As a buyer or a real estate investor, it is important to dot your i’s and cross your t’s before getting into a legally binding agreement with a seller. The principle of Caveat Emptor, a Latin phrase meaning “buyer be aware” places a responsibility on a buyer to sufficiently perform their due diligence before making any purchase.
Echoing the words of the renowned federalist James Madison, “If men were angels, no government would be necessary”. Simply put, if men were honest, then Courts would not be overwhelmed with numerous land disputes, the Parliament would not need to enact the many existing land legislations and regulations and the professionals in the real estate market would be out of work.
The due diligence process of a buyer or real estate investor in land transactions involves the following 6 steps:
STEP 1: Physical Site Visit
With the help of a licensed surveyor, confirm the actual dimensions (boundaries) of the land and ensure the beacons are well delineated in line with the deed plan or mutation form. Further, take note of the pertinent features of the land for example are there existing structures or fixtures on the land? Are there signs of encroachment by squatters or grazing of animals? What soil type is present-is it conducive for construction or agriculture? Are there existing environmental and health hazards present? Can you spot any signs of flooding? Is the land ancestral i.e., can you spot graves on the property? and find out if the people living on the adjoining properties, know the seller.
STEP 2: Request a Survey map
Engage the services of a surveyor or an advocate in obtaining a survey map on your behalf. A survey map will show the positioning of the land vis-à-vis all the adjoining parcels of land and roads and is the best way to confirm whether the land is adjacent to a water body or railway line.
The location of the land on the survey map, will advise you on whether there is a need to undertake further searches at the following governmental bodies:
(a) KENHA or KURA- to confirm if the land forms part of a road reserve;
(b) NEMA-to confirm if the land forms part of a riparian reserve or forest reserve; and
(c) Kenya Railways Authority- to confirm if the land forms part of a railway reserve.
STEP 3: Obtain an official search and a Certified Green Card from a Land Registry
An official search provides the details of the registered owner; the nature of title- is it a freehold or leasehold; the size of the Land; if it is a leasehold the duration of the term, the rent payable, and the commencement date of the term; and any encumbrances over the Land-charges, caveats, cautions, and restrictions.
However, it should be noted an official search is not enough and its contents can easily be forged or mispresented in favor of the person claiming to own the land. As such, we advise on the acquisition of a certified green card.
A green card holds the original records and a historical search of all the transactions relating to the land. Therefore, over and above, what is contained in an official search, a green card reveals the history of the title, how the land has changed hands (previous owners), any registered cautions, caveats, or restrictions, and if the land has been subject to a succession cause or litigation dispute.
While an official search and green card can be requisitioned simultaneously, we advise that you conduct an official search first, and thereafter obtain a certified green card. This will enable you to investigate the title further and pull out of the process should the information contained in an official search differ from that of the certified green card.
STEP 4: Search at the County Land Registry
If land is situated within a municipality, whether it is a freehold or leasehold, it is ratable. Once you establish the details of the seller, then visit the County land offices with a copy of the title and a current official search to:
(a) ascertain whether the existing land rates have been fully paid by the seller. All existing land rates and land rent (for leasehold properties) must be fully paid by the seller before purchase and transfer are made; and
(b) establish the permitted use of the land. It is prudent to know the zoning and building regulations permitted on the land you seek to purchase. For example, land designated for residential purposes cannot be used for commercial purposes and vice versa. Thus, should the land fail to match your designated use, then an application for a change of use is required.
STEP 5: Confirm the identity and details of the Seller
So as not to fall prey to an unscrupulous seller masquerading as a registered owner, it is important to perform a search on the seller and verify their identification documents. If the seller is a person, then the search is conducted at the National Registration Bureau, if it is a company at the Company Registry and if it is a Sacco at the Sacco Societies Regulatory Authority (SASRA). However, it should be noted that access to these registries is limited to members of the public, as such you will require an Advocate to obtain the search on your behalf.
STEP 6: Perform a search in the Ndung’u Report
The Ndung’u Report is a report by the Commission of Inquiry that listed public land that was illegally or irregularly allocated post-independence. The National Land Commission has since taken up the mantle of regularly publishing notices in the Kenya Gazette and nationwide newspapers informing the general public of properties whose titles are subject to dispute or that have been revoked. It is prudent, for you to engage a professional to comb through the said list to ensure that you do not purchase a property that is illegally or irregularly acquired or whose title has since been revoked.
In conclusion, we reiterate the famous quote by Benjamin Franklin, “Diligence is the mother of good luck.”
At Property Boutique we have a qualified and experienced personnel that will assist you in performing comprehensive due diligence on the property you seek to purchase, advise and walk with you through the entire purchase process and above all protect your interests and finances.
For more information and assistance on the above, please contact us through our email, email@example.com
Written by Cynthia Kitolo
Legal Officer & Advocate of the High Court of Kenya