The process of purchasing property in Kenya (Conveyancing process)

Introduction: 

The process of purchasing property in Kenya, known as conveyancing, is a complex legal undertaking that requires the expertise of a qualified advocate. The advocate's role is crucial in safeguarding the client's interests, ensuring legal compliance, and preventing fraud.

Significant processes to note when a client is purchasing property in Kenya:
 

1. Client Instructions and Engagement:

Initial Consultation: The advocate will meet with the client to understand their objectives, the nature of the property they intend to buy, their budget, and any specific concerns.

Explanation of Process: The advocate will explain the entire conveyancing process, timelines, potential costs (fees and disbursements), and what the client needs to provide.

Letter of Engagement/Retainer Agreement: A formal agreement is signed between the advocate and the client, outlining the scope of services, professional fees (often guided by the Advocates Remuneration Order, 2014, as amended), payment terms, and client responsibilities. This ensures clarity and avoids future disputes.
 

2. Due Diligence and Property Verification (The Most Critical Stage):

Obtaining Property Documents: The advocate will request essential documents from the seller or their advocate, including:

• Copy of the Title Deed/Certificate of Lease.
• Seller's National ID/Passport and KRA PIN Certificate.
• Spousal consent (if the seller is married and the property is matrimonial land).
• Company registration documents (if the seller is a company).
• Rates and Rent Clearance Certificates.
• Survey map/Mutation Form (for subdivided plots).

Official Search at Lands Registry: The advocate conducts a formal search at the relevant Lands Registry to:
    * Verify the registered owner of the property.
    * Confirm the size and boundaries of the property.
    * Ascertain the tenure (freehold or leasehold) and its unexpired term.
    * Check for any encumbrances (e.g., existing mortgages, charges, cautions, caveats, easements, or court orders) that might affect the property.
    * Confirm the authenticity of the title deed.
* **Local Authority Searches:** To ascertain:
    * Outstanding land rates and service charges from the County Government.
    * Any planning restrictions or proposed developments that might affect the property's use.
    * Obtain a Rates Clearance Certificate.
* **Company Searches (if applicable):** If the seller is a company, a search is conducted at the Registrar of Companies to confirm its legal existence, directorship, and authority to sell.
* **Physical Inspection Advice:** The advocate advises the client to conduct a physical inspection of the property with a surveyor to confirm its actual condition, boundaries, and ensure it matches the land records, and identify any third-party occupants or encroachments.
* **Verification of Seller's Identity:** Ensuring the seller is the legitimate owner and has the legal capacity to sell.

**3. Negotiation and Drafting of Sale Agreement:**
* **Negotiation of Terms:** The advocate assists the client in negotiating the terms of the sale, including the purchase price, payment schedule, conditions precedent (e.g., obtaining consent), and the completion period (typically 90 days).
* **Review/Drafting of Sale Agreement:**
    * The seller's advocate usually drafts the Sale Agreement. The buyer's advocate meticulously reviews it to ensure all clauses are fair, protect the buyer's interests, and comply with the Law of Contract Act and Land Act.
    * The agreement includes details like parties, property description, purchase price, deposit amount, payment timelines, conditions for completion, default clauses, and dispute resolution mechanisms.
* **Execution of Sale Agreement:** Both the buyer and seller, along with their witnesses, sign the Sale Agreement. The buyer usually pays a deposit (commonly 10% of the purchase price), which is often held by the seller's advocate in a client account as a stakeholder.

**4. Obtaining Consents and Clearances:**
* **Land Control Board (LCB) Consent:** If the property is **agricultural land**, the seller's advocate applies for consent from the Land Control Board. This is a mandatory step, and without it, the transaction is null and void. The advocate ensures all necessary documents are prepared and attends the LCB meeting.
* **Rates and Rent Clearance Certificates:** The advocate ensures that all outstanding land rates and land rent (for leasehold properties) are cleared by the seller, and the relevant clearance certificates are obtained.

**5. Valuation and Stamp Duty Payment:**
* **Valuation:** The buyer's advocate usually advises on a government valuation (or private valuation) of the property. This valuation is crucial for calculating stamp duty.
* **Stamp Duty Assessment and Payment:** The advocate assists the client in computing, assessing, and paying stamp duty to the Kenya Revenue Authority (KRA). This is a mandatory tax (4% of the value for urban properties, 2% for rural/agricultural properties). The documents (Sale Agreement and Transfer Forms) are stamped to legalize them.

**6. Transfer and Registration:**
* **Drafting Transfer Documents:** The buyer's advocate drafts the necessary Transfer Forms (e.g., Form L.R. or others depending on the land regime).
* **Execution of Transfer:** The Transfer Forms are executed by both the buyer and seller in the presence of the advocate, who attests to the signatures.
* **Lodging Documents for Registration:** Once all conditions are met, all completed and stamped documents are lodged at the relevant Lands Registry for registration. These typically include:
    * Original Title Deed/Certificate of Lease.
    * Duly executed and stamped Transfer Forms.
    * Consent to Transfer (if applicable, e.g., LCB consent).
    * Rates Clearance Certificate.
    * Land Rent Clearance Certificate (if applicable).
    * KRA PIN Certificates of both parties.
    * National IDs/Passports of both parties.
    * Passport photos of both parties.
    * Payment receipts for stamp duty.
* **Follow-up and Issuance of New Title:** The advocate continuously follows up with the Lands Registry to ensure the transfer is processed efficiently. Once registered, a new Title Deed or Certificate of Lease is issued in the buyer's name.

**7. Post-Completion Activities:**
* **Handover of Original Title:** The advocate hands over the original Title Deed/Certificate of Lease to the client.
* **Post-Registration Search:** Conducts a final search to confirm that the property has been registered in the client's name and is free from any new encumbrances.
* **Advisory:** Advise the client on subsequent steps, such as taking possession, obtaining necessary utility connections, or any further developments like obtaining construction permits (if applicable).
* **Custodian of Documents:** The advocate may hold original completion documents in their strong room for safekeeping on behalf of the client, as agreed.

By meticulously following these processes, the advocate ensures that the client acquires a legally sound title to the property, minimizing risks and protecting their investment.

Key Terms to Consider When Reviewing a Loan/Financing Agreement

When reviewing a loan agreement, it’s essential to pay close attention to key terms that define the rights, obligations, and risks for both the lender and the borrower. Here are the key terms to consider:

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1. Loan Amount and Disbursement Terms

• Clearly state the principal amount being lent.
• Check how and when the loan funds will be disbursed.
• Look out for conditions precedent (e.g., documents to be provided before disbursement).

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2. Interest Rate and Fees

• Confirm the interest rate type: fixed, floating, or variable.
• Watch for additional fees: arrangement fees, commitment fees, late payment penalties, etc.
• Understand how interest is calculated (e.g., daily, monthly, annually).

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3. Repayment Terms

• Review the repayment schedule: periodic payments, bullet payments, grace periods, etc.
• Check if early repayment is allowed and whether any prepayment penalties apply.
• Understand the currency and method of repayment.

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4. Security/Collateral

• Identify whether the loan is secured or unsecured.
• If secured, confirm the nature of the collateral (real estate, movable assets, shares, etc.).
• Check for any charges, liens, or rights over the assets provided as security.

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5. Covenants

• Positive covenants: Obligations the borrower agrees to do (e.g., maintain insurance).
• Negative covenants: Restrictions (e.g., no additional borrowing, no asset disposal).
• Failure to comply can trigger a default.

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6. Events of Default

• Clearly understand what constitutes a default (e.g., missed payments, insolvency).
• Review the grace period, if any, before a default is enforced.
• Know the lender’s remedies in case of default (e.g., demand immediate repayment, enforce security).

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7. Governing Law and Jurisdiction

• Confirm the legal system governing the agreement.
• Determine where disputes will be resolved (e.g., courts or arbitration, and which location).

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8. Representations and Warranties

• Statements made by the borrower regarding their legal capacity, financial condition, and ownership of collateral.
• Inaccuracies can give the lender grounds to terminate or call in the loan.

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For inquiries or consultation reach out to our team of advocates by leaving your details vide the "Comment"section Tab herein. 

 

Can Foreigners Buy Land in Kenya?

In Kenya, foreigners can own land, but under a leasehold system, not freehold, with a maximum duration of 99 years. They cannot own agricultural land directly, except through a Kenyan-incorporated company and with approval from the Land Control Board.

Kenya’s land ownership laws come from the Constitution of Kenya (2010), the Land Act (2012), and other statutes, such as the Land Registration Act (2012). These laws regulate land tenure and transactions, including those involving foreigners.

Foreigners can buy land in Kenya, but they face specific restrictions. Article 65 of the Constitution limits foreign ownership to leasehold land for up to 99 years. Foreigners cannot own freehold land, but they may lease land for extended periods. 

• Leasehold Tenure:

Foreigners can hold land on a leasehold basis, which means they have the right to use the land for a set period (up to 99 years) and pay rent to the landowner (the lessor). 

• No Freehold Ownership:

Foreigners cannot own land outright, meaning they don't have the absolute right to own the land for perpetuity. 

• Agricultural Land Restrictions:

Foreigners are generally barred from directly owning agricultural land, unless they do so through a Kenyan-incorporated company. This means a foreign individual or company would need to be registered in Kenya as a company to own agricultural land, and the transaction would still require approval from the Land Control Board. 

• Leasehold Limits:

The maximum lease term for foreign ownership is 99 years, and the lease is renewable for a similar term, with the lessor having first priority. 

• Land Ownership Limits:

There are limitations on how much land a foreigner can own, including a limit of 100 acres outside of Special Economic Zones (SEZs). 

• Need for Approval:

Foreign land acquisitions require approval from the National Land Commission (NLC), ensuring compliance with Kenyan laws. 

• Land Use Regulations:

Foreigners must ensure their land use aligns with local zoning regulations and obtain any necessary permits for specific uses. 

 

The process of acquisition of title deed from inherited unregistered/unallocated land

 What is a Confirmation of Grant?

A confirmation of grant is a legal document issued by the court in a succession process, confirming who the legal heirs of a deceased person's estate are.

It authorizes the distribution of the estate, including land, to the rightful beneficiaries.

After the succession process, and if the land has no title deed, the following steps should be taken:

1️⃣ Conduct a Land Search at the Lands Registry

Check whether the land is registered under any previous system (e.g., Green Card, Registry Index Map [RIM], or Land Reference Number [LRN]).

If no records exist, the land may still be under customary ownership
 or an old land allocation system.

2️⃣ Seek Surveyor Assistance to Establish Boundaries

A survey must be done to officially map the land and assign it a proper reference for registration.

The local land control board or adjudication office may assist in cases of ancestral or community land.

3️⃣ Apply for a Title Deed Through Adjudication or Registration
If the land was never formally registered, the heirs named in the confirmation of grant must apply to have the land registered under their names.

This can be done through the Ministry of Lands or County Land Boards.

4️⃣ Transfer of Land to Beneficiaries

Once the land is officially registered, the heirs named in the confirmation of grant can apply for title deeds under their names.
If they wish to sell, the title must first be processed before any transaction can be completed.

🚨 Risks of Buying Land Based Only on a Confirmation of Grant

🔴 No proof of land ownership – Without a title, verification becomes difficult.

🔴 Land disputes – Other family members may contest the inheritance, leading to court battles.

🔴 Government reclamation – If the land is unregistered, it may be classified as public land.

🔴 Difficulty in obtaining financing – Banks require a title deed for loans or land transfers.

📌 Final Advice

DO NOT buy land only based on a confirmation of grant without ensuring the title deed process has been completed.

If you are inheriting the land, make sure you follow due process to register the land and get a title deed before making any transactions.

Credits: NS 

Legal Review: How is an intestate estate distributed in cases where the deceased had no spouse(s) or children?

Section 39 of the Act provides that where the deceased is neither survived by a spouse nor children, his/her net intestate estate will devolve upon his/her blood relatives in the following order: father, or if dead; mother, or if dead; siblings and any of their children in equal shares, or if dead; half-siblings and any of their children in equal shares, or if none; any other relatives up to the sixth degree of consanguinity.

It is important to note, however, that section 39 of the Act is among the provisions that were recently declared unconstitutional in the case of Ripples International v Attorney General & another; FIDA (Interested Party) (Constitutional Petition E017 of 2021) [2022] KEHC 13210 (KLR) (29 September 2022) (Judgment) for being discriminatory on the basis of gender.