Introduction
It is increasingly common in Nigeria’s real estate market to encounter situations where a property owner, after agreeing to sell a property at a particular price, or even after collecting part payment, turns around to demand a higher amount. This often occurs due to a rise in market value, pressure from third-party offers, or, in some cases, sheer opportunism.
This article briefly considers the legal implications of such conduct under particularly in the context of contract formation, enforceability, and the remedies available to aggrieved purchasers.
Formation of a Binding Contract in Property Transactions
At the core of any enforceable property transaction lies the existence of a valid contract. Per case laws, a contract of sale of land is considered valid and binding if there is a final and complete agreement of the parties on essential terms of the contract[i], viz, the parties, the property to be sold, consideration for the sale, and the nature of interest to be granted. Once there is an agreement on these essential terms, a contract of sale will be concluded.
In real property transactions, the Supreme Court in Intl Textile Ind. (Nig) Ltd V. Aderemi & Ors[ii] establishes that the sale of real property process typically unfolds in two main stages:
- Contract Stage: This is the stage where parties negotiate, conduct investigations and execute a formal contract.
- Conveyance Stage: Here, parties complete any pending balance, execute a deed of assignment and perfect the deed by obtaining the Governor’s consent, stamping the deed and registering it with the relevant land registry.
It is at the contract stage that the actual sale is deemed to occur. Upon the exchange of the executed contract and payment of the purchase price (or a significant portion of it), the equitable interest in the property passes to the purchaser. At that point, the vendor becomes a constructive trustee of the legal estate on behalf of the purchaser, pending the completion of title perfection.
In practice, the sale process typically begins when the purchaser expresses interest in the property in response to an offer from the vendor. Negotiations may involve counteroffers and adjustments to terms until a consensus is reached. At that point, parties typically proceed to reduce the agreement into writing.
However, it is not uncommon for some vendors to exploit this process by deliberately stalling the execution of the contract. In many instances, they renege on the previously agreed price and attempt to introduce a higher figure, often justifying post-agreement price increases based on macroeconomic factors such as inflation, rising construction costs, or currency fluctuations. While these concerns may reflect the prevailing economic reality, they do not override the legal principle that a contract, once formed, must be honoured. The sanctity of contract remains a cornerstone of commercial transactions and cannot be displaced by subjective economic considerations.
Courts have established that in a contract for sale of property, where part-payment is paid, the law is clear that the contract for the purchase has been concluded and is final, leaving the payment of the balance of the purchase price outstanding to be paid. The contract for the sale and purchase is absolute and complete, for which each party can be in breach for non-performance and for which action lies for specific performance.[iii] In a different light, courts have also held in numerous cases that the effect of payment of the purchase price without possession is that no transfer of legal or equitable ownership of the property has occurred in favour of the purchaser, and the best it does is to invest the purchaser with a right to sue for specific performance.[iv]
Two things can be deduced from the above paragraph. First is that upon the part payment of the purchase price of a property, the contract is deemed to have been completed, the breach of which can give rise to liabilities on either party. On the second note, mere part payment without more, i.e a contemporaneous handing over of possession of the property, does not amount to a transfer of any form of interest to the purchaser. It is, however, clear that whether possession is transferred, the terms of a contract, once agreed to by the parties and accompanied by consideration, become a concluded contract, breach of which may give rise to the right to seek legal remedies.
Unilateral Price Variation in the Absence of a Formal Sale Agreement
Where both parties in a sale of land agree on terms without executing a formal contract of sale, the vendor may unilaterally increase the sale price and vary the terms that the parties had agreed. This is because, generally, oral contracts are valid but unenforceable for not meeting the requirements of Section 4 of the Statute of Frauds (1677). Notwithstanding its general unenforceability, an oral contract may be enforceable under certain instances:
- Sufficient acts of part performance have been made.
- There is written evidence of the oral agreement.
- Where the sale is made under native law or customs.
Because oral contracts are difficult to prove, the above may avail a party relying on the words of the other party. In the context of land sales, the vendor may unilaterally increase the price of the property in the absence of a formal contract or the above-listed instances, since there is nothing to bind him or indicate that both parties agreed to a certain price or terms. In this event, the only string the purchaser must hold onto will be actions for specific performance if he has expended a reasonable amount of performance whilst relying on the oral agreement made with the vendor.
Hence, where the vendor increases the agreed price before a contract of sale is executed, the purchaser may have little to no legal recourse unless he can establish part performance, produce documentary evidence of the oral terms, or bring the transaction within the ambit of customary law. Without such safeguards, the vendor’s variation of terms stands, emphasising the critical importance of reducing land sale agreements into writing at the earliest stage.
Price Variation after a Formal Contract of Sale
At the point a formal contract of sale of land is executed, the purchaser acquires an equitable interest in the property, and the vendor becomes a trustee holding the property on behalf of the purchaser.[v]
One major advantage of a formal contract of sale in a land transaction is that it prevents gazumping and gazundering. That is, the vendor cannot unilaterally increase the amount agreed upon by the parties, and the purchaser can also not unilaterally offer to reduce the price agreed upon by the parties.
Though a mere formal contract of sale does not validly transfer title to the purchaser, it crystallises the position of both parties as to the terms of and the bindingness of the contract. A formal contract of sale serves to evidence an agreement between both parties and strengthens their intention to create legally binding relations. Thus, where a party does any action contrary to what has been stipulated in the contract, they will be in breach and may be liable to that effect.
At this stage of the transaction, the purchaser may make one of two types of payments to the vendor. The first is a deposit, which typically serves as a demonstration of the purchaser’s commitment to the sale and an intention to proceed. This payment is usually made prior to the execution of a formal contract and is often subject to forfeiture if the purchaser defaults or fails to complete the transaction. Where the parties proceed to execute a formal contract following the payment of a deposit, the deposit is generally treated as part payment of the purchase price under the contract.[vi]
The other form of payment is the part payment. This payment is typically made after the contract has been executed, indicating a furtherance of the transaction. For part payments, the purchaser is entitled to a refund in the event of a breach by either party.
Regardless of any payments, once a formal contract has been executed, the vendor can not unilaterally increase the purchase price of the property for any reason except certain clauses have been included in the contract giving the vendor the autonomy to increase the purchase price before the transaction is completed.
Clauses to look out for in a Contract of Sale of Real Property
Generally, every clause in a contract of sale of real property requires proper scrutiny. A good contract must clearly and accurately describe the property, spell out the total purchase price, any initial deposits, payment structure (e.g., instalments), and deadlines.
That said, to prevent issues involving the introduction of new terms into an agreement or the alteration of prior agreements, certain clauses must be carefully perused by the purchaser to protect their interest before executing the contract. Some of these clauses are:
- Price Adjustment Due to Exchange Rate or Material Cost Fluctuations
This clause is common in transactions involving properties that require development before possession can be transferred. This clause gives the vendor or developer the power to increase the purchase price if the cost of materials goes up or there’s a change in exchange rates.[vii] On the surface, it sounds reasonable; after all, Nigeria’s economy is unpredictable. But on a deeper look, this clause is one-sided.
Developers who insert this clause are rarely the ones taking financial risk. They build with the buyers’ money yet shift the full brunt of market changes to the buyer. Worse, if the project is delayed or abandoned, they can easily point fingers at “economic conditions” while still holding buyers to additional payments.
- Completion Timeline Clauses
Some agreements contain vaguely worded clauses that allow the vendor to extend completion dates without a definite timeline or accountability. Purchasers must avoid open-ended completion terms that do not tie the vendor to a specific delivery obligation or provide remedies for undue delays.
- Post-Completion Service Charges or Development Levies
Some contracts quietly include clauses that require the purchaser to pay certain fees even after full payment has been made, often for development, infrastructure, or “community services.” These clauses are usually vaguely defined and can create long-term financial commitments with no clear endpoint.
- Exclusion of Specific Performance
Certain contracts may exclude the purchaser’s right to sue for specific performance in the event of a breach. This limits the purchaser to monetary compensation alone, which may not be adequate in transactions involving unique property interests. Purchasers should be cautious about waiving their right to equitable remedies.
- Entire Agreement Clause
This clause provides that only the written contract represents the full agreement between the parties, overriding all oral agreements or previous representations. While not inherently unfair, this becomes a trap where the vendor has made verbal assurances (e.g., on pricing, timelines, or specifications) that are not reflected in the final contract. Purchasers must ensure all material discussions are written into the contract before signing.
In addition, in some instances, vendors try to rely on letters of offer or payment receipts to claim that a binding contract exists, even when key terms were never negotiated. Purchasers should be clear that such documents are provisional and subject to a formal execution of a proper contract of sale.
Related Risk: Oversubscription and Non-Allocation in Real Estate Sales[viii]
Another emerging concern in Nigeria’s real estate market, closely tied to post-agreement price manipulation, is the fraudulent practice of oversubscription and non-allocation of land, particularly by real estate companies operating off-plan or under large-scale development schemes.
Oversubscription occurs when a developer or vendor collects payment from more buyers than there is available land or property to accommodate them. Non-allocation refers to the failure to assign land or property to a purchaser after payment has been made. These practices often lead to similar outcomes as unilateral price increases: financial loss, legal disputes, and prolonged uncertainty.
In many cases, developers exploit vague contract clauses or the absence of a formal contract to justify failure to allocate land or to demand additional payments under the guise of economic conditions. Victims are left with little beyond legal recourse, which is frequently delayed, resource-intensive, and emotionally draining.
The causes of this phenomenon are largely systemic, including weak regulation, insufficient title verification, and a lack of enforcement mechanisms. Some companies also rely on aggressive marketing and verbal assurances that are not captured in the contract, leaving purchasers exposed to later claims that the original terms were never agreed upon or were subject to change.
For purchasers, the implications are severe: loss of capital, diminished trust in the real estate sector, and, in many cases, foreclosure of other investment opportunities. Even where formal agreements exist, fraudulent developers may delay allocation indefinitely, demand arbitrary “development levies,” or unilaterally amend the payment structure.
To safeguard against these issues, the preventive measures addressed subsequently become even more critical, ensuring written documentation, verifying title authenticity, avoiding vague clauses, and engaging legal counsel before any payment is made. Purchasers must be particularly cautious of contracts that allow price adjustment based on material cost fluctuations or completion delays, as these can serve as loopholes for non-allocation or further financial demands.
Remedies available to Purchaser
As a purchaser caught in between a unilateral increase, there are several remedies available depending on whether the increase was before a formal contract of sale was executed or after.
As previously stated, an agreement for the sale of land that has not been evidenced in writing is generally unenforceable, except in some instances, one of which is acts of part performance. The remedy that the part performance here gives rise to is the equitable remedy of specific performance.
- Specific Performance
Particularly implored where damages won’t do justice; Specific performance is an equitable remedy that compels a vendor to honour a concluded contract by completing the sale on the original terms. The remedy is discretionary and only available where the purchaser can prove the existence of a valid and enforceable contract: oral or written, alongside acts of part performance that would make it inequitable for the vendor to renege.
The doctrine of part performance allows the court to enforce an otherwise unenforceable oral agreement concerning land where the purchaser has taken steps in reliance on the agreement. However, these acts must meet strict criteria.
- The acts of part performance must be unequivocally referable to the alleged contract and incapable of being explained by any other relationship;
- The purchaser must have altered their position in reliance on the oral agreement;
- The agreement must be capable of enforcement, i.e., it must concern land or an interest in land and be sufficiently certain in its terms;
- The acts of part performance must reflect a finally concluded agreement, not one still under negotiation or lacking consensus on material terms;
- The acts must be performed by the purchaser, not the vendor and must show that the purchaser has suffered a detriment or altered their position significantly[ix]
That said, specific performance will not be granted where the contract is uncertain, lacks mutuality, was induced by fraud or misrepresentation, or where undue delay or hardship would result.[x]
In essence, specific performance remains a powerful remedy against unjustified price increases in land sales. Still, it is not automatic and will only be available where there is an enforceable agreement and compelling equitable grounds for enforcement.
- Damages for Breach
Where the vendor unilaterally varies the agreed terms or sells the property to a third party after a concluded agreement, the purchaser may seek damages for breach of contract. Damages serve to compensate the purchaser for actual losses suffered as a result of the vendor’s failure to perform the contract. This may include direct financial losses such as legal and agency fees, survey and valuation costs, or other expenses reasonably incurred in reliance on the agreement. In appropriate cases, a purchaser may also recover expectation damages, which aim to put them in the position they would have been in had the contract been fully performed.
Additionally, consequential losses may be claimed where the purchaser can establish that the vendor’s breach led to foreseeable indirect harm, such as the loss of another investment opportunity or increased acquisition costs resulting from delays.
Damages may also operate as a fallback where specific performance is either unavailable or impractical due to factors such as the vendor’s insolvency or the property’s transfer to a bona fide purchaser without notice.
- Injunctive Relief
In urgent scenarios, especially where the vendor is on the verge of transferring the property to a third party in breach of a concluded agreement, the purchaser may apply for an interim or interlocutory injunction to preserve the status quo pending the resolution of the dispute. This remedy is preventive rather than compensatory and is particularly useful where the risk of irreversible harm exists, such as the alienation of a uniquely situated property.
To obtain injunctive relief, the purchaser must satisfy the well-established tripartite test:
- There is a serious issue to be tried;
- Damages would not be an adequate remedy;
- The balance of convenience tilts in favour of granting the injunction.
The courts may also grant an Anton Piller Order (in extreme cases) to preserve documents or items relating to the property where there is a risk of destruction or concealment. However, injunctive relief is not automatic and will not be granted where the purchaser’s conduct shows undue delay, lack of clean hands, or absence of clear contractual documentation.
Injunctions can be powerful tools in stalling a vendor’s attempt to undermine a concluded sale, especially in Nigeria’s fast-moving real estate market, where properties often change hands rapidly. It gives the purchaser breathing room to pursue full legal remedies without the fear of losing the subject matter in dispute.
Preventive Measures and Practical Advice
Given the frequency of post-agreement price variations and contractual breaches in Nigeria’s real estate space, prospective purchasers must adopt proactive strategies to safeguard their interests. The following practical steps are recommended to prevent disputes and strengthen legal protection where they arise:
- Engage a Lawyer
The most important first step in any real property transaction is to engage the services of a competent legal practitioner. Real estate transactions involve multiple legal and procedural layers, from verifying title and conducting land registry searches to drafting, reviewing, and executing the contract of sale. Without professional legal guidance, purchasers may overlook critical clauses, rely on verbal assurances, or enter into lopsided agreements that expose them to financial loss.
A lawyer’s role is not just to prepare documents, but to ensure that the purchaser’s rights are adequately protected at every stage of the transaction. Legal practitioners can identify red flags early, negotiate more equitable terms, and structure the deal to prevent potential breaches or unilateral variations. Engaging a lawyer at the outset is not a luxury; it is a protective necessity.
- Reduce All Agreements into Writing
A verbal agreement, no matter how clear, is rarely sufficient in land transactions. Purchasers should ensure that all terms, especially price, payment structure, timelines, and obligations, are documented in a formal contract of sale. Engaging legal counsel early in the process is not merely advisable but essential. A well-drafted contract anticipates and closes legal loopholes that vendors may otherwise exploit.
- Ensure All Payments Are Documented and Traceable
Every financial transaction related to the property should be made through traceable channels (such as bank transfers) and accompanied by detailed receipts indicating what the payment is for (e.g., deposit, part payment, survey fee). Purchasers should also insist on an acknowledgement of these payments in the body of the contract, especially where they are made before the execution of the agreement.
- Avoid Premature Financial Commitments
While enthusiasm is understandable, making large financial outlays, such as starting renovations, taking possession, or commissioning documentation, before signing a formal agreement can leave a purchaser exposed. Such actions may not automatically confer legal interest in the property and may be difficult to recover if the transaction falls through. Unless there is strong documentation to support the agreement, such steps should be avoided.
- Act Promptly at the First Sign of Non-Compliance
Where a vendor begins to stall, alter previously agreed terms, or make unreasonable new demands, the purchaser must act quickly. Delay can undermine the purchaser’s legal position, weaken the credibility of their claims, or allow the vendor to sell to a third party. In some cases, early legal intervention, whether through a demand letter, injunctive relief, or mediation, can help preserve the purchaser’s rights and prevent escalation.
In essence, due diligence, documentation, and early legal involvement remain the most effective shields against post-agreement price manipulation and breach of contract in real property transactions.
Conclusion
The practice of post-agreement price increases in real property transactions undermines the sanctity of contracts and threatens the integrity of Nigeria’s real estate market. While vendors may attempt to justify such conduct on economic grounds, the law remains clear: once parties have reached an agreement on essential terms, especially where part payment has been made or a formal contract has been executed, unilateral variation of the price is impermissible and actionable.
Purchasers are not without remedy. Whether through specific performance, damages, or injunctive relief, the law provides avenues for redress, though such remedies are often only accessible where the purchaser has taken proactive and documented steps to protect their interest. Ultimately, legal enforceability depends not only on the facts of the case but also on the prudence of the purchaser.
Therefore, beyond legal recourse, prevention remains the best strategy. Purchasers must engage competent legal counsel, reduce agreements into writing, avoid premature commitments, and act decisively at the earliest signs of breach. In a market prone to sharp practices and shifting terms, diligence is not merely a virtue; it is a necessity.
Author
Mopelola Muibi-Hammed
Associate, Popoola Taiwo LP.
REFERENCES
[i] Biyo v. Aku (1996) 1 NWLR (Pt. 422) 1 at p. 38 par. F-G
[ii] (1999) Lpelr-1527(SC)
[iii] Biyo v. Aku (1996) 1 NWLR (Pt. 422) 1 at p. 24 par. D-E
[iv] Ekwem v. Li Baqi (2017) LPELR – 43456 (CA)
[v] Osagie v. Oyeyinka (1987) 3 NWLR (Pt 59) 144
[vi] Gege v Nande, [2006] 10 NWLR [Pt. 988] 265
[vii] https://venturanna.com.ng/4-real-estate-contract-clauses-you-should-never-accept-before-buying-property/
[viii] https://businessday.ng/news/legal-business/article/oversubscription-and-non-allocation-of-land-by-real-estate-companies-a-real-estate-fraud/
[ix] Ekpanya v Akpan, (1989) 2 NWLR (Pt. 101) 86 at 97
[x] (Ohiwerei v. Okosun (2003) 11 NWLR (Pt. 832) 463).