The document outlines the key laws governing the conveyancing process in Kenya, emphasizing the importance of registration and the role of various legal documents, such as the letter of offer and due diligence documentation. It highlights that proper registration is essential for establishing ownership and rights over land, while failure to register can lead to unenforceable interests. Additionally, it details the necessary components of a letter of offer and the due diligence documents required to ensure a smooth transaction.
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Pre Contract Stage
The document outlines the key laws governing the conveyancing process in Kenya, emphasizing the importance of registration and the role of various legal documents, such as the letter of offer and due diligence documentation. It highlights that proper registration is essential for establishing ownership and rights over land, while failure to register can lead to unenforceable interests. Additionally, it details the necessary components of a letter of offer and the due diligence documents required to ensure a smooth transaction.
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The following laws are applicable in the conveyancing process
in Kenya and play significant role in the following ways:-
1. The Constitution of Kenya, 2010 2. The Estate Agents Act CAP 533 3. The Advocates Act CAP 16 4. The Laws of Property Act 1925 UK 5. The Rent Restriction Act CAP 296 6. The Auctioneers Act 1996 and the Auctioneer Rules 1997 7. The Companies Act CAP 486 8. Distress for Rent Act CAP 293 9. The Stamp Duty Act CAP 480 10. The Law of Contract Act 11. The Land Registration Act 2012
The worst mistake that a practising conveyancer can make is to
fail to spot something fraudulent as they must not be negligent. A thorough understanding of the key conveyancing protocols is also important
Registration in Conveyancing
Once registration has been effectuated in the relevant Land
Registries, the conveyancing process can be deemed and rendered as complete. Governed by the LRA, registration is the keeping of records of land transactions in the Lands Register which involves registration of both title and the interest therein. What is usually subjected to registration is usually title or ownership to the land and any instrument that deals with land or its disposals thereof. The conveyancer must be keen while presenting the instruments for registration and ensure that the same instruments are signed/registered by the proper Registrar The objective and effect of subjecting the aforementioned to registration include but not limited to: 1. Enable the Government to keep track of user and easier collection of revenue for instance in collection of stamp duty. 2. Reducing unnecessary litigation in maters related to land. Registration gives the registered owner the right to transact or settle in their property without any challenges. 3. Eases subsequent dealings in land transactions 4. It avails certainty and security of title or tenure. This is because a registered proprietor acquires an indefeasible title against the whole world as indicated in section 24 of the LRA. It is therefore important to understand that title (land) – freehold and leasehold as well as interest – charges, leases, easements, profits, covenants etc are the key issues that are subjected to registration. The registered owner has the absolute ownership of the land together with all rights and privileges and similarly, the registration of a person as the proprietor of a lease shall vest in that person during the tenure of the leasehold interest. Section 44(1) of the LRA prescribes the modus under which registration shall be executed; each of the parties has to consent to it in accordance to the provisions of the act as well as append relevant signatures or a thumbprint as evidence of personal acceptance of that instrument. Having understood the importance and effect of registration, it is crucial to as well issue on what is the sole effect of non- registration. Failure to register simply implies that there is no interest that exists and the rights and privileges that exist therein cannot be enforced. Section 26 of the LRA issues that the certificate of title can be rendered as conclusive evidence of proprietorship unless fraudulently and/or unprocedural obtained. A proper construction of section 30 of the LRA however issues that rights concerning land give no proprietor quality unless it is registered.
THE LETTER OF OFFER
Purchasing any form of property involves several legal steps
that many first-time parties to a transaction are unaware of. A letter of offer therefore is a document that details out the main terms and conditions of the transaction as it is drafted at the initial stage before any payments are made and signed by both the vendor and the purchaser. This document clearly outlines the intentions of the purchaser and the terms of engagement of parties but has no legally binding effect. Despite being knowledgeable on the contents of the letter of offer, it is important to have a brief overview of what it entails (Issue a sample to have a clear and practical demonstration). 1. Details of the purchaser. This includes 3 official names, P.O Box number, ID/Passport Number, email address KRA PIN (optional), phone number among others. 2. Subject of the letter of offer. This pinpoints the specifics of the property being sold to include the apartment number, land reference where the property is erected as well as its location. 3. Vendor details. This include the name of the vendor/ entity, tier address as well as their email address 4. Purchaser details. This is a reflection of what has been discussed in pointer number 1 5. Specific details of the property in the transaction. This para entails the specific measurements of the apartment in the transaction, the specific description of the apartment to include the apartment number, block number and the floor number as well as the land reference number of the location in which the apartment is situated. 6. Title. This para also issues on the land ref number as well as te nature of interest sold to the purchaser. The vendor’s title is clearly outlined describing the apartment in general together with the essential features in the apartment. 7. Purchase price and mode of payment. The purchase price is meted in the letter as well as the mode of payment be it financed or payment through cash. 8. Bank details. This is issued to the purchaser in order to inform them on where to effectuate payment of either the deposit or the balance of the purchase price. 9. Closing costs. As clear as it is this para tabulates the various prerequisite payments that ought to be effectuated by the purchaser. This include but is not limited to the stamp duty as stipulated in the letter, valuation fees, registration costs and fees for sectional title processing, legal fees, VAT on legal fees, cost of registration of the corporation, deposit of the service charge for one year as well as a utility deposit. The mode of payment of the same are also indicated in the letter. 10. Agreement. It indicates on who will prepare the sale agreement being the vendor’s advocate. This can only be prepared only when the purchaser has paid a deposit of the purchase price. 11. Completion date. This para indicates the specific completion date and the justification that the unit of property shall be vested to the purchaser upon completion of payment of the purchase price. 12. Cancelation costs and forfeiture. These costs are executed when the purchaser see it fit not to continue with the transaction. The same is used to cushion the vendor of the expenses incurred in sale commissions and administrative expenses of the vendor.
DUE DILLIGENCE DOCUMENTATION
During the pre-contract stage in this instance of selling a unit in an apartment, the vendor’s advocate shall possess several key due diligence documents that are essential in verifying ownership, compliance with legal requirements and facilitating a smoot transaction generally. Conducting due diligence helps parties mitigate the risks therein such as undisclosed liabilities or legal complications arising from unclear ownership. It therefore ensures that both parties are well informed and can proceed with the transaction. Some of not all of the relevant documents needed in a conveyancing transaction are therefore briefly discussed as follows:- 1. Sale Agreement and Transfer documents. Drafted by the vendor advocate, the former outlines the terms of sale, the conditions precedents, timelines of closing and transfer of ownership as well as any warranties and representations thereof. The latter in its sense issues on the details of the parties involved, description of the property being transferred, a confirmation that all conditions for sale have been met and the attestation of both parties. The transfer documents must be stamped and registered at the land registry. 2. By-laws of the development. These are the rules governing the management and use of the property in the transaction. 3. The mother title or sectional title. It is essential to have a copy of the original title deed or the sectional title of the unit if it has already been developed. 4. Sectional plan. This involves a clear outline of specifies the unit factor, unit, the floor and door number among other specifications. 5. Stamp duty payment slip. This is basically the proof of payment of stamp duty upon transfer which is necessary to ensure that there is legal compliance. 6. Valuation form. Upon conducting valuation by the Government valuer and the costs indicated, the valuer issues an approved valuation form for the apartment. 7. Completion certificate. This is a certificate confirming that construction is done and dusted, and that the unit is ready for occupation. 8. Certificate of Registration of the Corporation, share certificate and CR12 certificate. This only applies if and only if the apartment is run and managed by another company. 9. Construction licences. Issued by NEMA and NCA, these licences indicate that the same apartment passed the relevant impact assessments. 10. Identification documents. This includes their passports, bio data, national IDs, KRA pin, addresses among others. 11. Charge Document (if any). This applies if there exists a charge on the mother title or sectional title including information about principal amounts, repayment terms as well as interest rates.
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