Navigating the Conveyancing Process in Kenya

Conveyancing in Kenya is the legal process of transferring property ownership from one party to another, whether through sale, lease, or charge. This intricate process involves multiple steps, legal requirements, and stakeholders to ensure a transparent and legally binding transaction. Governed by a robust legislative framework, including the Constitution of Kenya (2010), the Land Registration Act (2012), the Land Act (2012), and the Land Control Act (Cap 302), conveyancing ensures that property rights are protected and transactions are secure. This article provides a detailed guide to the conveyancing process, focusing on the key steps, the registration process at the land registry, and the pivotal role of advocates.

Steps in the Conveyancing process

The conveyancing process in Kenya can be broadly divided into three stages: pre-contract, contract, and completion (including registration). Each stage involves specific actions, such as searches and obtaining consents, to ensure the transaction is legally sound.

1. Pre-Contract Stage: Due Diligence and Initial Agreements

The pre-contract stage is crucial for laying the groundwork for a successful property transaction. It involves verifying the property’s legal status and ensuring both parties are prepared to proceed.

- Engaging a Qualified Advocate: The process begins with hiring a conveyancing lawyer. According to the Advocates Act (Cap 16), only advocates with a current practicing certificate are qualified to draft or handle conveyancing documents. Engaging separate advocates for the buyer and seller is recommended to avoid conflicts of interest, as a single advocate representing both parties may compromise impartiality.

- Preliminary Searches: Advocates conduct thorough searches to confirm the property’s legal status and identify potential issues. These searches include:

Land Registry Search: This verifies the seller’s ownership and checks for encumbrances, such as mortgages, charges, or cautions. An official search involves applying to the registrar for certified copies of the title register, while a personal search entails examining deed files. Both require nominal fees.

a) Local Authority Searches: These uncover outstanding land rates or planning restrictions that could affect the property’s use or development. A Rates Clearance Certificate is required to confirm that all dues are paid.

b) Company Searches (if applicable): If the seller is a company, searches at the Registrar of Companies verify the company’s legal standing and authority to sell.

c) Historical Searches: In cases of ownership disputes, a historical search may be conducted to trace all transactions related to the property from its first recorded entry.

d) Identity Verification: To prevent fraud, advocates verify the seller’s identity documents at the Registry of Persons, ensuring the seller is the legitimate owner.

- Physical Inspection: Advocates advise buyers to inspect the property physically to confirm its condition, boundaries, and occupancy status (e.g., vacant or tenanted). This step helps avoid surprises after the transaction.

- Negotiation and Sale Agreement: Once searches confirm the property’s status, the parties negotiate terms, including the purchase price, deposit (typically 10% of the price per the Law Society Conditions of Sale), and completion timeline (usually 90 days). The vendor’s advocate drafts the sale agreement, which the buyer’s advocate reviews and approves. The agreement must be in writing, signed, and witnessed, as required by Section 3 of the Law of Contract Act (Cap 23).

2. Contract Stage: Execution and Consents

The contract stage involves formalizing the agreement and obtaining necessary consents to proceed with the transfer.

- Signing the Sale Agreement: Both parties sign the sale agreement, which outlines the terms of the transaction, including the property description, purchase price, payment terms, and completion date. The agreement incorporates the Law Society Conditions of Sale (1989) unless otherwise specified. The buyer typically pays the deposit to the vendor’s advocate, who holds it in escrow.

- Obtaining Consents and Clearances: Various consents and clearance certificates are required to ensure the transaction complies with legal requirements. These include:

i. Land Control Board (LCB) Consent: For agricultural land, as defined under Section 2 of the Land Control Act (Cap 302), LCB consent is mandatory for transactions like sales, transfers, or subdivisions. Applications are made within six months of the agreement using prescribed forms, with the LCB issuing a Letter of Consent if approved.

ii. Land Rent Clearance Certificate: For leasehold properties, a certificate confirming that no rent is owed to the national or county government is required under Section 39(1) of the Land Registration Act (2012).

iii. Rates Clearance Certificate: Issued by the local or county government, this certificate verifies that all property rates are paid, as mandated by the Rating Act and Valuation for Rating Act.

iv. Spousal Consent: Under the Matrimonial Property Act (2013), spousal consent is required for transactions involving matrimonial property in a monogamous marriage. This is submitted as an affidavit sworn before a commissioner for oaths.

v. Chargee’s Consent: If the property is under a mortgage, the chargee (lender) must consent to the transfer or lease, as per Section 59 of the Land Registration Act (2012).

vi. Lessor’s Consent: For leasehold properties, the landlord or management company must consent to assignments or subleases.

vii. Other Consents: Depending on the property’s location or use, additional consents may be required, such as from the Kenya Airports Authority for land near airports or the National Parks for properties near parks.

- Preparation of Transfer Documents: The buyer’s advocate prepares the transfer instrument, which the vendor’s advocate reviews and approves. The transfer document, along with the sale agreement and completion documents (e.g., original title deed, clearance certificates, and consents), is executed and attested. For corporate entities, execution must occur in the presence of an advocate, magistrate, judge, or notary public, as per Section 44 of the Land Registration Act.

3. Completion Stage: Payment and Registration

The completion stage finalizes the transaction through payment, stamping, and registration at the land registry.

- Payment of Stamp Duty: Stamp duty, a tax on property transfers under the Stamp Duty Act (Cap 480), is assessed based on the property’s valuation (4% for leasehold properties in urban areas, 2% for freehold properties outside urban areas). The buyer’s advocate submits valuation forms, a copy of the title deed, and an area sketch map to the Lands Office for assessment. Payment is made via the Kenya Revenue Authority’s iTax platform within 30 days of assessment.

- Payment of Purchase Price: Upon verification of completion documents, the buyer pays the balance of the purchase price, typically through the advocate’s escrow account. If financed, the lender releases funds after registering a charge on the property.

- Booking and Registration: The buyer’s advocate books the transfer at the land registry, paying a booking fee (which varies by registry). The transfer documents, including the executed transfer form, sale agreement, consents, clearances, and stamp duty receipts, are submitted for registration. The land registrar updates the green card (a record of all transactions) and issues a new title deed in the buyer’s name, signed on pages 1, 2, and 3.

- Post-Registration Search: One to two weeks after registration, the buyer’s advocate conducts a final search to confirm the title is registered in the buyer’s name, ensuring no discrepancies.

Registration at the Land Registry

Registration at the land registry is the final step to formalize ownership transfer. In Kenya, land registration is governed by the Land Registration Act (2012), which consolidates the registration of public, private, and community land. The process is facilitated through the Ardhisasa platform, a digital system introduced by the Ministry of Lands and Physical Planning, currently operational for Nairobi properties.

- Ardhisasa Platform: Property owners must register on Ardhisasa to add their parcels and conduct searches. For searches, the proprietor’s consent is required to access verified results. Advocates handle applications for transfers and charges on behalf of clients, ensuring accountability. The platform enhances transparency by digitizing records, reducing fraud, and streamlining transactions.

- Documents Required: The registrar requires the following for registration:

a. Executed transfer instrument

b. Sale agreement

c. Original title deed or lease certificate

d. Consents (e.g., LCB, chargee, spousal)

e. Clearance certificates (land rent, rates)

f. Stamp duty payment receipts

g. Certified copies of the seller’s and buyer’s IDs and passport photos

h. For companies, additional documents like PIN certificates and directors’ photos

- Registrar’s Role: The registrar verifies the documents, ensures all consents and clearances are in place, and updates the land register. The new title deed is issued, signifying the buyer’s legal ownership. If a charge is registered (e.g., for a mortgage), the lender holds the title until the loan is repaid.

- Cautions and Restrictions: To prevent fraudulent dealings, a caution or restriction may be registered on the title to prohibit transactions without notifying the cautioner or until a specified condition is met. These can be withdrawn by the cautioner, court order, or registrar after due process.

Role of Advocates in the Conveyancing Process

Advocates play a central role in ensuring a seamless and legally compliant conveyancing process. Their expertise mitigates risks, ensures compliance, and protects clients’ interests. Key responsibilities include:

1. Due Diligence: Advocates conduct searches to verify ownership, check for encumbrances, and identify potential legal issues. Failure to perform adequate searches can result in liability for negligence if the client suffers losses.

2. Document Preparation and Review: Advocates draft and review critical documents, such as sale agreements and transfer instruments, ensuring compliance with statutory forms under Section 108(1) of the Land Registration Act. They also obtain approval from the Chief Land Registrar for non-standard forms.

3. Advising Clients: Advocates guide clients through legal complexities, advising on financing, taxes, and legal costs. They ensure clients understand their rights and obligations under the sale agreement and related laws.

4. Obtaining Consents and Clearances: Advocates coordinate with relevant authorities to secure consents (e.g., LCB, chargee) and clearance certificates (e.g., land rent, rates), ensuring all regulatory requirements are met.

5. Negotiation and Dispute Resolution: Advocates negotiate terms on behalf of clients to secure favorable conditions. If disputes arise, they may represent clients in litigation or arbitration, as conveyancing can involve legal disputes over failed transactions.

6. Registration and Payment Handling: Advocates manage the submission of documents to the land registry, handle stamp duty payments, and ensure secure transfer of funds, often through escrow accounts.

7. Preventing Fraud: By verifying identities and title authenticity, advocates protect clients from fraudulent transactions, a common issue in Kenyan land dealings.

8. Compliance with Ethical Standards: Advocates must adhere to the Advocates Act and avoid conflicts of interest. For instance, acting for both parties without consent can lead to ethical breaches.

Conclusion

Navigating the conveyancing process in Kenya requires careful attention to legal requirements, thorough due diligence, and professional guidance. From conducting searches and obtaining consents to registering the transfer at the land registry, each step is critical to ensuring a secure and legally binding transaction. Advocates are indispensable, providing expertise, safeguarding interests, and ensuring compliance with Kenya’s robust legal framework. By engaging a qualified conveyancing lawyer and following the outlined steps, buyers and sellers can achieve a seamless property transfer, minimizing risks and securing their investment.

For professional assistance in matters conveyancing, contact us at +254 716 808 104 or info@lawguide.co.ke