A DILIGENT LAND BUYER’S GUIDE TO SECURING PROPERTY IN KENYA

Investing in land in Kenya can be a rewarding venture, but it is a path fraught with potential pitfalls for the uninformed. A diligent approach is not just recommended; it is essential to safeguard your investment and ensure a smooth, legally sound transaction.

This guide walks you through the critical stages of purchasing land in Kenya, from understanding the legal landscape to obtaining the final completion documents.

1. What are the fundamental laws that govern purchase of Property in Kenya?

A diligent buyer should be aware of the primary legal framework governing land transactions in Kenya. The supreme law is the Constitution of Kenya, 2010, which provides the overarching principles for land ownership and management. Key statutes that operationalize these principles include:

1. The Land Act, 2012;
2. The Land Registration Act 2012;
3. The National Land Commission Act, 2012;
4. The Matrimonial Property Act, 2013; and
5. The Law of Contract Act.

2. What does a thorough due diligence process entail?

It is the most crucial step in ensuring you have a good title and protecting yourself from fraud and future disputes. As correctly stated in Dina Management Limited v. County Government of Mombasa & 5 Others (2023) eKLR, the Supreme Court emphasized that one must go to the root of the title to satisfy themselves as to the validity of the title. comprehensive due diligence process should include:

2.1 Land Search at the Land Registry: A search includes historical search to confirm that the process of acquisition from inception was legal. The search will also reveal the registered owner of the property, the size of the land, and any encumbrances such as mortgages (charges), caveats, or court orders. For Nairobi Properties, the search can be done on the online Ardhisasa platform. However, the search must be authorized by the owner of the property.

2.2 Physical Inspection of the Property: Visit the land you intend to verify its physical existence, size, and boundaries. It is advisable to engage a qualified surveyor to confirm the beacons and the property’s dimensions against the survey map (mutation). While visiting the property, you may inquire from the neighbors and local administration about the history of the land and any potential disputes.

2.3 Verification of Identity: Verify the details of the seller by requesting their National ID and KRA PIN. If a company, request for a Certificate of Incorporation and a KRA PIN Certificate. Once the details are availed to you, compared with the information on the title document.

2.4 Request for Land Rates and Rents Clearance Certificates. If the interest of the property is leasehold, request for a land rent clearance certificate and land rates clearance certificate from the respective county government offices for freehold and leasehold properties.

2.5 Conduct searches of the Property Title Number at the Kenya Law Case directory: conducting the search will ensure that the property has a clear and undisputed title. The search will expose ownership disputes, any irregular allocations, any existing claims or restrictions on the property, any court orders that might affect the sale or transfer of the property and any environmental and land use disputes.

2.6 Checking with the National or County Government: For development purposes, it is prudent to check with the relevant authorities on the zoning of the area and any planned public projects that might affect the property.

3. What is an Offer Letter and is it legally binding?

An offer letter is an initial formal expression of interest by a registered owner to sell the property. An offer letter may also be by a potential buyer expressing interest to purchase a property. It is generally considered, “subject to contract” and it is not a legally binding contract for the sale of property. This means that either party can usually withdraw from the deal after signing the Letter of Offer without suffering significant financial loss or being subjected to litigation for breach of contract.

4. What is an Agreement for Sale and what are its key components?

An Agreement for Sale is a legally binding contract between the buyer and the seller that outlines the terms and conditions of the sale. It is typically prepared by the seller’s advocate and reviewed by the buyer’s advocate. An agreement for sale is merely executory and it is not a transfer document; it does not confer title to the buyer.

A well-drafted agreement should contain: names and address of the parties, a detailed description of the property, the purchase price, payment terms to include payment of the deposit and the balance of the purchase price, completion steps, default clause, dispute resolution and obligations of the parties.

5. Other than the Agreement for Sale and the Title, what other documents should I look out for?

Depending on the intricacies of a transaction, whether or not consents are required, a diligent buyer, through their advocate, should receive completion documents. The general completion documents include:

1. The Original Title Deed with respect to the Property;
2. The Transfer duly executed by the Seller (in triplicate);
3. Spousal Consent (for matrimonial property;
4. Land Rates Clearance Certificate;
5. Land Rent Clearance Certificate;
6. Copies of ID and KRA PIN Certificate of the Vendor (if a natural person), Copies of Certificate of Incorporation and KRA PIN Certificate (if a company);
7.   Passport Photos

6. What are the next steps after I have signed the Agreement for Sale?

Both Parties sign the Agreement after they are satisfied with the terms of the agreement. The signing by the Buyer and Seller is done in the presence of their witnesses. Once executed, the buyer proceeds to make a 10% security deposit of the Purchase Price in an escrow account to offer protection in case of any issues.

7.     When does the  transfer process happen?

The transfer process happens 60-120 days after the signing of the Agreement for Sale, the transfer process should be clearly provided for in the Agreement for Sale. It involves payment of stamp duty, which is 4% for lands in the municipal/urban areas and 2% for agricultural land. After payment of stamp duty, the title is deposited with the land registrar for the transfer of ownership to the buyer and issuance of a new title in favor of the buyer.  

8. Are there transactions that are exempt from the payment of Stamp duty?

Yes, there are transfers that are exempt from payment of Stamp Duty as provided in the Stamp Duty Act (Cap. 480), they include:

1. Transfer of property between husband and wife;
2. Transfer of family property to a limited liability company wholly owned by the family;
3. Transfers to Registered Family Trusts; and
4. Transfers to Charitable Organizations as gifts. 

By diligently following these steps and seeking professional legal advice, a land buyer in Kenya can navigate the complexities of property acquisition with confidence, ensuring their investment is secure for years to come.

Authors:

Valentine Magato – Conveyancing Lawyer 

Contact us : info@wmcoadvocates.co.ke  

Disclaimer –This Article is in general terms for guidance only and is not intended to substitute professional advice. While due diligence has been undertaken, in ensuring the accuracy of information provided herein, Waithira M. & Co. Advocates is not responsible for any actions , omissions undertaken as a result of the same.