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Buying unregistered land could get you into trouble

REAL ESTATE
By Harold Ayodo | August 4th 2016
Majority of land in rural areas is not registered because the “owners” mainly inherited them. They lack title deeds to the land they “own” because they were never adjudicated and registered by the government. (PHOTO: MOSE SAMMY/ STANDARD)

I have identified a parcel of land which is both affordable and in a good location in my rural area. I am about to make a deposit to the seller as mutually agreed and pay the balance in installments. However, I have some reservations as the land is not registered by the Ministry of Lands although elders in the area have confirmed to me that the seller hails from the family that owned the land ancestrally. Can I proceed to buy the property? I would also appreciate your thoughts on merits of buying a registered property.

Patrick, Nyandarua

No. It is not advisable to buy property that is not registered with the Ministry of Lands as it would not be possible to know who the legal owner is. The best way of knowing the legal owner of a property is by conducting an official search at the Ministry of Lands.

A dream property may cost well below the ever-increasing market price but may end up being too costly when the long arm of the law catches up with you.

Majority of land in rural areas is not registered because the “owners” mainly inherited from their forefathers. They lack title deeds to the land they “own” because they were never adjudicated and registered by the government.

Currently, slightly over 60 per cent of land in Kenya is unregistered, creating title insecurity and room for conflicts. Legally, it is not easy to sell property that is not registered under your name, unless the registered owner gives you the power of attorney to transact on his or her behalf.

It is therefore more straightforward to buy registered property that has a valid title deed. For instance, property owners of registered land have security of tenure and a right to indemnity from the government in case of compulsory acquisition.

Furthermore, commercial banks and other financial institutions prefer extending loans to clients with valid title deeds as security. Moreover, banks often perform official searches at the Ministry of Lands to prove validity of property offered as collateral.

On the other hand, investors can also easily secure capital from moneylenders for development of their land. Moreover, dealing in registered property reduces court cases over ownership as the size and owner of the land or home are conclusively established and determined.

Purchasing property from a registered seller ensures full commercial confidence in the transaction protected by law. Even before passing of the new land laws, property registered under the Registration of Titles Act (RTA) and the Government Lands Act (GLA) offered absolute proprietorship to registered owners.
Back to registration, it also prevents unreasonable and unnecessary subdivisions or fragmentation of – especially – agricultural land.

Generally, fragmentation of land may lead to low productivity, thus hindering benefits of economies of scale for investors for agricultural reasons. Prospective investors on such property require consent of the Land Control Board before any sale or sub-division.

Similarly, permission for planning, development and using land within urban areas is necessary, according to the Land Planning Act of 1968. The law also protects subdivision of registered land - in urban areas – into partitions that would impact negatively on their proper use.

For the government, registration makes it easy to identify property owners to levy tax on or rates on the same as land transactions must be registered.Some landowners also prefer not to register their property to avoid paying taxes – unregistered lands are “invisible” to the tax man.

Unfortunately, registration of some trust lands countrywide is incomplete, making it difficult for local authorities to levy rates. Professionally, unregistered land is difficult to value because of the uncertainty of title and an accepted and practical method for valuing.

—The writer is an advocate of the High Court

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