Outline of a Conveyancing transaction

Seller’s Advocate (SA)	Buyer’s Advocate (BA)
Take instructions At this stage- must obtain documentary proof of the client’s identity (to comply with money laundering regulations)	Take instructions At this stage- must obtain documentary proof of the client’s identity (to comply with money laundering regulations)
Prepare Pre-contract package This comprises of; Draft contract, showing what land the seller is selling and on what terms he is prepared to sell Evidence of the seller’s legal title to the property, to prove that he does own it Sometimes the results of the pre-contract searches which the seller has made and the other information about the property The package may also include other information such as planning permission.
	Investigate Title Must check that the seller is entitled to see  what he is purporting to sell If problems with the title are discovered, the buyer can withdraw as there is no binding contract as yet
	Pre-contract searches and enquiries Necessary because of caveat emptor- buyer beware The National Land information service provides an internet ‘one-stop-shop’
	Check buyer’s finances To ensure he is able to proceed with the transaction, including all associated costs and deposits
	Approve the draft contract It must be then returned to SA, telling him that the buyer has approved the terms The contract is the prepared for the client’s signatures Two copies are printed, buyer signs one, seller signs the other The contract comes into existence by ‘exchange of contracts’ (i.e. the buyer received the copy signed by the seller and vice versa) Prior to physical exchange through the post, parties usually agree over the phone that the contract should come into existence at that moment. This is telephonic exchange
EXCHANGE CONTRACTS This marks the stage where a binding contract comes into existence On exchange, the buyer will normally pay the deposit
	Raise requisitions with the seller These are questions or requests, usually directed at the resolution of procedural queries relation to the mechanics of completion its self. E.g. buyer needs to know how much money is required to complete, where completion is to take place and who holds the keys. Standard form is usually used here.
	Prepare transfer deed Sends to SA for approval at the same time as requisitions NB sometimes the contract will provide for SA to draft the transfer deed, which will be provided to the buyer at the same time as the draft contract The contract states what the parties have agreed to do, the transfer carries it out
Approve Transfer deed This approval is normally notified to the buyer’s solicitor at the stage when replying to requisition The transfer deed can then be engrossed- i.e. a copy is prepared containing any agreed amendments. This is the copy which will be signed by the parties
	Pre completion searches To ensure no last minute problems have occurred with the title
Prepare for completion Take steps to ensure that completion will proceed smoothly and without delay	Prepare for completion Make a checklist of what is to happen at completion, to ensure nothing has been overlooked
Completion
Post completion matters Tie up loose ends Send the seller’s lender the amount required to pay off the seller’s mortgage, obtain a receipt, and send it to BS who will need this to prove to land registry that the mortgage has been discharged Account to his client for the proceeds of sale and submit bill of costs (if not already done). The proceeds of sale should be dealt with asap, or the SS may have to pay interest on them	Post completion matters Deal with payment of stamp duty land tax, usually paid within 30 days of completion Particulars of the transaction must be delivered to HMRC after completion, a certificate is then issued which allows registration of the transaction at the Land Registry. Without registration the buyer will not acquire legal ownership to the property After these formalities, BS must apply to Land Registry for is client’s title to be registered. Land registry will provide a Title info Document, which should be kept either with the buyer, lender or BS

Registration of Leases: How to Secure Your Rights & Interests Over Leased Property

 

Introduction 

The registration of leases could be described as a process that giving legal credence to leases by having them registered with the Department of Lands, more specifically with the Registrar of Lands for the particular jurisdiction in which the property falls.

A lease only transfers possession of a property but not ownership. For a fixed term and price, a lease confers usage rights of property to the person to whom the lease is granted (lessee) from the owner of the property (the lessor).

Section 47 of The Registered Land Act Chapter 300 of the laws of Kenya requires that where a lease is (a) for a specified period exceeding two years, (b) for the life of the lessor or of the lessee, or (c) if it contains an option whereby the lessee may require the lessor to grant him a further term or terms which, together with the original term, exceed two years, that the lease shall be in the prescribed form, and shall be completed by:

1. opening a register in respect of the lease in the name of the lessee; and
2. filing the lease; and
3. noting the lease in the encumbrances section of the register of the lessor’s land or lease.

Subsequent sections (Sections 48 to 64) of The Registered Land Act Chapter 300 of the laws of Kenya define various aspects of leasing of land including issues such as the lessor’s consent to dealing with the lease, lease of charged land, the duration of leases, what happens in the event of hold-over, implied agreements by both the lessor and lessee when they enter into a lease agreement and much more.

Registration of Leases: How to Secure Your Rights & Interests Over Leased Property

Why Does the Registration of Lease Agreements Matter?

It is important to note that while the registration of leases is not a legal prerequisite for the recognition of a legal contract between a lessor and lessee, an unregistered lease may be valid between the parties but will offer no protection against third parties to the agreement.

The Land Registration Act, 2012, in S.36(2) essentially confirms that nothing shall be construed as preventing any unregistered instrument (lease) from operating as a contract. There is also legal precedent to support this position.

If the law does not demand the registration of leases, why should a lease be registered? A formal lease document is important for several reasons

Strengthening the Formal, Written Record Provides Legal Recognition of the Lease:

First, registering the written record of the agreement between the lessor and lessee provides irrefutable proof and evidence of the agreement. In the event of any dispute, it is easier to clarify the agreement and find a resolution.

Recognition and Protection of The Rights & Interests of Both Parties

Second, the formal registration of leases can help to protect the rights and interests of both the lessor and lessee. A registered lease confirms the agreement between the parties, and the rights and responsibilities of each party, as well as offering them protections they would otherwise be unable to claim. This can help ensure that both parties are treated fairly and their rights are respected, more so where third-party rights are entered against the property.

Protection Where Third-Party Rights Subsist

Third, registration of leases may not only facilitate transactions that may require collateral against property but also creates legal, evidentiary support proof of the agreement between the parties. The registration of a lease may also inform the parties to the agreement of any prior or superseding rights that may take precedence over the property. For example, the lease may include provisions that protect the landlord from liability if the tenant causes damage to the property or that protect the tenant from being evicted without cause. For the lessee, attempting to register the lease may expose an undeclared prior right over the property, for example, a charge or a preregistered encumbrance on the property.

Professionalism

Finally, the registration of leases can help in establishing or asserting good governance measures in the conduct of business affairs that may be necessary, especially in corporate setups. This can be beneficial for both parties, as it can help to ensure that the agreement is conducted in a smooth and orderly manner.

A simple illustration of the importance of registering lease agreements is that a registered lease creates an encumbrance on the property, the effect of which is that the lessee cannot, for example, sub-let, charge or part with possession of the land leased or any part thereof without the written consent of the lessor.

Likewise, the lessor cannot interfere with the lessee’s rights created under the registered lease. For example, the lessor cannot arbitrarily transfer ownership of the property to a third party where the encumbrance subsists.

To register a lease, the parties submit the relevant documents in the prescribed form identifying the parties to the agreement, the specific property that is the subject of the lease including information such as the tenure, size, location and any other pertinent details of the property, the duration or tenure for lease, the specified lease amount agreed upon and any other information as prescribed.

Upon registration, the lease becomes a matter of public record entered against the title deed of the property. Registering a lease helps to ensure that the lessors ownership rights are recognized and that the lessee’s rights to occupy the property are enforceable.

The Process of Registration of Leases

Lease registration is an important legal process that varies depending on the jurisdiction. In some regions, lease agreements must be registered with the local authorities to gain legal validity and protection. Invariably, the registration process typically involves the following steps:

1. Prepare the Lease Agreement:

Before registration, the parties will draft a comprehensive lease agreement that includes all the essential elements. It is never a good idea to just go online and download a template and customize that, not least of all if you intend to take out an agreement for longer than two years. Take legal counsel!

2. Pay Stamp duty and Registration Fees:

Typically, it is the lessee who pays stamp duty for the lease agreement at the applicable rates (4% within municipalities and 2% outside of those areas). Generally, these levies will also vary based on the lease duration and local regulations.

3. Submit Lease Registration Documents:

Provide all necessary documents, including the original lease agreement, identification documents of both parties, property title deeds, and any other required paperwork.

4. Verification and Approval:

Local authorities will review the lease agreement to ensure compliance with applicable laws and regulations and register the lease. Once approved, they will stamp and seal the document.

5. Registry Record Keeping:

The registered lease agreement is kept on record at the local land registry. This will be beneficial in case of any legal disputes or conflicts in the future.

6. Renewal or Termination:

Lease registration may require renewal after a certain period, depending on the nature of the agreement, especially for long-term leases. Because registering a lease has the same effect as placing an encumbrance on the property, registered leases will also require specific termination procedures at the local land registry.

Conclusion

The necessity of registering leases may be arguable, depending on which side of the coin you’re staring at. For both the lessee and lessor, the hassle and additional costs associated with the registration of leases, on the one hand, may seem needless. On the other hand, at the risk of running into the headwinds that could result from commercial disputes, registering a lease agreement seems like a worthwhile endeavour. 

Neither party would want to enter into an agreement and then find themselves at the mercy of court-based adjudication that may not be guided by a formal, written agreement recognized in law. Additionally, the parties would not want to be unduly conscripted into any other commercial disputes that may arise from the actions of either party.

Essential Clauses of a valid Commercial Lease to Protect the Landlord/Lessor and Tenant/Lessee

 1.0 Introduction

A Lease Agreement (the “Lease”) sets out the rules to govern the relationship between the Landlord and the Tenant. It is a legal contract, as well as an immensely practical document full of crucial business details and deep legal implications. As a landlord, it is important to have a Lease that includes essential clauses that protect your rights and interests.
Failure to include these clauses may result in loss of income, liability for damages or lengthy and costly legal disputes in Court. This legal alert highlights some of the essential clauses of a lease protecting the landlord and provides a rationale for each clause.

2.0 Essential Clauses of a Lease Agreement

2.1 Permitted User clause

A permitted user clause is an important provision in leases that specify the type of business activity or use that is allowed on the leased premises. This clause restricts the tenant from using the property for purposes that are not permitted in the lease. The rationale for the inclusion of the permitted user clause is;

In summary, the clause is necessary to protect the landlord’s investment, comply with planning regulations, insurance and lender requirements and avoid potential legal issues.

2.2 Security Deposit Clause

The Security Deposit Clause acts as a form of insurance for the Landlord, protecting them from losses in case the tenant fails to fulfill their obligations. The security deposit clause must specify that the deposit shall not be used as rent for the months leading up to the lapse of term of lease. This clause must also specify how the deposit will be utilized before refunding after the lapse of lease.
The clause must specify the order of utilization of deposit as follows;

1. To settle all outstanding bills with respect to water, electricity, telephone, insurance, etc.;

2. To conduct repairs and maintenance of the rented premises;

3. To settle all penalties and/or interests accrued from outstanding rent and service charge bills;

4. To settle the outstanding service charge bills; and finally

5. To offset any outstanding rent charges.

2.3 Dispute Resolution Clause

A dispute resolution clause outlines the process to be followed in the event of a disagreement between the landlord and tenant. The clause provides alternative ways of resolving disputes aside from resorting to court processes, often characterized by exorbitant costs and prolonged timelines.
By offering avenues for dispute resolution, e.g., negotiation, mediation or arbitration, the clause fosters the preservation of the landlord- tenant relationship by departing from the confrontational nature of litigation.
The underlying rationale for the dispute resolution clause is to provide lucidity and predictability. By articulating a well- defined process, it obviates confusion and misunderstandings that may arise during court process.

2.4 Notice Clause

A proper notice clause is essential for protecting the landlord’s rights. The provision should clearly specify the requisite procedures and protocols for delivering notices. The law requires the landlord to adhere to specific notice requirements before making any amendments to the terms of the lease.
It is imperative that this clause be included in the lease which recognizes notice by newspaper. This enables the landlord to serve statutory notices in a national newspaper without first obtaining leave of court. Such inclusion will save time and litigation costs that may otherwise be incurred if the landlord were to obtain permission from the court before service.

2.5 Severability Clause

The severability clause establishes that in the event a court invalidates a provision within the lease, the remaining terms of the lease remain enforceable. This provision ensures that the lease remains valid, notwithstanding any unenforceable provision. The landlord retains the benefit of the lease despite any attempt by the tenant to terminate the lease due to the invalidation of a single clause by a court. The severability clause permits cancellation of only unenforceable provisions while preserving the effectiveness of other enforceable clauses in the lease.

2.6 Termination and Right of Re-Entry Clause

The Landlord and Tenant (Shops, Hotels & Catering Establishments) Act introduces the concept of a controlled tenant. A controlled tenancy is one that restrict the landlord’s ability to increase rent or terminate the lease without prior clearance from the Business Premises Rent Tribunal. To avoid  this, the Lease ought to satisfy the following requirements;

a. The term of lease must be more than 5 years;

b. The lease must not have a termination clause allowing the Tenant to terminate the lease before lapse of 5 years;

Commercial Leases typically do not have termination clauses. However, the re- entry clause allows the Landlord to terminate the lease by re- entering the rented premises before lapse of term in the following circumstances;

a. Non- payment of rent and other rent service even after receiving demand;

b. Non- performance or breach by the tenant of any covenants to the Lease;

c. Liquidation, placement under receivership or administration or voluntary arrangements with creditors of the tenant.

3.0 Conclusion

It is important to note that these clauses are not exhaustive and may vary depending on the specific circumstances of each Lease. Our legal team is well-equipped to provide personalized professional advice and assistance in drafting, reviewing and registering Lease Agreements that secures your rights and interests as a Landlord.

 

Review: The Role of the High Court in the Administration of the Islamic Estate and an Overview of Succession in Islamic Law

 

1.0 Introduction

To begin with, Article 24(4) of the Constitution of Kenya qualifies the right to equality “to the extent strictly necessary for the application of” Islamic law “in matters relating to personal status, marriage, divorce and inheritance”. Notably, Section 3 of the Marriage Act provides that, although spouses have equal rights during marriage and at its dissolution, “the parties to an Islamic marriage shall only have the rights granted under Islamic law”. The Law of Succession Act states that it is generally not applicable to the estate of a deceased Muslim. This article therefore undertakes to review the role of the High Court of Kenya in its involvement in the Islamic estate as guided by the various laws of Kenya, and an exclusive review of the law on succession under Islamic law. It examines case law from the Kadhi’s Court, the High Court and the Court of Appeal on issues of Muslim marriages and inheritance, with some cases clearly illustrating the tensions that exist between Islamic law and human rights law.

Generally, any application of the law relating to a Muslim’s personal status, marriage, divorce and inheritance outside Islamic Sharia could be interpreted as an affront to a Muslim’s freedom of religion which is guaranteed by the Constitution.

Section 2(3) of the law of Succession Act provides that the applicable law in relation to a deceased Muslim shall be Muslim law. The provision is reproduced below:

“Subject to subsection (4), the provision of this Act shall not apply to testamentary or intestate succession to the estate of any person who at the time of his death is a Muslim to the intent that in lieu of such provisions the devolution of the estate of any such person shall be governed by Muslim law.”

Reference is made to the case: In the Matter of the Estate of Ishmael Juma Chelanga – Deceased [2002] eKLR,  Etyang, J. was faced with a similar case had this to say:

“Under Islamic Law no non-Muslim is permitted to inherit the estate of a Muslim. This was ably verified in this court by the Kadhi of Nairobi Mr. Hammat Mohammed Kassim. It follows therefore that C, who had conceded that she is a Catholic, cannot inherit a share of the estate of her deceased father, a Muslim, by reason of her being a non-Muslim.


Secondly, an illegitimate child does not inherit the estate of his or her father but is permitted to inherit from his or her mother. The reason for this can be found in the Principles of Mohammedan Law by Dr (Mrs) Nishi Patel 1995 CTS publication Cap XIII at page 251:


“LAW OF PARENTAGE: INTRODUCTION


The Law of parentage which includes paternity and maternity, is the result of the institution of marriage. A Mohammedan marriage is a contract, which confers the status of husband and wife on the parties and of legitimacy on the children. Parentage gives rise to the concepts of legitimacy and illegitimacy. Illegitimacy is totally untolerated and sexual relations outside marriage are condemned as illicit and the woman who involved in it, is punishable for Zina (fornication)”.


It must then follow that, both C and N who are illegitimate children are not entitled to a share of the deceased’s estate.

2.0 Overview

2.1 Jurisdiction of The Kadhi’s Court

Article 170(1) of the Constitution establishes the Kadhi’s courts. A Kadhi’s Court is one of the subordinate courts and is supervised by the High Court. Article 170(5) provides that “[t]he jurisdiction of a Kadhi’s court shall be limited to the determination of questions of Muslim law relating to personal status, marriage, divorce or inheritance in proceedings in which all the parties profess the Muslim religion and submit to the jurisdiction of the Kadhi’s courts.”

Section 5 of the Kadhis’ Courts Act reproduces Article 170(5) of the Constitution verbatim.

In HA v AH, the High Court referred to article 170(5) of the Constitution and held that “[t]he 3 factors on the jurisdiction of the Kadhi’s Court are not disjunctive but conjunctive. They must all exist together for the Court to have jurisdiction. Where they do not, the Kadhi’s Court is stripped of jurisdiction.” It is therefore a pre-condition that both parties agree that the matter should be referred to the Kadhi’s Court and that they must be Muslims.

2.2 Role of the High Court in the Administration of the Islamic Estate

On 11 October 2018, the High Court made an order in the matter of Salim Abdalla v Swabra Abdulla (Miscellaneous Civil Application Number 20 of 2014), which reconfirmed that in Kenya only the High Court has jurisdiction in matters of administration of a deceased's estate, including those of Muslim faith. Administration of an estate involves gathering the assets of the estate, paying the deceased's debts, managing the estate and distributing the assets.

Established as a Subordinate Court by the Constitution of Kenya, the Kadhi's Court has jurisdiction to determine questions of Muslim law relating to personal status, marriage, divorce and inheritance in proceedings in which all parties profess the Muslim religion and submit to the jurisdiction of the Kadhi's Court. Muslims are also free to choose to submit to the jurisdiction of the High Court for determination of such matters.

Where the family of a deceased Muslim requires direction on how the estate is to be divided in accordance with Sharia law, then they may apply to the Kadhi's Court. The Kadhi would make an order, based on Sharia laws of distribution, setting out the division to take place amongst the beneficiaries.

The Kadhi's Court does not have jurisdiction in the administration of a deceased's estate. Therefore once the shares to be distributed to the beneficiaries in accordance with Sharia law has been determined, the personal representatives named in the deceased's will or determined in accordance with intestacy rules (where there is no will) would need to apply to the High Court to administer the deceased's estate in accordance with the Law of Succession Act. Only the High Court has the power to issue the grant of probate/letters of administration and confirmation of grant which are required for actual distribution of the estate to the beneficiaries.

2.3 Treatment of “Illegitimate Children” under Islamic Law

Whether a non-Muslim or a child born out of wedlock can inherit from a Muslim is an issue that Kenyan courts have dealt with, and the jurisprudence on this issue is still evolving.

Previously, Kenyan courts held that, under Islamic law, (which applies to persons of the Muslim faith) children born out of wedlock were not entitled to inherit from their father’s estate This position was based on Article 24(4) of the Constitution of Kenya, which allows certain qualifications to the Bill of Rights when applying Islamic law. In one of the decisions and in justifying the rationale for this position, the High Court noted that Islam does not recognise children born out of illicit relationships as legitimate heirs.

In a recent case, the Court of Appeal held that children born out of wedlock have the right to inherit from their father under Islamic law. The Court of Appeal based its decision on Article 27 of the Constitution of Kenya, which prohibits discrimination against any person on any grounds. The Court of Appeal also considered the fact that the child in question was treated as the deceased’s own during his lifetime, and therefore the child should inherit as a dependent of his father.

It remains to be seen if there will be an appeal to the Supreme Court of Kenya to finally determine the matter.

It is advisable that one considers effective succession planning by, for example, creating a lifetime trust that would cover all persons whom one may wish to provide for. A Sharia compliant trust could be set up to provide for an illegitimate child of a Muslim man, which would safeguard the child’s financial security. Assets transferred to a trust would not be subject to succession laws as the trust assets would be held and managed by a trustee and thus would not form part of the deceased’s estate.

3.0 Conclusion

The article has dealt with the jurisprudence from Kenyan Courts on the issues of marriage and inheritance in the context of Islamic law and human rights. It discusses inter alia, the conditions and the principles governing inheritance. It further argues that although the Law of Succession Act and international human rights instruments provide for the right of testation, Kenyan law does not allow Muslims to make valid secular wills.

Disclaimer:

The content of this article is intended to provide a general legal guide to the above-discussed subject matter and therefore Specialist advice should be sought about your specific circumstances as deemed fit.

Consents required in land transactions

 
a) Commissioner of Land’s Consent

· This consent is usually sought when one seeks to transfer, lease, sub-lease or subdivide property owned under leasehold tenure. This consent is to ensure that the Commissioner of Lands has proper control and management as well as surveillance of land use in the Country.

· The Commissioner may refuse to grant consent. On the other hand, a party may fail to comply with the requirements for grant of the consent. The effect of this is that the transaction becomes void.

b) Land Control Board Consent

· This consent is required for all Agricultural Land as defined in Section 2 of the Land Control Act. Therefore, all transactions relating to agricultural land have to be approved by the Land Control Board (LCB) that sits where the agricultural land is situated within 6 months of making the sale agreement between the parties.

· The transactions which require an LCB consent are:

1. Sale, transfer, lease, mortgage, exchange, partition and other disposal or dealing with any agricultural land;

2. Division of any such agricultural land into two or more parcels to be held under separate titles other than the division of an area less than 20 acres into plots in an area to which the Development and Use of Land (Planning) Regulations, 1961 (L.N. 516/1961) for the time being apply;

3. The issue, sale, transfer, mortgage or any other disposal of or dealing with any share in a private company or co-operative society which for the time being owns agricultural land situated within a land control area;

4. A declaration of trust of agricultural land situate within a control area dealing in that land.

· Any transaction which requires to have the LCB consent but proceeds without it is null and void.

· There are transactions which are exempt from the LCB consent and they are:

1. Transmissions under a will or intestacy of a deceased person unless the same would result in the division of the land into two or more parcels to be held under separate titles;

2. A transaction to which the Government or the Settlement Fund Trustees (in respect of trust land) of a county council is a party;

3. A transaction whose exemption is granted by the President under a Gazette Notice.

· It is important to note that the parties to the agreement may be required to attend a hearing before the LCB with a decision to grant or refuse being communicated later thereon.

c) Rates Clearance Certificate

· The essence of rates is to raise revenue for the County Governments.

· It is obtained to show that the owner of the land has no outstanding land rates owed to the County Government.

· The certificate issued is normally valid for a period of 30 days.

d) Rent Clearance Certificate

· This certificate is issued by the Ministry of Lands. Land rent is payable by a person who is registered as proprietor lessee from the Government of Kenya.

· It is used to show that the registered proprietor of the leasehold interest has cleared the annual land rent payable to the Government of Kenya.

e) Head lessor’s consent/lessor’s consent:

· This is the consent required during sub-leasing of a lease/charging/transferring.

· It shows that the owner of the Head Lessor/Management Company has consented to the creation of the instrument –be it a lease, charge or transfer.

f) Spousal consent

· Spousal consent is crucial in the sale, charging or leasing of matrimonial property. Without a valid spousal consent, the registered transaction is deemed to be invalid.

· A spousal consent is usually in the form of a statement or an affidavit by the consenting spouse.