May 02, 2019 01:07

Property investment [a.k.a. real estate i.e. land and immoveable property on it] is widely regarded as one of the most secure and profitable forms of investment all over the world. The reason for this is not far-fetched – the value of land is continuously on the up, and once ownership has been properly obtained, it does not bear the kinds of loss that moveable property is subject to (e.g. theft, fire, etc.). To understand how much belief is put on the business-worthiness of real estate, one only has to look at this quote from one of history’s richest men ever, Marshall Field – “Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy.” However attractive investment in real estate may seem though, things may easily go awry if an investor does not engage the services of relevant professionals who are trained and knowledgeable in specific aspects of the industry. Depending on the jurisdiction in which a potential investor intends to plant his fund, some of these professionals are essential while in some other jurisdictions, they may not be relevant. An example would be a heating engineer. Due to the differing climatic conditions, such professional would be a non-negotiable in Alaska, USA but will rarely be needed in Lagos, Nigeria. Below, some of these professionals are highlighted, including how important they are in different jurisdictions, particularly United Kingdom, Nigeria and United States of America: Mortgage Specialists That investment in real estate is capital intensive is an indisputable statement of fact. To this end, there are mortgage experts/specialists who advise would-be property-owners on how they can avail themselves of mortgage loans; and also help them shop for the best lender and rate, taking into cognizance the would-be property owner’s financial state and status. Functions of a Mortgage Specialist: Helps choose the right loan for the client’s needs and advises on the most favourable interest rate vis-à-vis the attendant risks; Interfaces with the lender(s) on behalf of the client; Facilitates the loan’s application on behalf of the client. Mortgage Institutions in selected jurisdictions: There are currently over two hundred financial organizations supplying mortgage loans to house buyers in Britain. The major lenders include building societies, banks, specialized mortgage corporations, insurance companies, and pension funds. In Nigeria, the Mortgage operations are overseen by the Federal Mortgage Bank of Nigeria which operates through Mortgage Banks known as Primary Mortgage Institutions which are licensed to interface with the individual customers. The terms and interest payable on Mortgages are usually less cumbersome than commercial loans. They are usually secured against the “brick and mortar” (property) for which the Mortgage is obtained as this is generally seen as one of the safest collaterals or securities. The tenure (or repayment period) is usually up to a period of 30 years. The current interest rate on the National Housing Fund [NHF] Loan is 6%. This is a far cry from the interest payable on commercial loans which in many cases could be as high as 30%. There are currently about one hundred licensed primary mortgage institutions in Nigeria. The Fund utilised for mortgages in Nigeria is generated through a contributory Fund called the NHF where contributors pay 2.5% of their monthly income to the Fund and are in return eligible to access Mortgage Loan of up to a maximum of Naira 15 million, subject to status, which is repayable over a period of up to 30 years. The mortgage industry of the United States is a major financial sector. The federal government created several programs, or government sponsored entities, to foster mortgage lending, construction and encourage home ownership. These programs include the Government National Mortgage Association, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. In most of Western Europe, variable-rate mortgages are more common, unlike the fixed-rate mortgage common in the United States. Much of Europe has home ownership rates comparable to the United States, but overall default rates are lower in Europe than in the United States. Mortgage loan financing relies less on securitizing mortgages and more on formal government guarantees backed by covered bonds and deposits, except Denmark and Germany where asset-backed securities are also common. Prepayment penalties are still common, whilst the United States has discouraged their use. Unlike much of the United States, mortgage loans are usually not nonrecourse debt. In Islamic countries, Islamic Sharia law prohibits the payment or receipt of interest, meaning that Muslims cannot use conventional mortgages. However, real estate is far too expensive for most people to buy outright using cash: Islamic mortgages solve this problem by having the property change hands twice. In one variation, the bank will buy the house outright and then act as a landlord. The homebuyer, in addition to paying rent, will pay a contribution towards the purchase of the property. When the last payment is made, the property changes hands. Property Owners Property owners are individuals or corporate personalities who own or possess title to a property. However, the way and manner a title is acquired varies from one jurisdiction to another; so also the transferability of same. Across jurisdictions, property owners with valid title transfer such title to another in accordance with the law of the nation where the transaction is taking place. The Owner has a responsibility of overseeing the property and preventing it from all potential hazards. In some instances, this task is assigned to project managers, who give effect to the wishes of the owner on such property. The owner by himself, or through the project manager, determines the plan for the project and also possesses a definitive obligation with regards to distinguishing, investigating, relieving, and controlling project dangers, including acknowledgment of the project dangers. Estate Agents An estate agent is a person that specializes in arranging the sale, rent and management of property. They also accompany clients to property site, discuss conditions of sale, and draw up real estate contracts. Some agents may also perform the service of representing a buyer. Estate agents are therefore important for an investor, be he interested in undeveloped property or developed property. In order to best carry out the above services, estate agents monitor the chain of buyers selling their old homes and might even keep a list of such homes. They are a potential investor’s best bet at getting quick information about available properties as well as the pros and cons of investing in particular neighbourhoods. An estate agent is one of the few professionals that should not be sidestepped by a real estate investor in any jurisdiction (in particular, Nigeria, United States of America or the United Kingdom), especially in a place he is not familiar. Land Surveyors Surveying is needed for the definition of legal boundaries for land ownership, preparation of maps and the planning and execution of most form of construction. This work of surveying is performed by land surveyors. Surveyors make precise measurements to determine property boundaries to avoid future legal disputes. Many land/property regulatory authorities require that any instrument of transfer of ownership contain a description of such property as prepared by a surveyor. Land surveyors therefore represent one of the professionals that are crucial for successful transactions by potential investors. Estate Valuers An estate valuer inspects a property to ascertain its condition and thereafter carries out market survey and analysis to be aware of the levels of demand and supply and the prices of comparable assets in the market. This is done in order to arrive at the probable price range of real estate asset. Sometimes, the role of an estate surveyor and an estate valuer may be performed by a single person who is trained to render both services. For example, in Nigeria, the Nigerian Institution of Estate Surveyors and Valuers (NIESV) in conjunction with the Estate Surveyors and Valuers Registration Board of Nigeria (ESVRBON) is responsible for registration and any qualified person is licensed to practice both profession without discrimination. In the United States, these professionals are sometimes also called appraisers. Solicitors/Lawyers Inevitably, lawyers feature as one of the essential professionals for a successful investment in real estate, as with investment in most other sectors of the economy. Solicitors/lawyers help clients in ensuring compliance with regulatory requirements; draft documents for transfer of property; register such transfers at the appropriate agencies; and protect clients’ interests against persons wishing to prey on them. Lawyers also carry out due diligence on potential assets e.g. carrying out searches at land registries, review titles to ensure there are no outstanding liens, etc. Some lawyers have by practice become specialized in this aspect of the law and these kinds are called real estate lawyers. Although, many of these tasks can be performed by an investor himself, it is more realistic and advisable that a real estate lawyer be engaged as they usually have become meticulous from handling similar transactions virtually every day. They are engaged for their ability to provide cut-edge expertise and effective delivery. Moreover, in a country like Nigeria, by the provisions of Section 22 (1) (d) of the Legal Practitioners’ Act, only legal practitioners can prepare documents for transfer of property for a fee, therefore bypassing a lawyer may amount to an illegality. In the United Kingdom, the dual role of lawyers as solicitors and advocates is not fused. The pro