Legal Review: How to secure your land or property

 

 1.0 Introduction

Every person has a right to own and use land or property in Kenya.

1.1 The Legal provisions under the Kenyan Law

The Constitution of Kenya 2010, which is the supreme law of the country, provides in its various articles’, the ways in which the rights to own are upheld.

Article 40(1) that subject to Article 65, every person has the right, either individually or in association with others, to acquire and own property (a) of any description; and (b) in any part of Kenya.

Article 65 (1) states that a person who is not a citizen of Kenya may hold land on the basis of leasehold tenure only, and any such lease, however granted, shall not exceed ninety-nine years.

1.2 The Lands Registrar

The Lands Registrar (Officer in charge of the Lands Office) is the keeper of the land register and gives registration documents. Therefore, any action that requires registration must be registered at this office. To protect your land rights, you need to understand various steps you can take to secure the land or property. How this right is acquired and passed to another person is provided by the land laws of the country. To gain or give such rights, a person needs to apply for the consent of the Lands Office, who may either reject the request or register the request and issue a confirmation document.

2.0 Step by step guide on how to secure your land or property.

The steps include:

2.1 The land search

This is a process used at the lands office (registry) to confirm the name of the person that a given piece of land is registered in, the land number, size, and the address of the person.

2.2 The Green Card

This is a document kept at the lands registry that gives the history of a given land or property, from the time that the land was opened or divided to the current time.

2.3 Inhibition

This is a process where a person goes to court, asking the court to give orders that will prevent or stop any intended or current activities being conducted by other people that affect your land ownership or use.

2.4 Caution

This is a process where you go to the lands office and request the Lands Officer, called a Registrar, to stop activities of other people on your land.

2.5 Restriction

This is where you ask the Lands Registrar to stop other people from conducting activities on your land. The Registrar may also stop activities without your request where he or she thinks there is a need to prevent fraud or any other illegal activity.

NOTE: A copy of the application for restriction form LRA 75.

2.6 Power of Attorney

This is a process where you give another person the right to sign on your behalf. You can allow them to sell, hire out (lease), or even take loans on your land and sign on your behalf.

2.7 Registration as a spouse

This is a process where a married woman or man applies to be registered as either the wife or husband of the person who owns the land or property.

 

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Legal Review: Essentials of a Valid Will

 

1.0 What is a will?

A will is a legal document created to provide instructions on how an individual’s property and custody of minor children, if any, should be handled after death. The individual expresses their wishes through the document and names a trustee or executor that they trust to fulfill their stated intentions. A will can be used to distribute real property including land as well as movable property such as money, shares in a company, intellectual property and personal effects.

It also indicates whether a trust should be created after death. Depending on the estate owner’s intentions, a trust can go into effect during their lifetime (living trust) or after their death (testamentary trust).

A will provides certainty to the surviving members of the deceased’s family, by distributing the property of the deceased according to his wishes. It prevents or minimizes family disputes that are likely to arise during division of property.

2.0 Determination of Authenticity of a Will

The authenticity of a will is determined through a legal process known as probate. Probate is the first step taken in administering the estate of a deceased person and distributing assets to the beneficiaries. When an individual dies, the custodian of the will must take the will to the probate court or to the executor named in the will within 30 days of the death of the testator.

The probate process is a court-supervised procedure in which the authenticity of the will left behind is proved to be valid and accepted as the true last testament of the deceased. The court officially appoints the executor named in the will, which, in turn, gives the executor the legal power to act on behalf of the deceased.

3.0 Significance of a will

If you own property and assets, you may want to have a will. That way you, rather than your state government, can decide who gets your property and assets when you die. In most cases, wills are written legal documents, but some states do recognize other types of wills.

4.0 Legal requirements of a Will to attain validity.

The legal requirements of each state can vary, so it’s essential that your will is drafted and executed properly.

A Will Must Meet All Legal Requirements – Most wills are formal documents that instruct how money and property should be distributed to each person named as an heir. For a will to be valid, you usually need to have one or two people witness you signing the will and then sign it themselves.

Your Will Does More than Name Heirs – The main reason for having a will is to allocate your property to heirs in any way you like. But there are other things you can include such as funeral arrangements, legal guardians for your minor children, and who should serve as executor of your will or trustee of any trusts you create.

A Will Prevents Intestate Succession – When you die without a will, state laws known as “intestate succession laws” will decide which family members will inherit your estate and in what proportion.

A Will May Eliminate Family Conflict – The division of an estate after death comes with many emotions. The slightest differences can result in hurt feeling and recriminations. As divorce becomes more complex and blended families more common, dividing assets has become even more complicated. A typical situation is when you’re in a second marriage and have children from your first marriage. In this case, allocating your property purposefully between your second spouse and your children can give you peace of mind and prevent your family from fighting over your possessions.

5.0 Essentials of preparing a valid will

The specific requirements for a will depend on law.

Commonly, the will must be in writing, signed by the person whose will it is (the “testator“) and witnessed by (usually) two persons however an oral will is valid if made at least three months before the death of the testator or a person in Armed Service/ Military Service.

The testator normally must have attained the age of majority, and must be of “sound mind” at the time the will is executed.

The witnesses normally MUST be “uninterested”, meaning they’re not beneficiaries of the will.

Witnesses also must be competent persons.

A will normally doesn’t need to be notarized, but a document called a “self-proving affidavit” might be created to provide further legal strength to the will.

A will may be changed or amended if the testator is competent. A new will or a “codicil” can be executed to create a new scheme for disposing of the testator’s property.

The court can change a will also. This is commonly done when there has been a divorce. Usually a divorce terminates the ex-spouse’s rights under a will, unless a contrary intent is clearly shown. A separation doesn’t terminate a spouse’s rights under a will. The specific impact of divorce on an existing will depends entirely on the law.

A will may also name guardians of children who are left by the deceased. This is another valuable benefit that a will can provide. However, a Court is not bound by the naming of a guardian in a will. The Court will certainly consider it, and it’s often the only way to make your wishes known after you’ve died.

Testamentary freedom allows for one to dispose of their property as they wish but this is limited to legal and appropriate means. So if you indicated that all your property should be collected and burned, the law might not give effect to that part of your will. One won’t be able to avoid protections given to others by act of law, either. This can include your spouse’s rights against the estate, community property protections, and special protections for children.

More than one person can be appointed as executors in the will. Having more than one representative can create problems during probate, however. Normally they will have the same powers to act, and this can create conflict. The nomination of two or more executors/representatives should be carefully considered.

A will may be contested. A person contests a will by filing the relevant documents with the probate Court. The person normally must be “interested” that is, must be an heir under the will or at law. There are time limits for contesting a will. You must have grounds to have a chance of successfully contesting a will. Unhappiness with the proposed distribution of property is not a valid ground. Valid grounds depend on law. Incapacity, fraud, undue influence and duress are the most common grounds.

The representative of the estate normally must provide notice of probate to all interested parties, and they can obtain a copy of the will from the probate Court.

6.0 Is the will invalidated where certain parts are not valid?

The invalidity of certain parts of the will may not invalidate the entire will. For instance, where the testator gave out property that does not belong to him, then such a gift cannot pass to the intended recipient.

This only invalidates that specific gift but does not affect the entire will. The courts have power to alter the contents of a will under certain circumstances.

Legal Review: An indepth evaluaition of "Interest in Land" and the various forms involved

 

1.0 Introduction

People often say that they have an interest in land or that they wish to own, purchase or transfer an interest in land. But what are these interests?

It is important that people purchasing property understand the various interests under which land is held in Kenya. This has certain ramifications, including:

• the period for which land can be held by a particular owner;

• various terms and conditions under which land is held;

• due diligence to be conducted on acquisition of property;

• consent required in the transaction; and

• various title and security documents appurtenant to the various interests in land.

2.0 What is an interest in land?

Article 40 of the Constitution guarantees the right of every individual to acquire and own land in Kenya, either individually or in association with others. However, this right does not extend to property that is found to have been unlawfully acquired. The right is further subject to Article 65 of the Constitution.

In this regard, Kenyan citizens have the right to own land of any description in any part in Kenya.

Further, they cannot be deprived of their right over or interest in land, except under exceptional circumstances provided by the Constitution.

Interest in land can be either legal or beneficial. 'Legal interest' refers to formal ownership of an interest in or right over land. 'Beneficial interest' refers to the right to receive benefits resulting from the land (eg, sale proceeds or rental income). A beneficial interest can be held and transferred separately from the legal interest in land. It is important to confirm whether the interests are held legally or beneficially.

3.0 The classes of Interest in Land

Rights and interests can be divided into two classes: freehold and leasehold.

3.1 Freehold interest

Black's Law Dictionary defines 'freehold interest' as an estate in land held in fee simple, fee tail or for term of life. The word 'fee' means an estate of inheritance. It is an estate, which on the death of the owner, can descend to the heirs and the estate may continue forever. A fee simple generally descends to the heir and even to collaterals, while a fee tail descends only to lineal descendants and was originally designed to keep land in the family. On the other hand, an estate for a term of life is not an interest of inheritance and cannot continue forever.

In Kenya, freehold interest is recognised under the Registered Land Act (Cap 300, Laws of Kenya).

The title document is a title deed or land certificate and the concept of 'freehold' is referred to as absolute proprietorship. The Registration of Titles Act (Cap 281, Laws of Kenya) also recognises the concept. The title documents is typically a certificate of title or grant and the proprietor is often stated as holding the estate in fee simple. The Government Lands Act (Cap 280, Laws of Kenya) also confers freehold interests, usually in fee simple, and the title document is generally a conveyance.

These interests can descend to heirs and be transferred.

3.2 Leasehold interest

Unlike freehold interest, leasehold interest is granted for a fixed term. The terms can be 50 years, 99 years, 999 years or a period otherwise stated in the title document. Various types of leasehold interest exist. However, the common thread that runs through the terms is that a leasehold interest in land is an interest for exclusive possession and profit of land for a fixed period and usually in consideration of payment or rent (often nominal and referred to as a 'peppercorn rent'). It is a contract for the grant of time in land. When purchasing such properties, it is important to consider the term of the lease and the various conditions under which a proprietor holds it.

On expiry of a leasehold term, the property reverts to the government. Proprietors of leasehold titles should ensure that they adhere to the conditions under which the land is held and apply for renewal.

The process of application for renewal should commence at least two to three years before the term expires.

The leasehold interest is recognised under the Registered Land Act (Cap 300, Laws of Kenya), wherein the title document is a certificate of lease. The Registration of Titles Act (Cap 281, Laws of Kenya) also recognises leasehold interests, where title documents can be either a grant or certificate of title, with terms and annual rent indicated. The Government Lands Act (Cap 280, Laws of Kenya) also confers leasehold interests.

4.0 Foreigners and interest acquired in land

While the Constitution grants all persons the right to own land in Kenya, Article 65 states that foreigners can hold land in Kenya only under a leasehold tenure. Such a leasehold tenure cannot exceed a 99-year term. However, on expiry of the leasehold term, lease renewal may be sought.

Any document which purports to confer on a foreigner an interest in land greater than a 99-year lease is regarded as conferring a 99-year lease and no more. This means that foreigners can purchase freehold land and leasehold land for more than 99 years. Even so, the implication of the Constitution's provisions is that this is deemed as conferring a 99-year leasehold interest only on the foreigner.

It is important that persons purchasing land are aware of the type of interest that they are acquiring and the conditions under which the land is held. Some financiers will not accept titles for land with a leasehold term below a certain number of years as security. The issue of the various interests held in land can be ascertained by engaging qualified professionals in land transactions.

5.0 Does the Constitution of Kenya adequately protect the rights of foreigners on land ownership in Kenya?

The Constitution 2010 sort to heal the historical injustices that have ailed our country for a long time. It is the skeleton which the new land laws provide the necessary flesh to protect and secure the rights of Land owners in Kenya. The Law in clear as to the land ownership by foreigners and their rights are clearly spelt out and their interests secured. In my opinion this has brought about productivity in terms of utilization of Land by foreigners for development purposes which has led to economic growth in the country.

The Constitution 2010 and the new land law regime seeks to bring about a sense of equitable ownership of Land which has given a guarantee of the foreigner’s right being protected and secured.

As we celebrate the positive side which the laws have achieved we need not forget that the legal restrictions and limitations has also created room for corruption and fraud. In cases where consent is needed like the acquisition of Agricultural land, official will often make promises to foreign investors with intentions of defrauding them by giving them possession of land which the law prohibits them from having access to.

As much as the conversion was of Freeholds and Leaseholds of more than 99 years were automated by the use of the operative word “shall” there is need for some legislative or policy procedure by the National Land Commission and the Ministry of Land and Physical Planning.

When it comes to the renewal and extension of the Leasehold period for a foreigner, there is uncertainty which should be addressed by providing some guidelines for which foreigners can seek extension and renewal of Leases to enable sustainability of the investments they have made on their land.

Under the Land Control Act for a foreigner to own agricultural land, they need to seek exception by the president. This requirement was passed during postcolonial era when the president had powers and control over land but with the Constitution 201o and the new land regime this function should be transferred to the National Land Commission.

It is also important to note that there is a loophole under the Land Control Act whereby a foreigner can own agricultural land by being a shareholder in a Public company. Foreigners have taken advantage of this loophole and incorporated Public companies in which they are shareholders and through these companies they gain the capacity to own agricultural land. The act should therefore be review to include that a public company that has foreign shareholding can’t own agricultural land.

There is also a need for a test against which a non-citizen corporation seeking land for investments should be measured, in order to determine the scope and breadth of leasehold interests, up to the upper limit of 99 years.

 

OWNERSHIP OF LAND BY FOREIGNERS IN KENYA AND THE LEGAL ASPECTS ON FREEHOLD AND LEASEHOLD TITLES OWNED BY FOREIGNERS AND CONVERSION PROCESS THEREOF

 

INTRODUCTION

The foundation of the new legislation relating to land in Kenya (the “Land Laws”) is the Constitution of Kenya that was promulgated on 27th August, 2010 (the “Constitution”). Article 68 of the Constitution states that Parliament shall enact legislation to give effect to the provisions of the Constitution relating to land. It is on this basis that Parliament enacted the Land Laws.

The Land Laws came into force on 2nd May 2012 and they comprise of:

1. The Land Act (Act No. 6 of 2012);
2. The Land Registration Act (Act No. 3 of 2012); and
3. The National Land Commission Act (Act No. 5 of 2012).  

QUESTIONS

1.0 Will all foreigners have their freehold titles reduced to 99-year leasehold titles? What is the purpose of this provision? Is there any clarity as to when the 99-year period will run from? Is it from 27 August 2010?

Article 65 of the Constitution provides that non-citizens can only hold land on the basis of leasehold tenure which shall not exceed 99 years. S.107(3) of the Land Registration Act provides that for the avoidance of doubt, any lease granted to a non-citizen shall not exceed 99 years. This provision limits foreigners from owning a freehold interest in land as well as any leasehold interest exceeding 99 years.

The purpose of this provision has not been expressly stated in the Constitution or the Land Laws. It has been argued that the provision is aimed at correcting historical injustices emanating from colonial rule where foreigners obtained large tracts of land and are holding the same under freehold tenure in perpetuity.

Neither the Constitution nor the Land Laws indicate when this 99 year leasehold term is deemed to commence. Our assumption is that, without clear indication of when this term commences, for longer leases or freeholds held by foreigners the leasehold will be deemed to have commenced on the date when the Constitution came into force i.e. 27th August, 2010.

2.0 Is any compensation payable to the foreigner?

Article 40(3) of the Constitution provides that the State shall not deprive a person of property of any description, or of any interest in, or right over, property of any description, unless the deprivation results from an acquisition of land or an interest in land or a conversion of an interest in or title to land, in accordance with chapter 5 of the Constitution.

Article 65, which limits land ownership by foreigners to 99 year leasehold tenure, falls under chapter 5 of the Constitution. Our interpretation of this provision is that the Government is not required to pay compensation to foreigners for the conversion of their freehold and longer leasehold tenure to 99 year leaseholds.

3.0 What is the definition of "foreigner" under this law? Would a Kenyan company ultimately controlled by a foreign entity (at any remove) be regarded as a "foreigner" for the purpose of this new law?

Article 65(3) of the Constitution provides that a body corporate is regarded as a citizen only if it is wholly and exclusively owned by one or more citizens and property held in trust is regarded as being held by a citizen only if the entire beneficial interest under the trust is held by persons who are citizens. This means that a company will have to have 100% local shareholding to be considered a citizen.

Ownership refers to shareholding in a company and not to directorships. A company that has Kenyan shareholders but has foreign directors would be considered a local company capable of holding a freehold interest in land or leasehold interest for more than 99 years.

4.0 Has the Government of Kenya become the landlord of the 99 year lease when the foreigner's freehold has been reduced to a 99 year lease?

De facto yes.

5.0 Do foreign investors who have been stripped of their freehold title have to pay a rent to their landlord (Government) under their new 99 year lease?

The law does not specify whether any rent is payable.

The nature of a leasehold interest is that there is a liability to pay rent to the landlord. However, the rent payable under each title varies and in some instances it is even set as a peppercorn which in essence means that the land owner does not pay any rent.

6.0 What are the terms of the new lease? Can the new landlord forfeit it at any time for breach of any provision in the lease?

The Land Laws do not specify what the terms of the leases are. However, S.55 of the Land Act states that, the provisions of the Land Act relating to leases, shall apply to all leases unless the parties provide otherwise in the lease instrument.

S.66 of the Land Act details the implied covenants on the part of the lessee which include, the obligation to pay rent, the obligation to use the land in accordance with the conditions imposed on the use of that land by the lease and the obligation to yield up the property at the expiry of the lease period.

S.65 of the Land Act sets out the implied covenants on the part of the lessor which include, the obligation to grant quiet possession and the right to terminate the lease in the event that the rent is unpaid for one month or if the lessee fails to observe the conditions of the lease for one month.

7.0 What happens after the end of the 99 year lease? Is there an automatic renewal right or is that only applicable if the immediate past owner is a Kenyan citizen? Will it apply to Kenyan companies? How much would it cost?

S.12(6) of the Land Act provides that at the expiry, termination or extinction of a lease, reversion of interests or rights in and over the land shall vest in the national or county government (as the case may be). S.13(1) of the Land Act further provides that after expiry of the new leasehold interest the land shall be offered to the immediate past holder of the leasehold interest provided that such lessee is a Kenyan citizen. This provision means that a non-citizen is not automatically entitled to renewal of its leasehold interest in land. Previously, renewals of leasehold interest in land were granted as a matter of course.

There are no prescribed fees for a renewal.

8.0 Can foreigners only sell their leasehold to Kenyan residents or otherwise deal with the title?

Foreigners can sell their leasehold interest to anyone whether the purchaser is a citizen or non-citizen. However, one condition that is usually present in all Government leasehold titles is that any dealings require the consent of the Commissioner of Lands whose functions under the Land Laws will be carried out by the National Land Commission. This consent is an administrative step and does not prevent dealings with leasehold land.

9.0 Does it affect the value and marketability of the land owned by a foreigner?

At the moment, in our experience, the market value of a new 99 year leasehold or freehold property is the same.

10.0 Can a Kenyan citizen purchasing a leasehold property from a foreign entity upgrade it to a freehold? If so, what is the procedure and would it be costly?

A Kenyan citizen purchasing land from a foreigner only purchases the 99 year leasehold interest held by the foreigner. There is no provision for “upgrading” the interest to a freehold interest or a leasehold interest of more than 99 years.

11.0 Do the Land Laws affect a mortgagee's right to enforce its security?

With regard to a mortgagee’s right to exercise its statutory power of sale, S. 106 of the Land Registration Act provides that the rights, liabilities and remedies of the parties under any mortgage, charge, memorandum of equitable mortgage, memorandum of charge by deposit of title or lease that, immediately before the registration under this Act of the land affected, was registered under any of the repealed Acts shall not be affected. This section is replicated under S.162(1) of the Land Act. This means that the mortgagee under a mortgage existing as at 2nd May 2012 can exercise its rights under any instrument registered prior to the enactment of the Land Laws.

12.0 What happens to mortgages over freeholds where the freeholds are owned by foreigners? Does it change anything if the banks who have lent the money are local banks?

The freehold interest held by a foreigner is deemed to have automatically converted to a 99 year leasehold interest and therefore the security attaches to the converted property interest.

Another concern would be the effect on freehold property that at the time the Constitution came into effect was mortgaged by a foreigner to a local bank. Although a local bank (without a single foreign shareholder) could argue that the freehold title was preserved because the Constitution came into effect after the mortgage was created, we think this is academic because:

1. it is highly unlikely that any bank in Kenya is 100% owned by Kenyan citizens; and
2. the freehold interest would be lost at the time the loan is paid back and the property is reconveyed to the foreigner.

13.0 What guarantees or assurances are there for foreign companies investing in Kenya that their investment will be secure?

Foreign companies investing in Kenya are assured that their investment is secure for the following reasons:

One of the guiding principles in the management and use of land as stated in Article 60(1)(b) of the Constitution and S.4(2)(b) of the Land Act is the security of land rights. As stated earlier, Article 40 of the Constitution protects the right to property save for the provisions of Article 65 which limit land ownership by foreigners to 99 year leaseholds. Article 40(3)(b) of the Constitution provides that no one shall be deprived of property or any interest in property by the State unless the land is needed for public use and prompt payment in full, of just compensation to the person so deprived is made.

The Kenyan court system is relatively advanced and it upholds the rule of law as relates to protection of property rights. Article 27 of the Constitution provides that every person is equal before the law and has the right to equal protection and equal benefit of the law.

There is little freehold land remaining in Kenya and most of that is agricultural. Most land in urban areas is held under leasehold tenure for terms that are for 99 years or less.

The value of long leaseholds and freehold land in the market is not starkly different in our experience.

 

THE LEGAL PROCESS OF REGISTERING A TRADEMARK

 Introduction

 The Constitution of Kenya under Article 40(5) provides that the state shall support, promote and protect the intellectual property rights of the people of Kenya.

A trademark, is a recognizable sign, design or expression which identifies a particular product or service from the others.

Any individual or company can register a trademark in so far as they meet the necessary requirements.

Trademark registration and protection is governed by the Trademarks Act of Kenya (Cap 506). Trademarks are registered at the Kenya Industrial Property Institute (KIPI) and the registration lasts for an initial ten(10) years which can be renewed for a further ten(10) years using Form TM10 upon payment of renewal fees.

The procedure

The procedure for registering a Trademark is as below:

1.0    Preliminary Search

Prior to registration of a Trademark one has to conduct a preliminary search to find out if the mark can be registered or not. This is a very important step for anyone who intends to register a trademark as it helps one know whether the mark is registrable or not and to avid trade mark infringement suits. The search is conducted using Form TM27.

2.0 Application for registration

After confirmation that the trademark can be registered through the preliminary search, the next step would be to lodge an application for registration which is done using Form TM2 and TM32. In the case of foreigners who require to appoint an agent to conduct the registration on their behalf, their application has to be accompanied by Form TM1. The applicant has to also make the necessary payments required for registration.

3.0 Examination by the registrar

The application is fully examined at this stage to determine whether the mark is registrable. Once this is determined an examination report is issued stating whether the mark has been approved for registration or not.

4.0 Advertisement

Once the mark is approved for registration, one should pay the required advertisement fee after which the mark will be advertised in the KIPI Journal for sixty(60) days to allow for any objections to be raised,if no objection is raised then the mark can be able to proceed for registration. However, where there is an objection, Form TM6 is usually filed and proceedings in respect of the objection commence.

5.0 Registration

If there are no objections raised, the mark is registered and the proprietor of the mark is then issued with a Trademark Certificate.