You have just identified your ideal piece of land. It is just a few meters away from the main road. You can see schools, a couple of well-known churches, and a shopping center with a well-stocked supermarket, which is just a 15-minute drive. The offer is crazy, and you just can’t wait to have your name on the title deed. You pull strings left, right, and center to get the full amount. You pay, and after a few weeks, you get your title deed as promised. Only later do you discover that there are 3 other people with the same documents, also claiming ownership. The seller is nowhere to be found!
This is a predicament facing many people buying property in Kenya. You at least know of one person who has been defrauded. It’s all over the news. And we can assure you that the heap of files in our courts is ever-increasing. In short, you do not want to be a victim. And you will never be if you carefully read this article to the end.
We have dealt with land and property cases (Conveyance) for many years. We have assisted thousands of people in buying and selling property. We have also helped with cases of fraud. Some were successful. Some were too far gone for anything to be salvaged. With this experience, we share with you some of the things we feel are important when buying property in Kenya.
DUE DILIGENCE
When purchasing property, it is not enough to invest your money. Investing enough time to know what you are buying is equally important. For instance, you need to know the property’s current or previous owner(s). You need to find out if the location at the registrar’s office matches what you saw on the ground. You want to know if there is a charge or easement law on the land. This is the process of Due Diligence.
Due Diligence is the research you conduct, physically or virtually, that helps you know the ownership of a title to a property and whether or not that title is inhibited from various processes or procedures. For example, when a land owner uses her title deed to acquire a loan from a bank, the bank registers an instrument called a Charge. This means that whoever wields the title is responsible for the loan. This is one of the many reasons why the due diligence process should be thorough. You will avoid potential pain and losses in future.
Let’s go to the fine details. Below is an in-depth analysis of what due diligence entails, explained in a simple way that is easy to digest.
1. Search
This is the first and most important step in the Due diligence process. Initially, you had to make a request to the land’s office and wait in line for your request to be honored. Thanks to the digital platform (Ardhisasa), the process is easier and faster.
A Search is conducted by the one desiring to Purchase the property through their Advocate. You can do it yourself physically, but we will be doing you great injustice by not advising you against it. If you know what you are doing, well and good. If not, you may find yourself in the predicament of this Kenyan who got a title deed that made him a proud owner of a roundabout along Tom Mboya Street.
A good search should determine whether the title deed exists and whether it is legal (original). It should also ascertain whether the property is privately owned (not public). If you are purchasing the property through a developer or land dealer, then you should equally do thorough research on the company. Find out who their lawyer/law firm is, and get to know their reputation or standing with the Law Society of Kenya (LSK). Also, find their existing customers, if any, and assess their congruity. If you cannot do all of that for any reason, you can always hire a lawyer.
To conduct this Search, you need the following:
• A Search application form
• A Copy of the title deed
• A Copy of the seller’s ID
• A Copy of the Seller’s KRA Pin Number
2. Ardhisasa
As stated earlier, searches were initially conducted at the Physical Land Registries until the 27th of April 2021, when the Ardhisasa online platform was launched. Thanks to Ardhisasa, you can do a search from anywhere.
For you to enjoy this service, you have to register for an Ardhisasa account. You can register as a professional, regular user, or both. Professionals have to be vetted and their credentials quantified before they can get the advanced account. The professional account has special privileges and access that are not available to the regular user. All qualified advocates have this special access.
Once you’re registered and logged into your registered account, you will see a ‘Services’ icon on your left. This is where you find the Land Registration option, which contains the search function, among other options. There are good videos on Youtube that can give you a step-by-step guide on how to navigate the platform.
Once the documents are verified and the Search is successful, you will receive a Certificate of Search.
3. Pre-Contract Inquiries
This method complements the ‘search’ function in the due diligence process. It exposes what might otherwise be missed by the search. It involves assessing the physical location and condition of the property as well as the actual title document.
We have seen cases where people bought land already inhabited by squatters, who had to be forcefully evicted because they were fully convinced they owned the property. Now imagine if your plan was to build a family home. Would you feel safe?
A Pre-Contract inquiry helps you assess the risk to make an informed decision.
4. Deducing/Proof of Title
Once you’re done with the third stage, you can go to the next stage of Deducing or Proof of Title. Much of the responsibility here lies on the seller, but it is important that you be involved.
The deduction of title involves the verifications of documents mentioned earlier in the first part (search) of the due process. This includes the Deed Plan or Registry Index Maps and the seller’s National ID and KRA pin.
PS: The seller is legally required to disclose all defects associated with the properties within their knowledge.
5. Requisitions
The last step in this process makes you both a lawyer and a detective. It involves asking questions and raising any objections or reservations you may have after assessing the title document. Requisitions come before you execute or sign the instrument enabling the transfer of title. It requires you to have a keen eye for detail to notice any irregularity, e.g., the absence of a signature or mark that executes the contract, so you can avoid problems in the future or after making the payment. Sometimes an absent or misplaced comma (,) may extend the conveyance process by months, costing you more time and money to get it right.
At first, the due diligence process may seem too long and even overwhelming. However, considering the amount of money you could lose if not done right, it is a small price to pay.
Do you have any questions or concerns on this topic or article? Click here and contact a branch near you. You can also send us an email at consult@mahida-maina.com with the subject line ‘Due Diligence’ and we will respond promptly.
