Investing while you are in the Diaspora
HOME & AWAY
By - | May 31st 2012
By Harold Ayodo
A section of prospective investors working abroad are frustrated with real estate investements following loss of fortunes to con artists.
Majority of the villains are blood relatives trusted to buy property for their kin in the Diaspora.
Mostly, the prospective investors see online advertisements of homes on sale before sending money to buy through relatives.
Among the common modes used to wire money are Western Union, PostaPay and mobile money transfer.
Others prefer customised card payment systems that offer easy, fast and secure means that have formalised remittances.
Latest official statistics from the Central Bank of Kenya (CBK) partly explain the fortunes Kenyans abroad have invested at home. For instance, Diaspora remittances in February alone hit a record high of Sh8.65 billion! During the preceding month of January, the remittances totalled Sh7.45 billion.
The CBK attributes the highest remittances in the last six years to increased confidence in the economy by Kenyans abroad. ?????
Economists concur that the increased inflows have played a key role in pushing up property prices, ranking Nairobi and Mombasa as the top two cities with the highest rate of increase in property prices globally.
But it is not all rosy to prospective investors based abroad as money they send is not always used for their purposes.
?Some of the buyers instruct their kin to buy them plots and send money religiously for construction of their desired homes.
Unfortunately, the trusted relatives pocket the money, unbothered that their kin abroad toils for over ten hours a day to save for the property.
Take the case of Brian Mwangi, writing from the United States who sent this column an email expressing his frustrations.
“How can I invest in property back home without being conned off my hard earned money as once experienced with my relative?” Mwangi asks.
Two years ago, he identified an apartment, online, for sale in Kilimani, sent his cousin Sh8 million to buy, but in vain.
“He (cousin) stopped picking my calls and responding to emails until I wrote to the sellers who confirmed my worst fears,” Mwangi writes.
Mwangi works at a hospice in the US and says once bitten twice shy.
“I have been here (US) for nearly 12 years…my idea was to invest at home before coming back but now I am discouraged,” he says.
Mwangi is not alone. Tom Mogaka from the United Kingdom says he is a member of a ‘chama’ (investment group) of Kenyans who search for homes and land online.
Unfortunately, Mogaka says they have lost many properties they identified as they are not around to complete legal requirements.
He says they once identified two homes in the high-end areas in Muthangari and Kileleshwa but were swindled by an agent.
According to Mogaka, they sent the agent Sh6 million to pay as deposit for the property in January and has since been unreachable on phone. The concern of their group is whether they can legally have an agreement with a person they trust to perform property transactions on their behalf.
Other fears include increasing reports in the media on property transactions turned sour.
However, investors in the Diaspora can overcome their frustrations by legally appointing agents to work on their behalf.
For instance, they can use the power of attorney to appoint a trusted person to perform property transactions on their behalf.
The power of attorney can be specific — only for a particular property transaction or general and must be registered at the Ministry of Lands in line with the Registration of Documents Act.
As part of the registration, the prospective investor must fill official forms before the registrar consents and certifies the document.
Legally, the power of attorney can be revoked by the appointee (investor) at any time by simply issuing notice to the registrar.
But, a person who is mentally ill has no capacity in law to donate a power of attorney in property transactions.
According to Section 114 of the Registered Lands Act, the appointed agent with a registered power of attorney can sign legal documents.
For instance, the agent can — on behalf of the investor - sign the agreement for sale, consent and transfer forms during transactions.
As a caution, when undertaking international transactions, investors should engage a registered lawyer who is a certified Notary Public.
A Notary Public is an advocate who has practised for over seven years and is registered to certify documents on international transactions.?
The writer is an Advocate of the High Court of Kenya.
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