Buying land without headache

By Allan Olingo

If you want to buy land, don’t just give money to anyone selling. To protect yourself from the pain of losing your investment, it is advisable to follow legal procedures while purchasing land from a company or an individual.

Here is a quick run through the legal requirements that can insulate you:

Land identification

This is where a prospective buyer identifies a piece of land that meets his or her criteria including size, location, soil type and whether it is serviced, among other qualities.

Conveyance advocate Muthoni Wagenga says identification helps verify the actual location of the land and also for the prospective buyer to know the neighbourhood.

“Beacon identification gives the potential buyer a clearer vision of the shape of the land and its boundaries, as opposed to looking at what is on paper like the deed plan,” she explains.

Searches and title inspection

Once the buyer has seen the land, the seller should hand over a copy of the land title deed to facilitate the search. It normally takes a maximum of three working days to get search results after lodging a search application form (and attaching a copy of the title).

Muthoni says there are two kinds of searches. The first one is the company registry search, where you undertake a search at Sheria House, division of company registration, to ascertain that you are actually dealing with a duly incorporated company, and to also establish the directors and shareholders of the said company selling you the land.

The other search is at the Ministry of Lands office, where you will ascertain the true ownership of the property, whether it is genuine, it actually exists and whether it’s a road reserve.

The search will also establish the conditions and restrictions held in the title, user of title, size of land and its history.

Alex Muema, a director at Ndatani Enterprises Limited, a land selling company, says they advise their clients to also check whether the land is included on the Report by the Commission of Inquiry on the Illegal and Irregularly Allocated Land, commonly known as the Ndung’u Land Report.

“It is important for the owner to enlist the services of a registered surveyor, who shall confirm the beacons on the land and conduct further preliminary checks at the survey department,” says Muema.

Preparation of offers and price negotiation

Your advocate, who had conducted all the searches on your behalf, should now prepare an offer and price negotiations should begin.

Says Muthoni: “A letter of offer, or letter of intent, shows the details of the seller and purchaser (addresses and contacts), the description of the property on offer, the proposed purchase price and mode of payment, and finally the advocates acting on behalf of the parties.”

An offer is usually in writing as the same acts as the guide, in preparing the sale agreement (between the seller and the purchaser) that follows. An offer letter is also important as it is used to reserve or hold a property from being sold or offered to another party.

Sale agreement

Once both parties have accepted the offer, the advocate for the seller will then draft a sale agreement and present it to the purchaser’s advocate for approval.

“A sale agreement usually consists of the names and addresses of the seller and purchaser, a detailed description of the property being sold, the agreed purchase price and mode of payment, the terms governing the sale, and the special conditions of sale,” explains Muthoni.

She says it is the responsibility of the buyer’s advocate to clearly define the clauses in the agreement and their implication.

Once the terms are agreed upon between the parties, then the advocates will facilitate the execution of the sale agreement by the parties and witness the same.

According to Muema, in most cases, the buyer pays the agreed deposit to the seller through his advocate, upon execution of the sale agreement.

“This is the expected procedure and should act as a check against falling prey to conmen,” says Muema.

Payment of land rates, issuance of clearance certificates

It is the seller’s obligation to ensure that all pending land rates are paid in full and the relevant local authorities issue the clearance certificates for both, before the land can be transferred to the buyer.

Transfer of documents

The transfer document is usually prepared by the buyer’s advocate and approved by the seller’s advocate.

William Mokiri, an advocate says it is the responsibility of the buyer and seller to execute the transfer document prepared by the seller’s advocate depicting the transfer of all rights in the subject land from the seller to the buyer.

“This document will be affixed with coloured passport size photographs of both the buyer and seller, their PIN Numbers and ID or passport numbers. The signatures of the seller and buyer will be witnessed and certified by the respective advocates,” says Mokiri.

Consent to transfer

It is the mandate of the seller (through their advocate) to ensure that the relevant consent to transfer from the Commissioner of Lands has been issued against his property. For agricultural and scheme lands, the consent issued by the Land Control Board will be required.

Valuation

When the parties to the sale are ready to register the transfer, an application for valuation for purposes of stamp duty payment will be made to enable the government valuer make a site visit before preparing the valuation report.

Collins Otieno, a valuer says that the payable duty will be established by a government valuer, to determine the true open market value of the land as at the date of transfer vis a vis the value declared in the instruments presented for registration, for purposes of ascertaining whether the value declared in the instruments will be raised or not.

Collins says it is the responsibility of the buyer to apply for the valuation of the land by the state valuer using the valuation form duly completed by the seller.

“The Lands office will use these documents to determine the stamp duty payable,” says Collins.

Payment of Stamp Duty

The buyer normally pays the stamp duty, a tax levied on all lands. Registration of any such transfer at the Lands office cannot be effected until the stamp duty has been paid, embossment done and the document accompanied by proof of such payment. The government valuer determines the duty payable.

Registration of transfer and balance payment

Once the transfer documents are duly stamped (stamp duty has been paid and embossed on the transfer document), then the same documents can be booked at the Lands office for registration of the transfer of land to facilitate the official transfer of ownership in the land from the seller to the buyer. You are required to give these documents: Original title deed, duly stamped transfer documents, original stamp duty assessment and receipt, stamp duty valuation report, original paid up land rents receipts and clearance certificate, original land rates clearance certificate, consent to transfer and the application for registration,” says Muthoni.

Exchange of documents

Depending on the agreement between the parties, the payment of the balance is usually made in two instances — upon receipt of the ‘completion documents’ from the seller, the buyer is obligated in exchange of these documents to pay to the seller the entire balance against the land, through his advocates, to finalise with the registration of the documents after paying the requisite stamp duty, Muthoni explains.

Alternatively, where mortgage, loan or financial institutions are involved, the balance is usually payable upon receipt by the financier’s advocate of the duly registered transfer, title and charge in favour of the buyer and financial institution, accompanied with the completion documents mentioned above.