flags. For example, if there is an uncompleted building on the land, you need to investigate to find out who put up that building. If there is sand, gravel and construction materials on the land, you need to find out who put them there. If there are trees which do not naturally grow on their own, you should find out who planted them. If you fail to do these investigations and you go ahead to buy the land, a court would tell you that you failed to do the minimal due diligence and so you had constructive notice that someone was already on the land before you bought it. When a court tells you this, it means you are not a bonaofide purchaser for value without notice, and you will lose your money.

In addition to the physical inspection, it is important that you do some background investigations in the area. There are always people in the area who know the real owners of the land. Even if there are others claiming ownership, it is important to know so you don't buy litigation. So, you will have to go back to the location after the owner has shown you, either by yourself or by someone you have sent to ask questions about who is the owner of the land and whether or not there is any information about it such as litigation.

It is important to involve a Land Lawyer in all of these. Lawyers by their training are usually able to spot red flags quickly and save you from entering a transaction that will end in loss of money or litigation in the future.

Statutory Searches

There are two main statutory searches that you need to conduct before buying the land. First is the search at the lands commission. This will give you some important pieces of information. First is whether or not the land is a state land. Second is whether the land has been earmarked for a state project and finally whether the person purporting to sell it to you is the rightful owner. There are situations where the land will come out as free land after the search. You may not find the owner's name on it and you will not find any other name on it. In such situations, it means the original owners have not registered it, you will have to be extra careful to be sure the person selling to you has the right to sell.

For Stool Lands it is always the Chief together with his elders who have the power to sell the land. Therefore if the Chief signs, the elders must also sign as witnesses. For Family Lands, it's always the Head of Family together with the elders who have the power to sell. Therefore if the head of family signs, his elders must also sign. Extra due diligence is also needed at this point to be sure, the persons signing are the real persons with the requisite authority to sign. If the wrong people sign, you have paid money in vain. 

It is also important to check if the land has not been encumbered by any charge. In order words, you need to be sure whether the land has not been used for collateral by anyone. Banks do not necessarily register a piece of land in their name before giving the owners a loan. Therefore, it is important to run a search with the collateral registry to confirm if anyone has registered that particular land as charge over any loan with any bank. 

If upon your due diligence, you are satisfied that the land is for the person who is trying to sell to you, then you can go ahead to pay for it.

You should always take your indenture upon payment for it is the basic and most primary document showing that you have bought the land in question.

PERFECTING THE TRANSACTION

When you have received the indenture, the next thing is to register it. The indenture simply means you have a receipt showing that you have bought the land. It is not enough to hold only the indenture for the land you have purchased. 

The only organisation with the power to register land transactions is the Lands Commission. You will have to present your indenture with all the necessary signatures and authentication stamps such as a lawyers stamp and a court registrars stamp etc.

These days, the lands commission requires a barcoded site plan before your transaction can be registered. Therefore, a new site plan with bar code will be prepared for you before registration begins.

Buying land is a taxable transaction, therefore upon presenting the land, the Lands Commission will send its officers to the site. They will put a value on the land and then you pay a Stamp Duty Tax of 1% on the value of the land you are buying. Remember the stamp duty is not on the price at which you bought the land but rather on the value the Lands commission will put on the land. 

Upon the payment of the stamp duty, the lands commission will proceed to do its internal checks to satisfy itself that you can register that transaction. Your proposal will then be published in the gazette and if no person comes to object to your registration, then you will be issued with a Land Title Certificate, if your land is in Accra or Tarkoradi or a deed if your land is in any other region of Ghana.

This perfecting (registration) process can take time. But it pays to wait and get it done. It may take you a minimum of 8 months to get a title registered and it can take much longer time if there are any issues with your primary documents.

 

CONCLUSION

Land for many people is a lifetime investment. If you have to buy one, please don't do it in a hurry. Take time to do it right for your peace of mind.

Comments and questions are welcome. I do well to respond to comments or questions in due time. You may follow or subscribe to this blog or any of my social media handles as published in the menu on this website. Thank you.

Written by

Richard Nii Amarh ESQ.