How unregulated estate agencies, firms engage in multi-million-naira scams

Fraudsters are exploiting the desperation of prospective homeowners and tenants to have roofs over their heads and secure cheaper accommodation to defraud victims.
Minister of Works and Housing, Fashola
Minister of Works and Housing, Fashola

Fraudsters are exploiting the desperation of prospective homeowners and tenants to have roofs over their heads and secure cheaper accommodation to defraud victims.
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With an estimated N20 trillion yearly contribution to the Gross Domestic Product (GDP), 200 million population and a housing demand-supply shortfall put at over 20 million units, Nigeria’s property market is an attractive investment destination for many.

While major cities like Lagos, Ogun, Abuja, Port Harcourt, Kano, Ibadan and others are becoming a beehive of construction activities and huge demand for housing, the governments in these cities had in recent times been battling with fraudsters, mediated in over 150 petitions/complaints between property developers, landlords and potential tenants.

For instance, it was reported that over 500,000 lands scam occurs every year in Lagos and Ogun States. In Lagos, 50 cases of fraud were adjourned for further mediation in 2021, while 40 were referred to appropriate agencies, with five cases in courts in locations such as Ketu, Ajah, Ikorodu, Gbagada and Yaba.  In 2021, more than 500 people were allegedly defrauded of ₦8 million each by a real estate firm at Abijo area of Lagos, after buying a fake plot of land without titles.

The Guardian learnt that a major tactic used by perpetrators of real estate scams is laying claims to be marketing consultants with a mandate to sell property in choice locations such as Banana Island, Ikoyi, Asokoro and Lekki worth millions of naira.

Others market non-existing landed or disputed properties through social media, as well as hand out fake allocation letters to unsuspecting buyers.

Narrating her experience to The Guardian, a Lagos-based resident, Mrs. Tope Adekunle, said she recently bought a landed property at Orile-Igbein area of Ogun State at N850,000 in January 2021. She said one plot was left undeveloped for one year, adding that by January 2023 when she visited the property, some area boys drove her away from the site.
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Adekunle said the touts ordered her never to step on the property again because it has been sold to another person. She said it took the timely intervention of some highly placed individuals and friends before another site was allocated to her in a distant location from the initial site.

Similarly, a Federal Capital Territory High Court recently convicted and sentenced a property owner, Mercy Yusuf and her company, T.M Properties Limited to 24 years in prison for fraudulently obtaining $298,000 and N40 million from a property firm under the false pretence that she was the beneficial owner of plot 1721 Jahi District Cadastral Zone B08, Abuja.

Many of such cases still abound in courts, with the police and the Economic Financial Crimes Commission (EFCC).

Why professional associations have tamed such incidents through their codes and conducts, as well as disciplinary committees, some members are recalcitrant. A case in point is the recent suspension of a valuer by the Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON) tribunal over alleged professional misconduct for allegedly collecting N3.5 million from one Mrs. Oluwaranti Williams for building construction, which was never done.

Speaking with The Guardian, Mrs. Williams explained that she was forced to report the case to ESVARBON after several attempts were made to prevail on the suspect to either execute the project or refund the money paid but failed to observe either of the two options.

Sanwo-olu

Stakeholders said non-regulation of the estate sector creates opportunities for fraudulent developers and other operatives to swindle unsuspecting public. The incidents made the Lagos State government to set up the Lagos State Real Estate Registration Agency (LASRERA), which monitors and collates databases of all practising real estate individuals or organisations to conform them to global standards.

The Special Adviser to Lagos Governor on Housing, Mrs. Toke Benson-Awoyinka, said the intervention of the government in the real estate sector was to eliminate fraudulent practices by some unscrupulous persons because of the reported cases.
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An estate surveyor and valuer, Mr. Francis Okpaleke, said the menace has been an age-long issue, noting that the intensity has increased in recent times across various sectors of the economy and the entire spectrum of the real estate market.

“The concern is hinged on the monetary sum involved, with regard to the state of the economy. It has been occurring before, maybe before, it was on a lower scale than today, but the leasing and sales aspect is affected and it is a serious issue, “ he said.

Okpaleke, who is also an expert in real estate dispute resolution, pointed out that the scams on ‘letting and selling’ fall under real estate agencies, adding that the frequency is due to the absence of regulation.

“There is this feeling that estate agency is an all-comers affair because agency is all about representing somebody. There have been efforts by the Lagos government to regulate but on a national scale, there is no clear regulation. So, you see all sorts of people, retirees, and anybody claiming to be estate agents. But on the professional level, there are people that practice estate agencies professionally, who are regulated like estate surveyors and valuers and lawyers do practice too, “ Okpaleke said.

The occurrence of the scams, he said, is minimal within the regulated profession because they are self-regulatory and “when there are any scams involving an estate surveyor and valuer, you report to the professional body which has powers to discipline those found wanting by way of revoking their license.”

He said such acts are described as misconduct and there are several disciplinary measures by institutions like ESVARBON and Nigerian Institution of Estate Surveyors and Valuers (NIESV). He observed that the cases of property scams are predominant in the unregulated market and perpetuated by quacks. However, he explained that one couldn’t rule out the reality that there are also some bad eggs.

“The reality is that when there is a disservice, there are sanctions and no professional will want to be disciplined by the professional body. We renew our license yearly and no one would love to be questioned. People have been disciplined in the past.”

He advised intending property buyers not to cut corners but follow due process, deal with professionals, carry out due diligence and involve a lawyer to ascertain the title and conduct formal and informal searches before buying property.
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The Chairman, NIESV’s Faculty of Estate Agency and Marketing, Mr. Kayode Ogunji, said the demand and supply imbalance is a major factor for the rising cases, adding that it is now the survival of the fittest.

Ogunji said: “Estate agency is now an all-comers affair. We are in a country where we don’t regard professionals. When it comes to a situation whereby any tom, dick and harry can erect a billboard, put a number on it and you call. That is improper and that is why some developers collect money from 100 people, yet they only have 20 to 30 accommodations. Most of scammers advertise on social media and attract a lot of people. People should always do background checks.”

He said the government must improve in building more houses for the people like former governor of Lagos State, Lateef Jakande, when property scams were reduced drastically.

“We need more property in the market. Right now, you can’t go to the bank to take out a loan for housing, within five years, the interest will catch up with the capital when one is charged about 28 per cent interest rate. The income from the property cannot service the loan; people now build from their hard-earned money for themselves and not for commercial purposes. The mortgage banks need to be revived, people should be able to take mortgages at a single-digit interest rate. Also, people should patronise the professionals.”

Wamakko Redan

On efforts to curb the menace, the President, Real Estate Developers Association of Nigeria (REDAN), Dr. Aliyu Wamakko, said the association has made seals for every member of the association to use just like lawyers to enable it to award sanctions to registered members found culpable in any nefarious activity.

“It is not all developers that are REDAN members. REDAN is the umbrella body of all the organised real estate sectors both public and private and it is voluntary registration of people, who come together with the same interest, that enables us to know any member involved in nefarious activity easily and quickly.

“We have also streamlined our relationship with Economic and Financial Crimes Commission/SCUML, Independent Corrupt Practices and Other Related Offences Commission, (ICPC) Nigeria Financial and Intelligence Unit (NFIU) and the State Security Service so that it will be easy for us to stop illegal activity and sharp practices of some developers. We have made several referrals of cases to these agencies and in turn received several referrals from them,” Wamakko said.

According to him, the association has sponsored a bill in the National Assembly, which has been passed by the Senate for uniform regulation for the real estate sector and to stop people who are not of proven integrity from participating in the business.

“We have told the public that anyone who has been a victim of a REDAN member’s nefarious activity should come to us with a receipt and we assure them that they will get back their money. The people involved in land grabbing and other nefarious activities are not our members and anyone caught will be sanctioned, blacklisted and their identity made public,” he said.
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