Buying property in Cameroon is a significant investment that necessitates meticulous due diligence to ensure the transaction’s legitimacy and that the property is free from legal encumbrances. This guide provides an extensive overview of the critical legal steps and considerations in due diligence when buying property in Cameroon.
Due diligence involves a thorough investigative process by the buyer to verify the accuracy of the information the seller provides. This includes a series of checks and verifications to ensure that the property is as described and free from legal issues. In Cameroon, due diligence is particularly crucial due to the complexities and potential pitfalls in the real estate market.
Key Steps in Due Diligence
- Verification of Title and General Search: The initial step in due diligence is verifying the property’s title and conducting a general search of its status. Engaging a legal practitioner is often necessary for this process.
The lawyer to the seller will demand the document affecting the title of the property from the seller for proper scrutiny. Common property title documents in Cameroon include the Land Certificate, Attestation of Ownership, Ordinary Deed of Conveyance or possessory rights over land, Deed of Sublease, judgement of the court among others.
The lawyer will also conduct a search at the Land Registry to verify the property’s ownership and status. This search will reveal existing charges or mortgages on the property. However, it is important to note that only duly registered property can be searched at this level.
Depending on the type of document presented by the owner, additional searches might be necessary. Other places or registries where searches can be conducted are as follows
·Probate Registry: For properties involving a grant of probate or letter of administration.
·Trade and Personal Property Credit Registry: For properties owned by a company because any charges registered against the company.
·Encumbrances: Ensure the property is free from legal encumbrances such as mortgages, liens, or pending litigation by conducting a court search to check for ongoing legal disputes.
·Consent and Approvals: Verify that all necessary government consents and approvals, such as the Governor’s Consent for properties under government acquisition and building approvals for developed properties, have been obtained.
- Charting or Verification of Survey: Another important step is to obtain and verify the authenticity of the survey plan with the Office of the Surveyor. This process, known as charting, ensures that the land does not fall under any government acquisition and confirms its exact location and size.
- Verification of Land Use from the Ministry of Physical Planning: For properties with constructed buildings, it is essential to verify the building approval issued by the government. Conduct a search at the bureau in charge of town planning and housing to ensure the land is approved for construction.
- Vendor Verification: It is important to verify the genuineness of the seller. The buyer or his solicitor must confirm the seller’s identity by requesting valid identification documents such as a national ID card, international passport, or driver’s license. Ensure the seller is the rightful owner or has legal authority to sell the property. If the seller is a corporate entity, conduct a search at the Trade and Personal Property Rights Registry to verify the company’s registration status and confirm the identities of its directors and shareholders.
- Negotiation and Agreement: After satisfactory due diligence results, negotiate the sale terms and draft a formal agreement. The buyer’s solicitor must prepare a comprehensive sale agreement outlining the terms and conditions of the sale. Include details such as the purchase price, payment terms, completion date, and any special conditions. At this stage, a Contract of Sale is essential. If a deposit is required at this stage, ensure it is paid into an escrow account managed by a neutral third party, such as a legal practitioner. In most cases, the seller will insist this deposit is paid to him/her directly.
- Completion and Handover: Upon completing the sale, take the following steps:
·Transfer of Title: Execute the necessary documents to transfer the property’s title to your name. This includes the Deed of Assignment, Deed of Sublease, or other relevant transfer documents. Ensure these documents are duly stamped and registered with the Land Registry.
·Handover of Property: Take physical possession of the property, ensuring all keys and relevant documents are handed over. Conduct a final inspection to confirm the property is in the agreed condition.
- Post-Completion Obligations: After the purchase, the transaction will move to the post-completion stage. At this point, the buyer needs to register the transfer documents with the Land Registry to formalize his/her ownership. This is crucial to protect the buyer’s legal rights and interests in the property. The buyer will be required to pay any applicable property taxes at the registration stage.
Conclusion
Conducting thorough due diligence is vital when buying property in Cameroon to avoid legal issues and financial losses. By following the steps outlined in this guide, you can minimize risks associated with property transactions and ensure a smooth and successful purchase process. The purchaser of real estate is expected to retain a professional like a legal practitioner to verify the property title and draft transfer instrument for the property.
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