@ Marty . donot forget about the book publishing idea i told you about. go for it i think you'll help many people.
if there's any area that is undeserved in Kenya through our educational system ids financial education thats why we have such a high failure rate of business in their first first few years.
let's make an end to this and give people knowledge that will work fr them

kumbuka mimi on chepusit at gmail dot com

What is in this official search document?

Paul and I met this broker who was introduced to us by a friend in Rongai. This was on a cold Thursday morning sometimes in August 2010. The guy went ahead and showed us a very nice 2 acre piece of land around Rimpa, some place between Rongai and Kiserian. It had an old building and was on sale. We felt the price quoteed by the owner was quite low. However, the story went that the owner was liquidating a lot of his assets due to financial constraints hence the low figure quoted. We expressed interest in the property and the broker called the owner who apparently was in Kiserian. We therefore decided to drive on to Kiserian and meet the guy.

On reaching Kiserian we navigated our way to some dingy looking pub where the owner was having a drink with some other guys. We got shocked coz in front of us was a former KANU bigwig who seemed a shadow of his former self. The guy looked unkempt and in comparison to the man I knew in his hey days, it seemed like life had not be rough on him. He had a unique look and it was not possible to mistake him for someone else. I just realized how fast the tide can turn against you especially when in the political cold.

After the intros, we told the old man that we were interested in his property. He told us that we are not the first to express interest and if we really wanted the property, then we needed to make a commitment as fast as possible. Red flag?? Indeed yes, coupled with the fact that he was a former politician (another red flag), I knew we had to trend carefully. We informed the guy that however much we want the land we needed to confirm it is ok by way of carrying out an official search. He informed us that he is to travel to Kericho the day after so if we wanted his land then we had to move fast. We promised to revert back to him as soon as we had the search. No-one should ever force you into a quick deal before you perform the necessary due diligence.

As we departed for Nairobi, I called my contact in Kajiado and gave him the LR number so that he does the search. At around 4pm, my contact in Kajiado called me. He is usually a funny fellow but from his first words, he sounded shocked. He told me that he had the search with him and it was like none he had ever seen before. I was quite curious to know what was therein. He called me by my name and told me, “I thought I told you to be very careful with some of the land you keep attempting to buy”. I told him am usually careful and I do the best I can. “Forget about that land”, he retorted. He went ahead to inform me that the search had so many encumbrances to an extent that they could not fit in the space availed for listing them on the search document.

When I received the search the day after, it made some interesting reading. It had as many as 4 entries other than the normal entries of the name of the proprietor and when the title deed was issued. The 4 entries were as below:
1. A restriction that no dealing will be registered on the land unless the registered owner appears in person.
2. Caution by some guy claiming lender’s interest.
3. Charge in favour of a financier.
4. Further charge in favour of the same financier.
In total the land was charged to the tune of 9M and it was only worth 3M at the time we viewed it. I am sure by the time of the charge which was around 2004, it must have been worth 300k. How the charging was done for such a value, don’t ask me.

An official search is a confirmation by the respective land registry on behalf of the government on the ownership and status of a particular title. It shows the following details:
1. Title number, search number and the date the search was done.
2. Nature of title: Absolute or lease.
3. Approximate Area in hectares
4. Name and address of proprietor and whether a title deed has been issued to the proprietor.
5. A section on inhibitions, cautions and restrictions.
6. Encumbrances section (leases, charges etc)
7. Pending applications
The search document details are filled based on the content of the green card upon and must be signed and sealed by the Registrar.

For a title to be clean, then Nos 5 to 7 must be nil. If not, and especially section 6, a charge entry must have a corresponding discharge entry to free the charge. A title with the any unresolved issues in Nos 5 to 7 is not transferrable.

A quick look at the title document itself:
Other than confirming the title number, the approximate area of the plot/land and the proprietor details, one needs to confirm the entries in the proprietor section (part B) which should tally with the entries on the search. Take note of the date the title was issued and confirm it is the same with what appears on the search. There is also the need to have a look at any entries in section C (encumbrances section) coz therein they list them. Any entry in this section must be accompanied by a signature by the registrar. Remember the following important points:
• A charge entry must be accompanied by a discharge entry for the same amount and by the same chargee to release the charge.
• A caution can only be removed by the entity that placed the caution, same with restriction.
• If you come across a discrepancy in the proprietor details as in names, nature of title and approximate area, then be very careful. Take for example a discrepancy in the name of the proprietor (e.g. use of initial in the title as compared to full names in the ID), the legal process get quite interesting where the proprietor must go through a correction of names in the title. The process starts with swearing an affidavit, the same is presented to the registrar who writes some letter to the area chief, who must identify the proprietor and give them a letter. The proprietor must then present themselves to the relevant Land Control Board to get consent to change the name and he/she takes all the docs to the registrar for the change to be effected. Quite a procedure.

Special circumstances when you can proceed with a deal when a title is encumbered:
For developers who are financed, the titles for the land they are developing are usually charged by the financier. What normally happens, in the case when a customer who pays up for a house, a partial discharge for the specific title to the unit is done hence freeing it from the charge and allowing for the transfer to proceed. So whenever you carry out a search for the title of the house you want to purchase, you should not be worried to find it charged by a financier coz essentially it’ll undergo a discharge and the transfer will be executed. However, a vacant plot / land must be free from encumbrances.

Next lesson will dwell on understanding a sales agreement, I know most people have signed it but they were not sure what some clauses meant.

Good Stuff Marty.
Your education on Financial Matters is spot on. What I find outstanding with your should I call it book, the examples are good. You cannot compare them with the likes of "rich dad poor dads" Keeping it simple, I bet you, for those who want financial salvation....this is the book. Keep it up man and looking forward for more.

Understand that agreement before you sign it: Part 1


I signed that agreement and I never really understood most of the clauses therein. This is a common issue with most land purchasers. Did you know in the unlikely event of failure to complete a land purchase transaction and in the event of failure to resolve amicably any issues that may arise, the recourse the purchaser or the seller have will be based on the content of the agreement. Let us try and understand the contents of a standard sales agreement.

The agreement must have a vendor (seller) and a purchaser and either could be an individual or a company. The agreement will not only quote the name (s) of the vendor / purchaser but also mention successors in title, assigns and personal representatives. These are parties to the agreement. Who are these? Successors in title basically mean the successive owners of the titled land. Assigns are third parties to whom the vendor / purchaser would transfer all of the rights and obligations he/she has. A personal representative is ordinarily an executor for the estate of a deceased person who left a will or the administrator of an intestate estate. Take note that all these parties are bound by the agreement you are signing.

The agreement will further mention the Land Registration (LR) number, commonly referred to as the title number of the parcel in question, its area (approximate) & tenancy (freehold or lease). In the case of a lease the agreement will quote the lease period.

The agreement will further quote the Purchase price and terms of payment. Ordinarily, a payment of 10% on execution of the agreement will be paid by the purchaser. However, this may vary depending on what the two parties have agreed. The agreement will mention the completion period and in most cases give room for extension of the period as long as the parties agree and do so in writing.

It will further list the completion documents as below (if it is an individual buying and an individual selling):
1. Original Title in the name of the Vendor
2. Consent necessary for transfer
3. Duly executed transfer forms in triplicate
4. 3 Passport Photos of the Vendor
5. Copy of Pin Number of the Vendor
6. Copy of National ID of the Vendor
7. Rates Clearance Certificate (In Case the tenancy of the land is leasehold)
8. Rent Clearance Certificate (In Case the tenancy of the land is leasehold)
9. Valuation form duly filled

In the case the vendor/purchaser is a Company, then some additional documents will be required as below:

1. 3 photos each of the 2 directors of the company executing the transfer
2. Copies of PINS and ID copies for 2 directors executing the transfer.
3. Copy of the registration Certificate if it’s a company.
4. PIN Certificate of Company

There is this clause that goes like “The Property is sold with vacant possession which shall be given to the Purchasers by the Vendor against release of the full Purchase Price and apportionments (if any) to the Vendor.”

What does it mean?

Vacant possession: On completion of a sale, the seller is obliged to deliver the property with vacant possession which means clear of occupants and of any objects which are not included in the sale.

Apportionments: it refers to the allocation of property expenses such as insurance and taxes between the buyer and seller. Apportionment can also describe the division of property between tenants in common

Another clause will go like “The property is sold subject to all subsisting easements, quasi-easements and right of way if any, the acts reservation, special conditions and other matters if any attaching on the said property but otherwise free from any encumbrances.”

Let’s understand what these things mean:

Easements: The right of one party to use the property of another party. Easements are often applicable when public utility companies want the right to erect telephone poles, electricity poles or run water / sewer pipes either above or beneath private property.

Quasi easement: Similar to above but only applicable when a single owner has 2 or more adjoining plots. In this case, one or more parcels will be used to benefit the other (s). Notice how a quasi-easement becomes an easement upon the transfer of one or all of the parcels.

Right of way : It is basically the right to pass over property owned by another party. A good example would be KPLC power lines.

Special conditions: These apply especially in cases of leases. A lease is usually accompanied by special conditions which govern the lease.

Encumbrances: As earlier mentioned in another post, these will include restrictions, cautions, charges etc.

Take note that whenever you acquire that plot, you get it as is and consequently you inherit all of the above.

Next post we look at other agreement clauses including default clause, rescinding an agreement, certification of parties signing, validity of an agreement and disputes arbitration.

@ Marty,

Great read and keep it up. Few comments,

6th Sense : Women are great at it- if your mother ever told you to keep off a girl, you better. I normally trust my wife's 6th sense and never go wrong. One time i though i had a plot deal until i run it through her only for her to tell me-- that place is not even demarcated!

Tyranny of the budget: Once one has developed financial discipline, i find budgeting to the cent quite tedious. I personally prefer "block budgets" and leave out details.

Keep them coming

Understand that Agreement: PART 2

Continued………..

“The sale is subject to the Law Society Conditions of Sale (1989 Edition) in so far as they are not inconsistent with the conditions in this agreement.”

The LSK Conditions of sale (1989 Edition) are boiler plate set of conditions to aid in drafting of agreements and guide the sales and conveyancing process. They outline how critical matters are to be dealt with including:
• Deposits
• Completion
• Possession
• Apportionment
• Interest on purchase money
• Objections and requisitions
• Rescission
• Easement, Liabilities
• Consents
• Subdivision
• Notices
• etc

Default clauses
These are meant to protect the parties in case of default. In the event the vendor defaults, common practice is to return the deposit paid by the purchaser mostly with some interests guided by the market rates.

In the event of a default by the purchaser, the vendor is entitled to serve the purchaser with a 14 day notice and when the same expires, the Vendor at his sole discretion has the option of either extending the completion period or rescinding the agreement in writing.

Rescinding of an agreement: It basically means to declare a contract void—of no legal force or binding effect—from its inception and thereby restore the parties to the positions they would have occupied had no contract ever been made. In the event this happens due to failure of the purchaser to comply, then the purchaser loses the 10% deposit.

Completion
This is usually done by way of exchange of completion docs and balance between Vendor and purchaser respectively or upon successful registration of the transfer in the name of the purchaser.

Another common practice of late is signing on every page for the vendor and the purchaser just to make sure that a malicious party does not pluck out unsigned pages and replace them with unfavorable conditions or different content.
For the agreement to be valid, a Certificate to identify the vendor and purchaser, must be done by an advocate.

Another condition of late relates to simply stating who drew the agreement. “Drawn by”
Is an agreement which has not been witnessed by an advocate legal? Yes if there is a witness. However, the transfer documents must be certified by an advocate licensed to practice. Also certification of the other docs as true copies of the origin must be done by an advocate /notaries public.

Who is this notaries public? A person legally empowered to witness and certify the validity of documents and to take affidavits and depositions. Wow..and what is an affidavit? A written statement of facts voluntarily made by a person under an oath or affirmation administered by a person authorized to do so by law.

Arbitration of disputes
In the event there is a dispute between the parties over the agreement, they should issue a notice of 7 days to each other with a copy to their witnessing advocate who shall within 7 days invite both parties to a joint meeting and may arbitrate any disputes and his decision is binding and can only be reviewed by an arbitrator appointed by the two parties but in the event they cannot agree, then an arbitrator will be appointed by the Chartered institute of Arbitrators to arbitrate the dispute.

And what is power of attorney: A written document in which one person (the principal) appoints another person to act as an agent on his or her behalf, thus conferring authority on the agent to perform certain acts or functions on behalf of the principal. This means you can grant a person authority to act on your behalf and that includes the sales process. A power of attorney generally is terminated when the principal dies or becomes incompetent, but the principal can revoke the power of attorney at any time.

Enough of the agreement and the legal jargon. Next we will look at the subdivision process…

Tafadhali tuma hapa gits31@ymail.com . Asante.

Kindly inbox ilikeyou.ke{at}gmail{dot}com

The subdivision Process

We shall base the info herein on a subdivision of a freehold title.

Before you subdivide any land, you must get the consent to do so from the Land Control Board. Ideally the consent is issued upon the proprietor appearing before the Board. Notice that all land transactions are controlled. However, we all know that in Kenya, we may not necessarily appear before the board, but we can get what they call ‘Special Board’. I have put it in quotes because the concept is illegal. In fact what happens is that the consent date is backdated to the last Board sitting.

I once attended that board when I wanted to sell a plot in Ruiru. Those wazees really harassed my madam and I. “Kijana, kwa nini unauza shamba na wewe ni mdogo sana?”, they asked. I told them that I have other plots and I sell plots as a business. “Wapi bibi”, one retorted. I was with my significant other so I pointed at her. “Huyu sio msichana umeokota mahali?”. I produced the marriage cert and she produced her ID. They asked her “Na wewe unakubali mzee auze shamba mkae wapi?” She said she is OK with it and that is when they accepted. I swore never to return there. The wazees are famed at dismissing would be sellers unceremoniously. By the way, the idea behind the Land Control Board is noble especially to protect families from wazees who just sell land and leave their families desolate. Back in the village it is a common problem where fellows are selling inherited land and run away with young girls to squander the money only to return once the cash is over.

Once the consent is granted, the surveyor prepares the development plan on paper. The plots and access roads are earmarked and drawn to scale. Once the planning on paper is complete, the rest is to be done on the ground i.e. placing the beacons. Of course there are requirements that guide surveying including the width of the access road, minimum sizes and others.

Ideally, the proprietor is supposed to be present when the beacons are being put on the ground. Once the beacons are in place, a mutation form is filled in triplicate. The content of the form are as below:
1. Title number (mother title) and approximate area. (page 1)
2. Registered proprietor instructions to the surveyor on how they wish the land to be surveyed. (page 1).
3. Sketch or development plan which ideally should be filled by the proprietor(page 2)
4. Field diagram and observation on site with measurements to scale. This is normally filled by a licensed surveyor.

Once the mutation is filled and the proprietor has signed the 3 copies, they are presented to the district surveyor whose role is to approve the subdivision and allocate Land Reference numbers (new numbers to the new plots). The numbers are normally allocated serially based on a particular block of land. So the District Surveyor will just check from their records the last number issued for that particular block and allocate the new plots the numbers that follow.
The District surveyor then forwards a copy of the mutation to the registrar confirming that the survey work has been carried out and therefore the registrar can issue title deeds based on the LR Numbers already allocated by the DS. The DS also forwards a copy of mutation to survey of Kenya for purposes of amending the RIM (Registry Index Map).

Once the registrar receives the mutation, they open a green card for each of the new titles, issue a title for each of the new plots and then file the green-cards in the respective binders. The Proprietor then receives the new titles.

The Process gets is far more complex and trickier and expensive when subdividing leased land.

By the way, when someone tell you that they have subdivided their land and all they are showing you are beacons on the ground, ati titles ziko njiani, please take note that they may just have done the easiest part of the process.
What is astounding is how land buying and selling companies take forever to process titles and ordinarily it is a process that takes 4-6 weeks. Land buyers need to be more careful and insist on buying land whose titles are ready.

Next post we will try and explain the sizes of plots. Someone once asked me what 1/8th acre is? Is it 50 by 100? What is this hectare thing? We can also look at land tenancy