Legal considerations for property transactions and titles in Ghana

Purchasing or selling real estate in Ghana requires navigating a complex legal framework governing property transactions and land titles. Several laws regulate various aspects of conveyancing, registration, entitlements, and obligations of parties. Understanding the key legal requirements is crucial for a smooth property deal. This article provides an overview of the critical legal considerations for real estate transactions and titles in Ghana.

Land Administration and Ownership in Ghana:

Land ownership in Ghana is governed by customary law and statute law. Customary law derives from the indigenous traditions of communities. Statute laws were introduced during colonial times.

Approximately 80% of lands in Ghana are held under customary law and managed by traditional authorities like chiefs, clans, and families. The remaining 20% are public lands vested in the state.

Individuals can acquire land rights through allocation, inheritance, gift, or lease from customary authorities. These rights must be formally registered to secure the title.

The 1992 Constitution recognizes customary law but prohibits any custom that dehumanizes people or undermines their dignity.

Women have equal rights under the Constitution but face discrimination in inheritance and ownership of clan lands in some customary areas.

Key Laws Governing Land Administration:

The Conveyancing Act of 1973 establishes rules for land transactions in Ghana. It defines procedures for land contracts, deeds, mortgages, easements, leases, and other dealings.

The Land Registry Act of 1962 governs land registration and grants of deeds in Ghana. It sets out registration procedures for different land interests.

The Land Title Registration Law of 1986 makes land title registration mandatory for urban and developed lands. It aims to phase out deed registration and transition to a title registration system.

The Office of the Administrator of Stool Lands Act of 1994 establishes the office to oversee the management of stool lands (customary lands controlled by chiefs or traditional rulers).

The Land Commission Act of 2008 establishes the Land Commission as a body corporate with authority over public lands and other land matters.

The Local Governance Act of 2016 gives district assemblies powers over customary lands and land use planning in their jurisdictions.

Key Institutions in Land Administration:

The Lands Commission manages public lands and advises on land policy. It also oversees deeds and land title registrations.

The Office of the Administrator of Stool Lands manages the allocation and revenue collection from stool lands.

The Land Valuation Division of the Lands Commission assesses the value of lands for transactions.

The Land Use and Spatial Planning Authority (LUSPA) The Land Use and Spatial Planning Authority (LUSPA) regulates land use planning.

The Land Registry Division under the Lands Commission registers and keeps records of land transactions.

The Survey and Mapping Division under LUSPA surveys land and provides cadastral maps.

Customary Land Secretariats assist in land administration and dispute resolution at the local level.

The High Court and Regional Lands Commissions handle land disputes through alternative dispute resolution.

Steps in Property Purchase and Registration:

Buying and registering property in Ghana involves the following key steps:
Search Property Title

Conduct a title search at the Lands Commission to verify ownership and confirm if the land is unencumbered.

Review the land title document or deed to check details like size, boundaries, easements, covenants, etc.

Search for any encumbrances, like mortgages, liens, or pending litigation.

Investigate Property:

Conduct physical inspection and measurements to verify size and boundaries.

Check approved land use and consider zoning restrictions or requirements.

Assess any pre-existing damage or needed repairs.

Sign Sales Agreement:

Execute a sale agreement with terms like price, payment schedule, closing date, contingencies, default clauses, etc.

Make a partial payment as a deposit for the property as required.

Complete Transaction:

Make a full payment on the closing date once conditions are met.

Have the vendor execute a deed of assignment to transfer the title to the purchaser.

Pay stamp duty on the deed based on the property value.

Register Title:

Lodge the deed with the application and pay a registration fee to the Lands Commission.

Obtain a land title certificate with your ownership interest registered.

Update records like utility bills and property taxes.

Key Considerations:

Involve lawyers throughout the process for guidance and to prepare documents.

Be thorough with due diligence and background checks before making a commitment.

Comply with taxes like capital gains tax and income tax on rent.

Understand obligations like community participation in development.

Clarify maintenance responsibilities for utilities, facilities, and shared spaces for multi-residence buildings.

Types of Land Titles in Ghana:

There are three main categories of registered land titles in Ghana:

Allodial Title:

This confers ownership rights over land controlled by chiefs, tendambas, or family heads under customary law.

It is communal ownership vested in the lineage or clan rather than the individual.

Rights granted to individuals, like leases or assignments, derive from this title.

Leasehold Title:

This is granted by customary authorities, which give exclusive use rights over a period of 99 years.

Leaseholders can assign, mortgage, or sublet the land but cannot sell it outright without the landlord's consent.

Ground rent is paid to lessors annually or as a lump sum upfront for the lease term.

Freehold Title:

This grants full ownership rights similar to common-law freehold titles.

Freeholds have no time limit, and titleholders can dispose of lands as they wish.

This is common for lands with no allodial claims, like purchased public lands.

Many leaseholds get converted to freeholds over time after long, unchallenged occupations.

Key Considerations for Land Titles:

Check that the title deed or certificate correctly identifies the lands and interests transferred.

Confirm that the title is duly registered with plans and proper owner details.

Verify that the titleholder has the right to pass ownership or lease interest to you.

Ensure there are no other interests like liens, easements, or mortgages attached.

Check that ground rents, property rates, and other dues on the land have been fully paid up.

Obtain release documents if the land is mortgaged or family consent for allodial lands.

Demand a warranty from the titleholder on ownership rights and the absence of encumbrances.

Get adequately insured against risks like title disputes or defects.

Importance of Due Diligence:

Undertaking thorough due diligence is vital when transacting properties in Ghana to avoid pitfalls like these:

Fake titles: unscrupulous parties exploit weak recordkeeping to sell lands they do not own.

Multiple sales: Same lands sold to different parties, resulting in protracted disputes.

Title Challenges: Questions raised over allodial claims after a long, uncontested occupation.

Boundary conflicts: disputes with neighbours due to encroachment or confused plans.

Undisclosed obligations: liabilities like unpaid taxes, rates, rents, or mortgages.

Non-permitted use: land allocated contrary to zoning laws, leading to litigation or demolition.

Family property: defective transaction without proper family consent.

Land guards: properties illegally occupied, leading to lengthy court cases for eviction.

Importance of Proper Documentation:

Have all agreements been thoroughly prepared and properly executed, with parties duly identified?

Engage professionals like lawyers or licensed surveyors for conveyancing and plans.

Ensure payments are properly documented with receipts listing details.

Keep records of all correspondence, notices, consents, and other documents.

File all documents together for the property as proof of ownership and transactions.

Update records promptly for any changes like subdivisions, demolitions, renovations, etc.

Key Elements in Sale Agreement:

A legally drafted sale agreement or contract should clearly define:

Full identities of the seller and buyer.

Legal description of the property.

The nature of the property interest being conveyed, e.g., freehold or leasehold.

Sale price, payment terms, and schedule.

Provisions for deposit, advance rent, and default.

Inclusions like fixtures, fittings, and furniture.

Obligations like fees, taxes, utility transfers.

Closing date, possession date, and adjustment date.

Conditions of sale or termination provisions.

Warranties against defects and encumbrances.

Dispute resolution mechanisms.

Governing law and jurisdiction for contracts.

New Laws Impacting Property Transactions:

Some recent laws with significant impacts on real estate transactions include:

Real Estate Agency Act, 2016:

Provides for mandatory licensing of real estate agencies, agents, and salespersons.

Establishes educational requirements and codes of conduct for industry players.

Aims to increase professionalism and stamp out sharp practices.

Land Use and Spatial Planning Act, 2016:

Provides for orderly land use planning across Ghana.

Mandates procedures for zoning, development permits, and building approvals.

Aims to address haphazard developments and slum growth.

Condominium Property Act, 2019:

Provides for the division of buildings into individually owned units and common spaces.

Sets rules for the management of shared facilities through owner associations.

Aims to support higher-density urban development.

Key Compliance Issues for Foreign Investors:

Foreigners acquiring property in Ghana must comply with laws like:

Minimum foreign capital investment: $200,000 for foreign individual investors, higher for companies.

Limit on land size: 0.4 hectares in urban areas and 20 hectares in rural areas for residential use.

Environmental permitting: approvals are needed for large developments with an environmental impact.

Building codes: compliance is required with planning and building regulations for construction.

Taxes: payment of relevant taxes like VAT, capital gains tax, ground rent, corporate tax, etc.

Local content: Adherence to rules on the use of local building materials, professionals, laborers, etc.

Immigration laws: acquisition of a resident permit for stays beyond 90 days.

Red Flags to Watch Out For:

Some red flags to be wary of when transacting properties in Ghana:

Vendors are pushing for quick sales at below-market prices.

Properties without a proper ownership paper trail.

Lands with encumbrances like pending litigation.

Areas with chieftaincy or boundary disputes.

Irregularities in documentation like deeds, permits, etc.

Requests for extra payments apart from agreed considerations.

Pressure tactics like threats of violence or land guards.

Developments contrary to zoning regulations.

Lands are allocated without the necessary consent of customary owners.

Dispute Resolution Options:

Alternative Dispute Resolution: Mediation services provided by customary land
secretariats and quasi-judicial bodies like the Lands Commission.

High Court - Has jurisdiction over complex cases and can make a declaration on rights and entitlements over lands.

Appeal process: cases may be escalated from lower courts up to the Supreme Court.

International arbitration: Parties may agree to refer disputes to international arbitration, especially for high-value cross-border transactions.

Conclusion:

Purchasing property in Ghana requires an intimate understanding of applicable laws and diligent navigation of the regulatory requirements. While Ghana's legal framework for property titles and transactions is quite robust, knowledge gaps can expose parties to major risks like fraud and litigation. Obtaining proper legal advice throughout the process is highly advisable, as is conducting thorough due diligence on all aspects of the property and the counterparties involved before completing the transaction. With the right guidance, investors can safely steer through the system to secure legitimate titles over their acquisitions in Ghana.

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FAQs:

What documents do I need to register a land title in Ghana?

The key documents required for land title registration in Ghana are the original title deed or lease, a survey plan, consent from the allodial owner if required, purchase receipts, an executed deed of assignment, and a Land Title Registration Form from the Lands Commission.

How can I check if a land title is valid in Ghana?

To check the validity of a land title in Ghana, search records at the Land Registry to trace ownership history, review the terms of the title document, check the mapped site plan against the physical site, and verify the title is duly signed, stamped, and registered.

What taxes apply when buying property in Ghana?

Key taxes applicable when purchasing property in Ghana include stamp duty on conveyance, VAT and other levies on the property price, capital gains tax for sellers, income tax on rental income, and ground rent for leasehold interests.

What are landguards in Ghana?

Land guards refer to hoodlums illegally engaged to take control of lands using violent means. They are often engaged in land disputes where parties try to gain control through illegal means.

What is the average cost of property registration in Ghana?

The cost of registering title to the property in Ghana is around 1% of the property value as official registration fees. Additional costs for legal fees, inspections, and other procedural expenses may apply, amounting to around 3-4% of the property value.