Leasing property (whether residential or commercial) is a common practice in Kenya. However, understanding unregistered and unexecuted leases can be a challenge for both landlords and tenants. In this article, we will explore the types of leases available in Kenya, the registration requirements for leases, and the legal implications of unregistered and unexecuted leases. By the end of this article, you will have a better understanding of what you need to know when dealing with unregistered and unexecuted leases in Kenya.
Types of Leases under the Kenyan law
- Periodic lease (Section 57, the Land Act)- is a lease whose term is not specified and no provision is made for giving notice to terminate the tenancy. It also includes arrangements where a landlord permits exclusive occupation of the property at a rent without any agreement in writing.
- Future lease (Section 61, Land Act)- a lease of land made for a term to begin on a future date, not being later than 21 years after the date on which the lease is executed.
- Short-term lease (Section 58, Land Act)-is a lease made for a term of two years or less without an option for renewal; or a periodic lease. A short-term lease may be made orally or in writing.
- Long-term leases (Section 54(5), Land Registration Act and the Sectional Properties Act, 2020) – are used to confer ownership over sectional properties such as apartments, villas, maisonettes and townhouses.
Registration of Leases
Section 43(2) of the Land Registration Act, 2012 provides that no instrument affecting any disposition of private land shall operate to sell or assign land, create, transfer or otherwise affect land, lease or charge until it has been registered in accordance with the laws relating to registration of instruments unless the disposition is exempt from registration. However, short-term leases (leases for a period of less than 2 years) are exempt from this requirement under Section 58 (3) of the Land Act, 2012.
The Effect of an Unregistered Lease and Unexecuted Lease under the Law
(a) Unregistered Leases
Section 36(2) of the Land Registration Act provides that any unregistered instruments in land shall be construed as contracts between the parties.
In Mega Garment Limited vs. Mistry Jadva Parbat & Co. (EPZ) Limited (2016) eKLR), the Court of Appeal held while relying in the time- honoured decision in Bachelor’s Bakery Ltd v Westlands Securities Ltd (1982) KLR 366 held that a lease does not require to be registered to be enforceable between the parties. An unregistered lease amounts to an agreement and is valid between the parties, however it offers no protection against third parties to the agreement.
(b) Unexecuted Leases
In Chon Jeuk Suk Kim & another v E. J. Austin & 2 others [2013] eKLR, the Court of Appeal held that:
“The legal character of the document under consideration in this appeal is from its form and contents an agreement for a lease. It is common ground that the formal lease was not executed. From the authorities, although the document does not conform legal or equitable estate to the appellants the covenants therein would be enforceable as between the parties if it is ultimately found to be an enforceable contract.”
In conclusion, the registration of leases is an important aspect of property law in Kenya. While short-term leases are exempted from registration, all other leases require registration to be valid and enforceable against third parties. Unregistered leases may still be enforceable as contracts between the parties involved, but they offer no protection against third parties. On the other hand, unexecuted leases can be enforced as agreements between parties if the essential elements of a contract are present, such as the payment of rent and acknowledgment of receipt by the lessor. It is essential to seek legal advice before entering into any lease agreement to ensure compliance with the law and the protection of one’s interests.
Written by Cynthia Kitolo
Legal Officer & Advocate of the High Court of Kenya
