Both the Deed of Assignment and Contract of Sale are vital documents in the realm of real estate investment.
They play significant roles in property dealings, outlining the rights and responsibilities of the parties involved.
Let’s delve into the key differences between these two legal instruments.
Contract of Sale Versus Deed of Assignment
The contract of sale and the deed of assignment are crucial legal documents in Nigerian property transactions.
They each serve distinct roles in the acquisition of land titles.
In land acquisition, the process typically involves five stages.
The second stage involves the execution of the contract of sale.
This written document, though not required to be sealed, serves as a preliminary agreement between the buyer and seller.
The document outlines fundamental conditions, specific terms, payment details, and obligations related to the real estate transaction.
A contract of sale includes key information such as the parties’ details, property particulars, and witnesses.
It also includes the purchase price, deposit, payment terms, vendor’s capacity, risk and insurance.
Other information includes possession terms, completion date, and other specific clauses.
Once both parties sign the contract, the buyer gains an equitable right to the title, even though the legal title remains with the seller.
Any action inconsistent with the contract terms is not allowed.
Thus, termination without proper cause incurs liability for breach of contract.
Characteristics of a Contract of Sale:
1. Vendor commitment and buyer’s time for title investigation.
2. Continued validity despite the death of either party.
3. Prevention of last-minute withdrawals to avoid breach.
4. Protection of the equitable interest of the purchaser.
5. Explicit agreement on terms, preventing one-sided changes.
6. Fixed purchase price stated in the contract.
7. Payment of lesser stamp duties.
In contrast, the deed of assignment is a subsequent legal document.
This document is signed after the negotiation and closing stages.
It is subject to perfection and conveys title interest without conditions except for the consideration price.
Importantly, the title is perfected through specific stages, including obtaining Governor’s Consent, stamping of the deed, and registration with the Land Registry.
Unlike the contract of sale, the deed of assignment requires the assignee to complete these steps for title perfection.
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In summary, the contract of sale initiates any land purchase, and once the full payment is made, the parties proceed to prepare and execute the deed of assignment.
Understanding the distinctions between these documents is vital.
We can rightly categorize the differences into the following;
Nature of the Documents
Contract of Sale: This initial agreement outlines the terms and conditions between the seller and the buyer.
It establishes the intention to transfer property ownership but does not effect the actual transfer.
Deed of Assignment: This document, on the other hand, is the legal instrument that facilitates the transfer of ownership from the seller to the buyer. It formalizes the conveyance of the property.
2. Legal Status:
Contract of Sale is a preliminary agreement, creating an obligation for both parties to fulfill certain conditions before the transfer of ownership occurs.
Until you meet all the conditions, the property’s legal ownership remains with the seller.
Deed of Assignment: This document finalizes the transfer of legal ownership. Once executed, the buyer becomes the rightful owner of the property.
3. Execution Timing
Contract of Sale: precedes the Deed of Assignment and serves as a precursor to the actual transfer of ownership. It sets the framework for the transaction.
Deed of Assignment: it is executed after the conditions specified in the Contract of Sale are fulfilled, it completes the transfer of ownership.
4. Registration Requirement:
Contract of Sale: Generally, a Contract of Sale is not registrable. It acts as evidence of the agreement between the parties.
Deed of Assignment: This document, however, is registrable. Registration provides public notice of the change in ownership and protects the buyer’s interest.
5. Transfer of Rights:
Contract of Sale: It confers equitable rights on the buyer, signifying the intention to transfer ownership in the future.
Deed of Assignment: The actual transfer of legal ownership occurs through the execution of this document.
6. Conditions Precedent:
Contract of Sale: It often includes conditions such as payment of the purchase price, inspection of the property, and other prerequisites for the transfer of ownership.
Deed of Assignment: It is executed after the fulfillment of conditions outlined in the Contract of Sale.
7. Enforceability:
Contract of Sale: Breach of the contract can result in legal consequences. However, it primarily deals with the intention to transfer rather than the actual transfer.
Deed of Assignment: Breach of this document can lead to legal actions, and it directly pertains to the actual transfer of property.
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Conclusion:
In essence, while a Contract of Sale sets the stage for a property transaction, outlining terms and conditions, the Deed of Assignment is the ultimate legal instrument that effectuates the transfer of ownership.
To ensure a seamless and legally secure real estate experience in Nigeria, it’s important you know about these differences.
Whether you’re a buyer or a seller, seek professional legal advice throughout your transactions. Our team of experts can guide you.
To invest in our Abuja real estate offer, Kyami Pavilion Estate, please, call +2348132794689 or send a WhatsApp message to +2348132794689.
