Land/real estate is a significant asset class of a portfolio investment for individuals and businesses alike in every jurisdiction.
With Africa identified as the “last” frontier for global growth, acquiring and or investing in land/real estate in a country such as Ghana, one of the fastest growing economies and a development leader on the continent, in the view of many experts, is considered to be a strategic investment likely to yield significant results.
One must note however that acquiring land/real property in Ghana is often an involving process due to the country’s unique land tenure and land administration system.
It is important to understand how land is held in Ghana to appreciate the nature and requirements of land/real estate transactions.
How are Lands held in Ghana?
All lands in Ghana belong to the state, stool, families or private individuals.
The interests held in land are:
• Allodial interest- This is the highest form of interest held in land in Ghana. It provides the holder the right of absolute ownership. The holder is under no restrictions on his user rights or obligations, other than those imposed by law.
• Freehold Interest-Its holder obtains ownership of the land for a potentially indefinite period.
• Leasehold Interest-. This gives its holder a lesser term (duration) or interest (part of the land) than that of the Grantor.
• Assignment-This gives its holder all of the remainder of the unexpired term held by the Grantor.
• Customary Law Freehold or Usufruct-. These are rights of a user (usually a member of the clan or family) under customary law to the free use of land, either without consideration or on payment of nominal consideration and is subject to any restrictions or obligations imposed by a stool or a family being the allodial owner).
Can Foreigners acquire land in Ghana?
Foreigners can acquire land in Ghana. However they are restricted in the types of interest they can hold. Whilst Ghanaians may in some cases hold freehold interest in land and may lease land for up to 99 years, a foreigner cannot hold a freehold interest in land or a lease exceeding fifty (50) years at a time in accordance with the 1992 Constitution and other applicable land laws.
What are the steps must I take to acquire land/real estate in Ghana?
• Engage the services of a professional Real Estate Agent/Broker and Attorney
• Identify the Property
• Conduct or have conducted on your behalf a physical inspection of the property.
• Establish how the land is held. Is it government, stool or family land? In the event of the purchase of an already developed property, you will need to establish ownership of the property including the land on which the property is situated.
• Require from the seller their evidence of interest held (Proof of title, site plan). Proof of title may be evidenced by a title certificate on the land issued by the Lands Commission or in some cases a stamped Assignment or Lease duly lodged with the Lands Commission.
• Searches are conducted at the Registry of the Lands Commission, Land Title Registry, and Collateral Registry, to confirm the seller’s title and/or to check for any encumbrances on the land. There is usually a fee for these services which is paid for by the buyer. In some cases an updated site plan of the property will need to be prepared for a fee by an independent licensed surveyor to be submitted with the search request.
• Inspect the originals of title deeds/documents to determine whether the
covenants therein have been performed. It is important to ensure that covenants
such as the requirement to pay ground rent have bee complied with prior to your acquisition of the land/property.
• Ensure that the seller has obtained the consent and concurrence of the necessary parties for the transaction on that particular piece of land/property. This is required by law for sale of family lands, stool lands and government lands. Failure to obtain the required consent and concurrence of the necessary parties may vitiate, ab initio, an agreement for the sale of land.
• Ensure proposed development if sale is for land, is in accordance with Zoning and environmental requirements.
• If satisfied with results of initial due diligence, the Attorney on instruction shall prepare a sale and purchase agreement (SPA) to be executed by the parties to the transaction subject to the agreed upon terms.
• Simultaneous with or immediately after the sale purchase agreement (SPA) has been prepared and executed, a Deed of Conveyance shall be drawn up by the Attorney to be executed by the parties to the transaction.
• Upon signing the documents (SPA & Deed of Conveyance) and payment of the specified applicable fees in the agreement(s) the interest in the land/property is passed to the buyer from the seller.
• The buyer shall thereafter lodge an application and deposit the requisite
documents with the Lands Commission for the transfer and registration of your interest.
• The buyer shall be required to pay stamp duty on the property purchased.
Where the property value is:
Less than GHC10,000, the applicable stamp duty is 0.25% of the property value.
Between GHC10,000 and GHC50,000, the applicable stamp duty is 0.5%.
Above GHC50,000, the applicable stamp duty is 1%.
*the figures quoted are subject to change
• The Lands Commission shall after conducting its due diligence and undertaking its registration procedures, in accordance with the applicable statutory requirements, will thereafter provide you with a title certificate. This could be done as early as a few weeks or a few months depending on the situation.
• The title registration process may take as little as a few months up to a year to accomplish depending on particular facts of the transaction at hand.
In as much as a property or its terms of sale may be highly attractive, it is critical that as a potential buyer, in the interest of protecting your investment, one does not rush the purchase process. With the assistance of experienced professionals (Real Estate Agent and Attorney) throughout the process, you are usually assured “peace of mind” regarding your investment.
Credit: RMK Property Management Limited