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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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Onchiri Benigno
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0% found this document useful (0 votes)
92 views6 pages

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.

Uploaded by

Onchiri Benigno
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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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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