In every transaction, both the buyer and seller have expectations as they come into the deal. What sets these expectations apart, is the Law! Land buying is not an exception to this, and it’s in fact one of the transactions that require following the law to the latter.
Searching for land to build a new home or speculate is exciting. “An achievement,’’ some would say. However, buyers should be aware that raw land requires extensive due diligence.
Generally, land in Kenya is identified by Plot Number or Land Rate number (LR). After appropriate land is identified and the LR number obtained from the seller, the buyer should ensure they can answer the following questions that guide them on the process that follows:
Is the Mother title in favor of Company X or is still under the vendor’s name?
Every property has it’s own land registry. A search with the Land registries with relevance to the property you are buying will reveal:
- The true landowners and establish the presence of brokers if any.
- If the title has been charged or has a caveat e.g when title used to secure a loan, or there is a court order barring any transaction on that land, etc.
A search cost KSH 520/= and should be ready normally within two hours. A search is valid for a period not exceeding six months. If the Mother Title is under the vendor’s name, the vendor should then provide the sale agreement. Normally, you will be given the necessary documents showing the agreement between company X and the vendor. A consent letter showing company X now owns the property and is in the process of transferring the title should also be provided.
Is the title deed freehold or on the lease?
It is of great importance to inquire whether the title is freehold or on lease. If it’s on a lease, Company X should issue you with a certificate of Lease, if its freehold, then a title deed should be issued.
Do you have the site map?
Always ask for the site map of the property you are purchasing. In the right circumstances, company X should carry out a survey & issue two maps; one drawn to scale (informally known as tracing or mutation) and another showing the neighboring farms.
What is the size of the plot? Can it be measured?
Armed with the map, the surveyor and the buyer should visit the land on the ground. It is advisable to carry a tape measure to confirm the dimensions of the land from the map drawn to scale. Make sure you the boundaries of the land are defined using clear & visible beacons.
How do I protect your (buyer) interests when purchasing the land?
Company X will provide the Sale agreement. This will be an agreement between the buyer and the vendor. It will secure your interest when purchasing the land as all details regarding the payments, legal matters and timelines will be included. The law requires any land transaction to be in writing. While it is not a must a lawyer to be involved it is very advisable to have a lawyer.
What is the mode of payment?
After this, everything now depends on the agreement. Payments can be made as a one-off cash payment or by installments as per the agreement signed by the buyer & the seller. Either way, the seller will demand some money. By the time the initial payment is made, the title deed and other legal documents should be in the custody of the lawyers.
What is next after I finish making all the payments?
After the buyer pays off the buying price in full, the buyer signs Land Transfer Forms. He/ She must include passport photos, KRA pin, copy of the sale agreement, and old title deeds. All these official documents should be presented to the land registries to change ownership. In the case where you buy a piece of property from a well-established company, the company is responsible for acquiring title deeds for their customers.
Who pays the Stamp duty? And when is it Paid?
The buyer normally pays the stamp duty fee after fully paying the transaction cost of the land. The fee is normally 2% of the value of the land, normally weighs with the purchase price. However, several companies normally don’t charge the stamp duty fee as it is inclusive of the purchase price.
How long will it take to acquire the title deed?
This will depend on the registry your title is being processed in. Some registries tend to prolong the process to a period of 9 months while others are very efficient & deliver titles in a period of 1-2 months. The timeline varies with the sale agreement between the purchaser and the vendor.
How will I know the title deed is genuinely under my name after I acquire it?
The buyer should do another search with land registries to confirm that the land now reads their details.