ACQUISITION OF LAND IN KENYA, DUE DILIGENCE AND/ INVESTIGATING THE TITLE

ALL YOU NEED TO KNOW ABOUT ACQUISITION OF LAND IN KENYA, DUE DILIGENCE AND/ INVESTIGATING THE TITLE

The process of land acquisition in Kenya is complex and fraught with challenges for bona fide purchasers. Common challenges include fraud, unnecessary delays in compensation, and/ historical grievances which you might not be aware of. Primarily, the land acquisition process is governed by the Constitution of Kenya (2010), the Land Act (2012), the Land Registration Act 2012 and the subsequent land regulations.

Methods of acquiring land in Kenya?

In Kenya, land may be acquired through purchase and/or transfer with or without consideration, adverse possession, gifts, land allocation and even through succession. However, with the most common way of land acquisition being through purchase, we will weigh into what it takes to ensure legal compliance for purchasers. Of paramount importance, to ensure a thorough dig into the title through investigating the same and also investigating the vendor. Basically, this a call for a thorough due diligence.

What is the importance of investigating/deducing a title?

The main reasons for investigating a title for a purchaser is to find out the following among other things;

a) Whether the vendor/seller holds good title;

b) Due to the caveat emptor (buyer be aware) rule considering the fact that the seller is not under an obligation to disclose any patent defects but the latent defects they are aware of; and

c) To protect their interests for value without notice of defect in title.

Generally, investigating the title involves pre-contract inquiries, searches, and requisitions.

Pre-contract inquiries

Pre-contract inquiries mainly involve probing the physical condition of and location of the subject land typically via a physical inspection and the proposed contractual instrument if any.

What is the importance of pre-contract inquiries?

These inquiries declassify the information set out below;

1. Development prospects of the land including neighbourhood policies and restrictive covenants affecting the land;

2. Physical structures and defects of the land;

3. Existing legal disputes; and

4. Occupancy of the land.

The above information aids to ascertain the condition of the land, its value, any patent and latent defects, fixtures and fittings, those in actual occupation of the land; the boundaries and of course, any possible rights and/or easements affecting or benefitting the property.

Searches

Generally, searches are conducted at the Land Registry, Company Registry; Probate Registry, Survey Department, and through court records as a shield against fraud and to ascertain any planning, environmental, financial or other encumbrances which affect ownership of the interest being transferred or acquired.

Searches include, official, historical, personal and even postal searches.

Importance of searches during land acquisition process

Searches are of paramount significance as they may lead to;

1. Discovering legal impediments and/or restraints hindering registration like caveats, cautions, prohibitions or restrictions on the title;

2. Discovery of encumbrances like charges;

3. Unearthing that a proposed vendor is not the registered proprietor of the land; and

4. Getting clarity on any pending land rates and land rents.

Requisitions

These are objections or queries arising after perusal and deduction of title documents. Requisitions form an integral part of the process of investigation of title. Substantially, it helps give the purchaser title in accordance with the Agreement for Sale.

Basically, after investigation of title and execution of the Agreement for sale, the next step is normally completion and transfer.

COMPLETION AND TRANSFER

Completion is described as the process in a conveyancing transaction where necessary documents of title are handed over in exchange for the balance of the purchase price. The completion documents include:

a) Original Title document;

b) Duly signed and executed Transfer;

c) Land Rent Clearance Certificate and Original Land Rent payment receipts for leasehold titles;

d) Land Rates Clearance Certificate and Original Land Rate payment receipts where applicable;

e) Relevant consents applicable to the transfer;

f) Notice of withdrawal of a caveat or caution if any;

g) Copy of the ID’s, PIN Certificates and Certificate of Incorporation (for a company) of both the parties; and

h) Copies of 3 coloured photographs of the parties or the Directors of the company, where applicable.

At the completion and transfer stage, interest in the land is transferred to the purchaser and for the purchasers to acquire interest in the land, they need to register the transfer after paying the requisite stamp duty. It is the subject transfer documents that cause the disposition to take effect once registered.

Why you need a lawyer in a land transaction?

Due to the complexity of land transactions, it is advisable for parties to retain lawyers for the obvious reasons like conducting due diligence on the property being acquired and drafting attendant legal instruments, reviewing the subject instruments, procure execution of the Agreement for sale and above all ensure a seamless transaction while mitigating the risks associated with conveyancing transactions. As well, lawyers will assist to enforce material breach of the Agreement for Sale if any. In summary, a lawyer plays a critical role in investigating the root of the title and ensuring you acquire a good title.

Need a seasoned lawyer for your land transaction? Reach out to Musa & Musa Advocates who are ranked as the best conveyancing and real estate lawyers in Kenya to have your interests protected and to ensure that you acquire a good title.