The Off-Plan Sale, the Three Transfers and the Missing Approval
Your firm is sole agent for Lekki Pearl Ltd's 40-unit off-plan estate at Ajah, Lagos, at 5% commission payable 'on introduction of a purchaser who completes'. You introduced Mrs A, who has paid N85m of the N170m price in three tranches from three different company accounts, one of them an offshore shell company whose ownership the developer cannot explain. The name on her international passport does not match the spelling on the subscription agreement. The developer's in-house lawyer asks you to hold the latest N35m in your firm's client account 'for a few days' because the developer's bank account is frozen over a tax dispute. The developer later sells unit 14 to another buyer and refuses your commission on Mrs A's unit, saying she has not completed and has defaulted on the balance. Mrs A asks you whether the estate has 'government approval'; you know the building plan approval has lapsed and a renewal application is pending. The developer's instruction is: 'Don't mention it - it is a technicality.'
1. What are your anti-money-laundering and client account obligations on these facts?
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Registration and customer due diligence. Estate agency is a designated non-financial business or profession under the Money Laundering (Prevention and Prohibition) Act 2022. The firm should be registered with SCUML and must apply customer due diligence before the relationship is established. The red flags here are cumulative: a personal purchase funded from three company accounts, one an unexplained offshore shell; a name mismatch between passport and subscription agreement; and a request to route funds through an agent's account to escape a freeze. Identify the purchaser, the beneficial owners of each paying company, the source of the funds and the source of wealth. Until that is satisfactorily done, do not complete, do not hand over documents and do not release funds. If the explanation does not hold, file a suspicious transaction report with the NFIU and do not tip off the client or the developer - tipping off is itself an offence. Keep the CDD and transaction records for the statutory period.
The client account. Money received for a client must be paid into a designated client account, kept separate from office money, recorded in a client ledger and receipted in the firm's name. It may not be used to shelter the developer's money from a lawful freeze or from a tax authority: that is at best facilitating the dissipation of assets and at worst money laundering. The N35m belongs to the purchaser, not to the developer, and paying it over without the purchaser's written authority would be a misapplication of client money. Decline in writing, suggest a solicitor's escrow or a joint mandate, and if the funds are already held, retain them, seek the purchaser's instructions and take legal advice.
2. Advise on the commission claims for Mrs A's unit and for unit 14.
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Mrs A's unit. The agency agreement makes completion a condition of the commission - 'a purchaser who completes'. On the face of it, no completion means no commission yet. But a party cannot rely on a condition whose satisfaction it has itself prevented. If the balance is unpaid because the approval has lapsed, because the developer cannot deliver title, or because the developer refused to complete, the developer's own default caused the failure and the agency should be paid, or at least paid a quantum meruit for the work done. Check the exact wording - 'introduces a purchaser who enters into a contract' is a much easier threshold than 'who completes' - and check for any express fall-through or default clause in the agency agreement.
Unit 14. Mere introduction is not enough; the test is effective cause. If the buyer of unit 14 came through your marketing, your register or your introduction of Mrs A, you have a claim even though that particular sale did not complete through Mrs A. If the developer found that buyer independently, there is no commission. Prove it with the introduction register, viewing forms, dated correspondence and the sale date.
Next step. Issue a written fee note setting out both claims and the evidence, propose mediation under the agency agreement before litigation, and from now on use a written agency agreement that defines when commission is earned, what happens on a fall-through caused by the developer, and how commission is shared in joint agency.
3. How should you respond to Mrs A's question and to the developer's instruction?
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To Mrs A. You must not misrepresent the position, and must not answer a planning question with a reassuring noise. A truthful answer is: 'The building plan approval has lapsed and a renewal application is pending. I cannot give you legal advice; please instruct your solicitor and inspect the approval file at the planning authority yourself.' That is factual, protects her, and does not require you to hand over the developer's confidential file.
To the developer. Reply in writing that you will not state or imply that the estate is approved when it is not, that you will answer purchasers' questions truthfully, and that continuing to market on a false basis would be misrepresentation and a breach of planning control. Ask the developer to confirm the renewal timeline in writing and to correct the marketing material for all 40 units, not just Mrs A's. If the developer insists on concealment, withdraw from the instruction, give written reasons, and consider whether earlier marketing material needs correcting with other buyers.
Why it matters. An agent who conceals a material fact is exposed to a claim from the purchaser, to disciplinary action, and loses the defence that he was merely passing on what the developer said. It also sits badly with the money-laundering concerns on the same file: a transaction built on a false statement about approval is exactly the kind of transaction that should not be pushed through.