The Process of Buying Land in Kenya: The Critical Role of a Lawyer
1.0 Introduction
Article 40 of the Constitution of Kenya, provides for the right of every person to acquire and own land of any description in any part of the country. Whereas, Kenyan citizens can own land in perpetuity under the freehold tenure, foreigners can only own land for a renewable leasehold term of 99 years. Bearing in mind that land fraud has become an extremely prevalent malpractice with the Kenyan real estate practice in Kenya, any person keen to buy land ought to undertake extensive due diligence to confirm the authenticity of the title so as to avoid getting defrauded. In light of the foregoing, we summarize as hereunder the key steps to be followed in buying land.
2.1 Conducting Official Search
The initial step is conducting of an official search at the Land Registry where the land is situated. The purpose of this search is to identify the registered owner of the identified land, the size of the land as well as any encumbrances attached to the land. The results are normally out within 2-3 working days.
The purchaser should also check whether the land is included in the Report by the Commission of Inquiry on Illegal and Irregularly Allocated Land, also known as the Ndung’u Land Report.
2.2 Confirmation of Unpaid Land Rates
Thereafter, one conducts a search at the county office where the identified land is located to ensure that there are no unpaid land rates attached to the land. In the event that there are unpaid land rates, the vendor should cover those costs. The fees attached to this search vary from county to county.
- The Land Map
The next step shall be to acquire at least two land maps of the identified land. These can be acquired from the Land Registry or a local surveyor. One of the maps should be drawn to scale, so as to show the exact measurements of the land or mutations made to the land. While the other, should give an overview if the identified land together with its adjacent plots.
- Land Verification: The Site Visit
The purchaser should do a site visit upon the identified land, accompanied by the vendor and a surveyor, preferably the one who prepared the initially mentioned land maps. The purchaser shall verify the land as it appears in the maps, and should erect beacons to prevent any future misunderstandings or disputes. Ideally, while in contrast, the latent defects on the property can be identified through the official search, patent defects are pointed out through the site visit.
- The Sale Agreement
Based on the provisions of Section 3 of the Law of Contract Act, the Purchaser and the Vendor should enter into an Agreement for Sale in respect of the property with the assistance of their lawyers. The Sale Agreement sets out the terms of sale, including but not limited to; the purchase price, mode of payment, payment plan, the completion period, and the documents to be furnished by the vendor to enable registration of the transfer of property.
- Land Control Board Clearance
In the event that, the property is categorized as agricultural land as under the provisions of the Land Control Act, a consent from the Land Control Board shall be mandatory.
- Valuation of Payment of Stamp Duty
Upon undertaking all the foregoing procedures, the purchaser shall apply for the valuation of the property. Needless to state, valuation is critical for the reason that, stamp duty will be computed based on the land’s value. For all intents and purposes, stamp duty is a form of tax payable by the purchaser of the property.
If the property is located within a municipality, the duty payable is 4% of the market value of the land as determined by the Government Valuer. If the land is agricultural or outside a municipality, the duty payable is 2% of the market value as determined by the Government Valuer. For a charge or mortgage, the duty payable is 0.1% of the mortgage amount.
- Transfer of Land
Upon payment of the stamp duty, the purchaser shall apply to the Land Registry for the transfer of land by lodging the stated transfer documents.
In the event, the Purchaser is being financed, the charge over the property and consent to charge should also be lodged for registration together with the transfer. Thereafter, the duly registered documents; the original title deed, the transfer and the charge shall be forwarded to the financier, who shall hold onto them until the purchaser repays their loan in full.
Thereafter, the purchaser will be issued with a new title deed showing that ownership has been transferred and the old title deed has been destroyed. It is important to do a further search at the Land Registry confirming that ownership has been transferred.
3.0 Conclusion
Owing to the complex nature of a property purchase transaction, each party is advised to retain the services of a duly licensed to undertake the process on their behalf so as to avert fraud and other related malpractices. On that account, the most critical role of a lawyer in a property/ land purchase transaction is conducting comprehensive diligence so as to ascertain the history of ownership of the property and whether there are any encumbrances or restraints to its disposition. Without that, a Purchaser will have entered into an obscure and murky business likely to culminate in frustration and loss of money.
Writers: Muteti Festus & Anita Maundu, Lawyers. Date: 12th July, 2023
Disclaimer: The information contained in this article is not legal advice and is provided for informational purposes only.
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