UNIT 10

BILLING AND ACCOUNTS ON PROPERTY TRANSACTIONS

Billing and accounts management in property transactions are crucial aspects of real estate practice. They ensure transparency, proper record-keeping, and compliance with legal requirements. This note provides an overview of the principles and practices surrounding billing and accounts in Nigerian property transactions, highlighting relevant statutes and cases.

PRINCIPLES OF BILLING IN PROPERTY TRANSACTIONS

In Nigeria, the legal framework for billing in property transactions is influenced by various statutes and regulations. Key among them is the Nigerian land use act (LUA) 1978. Although the LUA primarily deals with land tenure, it sets the stage for billing practices by determining the legal rights and responsibilities related to land transactions. See section 1 of the LUA which vests all land in Nigeria in the governor of each state. The governor holds the land in trust for the people, which impacts the billing for land transactions, especially concerning statutory fees and rents. The act does not explicitly outline billing practices but establishes the framework within which they must operate.

BILLING FOR PROFESSIONAL SERVICES

Billing for professional services in property transactions, such as those rendered by solicitors, surveyors, and estate agents, is governed by contractual agreements and professional standards. The rules of professional conduct for legal practitioners (RPC) 2007, set out by the Nigerian bar association (NBA), regulate the billing practices of solicitors. See rule 47 of the RPC which addresses the issue of fees, stipulating that a lawyer must provide a clear, written agreement regarding fees to clients. This rule ensures transparency in billing for legal services related to property transactions. See also the case of Akinola v. Kolawole (2020) 12 NWLR (Pt. 1737) 135 where the court highlighted the need for transparency and accuracy in the billing of professional fees related to property transactions. It reinforced the necessity of clear agreements and proper documentation.

ACCOUNTS MANAGEMENT IN PROPERTY TRANSACTIONS

1. Record-keeping requirements: Proper accounts management involves maintaining accurate records of all financial transactions related to property deals. This includes receipts, invoices, and payment records. The companies and allied matters act (CAMA) 2020 plays a critical role in guiding record-keeping for corporate entities involved in property transactions. See sections 355 and 356 of CAMA which mandate that companies keep accurate records of their financial transactions and maintain proper accounting books. For property transactions, this means keeping detailed records of purchase prices, fees, and other expenses and the case of Ladipo v. Adeyemi (2014) 5 NWLR (Pt. 1401) 1 where the court dealt with issues related to billing discrepancies in property transactions. The court emphasized the importance of maintaining accurate records and clear billing statements to avoid disputes.
2. Taxation and financial reporting: Property transactions often involve various taxes and levies, which must be correctly billed and reported. The federal inland revenue service (FIRS) oversees tax collection, including those related to property transactions. See the income tax act (ITA) which governs income tax liabilities arising from property transactions. Property owners must account for income derived from rental properties and sales, ensuring accurate reporting to the FIRS and the value added tax act (VAT) which mandates the collection and remittance of VAT on certain property transactions, such as the sale of commercial properties. Accurate billing and accounting are crucial to ensure compliance with VAT requirements.
   
   

CONCLUSION

Billing and accounts in property transactions are governed by a mix of statutory requirements, professional standards, and case law. Key statutes such as the land use act, companies and allied matters act, and income tax act, along with professional regulations and judicial precedents, shape how billing and accounts should be managed. Adhering to these principles ensures transparency, accuracy, and legal compliance in property transactions.