chudi s. ubosi – fnivs mrics PREVALENCE OF FRAUDULENT ACTIVITIES IN REAL ESTATE TRANSACTIONS IN NIGERIA chudi s. ubosi – fnivs mrics Lead paper presented at the 2nd Edition of LASRETRAD 2017 Stakeholders Forum held at Adeyemi Bero Auditorium, The Secretariat, Alausa, Ikeja. Tuesday 19th December 2017

A. INTRODUCTION Why fraud is possible What is real estate fraud? 16 million housing deficit nationwide By UN standards we need to add 750,000 units annually to bridge the gap Currently annual addition to the housing stock is less than 50,000 Lagos 3.50 million with deficit Net daily inflow to Lagos is about 800 persons Annual addition to the housing stock in Lagos is less than 10,000 units

These statistics paint a vivid picture of huge demand over supply. Source: Centre for Affordable housing Finance Africa These statistics paint a vivid picture of huge demand over supply. Creates a market for price hike Makes black market profiteering possible Source: Centre for Affordable housing Finance Africa …. Average annual household income needed for the cheapest newly built house by a formal developer 2017 … Average annual household using expenditure, 2015 (PPP$)

B. REAL ESTATE FRAUD AND THE NIGERIAN EXPERIENCE. High demand over supply makes it easy to fall prey to fraudsters Variations of fraud -- - Sale of a plot of land or property to multiple buyers - Sale of a property using forged or fake documents - Letting of a property to multiple prospects - Letting of an occupied property to a new tenant - Letting of an unfinished property to tenants - Collection of consultation fees etc before showing properties or real estate available

- Forcible ejection from or by land grabbing omo-onile for property already paid for - Collection of multiple fees by omo-onile – foundation fee, decking fee, roofing fee, painting fee etc - Non disbursement of sale or rent proceeds to the vendor or principal - Placing of “top up” or “mark up” on sale/letting figures approved by vendor or Landlord etc. - Possibly the reason why LASRETRAD was created

How did we get here? Classification of estate agency as a general business Low entry and exit barriers Perception of estate agency as a business with huge cashflow and fees

OFFENCE AGAINST PROPERTY PERCENTAGE SHARE OF TOTAL Real Estate Fraud Statistics STATE OFFENCE AGAINST PROPERTY PERCENTAGE SHARE OF TOTAL FCT 9350 14.30 Abia 113 .17 Adamawa 1417 2.16 Akwa Ibom 333 .51 Anambra 1413 Bauchi 1713 2.62 Bayelsa 837 1.28

OFFENCE AGAINST PROPERTY PERCENTAGE SHARE OF TOTAL STATE OFFENCE AGAINST PROPERTY PERCENTAGE SHARE OF TOTAL Benue 497 .76 Borno 479 .73 Cross River 1154 1.76 Delta 2502 3.82 Ebonyi 595 .91 Edo 307 .48 Ekiti 1008 1.54 Enugu 1094 1.67 Gombe 1350 2.06 Imo 873 1.33

OFFENCE AGAINST PROPERTY PERCENTAGE SHARE OF TOTAL STATE OFFENCE AGAINST PROPERTY PERCENTAGE SHARE OF TOTAL Jigawa 214 .32 Kano 2375 3.63 Kaduna 502 .76 Katsina 65 .01 Kebbi 370 .56 Kogi 480 .73 Kwara 614 .94 Lagos 22885 34.99 Nasarawa 725 1.10 Niger 1083 1.66

OFFENCE AGAINST PROPERTY PERCENTAGE SHARE OF TOTAL STATE OFFENCE AGAINST PROPERTY PERCENTAGE SHARE OF TOTAL Ogun 1112 1.70 Ondo 1934 2.95 Osun 540 .82 Oyo 1752 2.67 Plateau 1928 2.96 Rivers 897 1.37 Sokoto 1055 1.61 Taraba 998 1.52 Yobe 520 .79 Zamfara 303 .46 Total 65,397 100% Source: National Bureau of Statistics

C. GLOBAL PRACTICES Real estate practice is highly regulated Professional bodies conduct exams License to practice Annual renewal

D. PROTECTING YOURSELF FROM REAL ESTATE FRAUDSTERS Never be desperate for any property Undertake proper due diligence on any transaction Be wary of cheap properties Use the right professionals Document transactions All payments must be made with cheques not cash

E. WHAT THE GOVERNMENT CAN DO TO PROTECT CITIZENS FROM REAL ESTATE FRAUDSTERS Greater regulation LASRETRAD Licensing of practitioners and continuous education Public awareness campaign Legislation on practice of estate agency Serious penalties to serve as deterrent

F. CONCLUSION Real estate fraud is not limited to Nigeria May be difficult to eradicate, but can be brought to a bare minimum All stakeholders have a role to play More intense regulation Stiffer penalties to serve as deterrent