By Emmanuel Anigwe
The emerging trend in property transactions is the prevalence of proxy purchase of properties under the name of persons other than the actual purchasers of the property in question.
This emerging trend involves the drafting of property purchase documents to reflect a name of an agent or trustee of the actual purchaser without any prima facie indication of an agency or trustee relationship on the property purchase document. Although, it is not entirely illegal or prohibited to purchase properties under another person’s name, one could not turn a blind eye to the enormous risks involved where everything does not go as planned or where the proxy in whose name the property was purchased lays claim of ownership to the property. In any case, we may fail to see the wisdom or motive behind the concealment of the name or true identity of a person, who is the actual purchaser of a property and the alternative use of a proxy on the purchase of a property. However, the thrust of this discourse is the analysis of the legal implications of purchasing a property in the name of another.
Documentary Evidence as Proof of Ownership
One of the primary ways to prove ownership or title to a property is through documentary evidence. The general rule is that a document speaks for itself, and the contents of such document cannot be contradicted, altered, added or varied by oral evidence. Therefore the presumption of the law is that if a document bears the name of Mr. ‘A’ as the owner of a property, in law, the property will be deemed to belong to Mr. ‘A’ except where the presumption is varied or rebutted by other contents on the documents such as conditions and exceptions.
Dangers involved in the proxy purchase of property
Asset protection is a classic reason why certain individuals tend to conceal their identity when purchasing a property. It could be to protect their properties from creditors threat, which if they were to know about the existence of the property would expose the property to litigation in order to recover their debt from the purchaser. It could also be a form of tax strategy to avoid the taxman, or a ploy to escape the enforcement of a judgment against the actual purchaser. Nevertheless, the dangers of proxy purchase of properties include the following:
- Double-cross: The proxy whose name was used in purchasing the property could lay adverse claim to the property contrary to the intention and agreement of the parties. This poses a great problem and challenge to the actual purchaser especially where the purchase document contains only the name of the proxy and there are no conditions or exceptions in the document to reveal the true intention of the parties.
- Adverse claim by the creditors of the proxy: Having your property in the name of another could expose the asset to the creditors of the person whose name you use in purchasing the property and it could be a dodgy business trying to prove in court that the person whose name appear on the title document is a mere trustee of the property especially where no such qualification appear on the title document.
- Death of the proxy: It is natural for a purchaser to carefully select the person in whose name he/she used in purchasing the property hence, the chance of double-cross is pretty slim. However, what happens in the event of the death of the proxy and the heir to the deceased lays adverse claim to the property. When this happens, firstly, the property is exposed and you could also lose the property to the estate of the deceased in whose name the property was purchased.
- Spouse of the proxy: It is most unlikely for a person’s parent, child, wife or husband, etc to lay adverse claim on the property of a loved one. However, what happens when both of your parents remarry, or your child marries and their spouse now have a say in the matter most likely when they are dead. As administrators of the estate of the deceased in whose name the property was acquired they have a better chance of getting the court to rule in their favour in the event of any dispute concerning the property.
Implications of proxy purchase of property and the concept of resulting trust
The intention of a purchaser is material in determining if the person in whose name the property is acquired can be deemed as the beneficial owner of the said property. This is because the Court will presume that the person in whose name the property was purchased holds the property for the benefit of the person who advanced the money for the purchase of the property. It is presumed that the intention of the person advancing the money was that the purchased property should be held in trust for him/her by the person in whose name the property was purchased. This presumption is hinged on the concept of “Resulting Trust”. Resulting Trust is based on the unexpressed but presumed intention of the true owner; this presumed intention arises by operation of law rather than by agreement of parties. Implied or resulting trusts may arise in the following circumstances:
- Where an express trust fails;
- Where the beneficial interest under an express trust is not fully disposed of or exhausted; and,
- Where there is a purchase in the name of another or where a person makes a voluntary conveyance of his property to another.
We are more concerned with the third option, which is purchasing property in the name of another. Usually we see married couples acquiring properties in the name of their spouse or children, employers in the name of their employees, boyfriends in the name of their girlfriends, a committee of friends or an association in the name of a friend or member etc. The question now is: does purchasing the property in the name of another fully divest the person who advanced the money of his/her legal right to the property?
The doctrine of resulting trust looks at the unexpressed but presumed intention of the person advancing the money for the purchase of the property. The fact that Mr. A acquires a property using the name of Mr. B does not, on its own, confer absolute title on Mr. B. Although, it is imperative to state that the presumption of resulting trust may be defeated by the “presumption of advancement”, which is a presumption in trust, contract or family law, which suggests that a property from a parent to child, or spouse to spouse, is a gift and would defeat any presumption of resulting trust. However, the law also makes a distinction when a wife buys a property and conveys it in the name of the husband, in such case there is no presumption of advancement in favour of her husband; he holds in a resulting trust for the benefit of the wife. The reverse is the case if the husband purchases a property in the wife’s name, the presumption of advancement applies and the property is deemed as prima facie gift to her.
The problem lies in proving the presumed intention of a person who acquired a property in the name of another, in the face of glaring documentary evidence bearing the name of another person, while the only evidence available to the actual purchaser are bare oral assertions that he/she intended the property to be held in trust for him/her. However, one of the exceptions where oral evidence may be admitted to vary or add to the contents of a document is in proof of an implied or resulting trust. This is termed the parole evidence rule, which is a substantive common law rule in contract which makes parole/oral evidence admissible if the advance of the purchase money by the real purchaser doesn’t appear on the face of the document, and the parole evidence is admissible to prove if and when money was actually advanced for the purchase. Also section 128 (1) (b) and (d) of the Evidence Act 2011 (as amended) provides, inter alia, that the existence of any separate oral agreement as to any matter which a document is silent on, and which is inconsistent with the terms in the document, allows the court to infer that the parties did not intend the document to be a complete and final statement of the transaction between the parties. Parole evidence may be admissible in proving the existence of any distinct subsequent agreement to rescind or modify any such contract, grant or disposition of property. In the case of Jolugbo v Aina (supra), the Court of Appeal (Lagos division) upheld the decision of the trial court that was reached after the trial court considered both oral and documentary evidence. The facts of the case is that the 1st respondent (wife) advanced money to the 2nd appellant (husband) to effect purchase of the three bedroom flat subject matter of the suit. The property was in the name of the husband as shown in exhibits ‘W’ and ‘V’ being the allocation letter by LSDPC and LSDPC receipt. The court still found in her favour, as she was able to prove that she bore all responsibility towards the property including: advancing the initial deposit sum, opening the mortgage account and mortgage savings account, servicing/payment of the mortgage loan, pursuing a reconciliation of the mortgage account, renovation of the flats singlehandedly as the receipts of purchase material shows, and the mortgage facility granted by LBIC was guaranteed by her father etc.
From the foregoing, it is safe to say that it’s not in all circumstances that a title document becomes conclusive evidence in proof of ownership. The notion that once the name of a person appears on the title document such person has become the bonafide/beneficial owner cannot succeed when there is a superior title. Nevertheless, we must not shy away from the risks involved in purchasing a property in the name of another, in the words of Ibrahim Tanko Muhammad J.S.C in Madu v Madu (supra), the learned jurist on this subject has this to say: “it is a dangerous practice where people prefer to hide their identities and resort to using the identities of others in transactions which from the bottom of their minds meant to be beneficial to them. If such transactions are meant to be held in such resulting trust, I think they should be qualified by explanations, exceptions and conditions attached”. In this case the court held that there was no presumption of the parties that could have created a resulting trust because all the documents and correspondence was in the name of the wife, and that the husband did not lay any proper foundation to support his assertion that he advanced the money used in purchasing the property, coupled with the fact that it was not the husband that applied to FCDA for the land allocation. Thus, if you must purchase in the name of another, even though your name is not contained in the title document strive to include necessary conditions, explanations and exceptions to reveal the true intention of the parties, draft a “ Declaration of Trust”which is a document that records the fact that the person whose name appears as holding the property for the benefit of someone else, ensure that at least the payment receipt is in your name, or any other correspondence that could serve as a foundation to your claim and which will allow the court to admit other oral evidence in support of your claim.
*Emmanuel Anigwe LL.B BL firstname.lastname@example.org
 Idundun v Okumagba (1976) 9 – 10 SC 227
 Section 128 (1) Evidence Act 2011( as amended), UBN Plc v Ozigi (1994) 3NWLR (Pt. 333) 385
 Supra Section 128 (1) (a) – (e) para (2) – (3) provides for the exceptions.
 Madu v Madu (2008) Vol. 5 MJSC p. 229 paras. E – G
 Jolugbo v Aina (2016) All FWLR (Pt. 859) p. 891 paras B- E
 Supra paras E- G
 Ugbutevbe v. Shonowo (2004) 16NWLR (Pt. 899) 300
 Silver v. Silver (1958) 1 All ER 523.
 Jolugbo v Aina opcit at p. 901 paras A- G