Conducting Due Diligence in Property Purchases in Kenya

Conducting Due Diligence in Property Purchases in Kenya

Posted on: 27 May, 2024

Property remains the most valuable yet emotive asset in Kenya. Land/Property transactions are made daily in billions of Kenya Shillings. With the costs and benefits involved, land has attracted many actors, some of whom are scammers, undercutters, sellers of hot-air. Whereas it morally right for the Vendor to sell to the Seller proper products i.e. land they actually own, the law puts the burden on conducting due diligence on the Purchaser. The purchaser can conduct this due diligence alone or, most preferably, through an advocate.

The benefit of an advocate is the due diligence conducted with the law in mind and the ability to ask technical and legal questions. All purchasers of value for land are encouraged but not mandatorily required to have the services of a lawyer to conduct due diligence. Studies have it that majority of those who purchase land/property through an advocate are less likely to be scammed than it is for those going it all alone in the purchase. The scamming is not only to the Purchasers, but also to the Vendors where a scammer pretends to be a Buyer of a genuine land but illegally acquires property details and fraudulently changes ownership and deprives the owner of his rightful property through a con-game.

In this Article, we shall focus on due diligence on the part of the Purchaser. While buying land or property, you need to consider the following steps to avoid being scammed.

a) Copies of Registers and Official Search and Company Searches

All land transactions, whether lease, sale, charges e.t.c. are recorded in the Registers known locally as green cards. It is important to obtain a certified copy and properly carry out a thorough examination of the records therein before deciding to buy the property/land. Likewise, an official search conducted at the ministry of lands will be very vital at assisting you make a proper decision. If any charges, encumbrances, cautions, restrictions and/or caveats are lodged, you will not be able to proceed with the transaction before the same is removed. It is illegal to purport to own property without the sanction of the Ministry of Lands and/or registration of the same into the lands register.

For Vendors who are companies, it it important to ascertain that the company actually exists since any transactions with an illegal or non-existent entity repudiates the Agreement for Sale on capacity basis. Importantly, the title allegedly owned/registered in favour of a non-existent company would easily be an illegal title as the entity lacks capacity to hold one. As such, it is prudent to visit companies registries, NGO Board and any body that registers entities to ascertain and verify records therein.

b) Historical Search

The common joke around is that you need a local drunkard who will spill then beans at the toss of a glass of the brew to enable you understand the current status on the ground for the land. Nevertheless, historical search is conducted at the local authorities offices such as the Village Elders, Nyumba Kumi, Area Chiefs, Neighbours, relatives to the owner among others to know how the land passed from one hand to the earth. This is so because titles can be challenged successfully, revoked and/or cancelled even though one holds a genuine title if it was acquired fraudulently, irregularly, unprocedurally and unlawfully.

c) Ascertaining Title Correspondence with Actual Parcel on the Ground

You will require a surveyor's assistance to look through the Survey maps and actually place the title you own to the corresponding property on the ground. Sometimes, a vendor might designate a Property for Sale, that which had been demised long ago, and issues a title copy pointing to a totally different parcel. Many years into occupation, you come to realize you have no property and/or the property you were sold is a different one. It is insignificant until you have put hefty investments in the wrong parcel. The pain is real since there will be no otherwise, unless a negotiation as between the buyers is reached, but to demolish and destroy the investments in order to vacate for the actual owner. In other occasions, you may be sued for trespass to land and/or illegal occupation of the person's land.