Why Registering Your Commercial Lease is Non-Negotiable

Introduction

Signing a commercial lease for more than two years? Don’t stop there—get it registered.

Many businesses assume that a signed lease is all they need for security. However, failing to register your lease exposes you to serious risks such as :

•  If the property is sold, the new owner isn’t obligated to honour an the terms of an unregistered lease.
•  If the landlord takes a loan, the financier’s rights may override yours.
•  If the landlord becomes insolvent, an unregistered lease may not be recognized.
•  If land use changs, tenants may be displaced without consultation.
•  Government directives affecting the property could sideline unregistered tenants.

The legal provisions:

The Land Act and Land Registration Act provide clear guidance:

• Short-term leases do not require registration. (Section 58 of the Land Act)
•  A valid and enforceable lease is created only upon registration. (Section 43(2) of the Land Registration Act)Registration confers and protects the Tenants' Interests. (Section 24 of the Land Registration Act)
•  An unregistered lease may just be treated as a private contract between the tenant and landlord. (Section 36(2) of the Land Registration Act)

Conclusion:
Ensure your lease is registered—whether manually or via Ardhisasa (for Nairobi properties)—to secure your tenancy rights.

Key Provisions and Legal Framework on Joint Ownership of Land and its Succession

In Kenya, the Land Act and Land Registration Act govern joint land ownership, with joint tenancy (where ownership passes by survivorship) and tenancy in common (where shares are distinct and divisible) as the main forms. Upon the death of a joint tenant, the property automatically passes to the surviving owner(s) without going through the succession process. 

Here's a more detailed explanation:

Forms of Joint Ownership:

• Joint Tenancy:

• Co-owners have equal, undivided shares.

• The right of survivorship applies, meaning the property automatically passes to the surviving owner(s) upon the death of a joint owner.

• The deceased owner's share doesn't form part of their estate to be shared by beneficiaries.

• Tenancy in Common:

• Co-owners have distinct, divisible shares.

• There is no right of survivorship; the deceased owner's share passes according to their will or the laws of intestacy. 

Key Provisions and Legal Framework:

• Land Registration Act, 2012: Governs land ownership, including joint ownership, and outlines the process for registration. 
• Section 91(2) of the Land Registration Act: Specifies that land may be owned jointly or in common. 
• Section 91(7) of the Land Registration Act: Allows joint tenants to sever their joint ownership by agreement and registration. 
• Land Act, 2012: Provides the legal framework for land tenure, including joint ownership. 
• Law of Succession Act: Guides inheritance and succession matters, including the distribution of property when there is no joint tenancy. 
  

Legal Framework Governing Joint Ownership in Kenya

The Land Registration Act, 2012 governs land ownership in Kenya. Under Section 91(2) of the Act, land may be owned jointly or in common:

• Joint Tenancy – Where co-owners have equal, undivided shares, and the right of survivorship applies.
• Tenancy in Common – Where co-owners have distinct, divisible shares with no right of survivorship.

To have a holistic  understanding of joint tenancy and tenancy in common and their distinct features, please read our previous article titled, Co-owning Property in Kenya: Joint Tenancy vs. Tenancy in Common

 Disputes may arise in either form of ownership when the owners disagree on managing or disposing of the property.

The Land Registration Act, 2012, and its subsidiary legislation, Land Registration (General) Regulations, are the primary legislations governing land ownership and disputes in Kenya. Key provisions relevant to joint ownership disputes include:

• Section 91: Provides for the two co-tenancies, the joint and the tenancy in common, and gives meaning to the incidents they can occur and co-owners’ rights. It also provides for the general presumption where an instrument of transfer of interest between two or more people does not specify the nature of their rights; there shall be a presumption that they hold the interest as tenants in common.
• Section 92: Guarantees the right of each co-tenant to receive a copy of the certificate of that land with an endorsement signed by the Registrar. A designated co-tenant will receive the original title. Allows the court to appoint a manager to oversee the property if co-owners cannot agree on its management.
• Section 93: Provide that where a spouse obtains an interest in the land during the subsistence of the marriage, such property shall be deemed as matrimonial property and will be dealt with under the Matrimonial Property Act ( Cap.152)
• Section 94 entitles any of the tenants in common to make an application for partition to the Registrar with the consent of all the tenants; however, any of the tenants or someone who has a decree for the sale of an undivided share in the land can still make the application without the consent of all the tenants.
• Sections 95 and 96 entitle the Land Registrar to cause the parties to mediate/negotiate and either transfer the share or sell the property and divide the proceeds if the partition would result in less than the minimum acreage limit.
• Section 97 provides that any partition of an undivided share is subject to a charge; there can never be a partition without the lender’s written consent, thus discharging the entire property.

 

Succession and Joint Ownership:

• Right of Survivorship:

In joint tenancy, the property automatically passes to the surviving owner(s) upon the death of a joint owner, regardless of the deceased's will. 

• No Succession Process:

The deceased joint owner's interest does not form part of their estate to be shared by beneficiaries. 

• Registration:

The surviving joint owner needs to present a copy of the death certificate to the relevant authorities (e.g., land registry) to remove the deceased's name from the register. 

• Court Intervention:

In cases of disputes or when a joint tenancy needs to be severed, the court can enforce the sale of the property through public auction or other means, ensuring a fair distribution of the proceeds based on the share of ownership. 

Example:

• If Mboya, Jelagat, and Kimathi jointly own land, each owning 33.3%, and Kimathi dies, Mboya and Jelagat will each own half of Kimathi's share (16.65% each). 

 

What are the measurements of an acre of land?

𝐀𝐧 𝐚𝐜𝐫𝐞 𝐢𝐬 𝐚 𝐬𝐭𝐚𝐧𝐝𝐚𝐫𝐝 𝐮𝐧𝐢𝐭 𝐨𝐟 𝐥𝐚𝐧𝐝 𝐦𝐞𝐚𝐬𝐮𝐫𝐞𝐦𝐞𝐧𝐭, 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐬𝐢𝐳𝐞 𝐢𝐧 𝐬𝐪𝐮𝐚𝐫𝐞 𝐦𝐞𝐭𝐞𝐫𝐬 𝐢𝐬:

✅ 4,046.86 square meters (rounded to two decimal places)

 Figuratively:

1 acre = 4,046.8564224 square meters

🔍 A Quick Conversions for common measurements is as follows:

¼ acre = 1,011.72 m²

½ acre = 2,023.43 m²

¾ acre = 3,035.14 m²

The Key Advantages of Arbitration process as compared to the Court process

When advocating for an arbitration clause in a lease agreement, it's essential to highlight the distinct advantages it offers compared to traditional court proceedings. Here's a breakdown of how to convincingly present those benefits:

Key Advantages of Arbitration:

• Efficiency and Speed:
• "Arbitration generally offers a faster resolution than court litigation. Court dockets can be heavily backlogged, leading to lengthy delays. Arbitration proceedings are often more streamlined, allowing for quicker scheduling and resolution."  
• "This efficiency can be particularly valuable in lease disputes, where timely resolution is crucial to minimize disruptions for both landlords and tenants."
• Cost-Effectiveness:
• "While arbitration does involve costs, it can often be more cost-effective than litigation. Court proceedings involve various expenses, including filing fees, extensive discovery, and prolonged attorney involvement. Arbitration can reduce these costs by streamlining the process."  
• "This can be especially beneficial for smaller businesses or individuals who may be concerned about the financial burden of litigation."
• Expertise and Specialization:
• "Arbitration allows the parties to select an arbitrator with specific expertise in real estate or lease law. This ensures that the dispute is handled by someone with a deep understanding of the relevant issues."  
• "In court, the judge may have a general legal background but may not possess specialized knowledge in the nuances of lease agreements."
• Confidentiality:
• "Arbitration proceedings are typically private and confidential, whereas court proceedings are generally public. This confidentiality can be advantageous for businesses that wish to protect sensitive information."  
• "Lease disputes can sometimes involve commercially sensitive information, and arbitration provides a means to keep those details private."
• Flexibility and Control:
• "Arbitration offers greater flexibility in terms of scheduling and procedural rules. The parties can often customize the process to suit their specific needs."  
• "This flexibility allows for a more tailored approach to dispute resolution, which can be particularly helpful in complex lease disputes."  
• Reducing the adversarial nature of disputes:
• "Arbitration can often be less adversarial than court proceedings, fostering a more collaborative approach to dispute resolution. This can help preserve the landlord-tenant relationship."

Transmission of Shares in Succession Law

Transmission refers to the automatic transfer of ownership of a shareholder’s share by operation of law upon the said shareholder’s demise or bankruptcy. Transmission of shares safeguards the continuity of membership in a company which fortifies the sustainability of the day-to-day running of a company as it mitigates the possibility of disruptive withdrawal of shareholders.

The Law

- Section 497 of the Companies Act provides that a company may only register a transfer of shares if a proper document of transfer(transfer of shares form) has been delivered to it, failure to which the said transfer is rendered void.

- The succession of shares of a deceased shareholder is regulated by the Law of Succession Act Cap 160 and the Companies Act No. 17 of 2015.

Documents required for Transmission of Shares.

The following documents should be lodged at the Companies registry in order to effect the transfer of shares by transmission to a beneficiary: -

• Certified copy of the Death certificate of the deceased shareholder;
• Certified copy of Identification card or surrender form of the deceased shareholder.
• Certified copy of the grant of letters of administration in the event the shareholder died intestate or certified copy grant of probate in the event the shareholder died testate;
• Certified copy of Certificate of confirmation of Grant from the High Court.
• Certified copy of the Identity card of the personal representative and/or administrator;
• Certified copy of the Identity card of the Beneficiary;
• Original share certificates of the subject companies; and
• Duly filled transfer of shares form.