Many Kenyans aspire to own land or a place they call home. There is significant investment that is required for land ownership, calling for a thorough due diligence to ensure a smooth and secure transaction. In legal terms, due diligence in land transactions is the process of establishing the legal ownership of the piece of land one is about to purchase, to determine whether the land has encumbrances, whether the title is leasehold or freehold, and whether the land is commercial or agricultural land.
This article provides a comprehensive guide on the important steps one should undertake when conducting due diligence on land transactions in Kenya.
Step 1: Verify the Seller’s Identity
It is important to verify the seller’s identity and ownership of the piece of land they are selling. Ensure that the person selling the land is the rightful owner or authorized agent. When buying from an individual, request for their national identity card and verify the details against those in the title deed. When buying from a reputable company like Nulands, you need to get information like the company registration certificate and CR12 – this discloses the shareholding structure of the company. Additionally, the directors at reputable companies like Nulands will give you their IDs and PINs as these are required during the transfer process.
Step 2: Verify the Title Deed
It is important to verify the title deed and confirm that all the information provided in the title deed is correct. This is done by conducting an official search at the land registry. It is recommended that one uses an advocate of the High Court of Kenya to help them understand the contents of the title deed. Additionally, one can request for a certified copy of the green card which provides more information on the land ownership.
Step 3: County Land Search
This should happen especially for pieces of land within municipalities and cities. The purpose of this search is to verify payment of land rates. This search also helps establish the designated use of the land. One should obtain a rates clearance certificate to ensure that the rates are up to date. The registered use of the land should be confirmed to ensure that the intended use aligns with the designated purpose.
It is important for one to understand the zoning regulations and land restrictions within an area they are purchasing their land.
Step 4: Certify the Land Size
It is important that one verifies the size of the property they are about to purchase. One should engage the services of a qualified surveyor before finalizing their transaction. The surveyor will help confirm the land’s boundaries and identify any encroachments or boundary disputes that may exist on the land. The survey should adhere to the Survey Act (Cap. 299) of the laws of Kenya.
Step 5: Site Visit
A site visit is an essential part of conducting due diligence when buying land in Kenya. The site visit allows a prospective buyer to physically inspect the property, verify the boundaries, and assess the condition of the land. Reputable companies like Nulands normally have signature bus and van tours where they take prospective buyers to the different pieces of land they are selling. In addition, there are caretakers on the ground that will grant you access to the piece of land in case you are visiting on any other day. During the site visit, observe the surrounding and consider other factors, such as soil quality, flood risk, presence of squatters, closeness to amenities such as schools, markets, hospitals, and roads among others.
Step 6: Financial Considerations
It is crucial to consider the financial aspects of land purchase. This includes considering the market value against the selling price and considering the potential return on investment. When the purpose is purely speculative, consider factors such as roads and market access and the potential for growth in the next few years. Budget for other transactional costs, such as stamp duty, registration fees, legal fees among other costs that may increase the total cost of purchasing the land.
Step 7: Community and Neighborhood Consideration
Before making the final decision, research the community and neighborhood in which the land is located. The purpose of this is to understand the sociocultural configuration of the neighborhood and whether this conforms to your beliefs and values. Where possible, engage with the residents and local authorities to gain insights into the development plan of the area and any potential conflicts.
Step 8: Financing Options
Consider the different financing options while comparing the interest rates, eligibility criteria, and repayment terms. Consider purchasing from companies like Nulands that have a flexible payment plan. Ensure you sign a sale agreement that covers you just in case of anything. The agreement should be professionally drafted by an Advocate of the High Court of Kenya.
Conclusion
The process of purchasing land in Kenya is complex thereby requiring due diligence to protect your investment. The steps outlined in this article, such as verifying individual or company identification documents, conducting official search at government registries, and engaging professionals are some of the strategies one can take to ensure a successful land transaction.
